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Corporate Growth

Corporate Growth. A major acquisition is the fastest way to compensate for a company's failure to grow organically (via internal means) You don't get a gazelle by breeding dinosaurs. “When Dinosaurs Mate,” G. Hamel, WSJ. Ford Jaguar Mazda General Motors Saab Hewlett-Packard Compaq

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Corporate Growth

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  1. Corporate Growth • A major acquisition is the fastest way to compensate for a company's failure to grow organically (via internal means) • You don't get a gazelle by breeding dinosaurs. • “When Dinosaurs Mate,” G. Hamel, WSJ

  2. Ford Jaguar Mazda General Motors Saab Hewlett-Packard Compaq Unilever Knorr Ben & Jerry Daimler-Benz Chrysler Corporate strategy solutions Starbuck’s Southwest Airlines Toyota Dell Wal-Mart Nike Business strategy solutions Best Path to Growth?

  3. Dell acquired gaming PC maker Alienware to expand position in high-end niche segment (prices start at $5995)

  4. Entering New Businesses • WHY? • Does business fit? • Financially • Strategically • Culturally • HOW? • Acquisition or merger • Internal start-up • Joint ventures • Alliance

  5. Justifications for M&A • Attractiveness test • Industry factors • Core competencies • Strategic position • Cost of entry test • Buy outstanding shares • Cash • Contributions to merger or JV • Better off test • Synergies, econ. of scale/scope • Consolidation of resources, activities • Leverage strategic assets for competitive advantage?

  6. Blue CircleUnrelated Diversified Firm HQ Bricks Gas Stoves Cement OK Cement Products Lawn Mowers Unrelated to Other Units or Core Competence

  7. BoddingtonsRelated Horizontal Diversified Firm HQ Pubs Hotels Health Clubs Restaurants Nursing Homes Related to Other Units via Core Competence

  8. Adidas-Reebok Merger + vs.

  9. Adidas-Reebok Merger

  10. Adidas-Reebok • Why? • Better off?

  11. Adidas-Reebok Merger + vs.

  12. Gillette Personal Grooming Small Appliances Oral Care Portable Power

  13. Gillette Personal Grooming Small Appliances Oral Care Portable Power PEST PEST PEST PEST

  14. Value Chain AnalysisGillette’s acquisition of Duracell allows it to leverage the following strategic assets across business units (synergies) Gillette Personal Grooming Small Appliances Oral Care Portable Power

  15. PROCTER & GAMBLE Soaps Food Beverages Paper Products Gillette Razors Core Product Mr. Coffee Machines Duracell Batteries Oral-B Toothbrush

  16. M&A Exercise Nokia should acquire _________________ Motorola Nextel Red Hat Sony-Ericsson XM-Sirius Radio Nokia Blackberry Palm AMD Apple Circuit City Netscape Other?

  17. Attractiveness TestWhy is the _________ industry attractive to Nokia?

  18. Cost of Entry TestCan Nokia afford to acquire ___________? Yes No

  19. Better-off Test (1)The acquisition of _____ gives it the following position in strategic space in the _____ industry Dimension 1 Dimension 2

  20. Better-off Test (2)Nokia’s acquisition of ______ allows it to leverage the following strategic assets across business units (synergies) Nokia Cell Phones

  21. Better-off Test (3)Nokia’s acquisition of ________ gives it the following business unit portfolio High Mobile Phones Long-term Industry Attractiveness Med Low Strong Avg. Weak Competitive Advantage

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