Vivendi (a): Revitalizing a French Conglomerate
MAPPING THE BUSINESS LANDSCAPE
General Environment:
For CGE, the 1980s were a period of "unprecedented opportunity" in France in which it could make the "great leap forward". The French economy as a whole was growing rapidly and the hopes of an expanded market with the European Community were attractive opportunities for the firm.
In CGE, one form of diversification was "cross shareholdings". The origin of this cross-shareholdings can be traced to the period 1986-1988 during a time of "cohabitation" in French government between a social president, Francois Mitterand, and a more conservative Prime Minister, Jacques Chirac. Afraid of the inability of the French weak capital markets to absorb large quantity of shares domestically and hesitant to open ownership of France 's "crown jewels" to foreigners, the French government encouraged large privately owned firms to soak up the new shares offered during the privatizations.
In 1995, the country 's real GDP growth was 2.1%, sinking to 1.5% in 1996. Investment growth was negative and consumer spending weak. By 1997, unemployment in France reached a post war record of 12.8%. Economic growth had flattened, and economic pessimism permeated both public and private sectors.
Not only CGE have to operate in the difficult economic environment, but, as the largest employer in France in 1995 with more than 217,000 employees. Government attempts in 1995 to liberalize the labor market led to nationwide strikes and economic gridlock.
A lack of transparency and a weak corporate governance system made investors wary of French equities. By 1997, foreign investors ' confidence in the opportunities in French market had grown somewhat, raising the overall level of foreign ownership of French equity market to 35%.
As a leading French company, CGE continually faced conflicting tensions.
Business Environment:
As opposed to the other countries where water utilities were strictly controlled by the central government, in France each
General Environment:
For CGE, the 1980s were a period of "unprecedented opportunity" in France in which it could make the "great leap forward". The French economy as a whole was growing rapidly and the hopes of an expanded market with the European Community were attractive opportunities for the firm.
In CGE, one form of diversification was "cross shareholdings". The origin of this cross-shareholdings can be traced to the period 1986-1988 during a time of "cohabitation" in French government between a social president, Francois Mitterand, and a more conservative Prime Minister, Jacques Chirac. Afraid of the inability of the French weak capital markets to absorb large quantity of shares domestically and hesitant to open ownership of France 's "crown jewels" to foreigners, the French government encouraged large privately owned firms to soak up the new shares offered during the privatizations.
In 1995, the country 's real GDP growth was 2.1%, sinking to 1.5% in 1996. Investment growth was negative and consumer spending weak. By 1997, unemployment in France reached a post war record of 12.8%. Economic growth had flattened, and economic pessimism permeated both public and private sectors.
Not only CGE have to operate in the difficult economic environment, but, as the largest employer in France in 1995 with more than 217,000 employees. Government attempts in 1995 to liberalize the labor market led to nationwide strikes and economic gridlock.
A lack of transparency and a weak corporate governance system made investors wary of French equities. By 1997, foreign investors ' confidence in the opportunities in French market had grown somewhat, raising the overall level of foreign ownership of French equity market to 35%.
As a leading French company, CGE continually faced conflicting tensions.
Business Environment:
As opposed to the other countries where water utilities were strictly controlled by the central government, in France each