Académique Documents
Professionnel Documents
Culture Documents
10-1
Mission
Objectives
Internal Analysis
Which Businesses to Enter? Corporate Level Strategy Vertical Integration Diversification Mode of Entry? Strategic Alliances Mergers & Acquisitions
Copyright 2012 Pearson Education, Inc. publishing Prentice Hall. Strategic Management & as Competitive Advantage
10-2 2
2) such that businesses forming the corporate whole are worth more than they would be under independent ownership
10-3 3
Acquisitions
one firm buys another firm
the words are often used interchangeably even though they mean something very different merger sounds more amicable, less threatening
Copyright 2012 Pearson Education, Inc. publishing Prentice Hall. Strategic Management & as Competitive Advantage
10-4 4
Acquisitions
can be a controlling share, a majority, or all of the target firms stock can be friendly or hostile usually done through a tender offer
Barney & Hesterly
Copyright 2012 Pearson Education, Inc. publishing Prentice Hall. Strategic Management & as Competitive Advantage
10-5 5
10-6 6
Product Extension complementary products Market Extension complementary markets Unrelated Conglomerate everything else
Barney & Hesterly
Copyright 2012 Pearson Education, Inc. publishing Prentice Hall. Strategic Management & as Competitive Advantage
10-7 7
Copyright 2012 Pearson Education, Inc. publishing Prentice Hall. Strategic Management & as Competitive Advantage
10-8 8
10-9 9
related M&A activity creates more value than unrelated M&A activity
10-10 10
Operational
Market Cap. $65.7 B $95.2 B $74.0 B $82.0 B $100.0 B $105.0 B
10-11 11
Copyright 2012 Pearson Education, Inc. publishing Prentice Hall. Strategic Management & as Competitive Advantage
Copyright 2012 Pearson Education, Inc. publishing Prentice Hall. Strategic Management & as Competitive Advantage
10-12 12
Managerial Hubris
Copyright 2012 Pearson Education, Inc. publishing Prentice Hall. Strategic Management & as Competitive Advantage
10-14 14
Competitive Advantage
Can an M&A strategy generate sustained competitive advantage? Yes, if managers abilities meet VRIO criteria
1 2 3 Managers may be good at recognizing & exploiting potentially value-creating economies with other firms Managers may be good at doing deals Managers may be good at both
Barney & Hesterly
Copyright 2012 Pearson Education, Inc. publishing Prentice Hall. Strategic Management & as Competitive Advantage
10-15 15
Competitive Advantage
Recognizing and Exploiting Economies of Scope
Private Economies Firm A
$12
, 000
Firm Cs recognized value is $10,000 Firm C Firm A sees value of $12,000 in Firm C Firm A can earn a profit of $2,000 only if the economy remains private
Barney & Hesterly
00 0 , $10
Copyright 2012 Pearson Education, Inc. publishing Prentice Hall. Strategic Management & as Competitive Advantage
10-16 16
Competitive Advantage
Recognizing and Exploiting Economies of Scope
Costly-to-Imitate Economies Firm A
$1 2 ,00 0
00 0 , 10
Firm C
if the economy between A & C is costly to imitate, it doesnt matter if other firms know Firm A can still earn a $2,000 profit
Barney & Hesterly
Copyright 2012 Pearson Education, Inc. publishing Prentice Hall. Strategic Management & as Competitive Advantage
10-17 17
Competitive Advantage
Recognizing and Exploiting Economies of Scope
Unexpected Economies Firm A
$10 , 000 $12 , 000
$ 00 0 , 10
Firm C has a market value of $10,000 Firm C Firm A buys Firm C for $10,000 Firm C turns out to be worth $12,000 Target
Barney & Hesterly
Firm B Bidders
Copyright 2012 Pearson Education, Inc. publishing Prentice Hall. Strategic Management & as Competitive Advantage
10-18 18
Competitive Advantage
Doing the Deal
Search for Rare Economies Seek Thinly Traded Markets Close the Deal Quickly Bidding Firms Perspective Limit Information to Other Bidders Limit Information to the Target
10-19 19
Competitive Advantage
Doing the Deal
Seek Information from Bidders
10-20 20
Implementation Issues
Structure, Control, and Compensation
M&A activity requires responses to these issues: m-form structure is typically used management controls & compensation policies are similar to those used in diversification strategies Managers must decide on the level of integration: target firm may remain somewhat autonomous target firm may be completely integrated
Copyright 2012 Pearson Education, Inc. publishing Prentice Hall. Strategic Management & as Competitive Advantage
10-21 21
Implementation Issues
Cultural Differences
high levels of integration require greater cultural blending cultural blending may be a matter of: combining elements of both cultures essentially replacing one culture with the other integration may be very costly, often unanticipated the ability to integrate efficiently may be a source of competitive advantage
Copyright 2012 Pearson Education, Inc. publishing Prentice Hall. Strategic Management & as Competitive Advantage
10-22 22
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
Copyright 2012 Pearson Education, Inc. publishing Prentice Hall. Strategic Management & as Competitive Advantage