Strategy monograph: Colas Rail, Turnkey produts

Colas Rail continues to be the French leader in the rail-track laying business. Its leading role in this business is partly due to its unique ability to deliver turnkey products to its clients. The company has been active in all the spheres of railway business, from building up to the maintenance of the railway system. Colas Rail's activities extend to nearly everything related to the railway industry: engineering, building, cargo, metallurgy, and so on. It also installs power transformers and catenaries by itself. The company is capable of integrating the whole project, and its clients can therefore rely on it to outsource their investments and maintenance costs. This ability, as well as Colas Rail's technological know-how and innovation, makes it likely to benefit from the rail-track management liberalization that began with railway cargo in 2005. This trend will continue since the European Commission is pushing for liberalization of most of the state monopolies. However, the rail-track laying market is still a very special market.It is deeply imperfect with huge government power interventionism and protectionism. In some countries, foreign companies constantly face discrimination.

[...] TURNKEY PRODUCTS: THE FUTURE VII- Colas Rail’s environment Although all the PESTEL elements play a role in the Colas Rail’s environment, its main drivers are the political, economical and technological factors. The political factor stems from the fact that railtrack management companies, in most of the countries, are state-owned. Furthermore, given the huge amount of investments needed in such an industry, investment decisions are taken by political management, in a long term view and as part of their country management plan. [...]

[...] For instance, when building a recent rail-track, Colas Rail found that the stones they were extracting from a hill it was excavating to install the rail-track was 8 an ideal ingredient for "ballast" ithad to put somewhere else on the project. If Colas Rail was only working on the project without managing it, it couldn’t have decided or obtained the authorization to use or have the firm in charge of it use the stones found. The firm thus found an efficient way to do as it wouldn’t be necessary to buy "ballast" somewhere else. [...]

[...] Everything was in place to demonstrate that a new entity had been created, and that there was no winner or loser in the merger, but a union between equal companies. For instance, new Headquarters was chosen, exactly halfway between the two former ones. The CEO of the new firm, Colas Rail, was Benoît de Bodman, Seco Rail’s CEO The merger was theoretically a perfect union, but in fact, it was a clash of different management cultures. Furthermore, these two firms were approximately the same size, in terms of number of employees, turn-over, etc; the solution was to create a third entity from the former ones. [...]