Compagnie Generale des Eaux - Case Study Example

The efforts of Guy Dejouany express the company's commitment in maximizing its financial resources by putting them in different investment opportunities. The leader should also be noted for his effort in minimizing company risk by not putting all its investment in a single industry. In contrast, he tried to distribute risk by putting the company's fund in various industries. Guy Dejouany also broadened intensified the influence of CGE by broadening its reach and market base. By establishing presence in industries where the company has no previous operation, CGE gained more bargaining power through its large size and coverage.

However, it should also be noted that the choice of which industry to diversify into is the sole choice of Dejouany according to his personal experiences and relationships instead of generating more formal business analyses. The leader has launched aggressive efforts in order to ward off competition or strengthen the business organization's position against its rivals. In terms of management style, Guy Dejouany can be characterized as a charismatic leader who influenced people through his personality.

Though engaged in a wide array of businesses, decision making is highly centralized emanating from a superior who very much involved in the operations of each business unit. During his administration, transactions and relationships have operated on trust while no significant attention is put on the performance of his subordinates. Models of Diversification Employed by Dejouany Keeping in mind that CGE has started as a player in the water utility business, the company's efforts to diversify in health care, transport, telecommunication, and real estate sectors represent a move toward unrelated diversification.

With this, it should be noted that Dejouany employed conglomerate diversification or opting to deliver new products to new markets which are the currently not served. In other instances, he also utilized vertical diversification by acquiring business organizations which are in the same value chain. Basing decisions solely in his relationships and personal experiences, Dejouany had undoubtedly entered industries which are highly unrelated. Conglomerate diversification has been used in order to manage the complexity of various businesses under a single portfolio.

However, instead of utilizing the company's resources to execute similar processes within business units, CGE maintained the separation between its business entities. In contrast to the typical strategy of acquiring promising small companies, CGE opted to establish new companies which will serve new clients. There has also been no establish relationship between business units and often, subsidiaries are unaware that they are a part of a single organization. Problems in the 1990s The year 1990s sees the near collapse of CGE because of its disastrous financial and overall performance.

The problems of the business organization can be traced to its larger business environment and issues inherent to its operation and governance. As discussed above, the decisions within CGE are solely made by Dejouany who build businesses