Zodiac: Inflatable Diversifications

Zodiac: inflatable diversifications

An organization may seek the benefits of synergies by building a portfolio of businesses through related diversification.

The Zodiac Company was founded near Paris, France, in 1896 by Maurice Mallet just after his first hot-air balloon ascent. For 40 years, Zodiac manufactured only dirigible airships. In 1937, the German Zeppelin Hindenburg crashed near New York, which abruptly stopped the development of the market for airships. Because of the extinction of its traditional activity, Zodiac decided to leverage its technical expertise and moved from dirigibles to inflatable boats. This diversification proved to be very successful: in 2004, with over one million units sold in 50 years, the Zodiac rubber dinghy (priced at approximately A10, 000) was extremely popular worldwide.

However, because of increasing competition, especially from Italian manufacturers, Zodiac diversified its business interests. In 1978, it took over Aerazur, a company specializing in parachutes, but also in 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 the takeover of Air Cruisers, a manufacturer of inflatable escape slides for airplanes. As a consequence, Zodiac became a key supplier to Boeing, McDonnel Douglas and Airbus. Zodiac strengthened this position through the takeover of the two leading manufacturers of airplane seats: Sicma Aero Seats from France and Weber Aircraft from the USA. In 1997, Zodiac also took over, for A150m, MAG Aerospace, the world leader for aircraft vacuum waste systems. Finally, 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, systems monitoring, etc.). By combining these competences with its traditional...