Professional Documents
Culture Documents
2. Merger and Acquisition Strategies 3. Vertical Integration Strategies: Operating Across More Stages of the Industry
Value Chain 4. Outsourcing Strategies: Narrowing the Boundaries of the Business
Such cooperative strategies go beyond normal company-to-company dealings but fall short of merger or full joint venture partnership.
Collaborative arrangements can help a company lower its costs and/or gain access to new markets, expertise and capabilities.
be possible internally
Open up expanded opportunities in target industry by combining firms capabilities with resources of partners
Joint Ventures
Going with a partner in foreign country: JV is a useful strategy in competitive markets Control exercised with shared risk JV agreement with a company from the target country market is an entry strategy Types of JVs:
Contractual Joint Ventures (for projects with time frame)
Equity Joint Ventures (long term) JV may be necessary due to legal restrictions on foreign investment Reduces the investment required by a foreign firm, besides reducing risk Foreign partner stands to gain from local expertise Foreign investor may find the local partner redundant after some time Local partner may become a competitor after the end of the agreement Example: Hero Honda Motors Ltd.,
A merger happens when two firms agree (mutually consented) to go forward as a single new company rather than remain separately owned and operated. When firms are of about the same size called "merger of equals. In the 1999 merger of Glaxo Wellcome and SmithKline Beecham, both firms ceased to exist when they merged, and a new company, GlaxoSmithKline, was created. An acquisition (takeover) is the purchase of one company by another company. It may be friendly or hostile.
When the deal is unfriendly (that is, when the target company does not want to be purchased) it is always regarded as an acquisition.
Much-used strategic option Especially suited for situations where alliances do not provide a
firm with needed capabilities or cost-reducing opportunities Ownership allows for tightly integrated operations, creating more control and autonomy than alliances
international markets
To gain quick access to new technologies or competitive capabilities
Economy of Scope: Increasing the scope of marketing and distribution, of different types of products.
Vertical Integration: Merger of an upstream and downstream firm. Increasing revenue or market share: Merged identity increases market power (market share of competitor) to set prices.
Improve supplychain efficiency, better control over inputs/outputs, expansion of core competencies, capturing upstream / downstream profit margins
Overview of an Enterprise
upstream downstream
Backward Integration
Forward Integration
Outsourcing Strategies
Outsourcing involves withdrawing from certain value chain activities and relying on outsiders to supply needed products, support services, or functional activities
Internally Performed Activities
Suppliers
Functional Activities
Support Services
Distributors or Retailers
Operations are streamlined to Improve flexibility Cut time to get new products into the market
Firm can concentrate on core value chain activities that best suit its resource
strengths
Risk: Losing touch with activities and expertise that determine overall long-term success
Offensive Strategies
Defensive Strategies
Used to build: new or stronger market position and / or create competitive advantage
Labor - intensive manufacturing: products produced using low-cost Chinese labor, Call centres staffed with low-cost English speaking workers in the Philippines and India,
Frequent shipments of small lot sizes according to strict quality and delivery performance standards.
Five Web site approaches Use to disseminate only product information (Catalogue website)
Use as minor distribution channel to sell direct to customers Use as one of several important distribution channels to access
4. Optimise it online (SEO & SMO) 5. Make sure you measure (web analytical tools for traffic,
transactions & customer satisfaction) 6. What will your website do? (either selling, or information or
both) 7. Differentiate your website (stand out from the crowd and easy
to navigate)
Google Analytics
First-Mover Advantages
When to make a strategic move is often as crucial as what move to make
Indirect Exporting:
Exporting through intermediary or distribution channel. Involve least risk and limited capital expenditure. Use merchants who sell the products of the company in international markets or Use the distribution facilities of other firms in the international markets Export through merchant exporters or large trading houses who export products on behalf of several small firms collectively
Distribution chains e.g. Wal-Mart, Malls, Stores Products: FMCG, garments, handicrafts, processed food, medicines, electronics, etc.
Exporters: Haldiram, MDH, LG, Samsung, Dell, HP, etc.
Develops
overseas
contacts,
undertakes
marketing
research,
handles
Strategy Implementation:
Why Strategic Plans Often Fails
Poor prioritization
priorities.
Lack of detailed planning to support plan goal achievement planning is road map while communication and
feedback are essence of execution.
plans to match the existing culture, human system and operating procedures. defining clear responsibilities and authority for rewards and sanctions.
Strategic Audit
Type of management audit that is extremely useful as a diagnostic tool to pinpoint corporate-wide problem areas and to highlight organization strength and weakness.