Don't know well Flashcards
(34 cards)
key 5 steps in industry analysis
- segmentation
- macro analysis (PESTEL)
- industry structure analysis (swot and 5 forces)
- forecasting
- KSF
the 6 portfolio strategy models
4 synergy approach:
- single industry, domestic
- single industry, multinational
- multi industry, tech driven
- multi industry, marketing driven
2 financial approahc:
- conglomerate with a main business
- classic conglomerate
parenting strategy models (resource allocation)
there are 4 models, that are not mutually exclusive:
- sharing assets
- transferring competencies
- dynamic portfolio management
- restructuring
portfolio matrices (not about strategy evaluation, but decisions)
- fair value matrix
- business logic matrix (profitable growth, need to revise, only makes cash, non strategic)
- added value matrix: positive and negative contributions (alien, heartland, ballast - not enough benefits, value trap - too many costs
a) operational synergies: horizontal and vertical
b) financial synergies
a) operational synergies are defined as the added value generated by joint operations.
Horizontal: cross selling, common resources, vertical integration
Vertical: people, strategy, tech
b) financial synergies derive from added value of efficient financial and tax management
Synergies: similarities and organisational change
Similar, little change: COMBINATION
Similar, lots of change: CONSOLIDATION
Not similar, little change: CONNECTION
Not similar, lots of change: PERSONALIZATION
How to evaluate the core business using the synergy approach
you make a matrix of
synergy approach:
a) ability to generate operational synergies
b) number of profitable growth opportunities
divide into: core, peripheral, business in transition, non strategic
financial approach: businesses that contribute the most to gross asset value
a) when to rethink core business?
b) signals that is is time to change the core
c) how to redefine the core business?
a) technological advancements, emerging markets disrupt the existing indsutry, strategy life comes to an end
b) shrinking profits (apple going from PC to phones), new competitors are better off, current growth formula is unsustainable
c) EVALUATE THE CORE
- customers (share, profits)
- differentiation
- state of the industry
- state of capabilities and resources
- state of culture and organization
EXPLORE HIDDEN ASSETS AND POTENTIAL VALUE
what are the four options of operational reinforcement?
- reinforcement ADJANCIES (customer, product, channel, coverage)
- inside out options (mostly scaling up via marketing and sales)
- business model innovation
- strenghtening owners control in a subsidiary of interest
which are the 5 growth traps?
- diseconomies of scale
- loss of flexibility - increased scale often leads to high FC
- overestimation of positive synergies
- limited country adaptation
- limits of vertical integration (competitive reactions, operational inefficiency, financial risks related to maintaining every business competititve)
reasons for growing with a financial approach
- risk diversification
- internal capital markets
- EOS in managing financial resources and tax
- dynamic portfolio management
- operational synergies related to centralization of key functions
growth traps
- pursue unrelated diversification when the current portfolio actually needs restructuring
- enter new business for personal motivations of management / owners
- allocate resources not based on merits but politics
- develop inefficient CHQ structures
pros and cons of internal develompment
PROS:
1. gradual financial commitment
2. learn by doing
3. higher change of cultural fit
4. stimulates CE
5. more control over the process
CONS:
1. slow
2. execution risk
3. risk of adding capacity without demand (risk of intensifying competition)
4. risk of failure
pros and cons of alliances
PROS:
1. speed
2. access to resources and markets
3. limited financial commitments
4. risk sharing
5. exclusivity
6. aligning interest (if equity)
CONS:
1. risk of partial fulfillment of expectations by partners
2. asymmetric learning (learning race)
3. risk of creating a competitor in case of alliance between rivals
4. limited control
5. limited adaptability to changes
pros and cons of M&A
PROS:
1. speed
2. full control of post integration process
3. eliminate competitors
CONS
1. significant financial commitment
2. risk of paying excessive premium
3. risk of acquiring non strategic resources
4. risk of integration failure
5. risk of weakening morale of employees
the 6 M&A scope and integration archetypes
- preservation
- accommodation: standardise some systems & processes
- collaboration
- absorption: substantial intervention in the target
- Bet of Both: divisionalization + centralization
- transformation: of BOTH
How can you classify alliances? 3 ways
a) classification grounded on contribution to corporate / competitive strategy:
- enter a new business
- strengthen competitiveness
b) classification grounded on motivations
- law alliance
- link alliance ( necessary to access resources)
- scale alliance (increase volumes)
- geographic alliance
- learning alliance
- platform alliance (obtain a market advantage)
c) classification grounded on object
- joint product development
- joint production
- joint tech development
in corporate entrepreneurship, what are communicative, behavioural, and value uncertainty?
Communicative: lack of clarity about what ideas are accepted and who to communicate projects
Behavioural: lack of clarity about the governance of innovation and the way resources are allocated for projects
Value: uncertainty about how the value of the new idea will be distributed, and how innovation will be rewarded
how to foster a CE environment
- increase entrepreneurial energy
- hire CE
- identify hidden champions
- nurture long term orientation
- balance risk aversion with risk of failure - decrease market uncertainty
- set up quick validation processes - redece communicative uncertainty
- set up innovation sandbox
- formalize a process for gathering ideas - decrease behavioural uncertainty
- define governance for innovation
- define resource allocation mechanisms - decrease value uncertainty
- define clear incentives and rewards
cause of resistance to change in restructuring
- distorted perception of the problem
- lack of sufficient motivation to change
- difficulty in defining a response to change (high complexity, belief problems are beyond control etc…)
- failure to implement a change plan (political blocs and leadership inadequateness)
which are the 4 forms of restructuring?
- operational restructuring
- financial restructuring (capital structure)
- portfolio restructuring (divesting non-core / acquiring complementary)
- organizational restructuring (workforce and leadership)
the 7 motivations for internationalization
- growth
- efficiency
- knowledge
- customers
- competitiveness (for example cost advantages)
- risk management
- regulations and tariffs
2 processes and 4 patterns for internationalisation
processes:
1. international trade
2. FDI
patterns (based on x/y of processes)
1. Sheltered
2. trading
3. multidomestic
4. globals
4 international strategies
- international strategy
- global
- glocal
- multi domestic
