Gdf-suez strategic analysis

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This strategy case will focus on the strategic choices of Gaz de France, French energy group, from its nationalization in 1946 to nowadays new group GDF-Suez. In order to understand the complexity of GDF-Suez structure, we have to stress on its organization. GDF-Suez is composed of 6 business units: Energy France (Supplying of gas and electricity in France, Production ofelectricity in France, Services to energy for individual), Energy Europe and International (Production of electricity outside France, Distribution and supplying of gas and electricity outside France), Global Gaz and LNG-Liquefied Natural Gas (Exploration and production, Provision in gas, Arbitrage LNG, Trade of energy and supplying of key accounts in Europe), Infrastructures (Infrastructures of bigtransportation of gas, LNG terminals in France and Benelux, Stocking activities in France and International, Gas distribution network in France), Services to energy (Control of urban networks in France and abroad, Administration of energy, industrial and tertiary installations, Complete multitechnique offers), and Environment (Water and cleaning up services, Engineering of water treatment, Cleanservices).

Those business units are distinguishable from each other since they serve a defined external market different for each of them; they have their own missions, objectives and business strategies, and also their own budgets.

The stages of strategy development and their characteristics

Gaz de france was born at the same time of EDF during the electricity and gas nationalization in 1946.It was formed by the grouping of all private companies which activities where either production or transportation or distribution of gas on the French territory. The first step of their strategy is to produce and sell synthetic gas (gaz de ville) stocked near consumption areas.

The second stage is distinguished with a diversification strategy since Gaz de France in 1950 began to provide a newgas and start to develop its market to reach both firms and individuals. They had a product development with the discovery of a new type of gas from the Lacq gas well: the natural gas which provides a lot of qualities with no toxicity. Gaz de France is at this moment able to provide to its existing market a new modified product which is better to respond to its consumer needs. At the same time, thisdiscovery of a new gas provides Gaz de France a tool to develop its market by reaching the private individual people and firms.

In 1970, with the oil crises, the will of Gaz de France to provide a diversified offer of energy is reinforced. They enter another stage with an international strategy. Their internationalization drivers are to be able to increase their capacities, to continue todiversify the energy offer in france and to meet their market demand. GDF starts to have closer economic relations with the other closest gas producing countries, they started alliances with Algeria, The Netherlands and USSR; in order to be able to refurnish its gas distribution. In order to enter a new territory, GDF had distributorship contracts with public collectivities and has the status ofoperator. This new stage make them tend to an innovation strategy with the development of new underground reservoirs in order to be able to stock more gas without using too much space, it happens to be a good tool to fight against some irregular gas supplying from foreign producers like USSR. They so managed to avoid the risk of internationalization supplying. During this innovation process, they alsodeveloped liquefied gas in order it to be easily transportable by gas carrier from a country to another and so respond to another problem internationalization could have raised.

Around 1980, they enter a new stage with a market development strategy. They begin to find and develop new usages of gas in order to increase its consumption. They so reinforce their commercial activities in order to...