Session 7 Flashcards
(36 cards)
What is a multinational enterprise?
MNE is a firm that engages in foreign direct investment and operates in multiple countries
What are the strategic advantages of global firms?
- global scale advantages reduce costs in production, product development and marketing
- global sourcing provides access to a wider range of inputs
- global knowledge management enhances innovation
- global operation allows better servicing of global customers
- risk diversification reduces the operate risk profile
What is the AAA-strategies?
- adaption (local responsiveness)
- aggregation (global integration)
- arbitrage (global production)
How does the M&As cross-border assemble?
- acquisition
- merger
What is a acquisition?
is the transfer of the control of operations and management from one firm (target) to another (acquirer),
the former becoming a unit of the latter
What is a merger?
is the combination of operations and management of two firms to establish a new legal entity
What are the main motives of acquisitions?
- synergistic motives
- hubris motives
- managerial motives
Which synergistic motives of acquisition exist?
- leverage superior organizational capabilities
- enhance market power
- reduce costs by eliminating duplicate units and exploiting scale economies
- access to complementary resources
Which hubris motives of acquisition exist?
managers’ overconfidence in their capabilities
Which managerial motives motives of acquisition exist?
self-interested actions such as empire building and bonuses
What is a alternative to full take over of another firm?
strategic alliance
Which conditions should have met that a joint venture is attractive option?
- two entities can together achieve something that neither could achieve on its own
- merged unit depends on inputs such as technologies from both parent firms that may be disrupted by legal separation
- a full take-over is not feasible, perhaps because the competition authorities would object
What are the causes of acquisition failures?
- due diligence is the assessment of the target firm’s financial status, resources and strategic fit
- strategic fit is the effective matching of complementary strategic capabilities
- organizational fit is the similarity in cultures, systems and structures
What are the problems of all M&A?
- pre-acquisition: overpayment for targets
- post-acquisition: failure in integration
Which problems exist in the pre-acquisition phase?
- managers overstimate their ability to create value
- inadequate pre-acquisition screening
- poor strategic fit
- lack of familarity with foreign cultures, institutions and business systems
- nationalistic concerns against foreign takeovers (political and media levels)
Which problems exist in the post-acquisition phase?
- poor organizational fit
- failure to adress multiple stakeholder groups’ concerns
- clashes of organizational cultures compounded by clashes of national cultures
- nationalistic concerns against foreign takeovers (firms and employee levels)
What are hidden champions?
- international business is often presented as primarily a matter of big MNEs competing for market share
- leading in their selected niche markets world wide with competitive advantages grounded in highly specialized technological competences that are exploited worldwide
What is global focusing?
- a strategic shift from diversification to specialization which increases the international profile
- acquisitions and divestments, the sale of business units, are often closely related
What are the general possibilites for integration of the R&D department into the organization?
- centralized R&D department
- decentralized R&D departments
- combined R&D departments
What are the advantages of centralized integration?
- utilization of specialization advantages - realization of larger projects possible - more efficient use of resources - facilitation of communication and coordination between R&D groups
What are the disadvantages of centralized integration?
- danger of acting too independently and of becoming too detached from the market - problems with coordination and interfaces between R&D and other functions - lower flexibility and reactivity, particularly with regard to radical technical changes
What are the advantages of decentralized integration?
- makes it easier to accomplish short term goals - better connection to the market - higher flexibility/ higher capacity of reaction
What are the disadvantages of decentralized integration?
- lower use of specialization advantages/danger of doing things twice - no economies of scale - higher coordination effort between R&D units - possible neglect of long term and trans-departmental tasks
What are the advantages of hybrid forms of integration?
- enables to address short- and
long-term tasks - centralized research
(specialization)
