The Health of the Family Business
Introduction
JCDecaux Group is a multinational company based in Neuilly-sur-Seine, Paris in France. The company was established in 1964 by Jean-Francois Decaux to offer bus stop advertising systems, billboards, public bicycle rental services, and street furniture (Jcdecaux.com, 2016). Currently, the company is the best outdoor advertising company in the world with annual revenues of more than 2.8 billion Euros. Its commitment is to deliver quality outdoor advertising services to its clients as well as providing first class public services to its customers around the world. The JCDecaux Group core values are innovation, quality, design, sustainable development and trustworthiness in all its services offered by its subsidiaries all over the world.
The business idea of starting the JCDecaux Group began in Beauvais in 1953 when Jean-Claude Decaux, who is the founder of the company, started an initiative of displaying advertising posters for the family’s shoe shop in the streets of the city. He believed that advertising had an impact on sales and began the initiative. It enabled him to gain massive recognition in the city and he eventually became a poster sticker for other retailers in the city who sought to promote their businesses (Mathe, 2015). He actualized the idea by setting up his billboard company and subsequently innovated and proposed the concept of providing and maintaining bus shelters financed by advertising. The mayor of the Lyon City adopted the idea in 1964 leading to establishment of the JCDecaux Group.
The founder of the JCDecaux Group made the company a family business as soon as he founded it by hiring his brothers Jean-Pierre and Jean Marie who helped him to develop the business significantly. In the 1980s, the second generation of the family, which involved the founder’s son, joined the group and moved abroad with the mission of developing the company's international operations. Jean-Francois Decaux, who was the eldest son of Jean-Claude Decaux, moved to German. Jean Charles Decaux moved to Spain while Jean-Sebastien Decaux, who was the third son to Jean-Claude Decaux, moved to United Kingdom (Jcdecaux.com, 2016). The input of all these family members contributed to the mission of the Group through strengthening the Group’s subsidiaries in other parts of the world (Poza, 2013). Therefore, the health of this family business will be described in the subsequent sections of the paper to explain the success strategy of JCDecaux Group.
Key Criteria of JCDecaux Group Family Business
The key criteria of the JCDecaux Group family business can be described using the three circle model and the business canvas model. The three circle model of a family business systems was developed at Harvard Business School by Renato Tagiuri and John Davis in the 1970s. The model can be used to analyze the current business systems of JCDecaux Group family business and provide significant recommendations on the necessary changes that need to be made to guarantee the business success in the future (Ward, 2011). The model provides a clear framework for understanding family business systems and can be used in this consultancy task to provide suitable recommendations to the family members who own the JCDecaux Group.
The JCDecaux Group has expanded its operations to different parts of the world through the establishment of subsidiaries that are run by different managements, which report to the overall management of the parent in Paris. The company is also listed in numerous securities exchanges around the world, and its shares are actively traded in these markets. Therefore, the company is currently owned by partly the family and shareholders from different parts of the world. Using the three circle model, one can integrate and analyze the key concepts in family business systems, which include the family, the business, and ownership. From the analysis, the JCDecaux Group has tried to integrate these three concepts, which involve the family members who are the founders of the parent company and the subsidiaries, the non-family employees who have been employed to help in running the operations of the JCDecaux Group and finally the non-family, Non-employee owners who have some interest in the company as shareholders (Dragu, 2013).
On the other hand, the business canvas model is a strategic management and entrepreneurial tool that can be used to describe, design, and invent a business model. The business canvas model will be used for the purpose of describing the JCDecaux Group’s family business to help in establishing a better design for improving the performance of the company. The model identifies that the JCDecaux Group has established and maintained good customer relationships over years in all its subsidiaries around the world; thus, translating to increased revenues from its operations (Voytenko & Mont, 2013). The company has also focused on the key resources that are its employees and has maintained and developed them through the exposure to different business systems in all its subsidiaries until they gain enough experience to guarantee excellent performance. The two main criteria for family business provide a good insight of the overall operations of the JCDecaux Group, which is a family business with well-established operations globally.
Organizational Strategy of JCDecaux Group
The JCDecaux Group deployed its sustainable development strategy internationally in 2014 and all its subsidiaries around the world have adopted this organizational strategy. The sustainable development strategy developed and adopted by the JCDecaux Group is based on the three pillars of sustainable development, which include environment, social, and stakeholder (Jcdecaux.com, 2016). Each of the pillars has priorities that the company focuses on in its sustainable development strategy. The environmental priorities include the reductions of the company’s energy consumption and reduction of the environmental impact of the company operations. The social priorities of the company are to establish a comprehensive health and safety policy and implement an ambitious group comprehensive social policy in all its subsidiaries around the world (Poza, 2013). The stakeholder priorities in the organizational strategy encompass the reinforcement of sustainable development in the purchasing policy and strengthening the employee’s commitment towards the implementation of the sustainable development strategy.
The JCDecaux Group has developed both short-term and long term strategies for ensuring it achieves an effective outdoor advertising. One of the core missions of the company is to deliver quality outdoor advertising services to its clients as well as providing first class public services to its customers around the world (Jcdecaux.com, 2016). It can only be achieved through ensuring that the company continuously engages in innovation in a bid to improve the effectiveness of the outdoor advertising activities. The company has been focusing on the short term advertising strategies globally which have not yielded significant returns in the long term (Dragu, 2013). I would recommend the company to combine both the short term and long term advertising strategies to ensure the company attains long term success. The company is increasing using the short term online metrics as a primary performance measure of its advertising strategies, but I would recommend the use of both the short term and long term online metrics to measure the performance of the advertising strategies to guarantee long-term success.
The JCDecaux Group has adopted two marketing approaches to advertising for all its subsidiaries around the world. The two marketing strategies involve the sales activation strategy and brand building strategy, which ensure that they offer quality and efficient services to their clients. The sales activation strategy involves the short-term process, which is meant to target the on spot buyers and its main purpose is to trigger a purchase impulse for the goods and services advertised (Jcdecaux.com, 2016). On the other hand, the brand building strategy is a long-term process that targets people who have no intention of buying the products and services to help convince them the need to purchase the products (Voytenko & Mont, 2013). The strategy involves the idea of trying to educate the potential buyers about the brand and reinforce their prior engagement with the brand with the aim of promoting more sales in the future.
Organizational Structure of JCDecaux Group
The ownership structure of the JCDecaux Group comprises of numerous categories of owners who have different values of shareholding in the company. The largest holding in the JCDecaux Group is by the Decaux family which represents 69.83 percent of the total value of the company (Jcdecaux.com, 2016). It is a clear prove why the JCDecaux Group is commonly referred to as a family business considering that the family of the founder owns more than half of the company shareholding. The public shareholding in JCDecaux Group ranks the second with a total shareholding of 28.7 percent which represents the shareholders for all the different subsidiaries in various parts of the world and the parent company in France. The other registered shareholders and employees of the company constituent the other percentage with a shareholding of 0.07 percent and 0.08 percent respectively. The different shareholding is a clear indicator of the intention of the company to take responsibility for providing the different shareholders with good value for their money (Ward, 2011).
Considering the ownership structure of the JCDecaux Group, the company has a great mandate of ensuring clear corporate governance is embraced to protect and promote the interests of all the shareholders of the company. Therefore, the company has embraced corporate governance for the parent company and all its subsidiaries in other parts of the world to ensure all the shareholders are treated equally irrespective of their amount of shareholding (Mathe, 2015). It has been very keen in following the principles of corporate governance since the year 2000 when the Group changed its status to a public limited corporation. The incorporation of the public in the ownership of the Group gave it the nature of a partial family and partial public business that is governed by an Executive Board that is supervised by the Supervisory Board.
The executive board of JCDecaux Group has six members who are appointed by the Supervisory Board to manage the day to day operations of the company. Jean-Francois Decaux and Jean Charles Decaux, who are sons of the JCDecaux Group founder alternate as chairman of the Executive Board (Jcdecaux.com, 2016). Jean-Sebastien Decaux, who is also a family member of the Founder's family, is also a member of the Executive Board and an indicator that the Group is still run by a majority of the family members hence qualifying to be called a family business (Ward, 2011). However, three non-family Executive Board members include David Bourg, the Chief Financial and Administration Officer, Emmanuel Bastide, who also serve as the Chief Executive Officer for Asia and Daniel Hofer who also serves as the Chief Executive Officer for Germany, Austria, Central and Eastern Europe and Central Asia. On the other hand, the Supervisory Board that oversees the management of the Executive Board comprises of 10 members headed by Jean-Claude Decaux, who is the founder of JCDecaux Group serving as the Honorary Chairman of the Supervisory Board.
Shareholders of the JCDecaux Group
The main shareholders in the JCDecaux Group include the Decaux family with 68.0 percent shareholding, the NNIP Advisors BV with 5.22 percent shareholding, and Northern Cross LLC with 3.74 percent. APG Asset Management NV with 3.36 percent, Capital Research & Management Co. with 2.90 percent, Gardner Russo & Gardner LLC with 2.34 percent shareholding and Sirios Capital Management LP with 0.75 percent (Jcdecaux.com, 2016). Jean Charles Decaux with 0.71 percent, The Vanguard Group with 0.68 percent and the TIAA-CREF Investment Management LLC with 0.64 percent shareholding (Jcdecaux.com, 2016). The JCDecaux Group is a commitment to make viable investments with high returns to guarantee the shareholders great value for their investments in the company shares (Poza, 2013).
The company engages in continuous innovation of its products and services to ensure that it remains competitive in the advertising industry being the number one advertising company in the world. Such an achievement gives the JCDecaux Group a great reputation in the minds of the shareholders as well as the minds of its clients. Such reputation has enabled the company to attract numerous shareholders in different parts of the world where the company has ventured into business. Through the family leadership, JCDecaux Group has been able to make significant progress towards its innovation agenda. The main innovation initiatives in Paris include the concept of a bus shelter, the Decoder Urbarn, the Digital Totem, the Digital Harbor, the e-Village and play (Jcdecaux.com, 2016). All these innovations have created a lot of revenues for the JCDecaux Group a clear indicator of good shareholder wealth management (Voytenko & Mont, 2013). The revenues gained from such innovations by the company are shared by all the company shareholders in proportion to their shareholding in the company assets. However, for the company to offer a better shareholder wealth management services, it needs to extend its innovation strategy to other parts of the world where it has investments to provide innovation with a global touch.
The JCDecaux Group has also established a sustainable development strategy, which seeks to address the issue of stakeholder responsibility in its global operations. The company is committed to serving the interests of a wide range of stakeholders from local government, customers, transport companies, commercial partners, its employees and the shareholders. However, the company focus should be to fulfill the interests of the shareholders who are the owners of the company resources (Mathe, 2015). I would recommend the company to respond to the concern of shareholder wealth management by devising strategies for maximizing the wealth of shareholders in all its outlets around the world.
Succession Process at JCDecaux Group
The succession process at JCDecaux Group is quite systematic because of the well-established organizational structure that guarantees quality management of the company. The alternation process of the chairman position of the Group between the two sons of the founder has proved to be the best succession technique for the company because it has yielded significant results. The company has maintained key personnel in the parent company and its subsidiaries around the world. Key management personnel with unique skills have been maintained within the company for quite some time since the company is not ready to let them go considering their roles in the overall performance of the company. For instance, Xavier de Sarrau has been a member of the Supervisory Board for JCDecaux Group since 2003 while Pierre-Alain Pariente has been a member since 2000. This is a clear indication that the company is committed to retaining specific members of staff whose roles are very critical in the entire JCDecaux Group (Dragu, 2013).
The JCDecaux Group has continued to attract, develop, and reward people who are very passionate about contributing to the continued growth and success of the company. The working environment at JCDecaux Group is very conducive for the staff career growth because the company recognized the need for its employees to make a difference in their lives this providing a culture of accountability, challenge and opportunity for them to make an impact in their lives (Poza, 2013). The company is also committed to retaining all its employees for a long period by providing comprehensive retirement plan, healthcare facilities, wellness programs, paid vacation and life insurance with a disability coverage.
Conclusion
Recommendations
According to my opinion, I can say that the JCDecaux Group has been one of the most successful family businesses in the world because it still the leading company in the global advertising industry up to date. However, I would recommend some things that need to happen to guarantee continued success of the JCDecaux Group. I would recommend the company to focus more on developing strategies for maximizing the shareholders wealth because they are the financiers of the company. More innovation should be done in the advertising products in different parts of the world to remain competitive and relevant. Finally, the company should consider reshuffling the two boards regularly to bring in people with new and possibly more brilliant ideas.
References
Dragu, I.M., 2013. Global 100. In Encyclopedia of Corporate Social Responsibility (pp. 1221-1226). Berlin: Springer Berlin Heidelberg.
Jcdecaux.com, 2016. Home - JCDecaux. [online] Jcdecaux.com. Available at: http://www.jcdecaux.com/en [Accessed 1 May 2016].
Jcdecaux.com, 2016. Home / Investors / Home - JCDecaux. [online] Jcdecaux.com. Available at: http://www.jcdecaux.com/en/Investors/Home [Accessed 1 May 2016].
Mathe, H., 2015. Living Innovation: Competing in the 21st Century Access Economy. New York: World Scientific.
Poza, E., 2013. Family business. Stamford: Cengage Learning.
Voytenko, Y. and Mont, O., 2013. Innovative value creation models for sustainable living. In Proceedings of SCORAI Europe & InContext Workshop (No. 3). SCORAI Europe.
Ward, J.L., 2011. Keeping the family business healthy: How to plan for continuing growth, profitability, and family leadership. London: Palgrave Macmillan.
