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Mini Case Assignment - Zodiac

The Zodiac Group started in 1896 manufacturing hot air balloons and dirigible airships, but halted this business in 1937. It leveraged its technical expertise into inflatable boats in the 1940s, selling over 1 million by 2004. Facing competition, it diversified into related aerospace products like parachutes and life rafts in the 1970s-1980s, becoming a key supplier to aircraft manufacturers. By the 2000s, aircraft products accounted for 80% of turnover, and Zodiac renamed itself Zodiac Aerospace. It has become a world leader in aerospace equipment and systems through acquisitions and high demand.

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215 views2 pages

Mini Case Assignment - Zodiac

The Zodiac Group started in 1896 manufacturing hot air balloons and dirigible airships, but halted this business in 1937. It leveraged its technical expertise into inflatable boats in the 1940s, selling over 1 million by 2004. Facing competition, it diversified into related aerospace products like parachutes and life rafts in the 1970s-1980s, becoming a key supplier to aircraft manufacturers. By the 2000s, aircraft products accounted for 80% of turnover, and Zodiac renamed itself Zodiac Aerospace. It has become a world leader in aerospace equipment and systems through acquisitions and high demand.

Uploaded by

NUR NADIRAH BINTI AHMAD
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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EPP4014

Short Case Study: Types of Strategies



Zodiac deflates: from boats to aerospace

The Zodiac Group is probably best known for its Zodiac inflatable boats, used by
Jacques Cousteau and seen in harbours around the world. But by 2012, Zodiac
was a world leader in aerospace equipment. How had this transformation come
about?

The Zodiac company was founded in 1896 by Maurice Mallet after his first hot-
air balloon ascent. Zodiac manufactured only dirigible airships for 40 years until
1937, when the German Zeppelin Hindenburg crashed near New York, abruptly
halting the airship market. With its traditional activity extinguished, Zodiac
decided to leverage its technical expertise and moved to inflatable boats. This
proved to be very successful with over one million Zodiac rubber inflatables sold
worldwide by 2004.

However, increasing competition from Italian manufacturers led Zodiac to
diversify. In 1978, it acquired Aerazur, a company specializing in parachutes, life
vests and inflatable life rafts. These products had strong market and technical
synergies with rubber boats and their main customers were aircraft
manufacturers. Zodiac confirmed this move to a new market in 1987 by taking
over Air Cruisers, a manufacturer of inflatable escape slides for aeroplanes. As a
consequence, Zodiac became a key supplier to Boeing, McDonnell Douglas and
Airbus. This position was strengthened through takeovers of leading
manufacturers of aeroplane seats: Sicma Aero Seats (France) and Weber Aircraft
(USA) and MAG Aerospace, the world leader for aircraft vacuum waste systems.
In 1999, Zodiac took over Intertechnique, a leading player in active components
for aircraft (fuel circulation, hydraulics, oxygen and life support, electrical power,
flight-deck controls and displays, system monitoring, etc.). By combining these
competences with its traditional expertise inflatable products, Zodiac launched a
new business unit: airbags for the automobile industry.

In parallel to these diversifications, Zodiac strengthened its position in inflatable
boats by the takeover of several competitors. Bombard-L’Angeviniere in 1980,
Sevylor in 1981, Hurricane and Metzeler in 1987. The company also developed a
swimming-pool business form its first product line, back in 1981, based on
inflatable structure technology. Through takeovers Zodiac now produced rigid
above-ground pools, modular in-ground pools, pool cleaners and water
purification systems, inflatable beach gear and air mattresses.

However, by 2007, aircraft products accounted for 80 per cent of group
turnover. For some airline equipment Zodiac held a 40 per cent market share
globally and produced electrical power systems for the Airbus A380 and Boeing
787. Zodiac had even reach Mars: NASA Mars probes Spirit and Opportunity were
equipped with Zodiac equipment.

In 2007 the marine and leisure businesses, which accounted for 19 per cent of
turnover, were sold, with Chief Executive Jean-Louis Gerondeau saying ‘this
would reinforce Zodiac’s acquisition capabilities, in the aerospace sector’. It was
also a response to pressure from financial analysts, who considered Zodiac too
diversified. The sale funded three further acquisitions of aircraft cabin
equipment companies, Driessen, Adder and TIA in 2008, and Zodiac renamed
itself Zodiac Aerospace. Although subject to a takeover bid from Safran, a French
aeronautics group, in 2012, Zodiac rebuffed the bid and announced higher than
expected profits of 319 million pound due to buoyant aerospace demand and
two recent acquisitions (Heath Tecna Aircraft (interiors); Contour Aerospace
(seats)). Re-pivoted, Zodiac is now a world leader in aerospace equipment and
installed systems for commercial aircraft and helicopters.

Source: Based on an illustrationby Frederic Frery, ESCP Europe Business, School; Exploring
Strategy: Text and Cases by Gerry Johnson, Richard Whittington, Kevan Scholes, Duncan Angwin,
Patrick Regner.

Questions

1. Explain the ways in which relatedness informed Zodiac’s diversification
strategy over time.

2. What are the disadvantages and potential dangers of its decision to focus
on the aircraft products market?

3. What do you think about the impact of Covid 19 to this business? What
are the possible strategies/industry/business that the company should
venture into?

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