U7 Do-It-Yourself, Buy, or Ally? Flashcards
(227 cards)
1
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Ten Reasons Mergers and Acquisitions Fail: The Most Common Causes For Companies Failing to Integrate and Profit from M&A Activity.
Having spent the first 17 years of his career reshaping companies acquired by an international group before focusing on?
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M&A consultancy across several industries, Paul J. Siegenthaler has seen his fair share of M&A pitfalls.
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Here’s his take on the most common causes behind the fact that?
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the majority of company integrations fail.
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Q
Ignorance.
While the parties in a merger or acquisition cannot exchange commercially sensitive information prior to?
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being under common ownership, there is enough crucially important and legally permissible preparation work to keep an integration team busy for several months before day one.
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Most chief executives don’t know this and they waste time that could be put to good use while waiting for ?
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clearance from the regulatory authorities.
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Good preparation means?
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the integration can kick off on day one. Speed matters.
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No common vision.
=In the absence of a clear statement of what the merged company will stand for,
= how the organization will operate,
=what it will feel like,
= and what will be different compared to how things are today,
=there is no point of convergence on the horizon and the organizations will never blend.
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Nasty surprises resulting from poor due diligence.
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This sounds basic, but happens so often.
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Team resourcing.
Resource requirements are very often underestimated. It can take—————————months to release the best players from daily business to join the ——————————- when the deal is completed.
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two or three
integration team(s),
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find a backfill for them, sign up contractors to?
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fill the gaps, and set up the team’s infrastructure. Most companies start too late and are not ready
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Poor governance.
Lack of clarity as to who decides what and no clear issue resolution process. Integrating organizations brings up a myriad of ?
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issues that need fast resolution or else the project comes to a standstill. Again, speed matters, but with a sound decision-making process.
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Poor governance. Lack of clarity as to who decides?
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what and no clear issue resolution process.
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Integrating organizations brings up a myriad of issues that need?
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fast resolution or else the project comes to a standstill.
Again, speed matters, but with a sound decision-making process.
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Poor communication.
Messages too frequently lack relevance to their audience and often hover at the strategic level when what employees want to know is?
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why the organization is merging, why a merger is the best course action it could take, how the company will be better after the merger,
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how it will ‘feel’, how the merger will affect their work, and what support they will receive if they are adversely impacted.
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Lack of courage.
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Delaying some of the tough decisions that are required to integrate two organizations can only result in a disappointing outcome.
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Making those decisions will not please everyone but has the advantage of clarity and honesty and allows those who do not find the journey and destination appealing to step off before the train gathers too much speed.
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Weak leadership.
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Integrating two organizations is like sailing through a storm: you need a strong captain, someone whom everyone can trust to bring the ship to its destination,
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someone who projects energy, enthusiasm, clarity and who communicates that energy to everyone.
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If senior managers do not walk the talk, if their behavior and ways of working do not match the vision and values the company aspires to
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, all credibility is lost and the merger’s mission is reduced to meaningless words.
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Lost baby with bathwater.
Companies contemplating a merger or acquisition too often omit to pinpoint what particular attributes make the other party attractive
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and define how they will ensure those attributes do not get lost when the organization and the culture have changed. Culture cannot be bought – it needs to be embraced.
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Do-It-Yourself
In order to embark on the path of strategic growth, organizations have three different options:
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==They can decide to grow organically.
==They can merge with or acquire another organization.
==They can form a strategic alliance.
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This section looks at the organic growth option, otherwise known as?
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the ‘do-it-yourself’ (DIY) approach.
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Organic growth is the investment into the development and growth of ?
the company’s own resources and capabilities.
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The advantages of this strategic growth option are that?
the organization takes the time to grow into new areas and builds up its own experience.
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The slow growth allows companies to spread the investment costs over time, making this growth much easier to?
finance than other growth options.
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The company does not need to find a suitable partner in order to?
form an alliance or merge. It stays independent and can continue on its strategic path.
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One example of an organization that decided to?
grow organically is Amazon. Amazon developed the e-book reader ‘Kindle’ and its own e-book store.
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This expansion into the e-book market came through ?
the internal development of the Kindle reading device.
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Amazon used its experience from the online book business and its software competence. After many years of being an online store for?
all products, Amazon went back to its roots with this new technology.
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The Kindle is a hugely successful product and sales are growing continuously. Founder Jeff Bezos attributed the growth to?
the low price of the Kindle reader compared to other devices (such as the Apple iPad), the large number of e-books available to customers, and fast delivery.
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Organic growth, however, did not come without expense for Amazon. The company invested?
a great deal of money in digital offers and e-books.
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The example of Amazon clearly illustrates that organic growth is-----------------------. Often, the resources to grow into innovative new markets, to --------------------------, or enter international markets are not readily ---------------------.
not easy
diversify
available
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To succeed in growing organically, companies need an innovative and entrepreneurial corporate culture. They also have to be?
prepared to invest heavily in these new projects and wait a long time until the product or service is ready to enter the market.
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Mergers and Acquisitions (M&A)
In addition to organic growth as an option for expansion, companies can also grow by?
merging with another organization or acquiring another organization.
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A merger is defined as the formation of a larger organization by two companies that?
operate as more or less equal partners.
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This is different to an acquisition of a company, which is the takeover of?
one company by another.
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If it is supported by both organizations, this is known as a ------------------------------. A --------------------------------------is one that is not welcomed by the assumed target and happens mostly by one company acquiring a majority of----------------------of the other company.
‘friendly takeover’
‘hostile takeover’
the shares
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Motives for Mergers and Acquisitions
There are various strategic reasons for mergers and acquisitions. In addition to these strategic reasons, there are?
usually financial implications and most often additional personal reasons for deciding to merge with or acquire a company.
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As a general rule, ------------------------------- will play a role in the decision.
all three factors
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--------------------------------------------------------------
Amazon
-----------------------------------------------------------------
This is an online store that started as a bookstore. Today, anything can be purchased through the Amazon website.
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e-book
An e-book is a book that is available in electronic form and can be accessed with an e-book reading device.
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Ten Reasons Mergers and Acquisitions Fail: The Most Common Causes For Companies Failing to Integrate and Profit from M&A Activity.
Ignorance.
No common vision.
Nasty surprises resulting from poor due diligence.
Team resourcing.
Poor governance.
Poor communication.
Poor program management.
Lack of courage.
Weak leadership.
Lost baby with bathwater.
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Motives for Mergers and Acquisitions
Strategic motives
Financial motives
Personal\/management motives
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Strategic motives
Companies can expand their range of products through mergers and acquisitions. They can also?
enter new markets and businesses or expand internationally into new countries or regions.
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These strategic motives look at increasing the size of?
the organization in order to benefit from economies of scale.
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In the example of the Chinese motor company Geely, the acquisition of?
Volvo demonstrates an expansion into a different country.
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Geely Buys Volvo. Believe It or Not, It Could Work
Mergers and acquisitions in the car business have a terrible record. ---------------------------stands tall as the worst example of a------------------------------------------.
DaimlerChrysler
bad marriage
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General Motors made a hash of Saab and Hummer and its tie-ups with?
Isuzu, Suzuki, and Subaru didn’t yield much either.
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Tata has struggled with --------------------------------and now that Ford is sending------------- off in a boat to China, we have to ask, can Geely make a go of this?
Jaguar and Land Rover
Volvo
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It’s going to be a tough job. Geely is paying $1.8 billion for the brand. Volvo sales of 335,000 globally are off 11% this year and 27% off their?
peak, according to this Bloomberg story.
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The Swedish carmaker has lost $2.6 billion during the last two years. The brand hasn’t been a real moneymaker for?
a very long time. Its costs are high and prices are strong but Volvo doesn’t command luxury premiums for its cars.
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On paper, at least, this could be a very good deal for Volvo. Be clear about one thing. Zhejiang Geely Holding Co., not the-----------------, is buying Volvo.Belgium.”
carmaker
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This is an important distinction, says?
Jim Hall, principal of 2953 Analytics in Birmingham, Mich.
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It indicates that Volvo won’t just be folded into Geely and lose the brand’s strong Nordic identity.
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Geely Chairman Li Shufu said with unintentional humor that, ?
“I see Volvo as a tiger. It belongs to the forest and shouldn’t be contained in the zoo,” Li said in Mandarin.
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“The heart of the tiger is in ----------------------------------------------.
Sweden and Belgium.”
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Volvo will keep its own management team, board of directors and headquarters in ?
Gothenburg, Sweden
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That would indicate that Volvo will keep its ----------------------------------------. European and American Volvo loyalists will still be buying cars engineered in -------------------------and built in Europe.
Swedish heritage and cachet
Gothenburg
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What that would mean, however, is that Geely is buying Volvo and lingering on with the same money-losing structure. That’s where China comes in. The Chinese luxury market is?
booming and still has room for some other players to come in and build a brand. Geely will assemble Volvo cars in China using cheaper manufacturing, Hall says.
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The brand is upscale and Geely ownership might even be seen as?
preferable by Chinese consumers.
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The brand is upscale and Geely ownership might even be seen as preferable by Chinese consumers. So the company can?
increase sales and get larger margins in China.
That makes the business case work better than it ever did either under Ford or as an independent carmaker.
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After so many failed auto deals, this one has the makings of a success. Of course, it means?
Geely can’t manhandle Volvo.
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They need to rely on Ford and the Swedes for?
technology that will make the Chinese cars real Volvos.
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In short, they should manage it as?
a separate subsidiary the way Volkswagen Group runs Audi AG.
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Give it autonomy and let the tiger run. Volvo is a -------------------------------- and will never be a --------------------------. But it certainly could work if Geely gives it some ---------------.
niche brand
cash cow.
independence
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Companies try to optimize their business model and become more efficient through?
a merger or an acquisition.
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For example, departments such as administration or logistics can often?
merge their resources and benefit from increased efficiencies. Increasing an organization’s size through a merger or acquisition boosts its market power.
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If a company acquires a competitor, the effect is multiplied:
the organization reduces the competition by means of the acquisition and augments its power to negotiate lower prices with suppliers through its increased size.
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Through an increase in economies of scale, the company sells larger quantities and can influence the market price for?
the product or service offered, thus increasing its profit margin.
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A further reason for mergers and acquisitions is?
the expansion of the company’s capabilities.
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Amazon could have merged with an electronics company such as?
Sony or acquired the smaller French pioneer Bookeen in the e-book business.
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In choosing this option, Amazon would have acquired the capability instead of -------------------. However, the organic growth option made
------------an expert in the e-book business.
developing it
Amazon
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Financial motives
In addition to strategic goals, mergers and acquisitions often have financial goals. Corporations may increase their financial efficiency by?
offsetting the profits of one entity with losses from another.
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In addition to strategic goals, mergers and acquisitions often have financial goals. Corporations may increase their financial efficiency by offsetting the profits of one entity with losses from another. Thus, ?
the entity that made a loss can pay its liabilities with the profits of the other entity in the corporation.
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The corporation benefits from the growth in size by?
acquiring the indebted entity and both sides benefit from the merger.
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Further financial considerations for a merger or acquisition are?
possible tax advantages
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. A company that operates in a country with high taxes may merge with or acquire a company in?
a country with low taxes in order to pay their taxes in that country
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Hostile takeovers often aim at increasing the assets of?
the acquiring company.
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Hostile takeovers often aim at increasing the assets of the?
acquiring company
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This is done by breaking up the acquired entities into?
parts and selling these parts off.
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The individual parts of the organization are often worth more than-----------------------------------. As such, the acquiring company makes a profit from the --------------------------------------.
the entire company
sale of these parts
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Personal\/management motives
General management motives also influence the decision in favor of?
a merger or acquisition.
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The personal ambition of a CEO may play a role in ------------decisions. Managers are often evaluated on -----------------------results and the target --------- price.
M&A
short-term growth
share
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To achieve the growth goal fast, the company can merge with or acquire another company instead of?
trying to grow organically over a long period of time.
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Successful takeovers boost the reputation of?
the manager as the name appears in the media.
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At times, the pressure from the shareholders might be strong if M&A are a trend in the industry and managers could succumb to?
the pressure and participate in the trend.
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What Criteria Play a Role in the Selection of a Company for M&A?
If companies want to grow through M&A, they should develop a strategy that?
defines exactly what they are looking for.
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In order to integrate two organizations successfully, ?
similar corporate cultures are a prerequisite.
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Only through the cooperation of all parties involved in the M&A can friction be?
avoided and common goals reached.
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Furthermore, an analysis of the fundamental, strategic, and cultural fit between ?
the organizations is required.
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What Criteria Play a Role in the Selection of a Company for M&A?
-Fundamental fit
-Strategic fit
-Cultural fit
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Fundamental fit
The fundamental fit looks at the organizations’ willingness and readiness to merge. Basic indicators such as--------------------------------------------------are checked for compatibility. If the company to be bought is generally opposed to the acquisition, the integration process of the acquisition will most likely --------------.
size, history, and capabilities
fail
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Strategic fit
The strategic fit describes the strategic goals of the organization to be?
acquired and its management know-how in order to direct and implement these goals.
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Both organizations need to know their?
core competencies and strengths as well as weaknesses.
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Furthermore, the position in the market, the competitive environment, and related strategy play a major role in?
evaluating the strategic fit.
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Before an M&A is decided, the company should determine whether the strategies of the two organizations are?
compatible and could strengthen their market position.
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Cultural fit
The cultural fit includes:
questions regarding corporate cultures and their management.
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The areas to analyze are communication style, openness, management style, the ability to?
delegate and work in teams, and the mission, values, and vision of the organization.
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It is very difficult to integrate companies with very different organizational cultures. Even the integration of companies with similar cultures has to follow?
a detailed plan.
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Integration Strategies
The integration process of two organizations depends on?
the strength of their strategic interdependence and their need for organizational autonomy.
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Depending on how distinct these two aspects are with respect to?
each of these organizations, the acquired organization will either adapt fairly quickly to the new strategy, culture, and systems, or not at all.
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There are four integration scenarios:
Maintenance
Symbiosis
Absorption
Holding
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Maintenance
If merging companies have little strategic interdependence, maintenance (also called
--------------------) is the strategy of ------------.
preservation
choice
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Often, these companies operate in different businesses and are not dependent on?
each other’s products or services.
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Moreover, the acquired company has a high need for?
organizational autonomy, which means it is better to preserve the strategies, corporate cultures, and systems of both organizations separately.
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Integration occurs at a minimum level (e.g., common financial reporting), and both companies continue to?
operate as separate entities.
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Symbiosis
A strategy of symbiosis is recommended if?
the two companies show high strategic interdependence and have a marked need for organizational autonomy.
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In this case, the two companies are mutually dependent; certain processes and systems have to be integrated in order to?
increase the efficiency of the M&A.
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The companies can learn and benefit from each other’s strengths and build on?
the available capabilities.
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The symbiosis is?
a long and difficult integration process.
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Absorption
If merging companies are strategically very interdependent and have little need for?
organizational autonomy, one company may completely absorb the other company.
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For example,
a manufacturing company buys a laser producer in order to optimize its own production processes that require precision lasers. The acquired laser company happens to have a medical laser division.
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The integration process may happen fast and the company that is absorbed needs to be?
prepared to adopt the strategy, culture, and processes of the new owner or company it merged with.
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Holding
Holding describes a situation where the companies show?
little interdependence and need for organizational autonomy.
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In this situation, integrating the company does not bring any -----------------------------------------------. The company thus holds the ------------------------ for a while and sells it in due course. The acquired company does not undergo any
-------------.
additional benefit or advantage
new entity
changes
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This is of no extra value to the manufacturing company and will be held before?
being sold, maybe to another medical company.
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Strategic Alliances
A strategic alliance is formed when?
two companies share resources or activities to reach a common goal.
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There are many types of strategic alliances. One example is?
a research and development alliance where both companies benefit from sharing the costs for the research and development of a product.
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Types of Alliances
There are two types of strategic alliances in terms of the ownership structure:
equity alliances and non-equity alliances.
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An equity alliance describes the creation of a new entity, which belongs to both alliance partners. For example?
, two pharmaceutical companies invest together in a research institute.
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Non-equity alliances are partnerships that do not involve a claim to a property, such as?
a research institute.
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Non-equity alliances are merely?
contract bound.
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An example of a non-equity alliance is ?
The Leading Hotels of the World (LHW).
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LHW is an alliance of luxury hotels, resorts, and spas worldwide that offer member hotels certain services, such as?
providing marketing measures for the group, consultation, and a central reservation system.
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The expertise of LHW is quality analyses of the member hotels, which guarantee ?
hotel guests a specific quality standard.
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Motives for Alliances
The motives for alliances are similar to those of --------------. However, an alliance requires a much lower --------------------------------- from companies.
M&A
financial commitment
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Alliances benefit from --------------------------------. The--------------------- provides
centralized marketing,
consultation,
reservation,
and quality inspection to all the member hotels.
economies of scale
LHW group
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This reduces, for example, the costs of printing advertising material for each?
individual hotel as this is provided by the LHW catalog of hotels or website.
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Access alliances offer companies distribution channels in foreign countries. They can sell ?
their products or services through distribution partners and do not have to invest in a direct sales force in these countries.
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The franchise system is a good example of ?
an access alliance of two partners.
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Companies like McDonald’s have expanded worldwide into all regions through?
a franchise system.
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Investing in all the countries they are represented in today would have been an impossible?
financial burden for the company.
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Complementary alliances consist of individual companies that provide?
one component each to the partnership.
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All components provided complement each other and form?
the final product or service.
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These alliances exist in?
complex markets in which individual companies are unable to provide all components or resources in order to be successful in the market.
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Complementary alliances are successful if the increase in?
benefits through the alliance outweighs the costs of coordinating the alliance partners.
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A complementary alliance for example?
could be with medical imaging companies, i.e., ultrasound, X-ray, MRI manufacturers, and a provider of digital hospital networks.
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All agree on a common interface in order to facilitate the integration of all systems and make it possible to?
digitally attach all images to the patients’ files
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How to Decide Whether to Buy, Ally, or Do-It-Yourself?
Deciding which strategic growth option is the best for the organization depends on various factors. One factor is?
how fast a company wants to grow, which describes the urgency to expand.
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Uncertainties in specific regional markets or technologies or market fluctuations also?
influence which strategy to pursue.
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The types of capabilities to be acquired, i.e.,?
soft capabilities (such as employees or know-how) or hard capabilities (such as machines or production facilities), play a major role in the strategic decision-making process.
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Finally, the degree of modularity of the capabilities influences?
the decision.
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Modularity?
This is the degree to which something can be separated into individual parts.
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How to Decide Whether to Buy, Ally, or Do-It-Yourself?
Urgency
Uncertainty
Type of Capabilities
Modularity of Capabilities
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Urgency
If the growth strategy has a high degree of urgency, the organic growth option will take too long. Therefore,?
an alliance or M&A would be the better, faster option.
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The Chinese auto manufacturer Geely could have invested a lot of time and money to ?
establish itself as a reliable car manufacturer in the European market.
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It would have been very difficult to build an image of high quality as a Chinese company. The decision to acquire Volvo allowed?
Geely to be present in the European market immediately and start gathering market information.
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Uncertainty
If you try to enter uncertain or fluctuating markets, alliances represent the ----------------------------. When forming an alliance, the partners usually -----------------------------------------.
best option
share the risk
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No company is solely responsible for the success or failure of the business. If the alliance proves to be successful over time,-------------------------------------------------------------------
the company has the option of acquiring the alliance partner.
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In an environment of high uncertainty, companies should refrain from?
expanding independently and making direct foreign investments as the investment costs are then fully borne by the company and lost if the development fails.
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The example of Helmerich & Payne?
clearly illustrates how a do-it-yourself (DIY) strategy fails in uncertain markets.
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Helmerich & Payne lost all its investments to the government of Venezuela.
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It would have been advisable to look for a possible alliance partner in Venezuela, thereby sharing the risk of the investment with a second company.
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Type of Capabilities
If a company needs hard capabilities (such as machines or a production facility) in order to?
grow, it would be advisable to acquire these through M&A.
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On the other hand, if the company needs soft capabilities (such as know-how) it would be best to?
take a DIY approach and hire employees with expertise.
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If the company tries to form an alliance with or acquire an organization that ?
has the soft capabilities, it might encounter integration problems as corporate cultures differ.
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The following example illustrates the types of capabilities that led to?
a strategic alliance between two quite different companies.
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After many years of partnership between?
the Swiss pharmaceutical company Roche and the California-based Genentech, Roche decided to acquire the company in 2009.
160
The Genentech employees have a very different corporate culture from the conservative Swiss employees at Roche and enjoyed a great deal of freedom, such as?
the opportunity to spend time on their personal research projects one day a week.
161
They describe themselves as ---------------------------. However, over the years of the partnership,
--------------has learned to accept the differences of ------------------------------.
cowboys
Roche
corporate cultures
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As Steven Burrill, chief executive officer of a San Francisco life sciences venture firm, observed in the San Francisco Chronicle:
“The assets of Genentech walk out in tennis shoes every night, and you hope they walk back in, in the morning”.
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Roche Agrees to Buy Genentech for $46.8 Billion
Roche Holding’s agreement on Thursday to acquire full ownership of Genentech for $46.8 billion is the third big drug industry merger this year.
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But it is different from the other two – Pfizer’s $68 billion proposal to acquire Wyeth and Merck’s $41 billion deal with Schering-Plough – in crucial ways.
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Pfizer and Wyeth are strangers, and Merck and Schering have a joint venture on cholesterol drugs but are otherwise not related.
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And in both those deals, executives describe potential costs savings as a big benefit.
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But Roche has owned a majority of Genentech since 1990, and it says cost savings, expected to be $750 million to $850 million a year, are not the main goal of the deal;
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the goal is to improve coordination on product development. That could make it easier to integrate the two companies.
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“It should be very easy because practically the entire portfolio is in common,”
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said Viren Mehta, managing member of Mehta Partners, a consulting firm that advises drug companies and investors.
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“These two companies have grown up closer than any two independent companies could be expected to be.”
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And yet the challenge for Roche, a big Swiss company, will be in integrating the two companies without ruining Genentech’s
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freewheeling and innovative culture and sending its top managers and scientists out the door. The culture clash between Roche and Genentech
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could be greater than that between Pfizer and Wyeth or between Merck and Schering-Plough, all of which are traditional, big drug companies.
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Laurence Lasky, a Silicon Valley venture capitalist who spent 20 years as a scientist at Genentech,
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said he expected top managers of Genentech to leave Roche. “They’re Swiss and Genentech is a bunch of entrepreneurial California cowboys.”
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Genentech, which was founded in 1976, said its executives would not comment.
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After eight months of resistance, Genentech agreed Thursday to a deal in which Roche will pay $95 a share for the 44 percent of Genentech that it does not own.
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The deal would end the independent existence of what is widely considered the world’s oldest and most successful biotechnology company.
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Genentech shareholders must still tender their shares but they are expected to do so because a committee of Genentech’s directors recommended the deal.
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The new price is higher than the $89 Roche offered in July and a bit higher than its offer last Friday of $93. While Genentech directors initially asked for $112,
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they came to realize that price was unrealistic in the face of sharply falling world stock markets, according to a regulatory filing by Genentech.
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Franz B. Humer, Roche’s chairman, said in an interview that he would meet with Arthur D. Levinson, Genentech’s chief executive, and Genentech’s top scientists.
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One issue, he said, would be to come up with an alternative to the stock options that have been a big financial incentive for Genentech employees.
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Roche has said Genentech’s research and early clinical trial operations will retain autonomy so the culture can be preserved.
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It has also said the combined United States commercial business of both companies will be based at Genentech’s headquarters in South San Francisco, Calif.,
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rather than in Nutley, NJ, where Roche’s American business is based. The drug portfolios of Roche will be sold under the Genentech brand in the United States.
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Pfizer and Merck have said their acquisitions will move them more into drugs made by biotechnology,
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which have more protection from generic competition than the chemical-based drugs companies now sell.
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Roche goes further, saying its purchase of Genentech will make it the largest biotechnology company in the world.
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Pfizer and Merck will also get other diversification from their deals, picking up vaccines in the case of Pfizer and consumer
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products in the cases of both Pfizer and Merck. Some big drug companies have been hoping that consumer products, generic drugs, or
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medical devices might shield them from the storms buffeting their industry, with patent expirations, pricing pressures, and tougher regulatory hurdles.
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Roche, by contrast, says it has no interest in generic drugs or consumer products and wants to stick to its specialty.
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“You go deep rather than broad,” Bill Burns, the head of Roche’s pharmaceutical business, said in an interview last month.
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The one exception is that Roche has become a leader in diagnostics, which increasingly will be used to tell which patients should receive a drug.
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Roche sells many of its own drugs and has others in development, such as ones for rheumatoid arthritis and diabetes.
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But Roche’s three best-selling drugs – the cancer medicines Avastin, Herceptin, and Rituxan – come from Genentech.
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And many of the late-stage clinical trials being conducted by Roche involve Genentech products. Roche’s main growth could come from extended use of Avastin.
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Roche now has first dibs on marketing rights outside the United States for drugs developed by Genentech.
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That arrangement was set to expire in 2015, another reason Roche wanted to own the whole company.
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Modularity of Capabilities
In the event the capabilities that the company is seeking can be separated into?
smaller parts, i.e., the capabilities are highly modular, alliances are the best option to pursue.
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Joint vJoint ventures can, for example, be used to ?
combine required capabilities with those existing in the company in order to create more value. The other parts of the companies are managed as usual and operate in their established markets.entures can,
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An acquisition might lead to problems as the entire operation will have to be?
acquired, which might lead to integration problems.
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If capabilities are modular, it might be advantageous to do-it-yourself as the company could build?
one separate department to develop the component.
206
The advantage of the modularity is that only part of ?
the organization is affected by and involved in the new development.
207
Amazon did this when?
it developed the Kindle.
208
The company still operated as an online store as usual, but it founded?
a separate department to develop the Kindle.
209
The decision regarding which strategic growth option to pursue also depends on?
other factors, such as finding a suitable partner to work with, which is often difficult.
210
In the case of non-profit organizations or charities, a change of ownership is difficult to?
execute, which limits their growth options to forming alliances and do-it-yourself.
211
Companies have several growth options.
The organic growth option,
do-it-yourself,
offers the advantage that the company develops its own competency in the field and can continue to pursue its strategy.
212
However, organic growth takes time and requires ?
an innovative and entrepreneurial corporate culture.
213
Mergers and acquisitions are another growth option--------------------------. The various motives for M&A are strategic motives (such as the development of ------------------------), financial motives (such as reducing the ----------------------), or personal\/management motives (such as short-term -----------------------------).
for companies
new markets
tax burden
growth goals
214
When choosing a company to acquire or to merge with, companies should analyze the?
fundamental, strategic, and cultural fit.
215
The fit often determines the success of the M&A. The integration of the two companies is challenging and depends on?
their strategic interdependence and their need for organizational autonomy.
216
Another option for companies to grow is through ?
a strategic partnership or alliance.
217
Alliances can be equity alliances, which involve the investment of both partners in?
a new entity, or non-equity alliances, which are contractual agreements.
218
Alliances are formed for similar reasons as M&A as companies try to benefit from?
economies of scale, access new markets, or complement their product offers.
219
Which growth option a company chooses depends on various factors. The urgency of the expansion plays?
a major role as well as possible uncertainties in the markets or technologies.
220
Furthermore, the types of capabilities a company is looking for,-------------------------, and the ----------------- of these influence the strategic decision. Finally, the availability of a suitable partner plays a role in the-------------------------------.
soft or hard
modularity
decision to grow
