Introduction
SNC-Lavalin and CGI Inc. are the biggest engineering and construction companies in Canada. Established in 1911, SNC-Lavalin has over 30,000 global employees and generated $7.5 billion in revenue in 2022 from diverse infrastructure, mining, and energy projects. CGI is a global IT and business consulting company founded in 1976 and now employs 82,000 people. The company reported $9.6 billion in revenue in 2021. Both companies were internationally oriented – SNC-Lavalin through bidding on megaprojects and CGI by strategic acquisitions.
The company has been facing accusations of unethical behavior and corruption involving some of its overseas operations in recent years, which is in contrast with CGI’s objective to create a robust ethical culture across its global operations. From the comparison of the fundamental elements of the company’s business strategy, corporate strategy, and international strategy, we can see the distinct differences. Although SNC-Lavalin has decentralized and loosely controlled foreign operations, CGI has a centralized governance and organizational alignment. CGI’s reputable, disciplined growth based on client relationships distinguishes it from SNC’s reputation-damaging misconduct. In the end, CGI focused on a sustainable global strategy.
Business Strategy
SNC-Lavalin Business Strategy
SNC-Lavalin’s core business historically centered around large-scale engineering and construction services in areas like infrastructure, mining, oil and gas, and power projects. The company aggressively bid on complex lump-sum turnkey (LSTK) contracts across Canada and worldwide, including public transit projects, hydroelectric dams, pipelines, and mines (Reynolds, 2023). This high-risk, high-reward approach helped SNC-Lavalin rapidly expand as it leveraged expertise from past megaprojects to underbid the competition. However, the strategy backfired in recent years as many fixed-price contracts faced delays and budget overruns, forcing SNC to absorb substantial losses.
At the same time, SNC-Lavalin pursued a broad differentiation strategy to stand out based on its depth of technical capabilities, global experience delivering challenging projects, and end-to-end services spanning design, engineering, project management, and operations. This allowed SNC to charge premium prices compared to more specialized competitors. The company also aimed to be a cost leader on specific contracts through economies of scale and aggressively low bids (Reynolds, 2023). SNC targeted an ideal position where it could offer technical solutions superior to rivals at very competitive pricing.
However, SNC-Lavalin’s strategy has markedly shifted under CEO Ian Edwards, who took over in 2019. Edwards moved to exit the company’s oil and gas operations and drilled down on higher-margin engineering consulting and project management services. This turned SNC’s focus toward sustaining long-term client relationships rather than one-off construction projects. Edwards also pivoted SNC away from lump-sum contracts with their inherent risks, choosing to take on fewer projects but with more stable fee-based or reimbursable contract structures (Reynolds, 2023).
SNC is still working through a backlog of problem LSTK projects dating back years, like Montreal’s light rail network extension. Supply chain issues and inflation have hampered these contracts, resulting in major financial hits from cost overruns in SNC’s now-shrinking capital segment. But Edwards expressed confidence that with construction nearly complete, the worst complications on fixed-price deals are in the past (Reynolds, 2023). By concentrating more on operations, maintenance, and other professional services, SNC aims to transform into a leaner firm less vulnerable to market gyrations.
However, SNC-Lavalin’s shift toward a more risk-averse, diversified business model built on consulting and project management has been hindered significantly by past ethical scandals. Widespread allegations of overseas bribery and corruption related to the company’s aggressive expansion have damaged SNC’s reputation and barred it from bidding on many public contracts over integrity concerns (Reynolds, 2023). These longstanding issues cast doubt on the viability of SNC’s latest strategy pivot. While SNC looks to put itsConstruction Services issues behind it and embrace more sustainable operations, years of controversy have eroded stakeholder trust and constrained the company’s opportunities. Restoring its standing to fully capitalize on a backlog of promising engineering projects remains an uphill climb.
CGI Business Strategy
CGI positioning itself as an end-to-end global IT and business consulting services leader that enables clients to undertake digital transformations. Its core strategy revolves around providing customized solutions tailored to each client’s specific needs and establishing intimate customer relationships, rather than selling pre-packaged products and services (Zafar, 2023). CGI consults closely with clients across areas like managed IT services, systems integration, business consulting, and application development to understand pain points and objectives. It then crafts roadmaps leveraging both proprietary CGI tools and solutions and third-party offerings to address these targets.
This client-based strategy helps CGI to tighten its connection with the clients and become a part of their teams over multi-year relationships. CGI assures operational excellence predicated on industry and technical expertise to effectively execute digital transformation programs that meet client specifications and deadlines. Integrated with strong customer intimacy, high customer retention, and satisfaction have been recorded to lead to sustainability (Zafar, 2023). The integration of IT infrastructure, either external through partnerships or internal between its global delivery centers, is the key to ensuring consistency and flexibility.
CGI does not focus on price competition but rather differentiates itself through service quality and the ability to manage large digital transformations from start to end across regions. This end-to-end capability combining both information technology implementation and strategic consulting is CGI’s main competitive advantage. Its specialized industry knowledge in verticals like financial services, government, healthcare, manufacturing, and communications also allows CGI to customize solutions to fit these vertical-specific needs in a way technology partners cannot (Zafar, 2023). CGI complements this expertise with its ongoing research on the latest digital trends and Intel that the company utilizes to stay on top of in-demand skills.
One of the vital facets that drives CGI’s customer-oriented strategy is its strong internal culture based on ethical values and corporate responsibility. CGI has established clear guidelines at all levels focusing on sustainable value creation for clients, shareholders, and employees (Zafar, 2023). It places itself as a partner of choice for companies looking for digital experts who comprehend stakeholder objectives and run their business ethically. This reputation helps attract talent globally to foster innovation. Meanwhile, CGI’s dispersed operations across hundreds of offices worldwide provide reach and scale while allowing localization based on regional clienteles (Valiante, 2019). With over 40 years perfecting digitally-enabled organizational change management, CGI sells long-lasting partnerships beyond mere project implementation. Its customer intimacy, industry knowledge, range of services, and responsible culture form the pillars of its differentiation strategy in a crowded technology consulting marketplace.
Comparison
A key contrast between SNC-Lavalin and CGI is their vulnerability to industry fluctuations. SNC still generates most revenues from large-scale construction and engineering projects in the infrastructure, energy, mining, and power sectors (Reynolds, 2023). These markets tend to follow economic cycles and resource price swings, meaning SNC’s business can suffer during recessionary periods when funding for capital-intensive new builds and expansions declines (Valiante, 2019). In fact, internal data indicates its lump-sum contracts have posted hundreds of millions in losses in recent years as supply chain woes, inflationary pressures, and labour stoppages hit fixed-price deals. CGI, on the other hand, operates in more stable markets as revenue mainly stems from multi-year IT and digital consulting managed services agreements with clients across sectors (Zafar, 2023). These long-term relationships centered on continually enhancing technology systems with regular maintenance and upgrades provide durable revenue streams for CGI regardless of macro conditions. So, CGI enjoys a more consistent, recurring business model.
Another key strategic variance is how the companies build competitive advantage. CGI’s core differentiation lies in deep customer intimacy, proprietary solutions tailored to each client’s needs, industry-specific expertise, and a focus on responsible values (Zafar, 2023). These qualities engender enduring client partnerships based on transparency and trust – CGI’s industry-leading 97% customer retention rate demonstrates this loyalty premium. Sustainability also comes from CGI interweaving its operations into customers’ IT infrastructure and business processes. Conversely, SNC historically touted technical abilities to deliver large, complex projects faster and cheaper than rivals (Reynolds, 2023) – a transactional sales pitch aimed at one-off construction contracts. Shifting client needs and expectations around more collaboration, accountability, and ethics makes SNC’s value proposition less compelling. So while CGI cultivates an inside track with customers via cooperation and integrity, SNC struggles on reputational factors.
And that diminished reputation has locked SNC-Lavalin out of many government contracts and joint venture partnerships in recent years amid scandals over international bribery and corruption charges (Reynolds, 2023). CGI’s network of technology alliances has no comparable integrity concerns weighing it down as the company enters new markets. SNC will need to regain trust to unlock access to many prominent owners seeking partners with solid values. And the taint of controversy also constrains SNC’s global ambitions compared to CGI, which has methodically grown abroad aided by its ethical standing and partnerships (Valiante, 2019). While SNC looks to de-risk and pivot its model toward more profitable, stable professional services, years spent recovering from missteps abroad have handed CGI the time to extend its lead with multinational clients interested in responsible, digitally-savvy advisors. So ethical considerations give CGI’s strategy more enduring, borderless upside.
Corporate Strategy
SNC-Lavalin Corporate Strategy
Historically, SNC-Lavalin operated a decentralized organizational structure with multiple industry-focused business units like mining and metallurgy, infrastructure, oil and gas, power, and nuclear given autonomy to pursue projects in their sectors (Yeager et al., 2021). This enabled regional leaders closest to local client needs and political dynamics to aggressively bid for contracts. However, the downside was that loose centralized oversight allowed controversial sales practices like overseas bribery to take root while chasing business abroad, unbeknownst to SNC corporate.
In fact, the company’s decentralized configuration was cited as enabling corruption scandals spanning Libya, Bangladesh, Algeria and beyond, as decentralized units operated independently (Yeager et al., 2021). So in response to these ethical crises, SNC has undertaken several restructurings to bolster governance while aiming to pivot from volatile construction toward more stable professional service offerings. SNC consolidated from five business segments down to three under reorganizations in 2015 and 2019, looking to simplify while enhancing head office visibility into operations.
Today, SNC groups itself into SNCL Engineering Services, SNCL Projects, and Capital (Yeager et al., 2021). The professional services-centered Engineering unit provides higher margins, helping offset losses and write downs still emanating from the lump-sum, turnkey infrastructure contracts in SNCL Projects. Looking ahead, SNC wants to chart a future as a premier global professional services and project management firm rather than merely an engineering and construction contractor (Acorn, 2021). This entails focusing more on consulting, design, and managing projects for clients versus self-performing high-risk building activities.
To support this strategic recalibration, SNC has also made several acquisitions to inject new technical capabilities and expertise. The 2017 purchase of UK-based WS Atkins for $3.6 billion brought global design, engineering and project management capabilities spanning transport, defense and urbanization. Other buys like Orbite Technologies and Nuclear Power Holding further bolstered niche offerings in environmental services and nuclear power (Yeager et al., 2021). These allow SNC to advance up the value chain toward a more well-rounded, multidisciplinary professional services leader less concentrated in traditional contracting.
CGI Corporate Strategy
Unlike SNC-Lavalin’s historically decentralized structure, CGI employs a centralized operating model to drive consistency, quality, and alignment across its global operations (Ingalls, 2022). Instead of giving local divisions full autonomy, CGI organizations across its hundreds of worldwide locations are overseen by a central management model for common policies, principles, processes, and management frameworks. This approach converges upon global expertise and oversight on a massive scale.
CGI’s strategic vision remains centered on establishing itself as a dominant provider of end-to-end global IT and business consultancy services. Its strategy is built on consulting-driven client proximity supported by the breadth and depth of the delivery network to achieve this goal (Ingalls, 2022). CGI is placing experts in clients’ industries and local markets in place of separate centralized R&D departments. The embedded experts, in collaboration with leaders of the client organization, share best practices and intellectual property through centers of excellence and innovation labs across CGI’s global footprint.
The continuity of CGI’s corporate strategy and structure is greatly realized by stability in the leadership ranks, including founder and executive chairperson Serge Godin, who has served for over 40 years. It flows down the execution layers, thus preventing CGI from making the strategic mistakes that SNC-Lavalin’s management team went through amidst the scandal (Ingalls, 2022). CGI also pushes its consultants to management internally, which only fans the flames of its unique culture.
Contrary to SNC-Lavalin’s reactive M&A spree of acquiring businesses that are struggling to grow, CGI more strategically prioritizes geographic diversification and abilities expansion to complement organic growth (Shahzad et al., 2021). For example, its 2017 purchase of UK firm WS Atkins and 2012 buy of Logica greatly enhanced its global professional services platform, while other deals provided it with more expertise in high-demand digital areas like cybersecurity and cloud. This consistency through major acquisitions facilitates CGI’s model integration. This strategy is made more robust by the fact that it is based on CGI’s durable client relationships, which include average tenures of 25+ years with its top 10 communications and 27 years with its top 10 manufacturing relationships (Reynolds, 2023).
Comparison
Both SNC-Lavalin and CGI demonstrate distinct contrasts in their approaches to global management, with CGI’s centralized consistency in operation differing from SNC’s decentralized structure, which suffers from control leaks (Shahzad et al., 2021). The industry-based business units of SNC used to work independently in order to continue to be responsive and to take advantage of megaprojects when they secure these projects. Nevertheless, a lack of oversight meant that corporations could not see how sales were being conducted in some overseas markets in order to win contracts. The ethically questionable choices made in the pursuit of growth were not yet detected, resulting in scandals spreading all over the world. Attempts of reorganization through merging three core divisions centralized governance, but criminal allegations continue haunting SNC (Yeager et al., 2021).
Compared to CGI, its operating model was designed for integration, integrating worldwide expertise from hundreds of locations and all units conforming to the policies, processes, and frameworks mandated by the headquarters. The unified governance structure provides the required checks and balances, enabling CGI to maintain its brand integrity as the company increases its scale through mega acquisitions such as Logica and WS Atkins, which enhances its capabilities (Shahzad et al., 2021). SNC’s decentralized edge allowed for localized ambition but led to mismanagement, whereas CGI’s centralized oversight promotes global coordination.
Not only that, SNC has faced high levels of leadership turnover, including several CEO changes this decade after various international scandals became public within the company itself, but CGI’s management longevity and stability come from their founders continuing to be actively involved. Serge Godin has been CGI’s executive chairman for four decades since he founded the company in 1976. This stability in vision, as well as the focus on promoting executives from within, enables CGI to sustain its culture globally (Joshuacogar, 2022). For SNC, the bigger challenge is to restructure its elite to bring in a fresh and new perspective after ethics violations by its former top leadership.
CGI differs completely from SNC’s retooling attempts by shutting down overseas units and acting reactively to disrepute in the market. CGI abides by stringent criteria for M&A targets, emphasizing deals that extend geographical reach and critical digital capabilities like cybersecurity and cloud solutions to boost organic growth (Joshuacogar, 2022). The sale of SNC’s foreign branches and wholesale business only clearly indicates the desperate need to raise capital that other divisions still need to meet. Likewise, both CGI and SNC have merged some of their major acquisitions, like Logica, well within their centralized operating model. In contrast, SNC merges its smaller bolt-on purchases during its pivot (Yeager et al., 2021). Continuity and consistency lift CGI in favor of SNC’s constant change
International Strategy
SNC-Lavalin International Strategy
SNC-Lavalin’s strategy has been aggressive global growth in the recent past by bidding on large and complex projects across developed countries (Yeager et al., 2021). This tactic was initially very lucrative, with foreign contracts accounting for over 50% of SNCs’ revenues by the mid-2000s. Nevertheless, the following period of turbulence highlighted the challenges of SNC’s uncontrolled overseas expansion. SNC has had to consolidate its international operations and withdraw from the markets where bribery and corruption charges have haunted it for the last half-decade.
The lack of corporate oversight allowed the abuses of overseas dealings to spread across SNC’s decentralized regional operations, with top executives prioritizing growing overseas rather than responsible governance (Yeager et al., 2021). Finally, the allegations of bribes and kickbacks to be awarded contracts in Libya, Bangladesh, Algeria, and elsewhere were found against SNC, resulting in legal prosecutions, government sanctions, market restrictions, and losses of market value. So far, more than $100 million of illegal payments have been uncovered in developing countries (Yeager et al., 2021).
The CEO of SNC, Neil Bruce, has undertaken a withdrawal from risky and unprofitable areas since he assumed his position in 2015. SNC registered significant writedowns to withdraw from sub-Saharan Africa and reduce scale in the Middle East and Central Asia. Moreover, an operating loss in mining and metallurgy led to plans to sell this segment (Yeager et al., 2021). In addition, SNC closed several regional offices near the foreign bribery investigations to avoid further damage to its already damaged reputation. Although still present in more than fifty countries, this global consolidation is done to manage risks better and improve margins.
The company has been hit hard by international corruption charges, particularly abroad, and there has been a strategic pullback. The 10-year World Bank ban from bidding for its financed infrastructure projects that cover developing nations has hindered the SNC growth potential across key markets (Acorn, 2021). Further fallouts with export credit agencies and global partners due to management weaknesses and impropriety led to additional divestment of business units. It has taken years to repair the damaged trust, which has significantly reduced the international contracts backlog that used to drive over 50% of SNC revenues (Valiante, 2019). The identity overhaul and relaunch as AtkinsRéalis in 2023 shows how the SNC is struggling to be free of past international assaults that are hampering its global aspirations.
CGI International Strategy
Whereas the decentralized and aggressive regional approach of SNC-Lavalin brought the company to overextension abroad, CGI took a far more constrained and methodical approach centered on its global headquarters (Joshuacogar, 2022). CGI carries out a CGI meticulous evaluation of various new geographies using parameters such as political environment, growth prospects, talent availability, and client demand to minimize overseas risks. It has focused its geographical presence on the advanced and emerging economies of the G7 nations so as to maintain high standards wherever CGI operates.
Strategically, CGI has grown its global delivery network through a balanced mix of onshore, nearshore, and offshore capabilities (Zafar, 2023). Its onshore centers are set up to suit local clients’ preferences and regulations. CGI nearshore centers are located closer to onshore teams for agility and cost optimization, with new centers established in Canada and Poland in 2019. Going even beyond, CGI offshore global delivery centers offer global scale as they address niche digital skills gaps like cybersecurity expertise from Australia (Zafar, 2023). This multi-shore blend accommodates CGI clients’ wishes for closeness and proximity to global CGI skills.
Comparison
SNC-Lavalin and CGI applied different strategies when they were expanding globally, and the consequences were contradictory. SNC relocated abroad, which put the management of regional units under their control, and the head office did not need more visibility for their operations (Yeager et al., 2021). The lack of corporate controls led to bribery in several developing countries. Financial and reputational repercussions of corruption allegations lost SNC a number of international operations it had accelerated in the period of its rapid growth. In contrast, CGI analyzes new regions by factors like political climate and talent pipeline depth before approving to expand international footprints (Khan, 2024). This calculated approach aligns any geographic expansions with corporate strategy and risk tolerance.
Lastly, CGI has established a global delivery network using onshore, nearshore, and offshore capabilities to provide flexibility (Saunders, 2020). Work distribution across integrated centers is what keeps efficiency, quality, and accountability. In this way, CGI uses this delivery backbone to transfer best practices globally. On the other hand, working separately through regional fiefdoms left SNC unable to move the necessary resources in a timely manner with global volatility. Prolonged operations with restricted supervision provide an opportunity for misconduct. However, by the time SNC tried to rein in the expense ratios after the scandals hit, many of the global units were already too tarnished to share the workload (Yeager et al., 2021).
Conclusion
While both SNC-Lavalin and CGI grew to be internationally recognized major professional services players, CGI adopted a stronger ethical and client-focused culture characterized by greater sustainability patterns. Although the new management of SNC has undertaken substantial efforts, the company must fully resolve all the remaining controversies related to its rapid overseas growth, which harmed stakeholder trust and limited strategic options, before being able to demonstrate a true revival. The centralization of CGI’s model of corporate responsibility and operational discipline has paradoxically allowed reliable global scaling and delivery. In the last analysis, CGI demonstrates how a combination of strategy with embedded values and governance, even through acquisitions, enables professional firms to grow sustainably. The global footprint is but one aspect that reveals the different impacts of SNC-Lavalin’s mistakes and CGI’s compliance culture that continues to unfold as both companies wrestle with the reputations developed over the past years.
References
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