Strategic Analysis Of Thales Group: External Environment, Five Forces, And Strategies

Thales Group Background

Strategic analysis is very necessary for all business functions. It involves developing a plan for a business through conducting business research and understanding the environment in which it operates. Strategic analysis is usually conducted to assist businesses to become more maintainable, strong, advanced and stay pertinent (Wethington, 2018). The main objective of this paper is to contact a strategic analysis of Thales group. This group ensures this is done to discover many things. The paper covers a detailed background of the business, the analysis of the company’s external environment, the analysis of the five forces, the strategies at the business level besides the necessity (Kelly, 2016) of developing good strategic associations with the main stakeholders of the company. In the current situations, markets usually keep changing all the time hence the necessity of developing effective strategies that ties them to customers than their competitors. Any company that have better environment operates well because in most cases they usually comply to legal frameworks, political rules and laws governing taxations. The five forces are very necessary for enhancing competition.

Thales group is a French company that operates in many nations. It operates in more than 56 counties. The company designs and builds electrical schemes. The company also provides aerospace, transportation, protection and security market services as given in the company website. It is headquartered in the business districts of Paris also known as La Défense (Wethington, 2018). It is among the 10 largest defense contractors worldwide. The stock of the group is listed on the Euronext Paris. It has over 64000 employees and 55% of its of its total sales comes from military sales. The company is the main designer of ship. This make it to generate more revenue hence continued expansion (Kelly, E 2016). The company has continued to generate deep knowledge in their areas of operation. The company has made good and close relationship with local clients. The reason for this is to have knowledge of their functional decision-making processes and values. This helps the management to endorse best solutions to their problems. The main customers comprise of the institutions, companies and government (Thales Euronext Paris 2016).

PESTEL analysis is a marketing tool used to measure, analyses and monitor external marketing environmental factors that affects a business (Song et al. 2017). They include the political, economic, social, technological environmental and legal factors that affects the business. The analyses help to identify the threats weakness and weakness that face the company.

PESTEL Analysis

The government of Australia developed business legislations that attracts direct foreign investments and takes control of activities related to money laundering. The creation of trade between Australia and china facilitates the export of Thales groups security products (Aerospace & Defense Industry Profile: Australia’ 2017) the country has strong financial sector. This facilitates fast acquisition of findings by the company hence fast expansion. According to the Government Spending Industry Profile: France (2017), Thales can access funding from the stable banks in Australia when need be. This facilitates business expansions. A business expansion motivates foreign investors to build more business in a country (Kasahara, 2015). This country also experiences challenges (Kelly, 2016) when it comes to technology. This made the country to develop a durable national broad band network NBN. this company is slow in adapting to the use of this network as it strengthens partnership with other business enterprises. Most students in this country do not undertake science discipline. This therefore means that it affects the company in some negative ways because its survival will make them higher more candidates outside the country. This then in the long run becomes expensive to the company (Karadag, 2015). This country has various legal elements. They include; strong environments for business, legal privileges and increased rules on legal services. This element highly promotes the growth of Thales environments. 

Table 1: Australia PESTEL Analysis

Political · Joint trade · Rules that prevents direct investments from foreign countries.	Economic · Strong direct foreign investments · Stables financial sectors	Technological · Low no of graduates in science · Low partnership level · Future prospects of increased business
Social -cultural · High standards of living · Strong health fertilities · High income discrepancy	Legal · Strong legal privileges · Stable environments that favor · business expansions · Raised rules on legal services	Environmental · High rate of pollutants · Strong environmental performance

Thales is happy with the operation in France as this country very effective strategies that pawns terrorism in Europe. This makes the country stable and good for investments. As Thales operate in this country it has less worries wen it comes to terrorism (Kelly, 2016). Countries that less experiences attacks attics more investors and increases the opportunity for growth of business. Moreover, France is a democratic country that promotes reforms in technological environments and has high rates of approvals of research and developments. This support highly favors Thales group as it highly depends on technology to produce advanced technology-led, aero plane, defense and security define solutions.

The country also has highly developed infrastructure (France Armaments 2018). This ensures that Thales products and services reach respective clients without failure (Kelly, 2016). France has strained ties with other countries economically. This affects the general operation of Thales group and other business and also reduces the rate of exportation. France also has Labour reforms that restricts free movement of skilled laborer’s. this restriction affects Thales from developing innovative products to limited skilled Labour.

External Analysis of France, Australia and UK

Table 2: PESTEL analysis for France

Political 1. Strong democratic rules 2. Poor relations with other countries 3. Continuous reforms in the local government 4. Possibility of attacks	Economic 1. Good infrastructure 2. Poor financial systems 3. Strong labor reforms	Technology 1. High rate of research and development 2. Technological development 3. Increased approval rate of patents
Social -cultural 1. High rate of fertility 2. High income discrepancy	Legal 1. High rate of tax 2. High interference rate 3. High rate of openness to foreign investors	Environmental 1. Possibility future carbon tax 2. Strong commitment towards international laws 3. Financial risks 4. Poor commitment towards international laws

UK is a constitutional monarchy that operates at the influence of the parliamentary systems. The economy of this country is stable hence good for investing companies like Thales. This country has good relationship with other countries (FRANCE ARMAMENTS 22 April 2014′ 2014). This assists investors to expand their businesses and attract more investors. The problem with this country is that they are very contract. They sometimes give first priority to those companies that come from UK. They become stronger economically. This strength plays key role in businesses. This country shows quality living standard. Thales operates well in this country as the employees are educated and like quality service (Kasahara, 2015). Thales is good in providing quality services. the company has some legal regulations that dictates how the employees are treated.

Political · Politically stable · Proactive government · Hidden corruption	Economic · Diversifies economy with public and private sectors · Free market · High direct foreign investments · More money spent on public resources	Technology · Quality innovation skills · Science expertise are readily available · Internal competition · Rate of technological development is slower than UK.
Social cultural · Free public services · High standards of living	Legal · They regulate the way employees are treated · Laws are there to restrict price movements	Environmental · Environmentally friendly

Two key competitors to Thales group and the five-force analysis

Table 3: Rockwell Collins five forces analysis

Competitive Rivalry · Key clients are the government agencies · Managed to grow with the government · Already has tougher financial force and fixed costs for investment · Highly distinguished products than Thales	Bargaining power of suppliers ·  Have specialized supplies as they mainly rely on government · Has stronger financial power than Thales · High bargaining power	Bargaining power of customers · Major buyers are government officials · Lower exchanging costs · High bargaining power than Thales
Threats of entrants · Rockwell Collins is more experienced in manufacturing of commercial security systems, space defense, and airlines. · Access to strong worldwide distribution networks · Can determine the price of their products as it is heavily governed by the government · Highly differentiated products	Threats of substitute products · Few replacements for aircrafts · Low intimidations in terms of creating alternatives · Increased swapping costs

BAE Systems

Table 4: BAE Systems

Competitive Rivalry · Disjointed market with Boeing, Lockheed Martin, and EADS N.V as the main players · Companies use varied product lines · The compete for government commercial contracts · High product diversity · Large capital outlay	Bargaining power of suppliers ·  Quality and availability determines quality of end-products · Improved power of suppliers · Unstable prices of products · Use of steel and aluminum as Primary inputs. Average power of suppliers	Bargaining power of customers · Has moderate power due to the quality of products. · Few buyers from governments, military space agencies and institutions. · Low cost of switching as clients can buy from competitors. · Buyers do not threaten them through backward integration
Threats of entrants · BAE manufactures world’s most advanced, aerospace, technology-led defense and security solutions. · Easy access to distribution channels worldwide · Can survive frequent changes in the prices ·  They follow rues thus prevent new entrants	Threats of substitute products · provide most advanced, aerospace, aerospace and technology-led defense and security solutions · doesn’t provide product substitute · face threats of substitutes

Rockwell Collins sells most of its products to the government agencies as compared to BAE and Thales. This make it have an increase bargaining power than their competitors. This competitive hedge makes the company to be price elastic hence availing products to customers cheaply (Porter, 2017).

BAE and rock field has high power of receiving good suppliers. This two companies have high power o suppliers. This make them to have increased cost of switching (Porter, 2017). This make to compete hence raising the threat to their suppliers as well

The two companies have been in the market for quite some time, therefore whenever new competitors up it become1s difficult to outshine them. this is because they are already experienced keeping them at the top in terms of competitions (Kelly, 2016). They also produce quality products thus giving new entrants a difficult time if they try to compete them

BAE and Rockwell do not have many substitutions in the market as compared to Thales. Thales are continuously contacting research by specialized employees hence continuously improving their product and creation of more substitutes (Ascher, D et al, 2018). Those two companies have week threat of substitutes. Those companies that can comfortably compete globally should have a variety of products so that the customers buy what they can afford.

This company faces competition from various companies. Some of them include, the Rockwell, Boeing and BAE. for instance, Boeing has very high fixed costs than its competitors (Porter, 2017). This offers this company the capacity to alternate the unit cost of the products the offer easily than the competitors.

Competitive Analysis of Rockwell Collins and BAE Systems

Few companies in Australia cannot serve all the regions. Therefore, Thales started developed a strategy of using the bendigo business units to expand the markets in Australia (Sturiale, et al.2017). This assists in serving the whole market. This strategy enables them to maximize the use of fixed capital.

Thales group is a multinational company that has a high opportunity for growth. This therefore means that locating it in a small-town limit it cavity to grow (Ascher, 2018). If the company lacks capacity it grows it mean that even the profit levels will be lower. This contravenes one of the objectives of Thales which is to increase the sale volumes.

At the present moment, Thales adopted a differentiation strategy to handle its cyber security divisions. This strategy results in the production of unique and durable products that are not easily imitated (Sturiale et al. 2017) by competitors. The strategy ensures the products are cost effective, easy to maintain and convenient.

This company targets different classes of customers using different approaches. At the current moment, this company manufactures quality cyber security systems (Beuve & Saussier, 2012). In order to achieve this the company has to outsource specialists in innovation, internet security and technology. This is because Australia has low number of engineering skills. 

There is a mutual relationship between shareholders and the company. Shareholders are people who depend on the company to satisfy their goals and the company also depends on them (Beuve, & Saussier, 2012). Shareholders assist the company in making different kinds of decisions and facilitates expansion of the markets.

A company that have the capacity to merge with Thales is the Lockheed Martin company. Mergers and acquisitions (Sturiale et al. 2017) facilitates fast entry into the market. This also helps in utilizing the capacity of the strategies and efficiency in costs.

This report clearly explains environment in Australia, France and UK in terms of contacting a business. It further provides knowledge regarding the strategic analysis of thales groups and the ways it operates in either small or large markets. The paper also identifies BAE and Rockwell Collins as the main competitors to thales group.

References

Aerospace & Defense Industry Profile: Australia. (2017) Aerospace & Defense Industry Profile: Australia, pp. 1-40

Ascher, D, da Silva, W, Polowczyk, J, da Silva, E, & da Veiga, C. (2018) Neurostrategy: an advance through the paradigm epistemological in strategic management?. Academy of Strategic Management Journal, 17,. (2, pp. 1-19

Beuve, J., & Saussier, S. (2012) Interfirm cooperation in strategic relationships: the role of formal contract. Industrial & Corporate Change, 21(4), 811-8

France Armaments (2014) Acquisdata Industry Snapshot: France – Armaments, 1383, pp. 1-74

France Armaments (2018) Acquis data Industry Snapshot: France – Armaments, 11397, pp. 1-8

Government Spending Industry Profile: France. (2017) Government Spending Industry Profile: France, pp. 1-38

 Karadag, H. (2015) Strategic Financial Management for Small and Medium Sized Companies, Bingley, United Kingdom

Kasahara, E. (2015) Practical Strategic Management: How to Apply Strategic Thinking in Business, New Jersey

Kelly, E. (2016) Australia’s One Sky makes progress. Asian Aviation Magazine, 14(2) p. 10.

Porter, E. M. (2017) The five competitive forces that shape strategy. Harvard Business Review, [Online]. Available at https://apps.insead.edu/edp-files/coords/share/MartinaF/BAE%202.1/5%20Competitive%20Forces.pdf

Song, J, Sun, Y, & Jin, L. (2017) PESTEL analysis of the development of the waste-to-energy incineration industry in China. Renewable & Sustainable Energy Reviews, 80, pp. 276-289.

Sturiale, A, Chicca, L, & Gerosa, S. (2017) Do not Gamble with Uncertainty. PM Network, 31, 10, pp. 30-31,

Thales Euronext Paris (2016), 1159, pp. 1-15

Thales SA SWOT Analysis. (2017) Thales SWOT Analysis, pp. 1-9

Thales website (2017) About us [Online]. Available at https://www.thalesgroup.com/en/global/group/about-us/thales-worldwide [accessed on 25 May 2018]

Wethington, T. (2018) Making Contact: Thales Launches One of Europe’s Most Ambitious Tactical Radio Modernizations. Military Technology, 42, 1, pp. 68-69