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Flashcards

CORPORATE LEVEL STRATEGY

starry_eyed_ English 83 cards

Cards in this deck (83)

  1. 1INTERNATIONALISATION AND PERFORMANCEInverted U curve- trade-offs between benefits and organisational complexity. Experience and commitment key. Service sector disadvantages- cultural diff, local presence reduces eco of scale
  2. 2ELEMENTS OF INTERNATIONAL STRATEGYINTERNATIONALIZATION DRIVERS
    GEOGRAPHIC ADVANTAGES
    MARKET SELECTION
    MODE OF ENTRY
  3. 3INTERNATIONALISATION DRIVERSYIP'S FRAMEWORK
    -MARKET DRIVERS
    -COST DRIVERS
    -GOVERNMENT DRIVERS
    -COMPETITIVE DRIVERS
  4. 4INTERNATIONALISATION DRIVERS- MARKET DRIVERSSimilar customer needs, global customers, transferable marketing
  5. 5INTERNATIONALISATION DRIVERS- COST DRIVERSEconomies of scale and scope, country specific differences, favorable logistics
  6. 6INTERNATIONALISATION DRIVERS- COMPETITION DRIVERSInterdependence between countries, competitors global strategies
  7. 7INTERNATIONALISATION DRIVERS- GOVERNMENT DRIVERSTrade policies, technical standards, host gov policies (e.g. subsidies)
  8. 8GEOGRAPHIC SOURCES OF ADVANTAGELOCATIONAL
    INTERNATIONAL VALUE NETWORK
  9. 9GEOGRAPHIC SOURCES OF ADVANTAGE- LOCATIONAL (DOMESTIC)Porters diamond
    Must be substantial enough to overcome the inherent liability of foreignness (over domestic orgs). Swiss- private banking
  10. 10GEOGRAPHIC SOURCES OF ADVANTAGE- LOCATIONAL- PORTERS DIAMONDFactor conditions, related and supporting industries, demand conditions, Industry structure/rivalry
  11. 11GEOGRAPHIC SOURCES OF ADVANTAGE- INTERNATIONAL VALUE NETWORKThe different skills, resources, and costs of countries can be systematically exploited via FDI, joint ventures or global sourcing. Advantages- cost, unique local capabilities, national market chracteristics
  12. 12INTERNATIONAL STRATEGIES- KEY CONSIDERATIONGlobal/local dilemma- standardization vs adaptation.
    CONFIGURATION (dispersed/dispersed) & COORDINATION
  13. 13INTERNATIONAL STRATEGIESGLOBAL- high co, dispersed
    COMPLEX EXPORT- high co, concentrated
    MULTI-DOMESTIC- low co, dispersed
    SIMPLE EXPORT- low co, concentrated
  14. 14INTERNATIONALISATION STRATEGIES- GLOBALHigh co, dispersed,
    international value networks, chosen according to locational advantage for each activity. High investment and skill in coordination
  15. 15INTERNATIONAL STRATEGIES- COMPLEX EXPORTHigh co, concentrated,
    activities largely in one country, but builds on more coordinated marketing. economies of scale can be reaped, branding and pricing more systemic
  16. 16INTERNATIONALISATION STRATEGIES- MULTI-DOMESTICLow co, dispersed
    goods/services produced locally in each national market, Where there is advantage in local adaptations and few eco of scale- professional services where relationships are essential
  17. 17INTERNATIONALISATION STRATEGIES- SIMPLE EXPORTLow co, concentrated
    e.g. manufacturing typically chosen by orgs with strong locational advantage but does not have the caps/no advantage to coordinate marketing
  18. 18MARKET SELECTION- BASED ONAttractiveness-
    MARKET CHARACTERISTICS- PESTLE
    ORG/COUNTRY COMPATIBILITY- CAGE
    COMP CHARACTERISTICS- 5 FORCES, reactiveness and clout
  19. 19MARKET SELECTION- MARKET CHARACTERISTICS- PESTLEP- Regulatory environment (taxes, tariffs)
    E- Disposable income, currency risk
    S- Attitudes and tastes, deo segments
    L- IP protection, contract enforcement
  20. 20MARKET SELECTION- ORG/COUNTRY COMPATIBILITY- CAGE FRAMEWORKC- CULTURAL DISTANCE (language and social norms)
    A- ADMIN/POLITICAL DISTANCE
    G- GEO DISTANCE (comms and infa)
    E- ECO DISTANCE (wealth)
  21. 21MARKET SELECTION- COMP CHARACTERISTICS- 5 FORCES, retaliation and cloutDefender's reactiveness- market attractiveness, coordinated strategy?
    Defender's clout- Market share, connections to powerful local players
  22. 22ENTRY MODESEXPORTING
    LICENSING/FRANCHISING
    JOINT VENTURES
    WHOLLY OWN SUBSIDIARIES (Acquisition/greenfield)
  23. 23THE STAGED INTERNATIONAL EXPANSION MODELProposes a sequential process of gradually increased commitment to newly entered markets as the build market knowledge and caps. Challenged by BORN GLOBAL, EMERGING COUNTRY MULTINATIONAL
  24. 24CHOOSING MODE OF ENTRYBREADTH OF COMP ADVANTAGE (rely on own caps or need a local partner?) vs. TRADEABILITY (can rely on trading relationships or need own presence?- transport and legal protection)
  25. 25CHOOSING MODE OF ENTRY (2)EXPORT- Broad CA, High trade
    SUBSIDIARY- Broad CA, Low trade
    LICENSE/FRANCHISE- Narrow CA, High trade
    JOINT VENTURE- Narrow, Low Trade
  26. 26INTERNATIONAL STRATEGY IS A TYPE OF...MARKET DEVELOPMENT STRATEGY
  27. 27INTERNATIONAL STRATEGY VS GLOBAL STRATEGYINTERNATIONAL- Range of ops operating outside country of origin
    GLOBAL- High co-ordination of extensive activities dispersed in many countries around the world
  28. 28M&A PROCESSTARGET?
    NEGOTIATE/VALUATE
    INTEGRATE
  29. 29M&A PROCESS- TARGET?STRATEGIC FIT- The extent to which the target firm strengthens/compliments the acquiring firm's strategy (synergies)
    ORGANISATIONAL FIT- Match of management practices, culture and staff characteristics (cultural webs)
  30. 30M&A PROCESS- NEGOTIATE/VALUATEFinancial analysis- payback period, shareholder value analysis. Bidding wars likely to go beyond economic value. Winners curse- price of winning never recovered. Circle of overvaluation
  31. 31Circle of overvaluationThe acquirer may tried to justify the price paid by cutting back on essential investments to improve immediate profits undermining the acquisition rationale damaging the assets that made up the strategic value of the target company
  32. 32M&A PROCESS- INTEGRATIONMediates ability to extract value
    Concerns organisational fit
    - Extent of strategic interdependence (related/unrelated)
    - need for organisational autonomy
  33. 33M&A PROCESS- INTEGRATION- strategic interdependence-High interdependence (related diversification) tight integration
    - Low interdependence (unrelated diversification) little need for integration beyond financial systems
  34. 34M&A- PROCESS- INTEGRATION- Organisational autonomy- Distinct culture, geographically distant, dominated by prima donna professionals- left loosely integrated or gradually so -distinctiveness can be valuable and may have been initial motive
  35. 35M&A PROCESS- INTEGRATION APPROACHESPRESERVATION- (conglom)
    SYMBIOSIS- (best of both)
    ABSORBTION- (rapid adjustment)
    (HOLDING- held temp, sold on)
  36. 36M&A PROCESS- INTEGRATION- KEY SKILLSMANAGING STRATEGIC CHANGE
    ORGANISATIONAL JUSTICE
    -Distributive, - Procedural
    - Informal (kraft- cadbury, somerdale)
  37. 37SERIAL ACQUIRERS- opp to accumulate exp, develop specialist teams
    -build dynamic cap for aquisitions
  38. 38DIVESTURESelling of a business that no longer fits the strategy of the firm (nike and umbro)
    - should be viewed positively as funds can be reinvested elsewhere
  39. 39A FAILED MERGER- CASE STUDYDAIMLER-CHRYSTLER
    A merger of equals? Daimler refused to share tech, couldn't integrate due to diff cultures, predicted synergies not realized
  40. 40THE NATURE OF M&ATypically cyclical phenomena driven by market confidence (fashion/bandwagon effect)
  41. 41MOTIVES FOR M&ASTRATEGIC- Extension, consolidation, capabilities
    FINANCIAL- Efficiency, tax efficiency, asset stripping.
    MANAGERIAL MOTIVES- personal ambition, bandwagon effects
  42. 42MOTIVATIONS FOR M&A- STRATEGICCapabilities- increase caps, Microsoft may quire a small entrepreneurial start up as a form of R&D.
    Extension- markets, geo, products.
    Consolidation- market power, efficiency.
  43. 43MOTIVES FOR M&A- FINANCIALFinancial efficiency- good balance sheet and bad balance sheet
    Tax efficiency- one operating in a low ta country, profits transferred
    Asset stripping- underlying assets worth more than company as a whole
  44. 44MOTIVES FOR M&A- MANAGERIALPersonal Ambition- meeting targets easier via M&A, media attention and personal reputation.
    Bandwagon effects- in M&A upswing pressure from media and stakeholders
  45. 45M&A VS. ORGANIC GROWTH- Benefits of organic growth-Knowledge and learning
    -Spreading investment over time (easier to adjust if conditions change)
    - No availability constraints
    -Strategic independence
  46. 46M&A IS A..Strategy method for carrying out a strategic option
  47. 47ORGANIC GROWTH LINKED TO..CORPORATE ENTREPRENEURSHIP- radical change in the organisation's business, driven principally by the org's own capabilities (amazon- kindle)
  48. 48ACQUISITION- DEFINITIONInvolves one firm taking over the ownership (equity) of another
  49. 49TAKEOVER- DEFFAcquisition where the target firm does not solicit the aquiring firm's bid
  50. 50MERGER-DEFFMutually agreed decision to combine the assets of two (similar-sized) organisations (usually equal partners)
  51. 51POLITICALLY MOTIVATED ACQUISITION- CASE STUDYMicrosoft and skype. in comparison to microsoft made tiny profit. Didn't want google to have it. Strategic/operational qs- keep it free? open source development? cultures?
  52. 52ACQUISITIONS TO ACCESS MARKETS- CASE STUDYHeineken and Carlsberg acquired scottish and national. Heineken acquired a 37.5 share in United beverages ltd in India. Carlsberg acquired the other half of Baltic beverages in Russia
  53. 53DIVERSIFICATION PAPERNg 2007, unrelated diversification and the RBV
    3 pillars that support unrelated diversification, 1. dynamic caps, 2. absorbtive capacity 3. Weak ties
  54. 54Ng 2007-UNRELATED DIVERSIFICATION Dynamic capsChanges to resources and combos promotes diversification into new unrelated markets
  55. 55Ng 2007-UNRELATED DIVERSIFICATION - Absorptive capacityEntry into new markets increases knowledge base which increases absorptive capacity to assimilate a broad range of market ops
  56. 56Ng 2007-UNRELATED DIVERSIFICATION- Weak TiesBridging relationships that connect novel resources and experiences, (Access to novel resources and exp strengthens dynamic caps)
  57. 57Ng 2007-UNRELATED DIVERSIFICATION - Virtuous circleIndivisible/lumpy resources create excess capacity. Developing related resources bring with them their our indivisible related resources
  58. 58Ng 2007-UNRELATED DIVERSIFICATION - conditions for Unrelated diversificationMarket incompleteness where resources are heterogeneous, discrete and indivisible
  59. 59Ng 2007-UNRELATED DIVERSIFICATION - limitations3 pillars interlinked, who likely is the org to have all 3? Unrelated diversification only beneficial in certain industries
  60. 60PROBLEMS WITH DIVERSIFICATIONCorporate parent value destroying activities
  61. 61PROBLEMS WITH ACHIEVING SYNERGYExcessive initial costs
    Overcoming self interest (after M&A)
    Illusionary synergies (e.g. news corp and myspace)
  62. 62CORPORATE PARENTINGThe level of management above that of the business units, without direct interaction with buyers and competitors
  63. 63TYPES OF CORPORATE PARENTThe portfolio manager
    The synergy manager
    The parental developer
  64. 64THE PORTFOLIO MANAGERActs as active investor
    Extracting value
    Investing/Divesting
    Lots of businesses in portfolio
  65. 65THE SYNERGY MANAGEREnhance value for all SBUs
    Related diversification
    Common purpose, cooperation, central services
    Illusionary synergies??
  66. 66THE PARENTAL DEVELOPERCentral capabilities to add value
    Related diversification
    Careful not to get attached to SBUs that are fine without parental contribution
  67. 67CORPORATE PARENT- VALUE ADDINGEnvisioning, Coaching and Facilitating (caps and synergies), Providing central services and resources (capital, bargaining power), Intervening
  68. 68CORPORATE PARENT- VALUE DESTROYINGAdding management costs, Adding bureaucratic complexity, Obscuring financial performance
  69. 69ROLE OF THE CORPORATE CENTER/PARENTMaking scope decisions
  70. 70SCOPE DECISIONSDivestment, Market penetration, Horizontal integration, backward/forward vertical integration, related/unrelated diversification. Relate to gym industry
  71. 71DIVERSIFICATIONAn organisation pursues new product offerings and new markets
  72. 72TYPES OF DIVERSIFICATIONLIMITED
    RELATED CONSTRAINED
    RELATED LINKED
    UNRELATED
  73. 73TYPES OF DIVERSIFICATION- LIMITED1 Business dominant (75-95% in one area)
  74. 74TYPES OF DIVERSIFICATION- RELATED CONSTRAINEDLots of value chain links e.g. Loreal, shared R&D, Distribution etc
  75. 75TYPES OF DIVERSIFICATION- RELATED LINKEDTenuous value chain links, but still some potential for economies of scale/scope e.g. Disney- entertainment as the rationale
  76. 76TYPES OF DIVERSIFICATION- UNRELATEDOnly link is finance based. Integration difficulties, must weigh up costs with derived benefits
  77. 77BENEFITS OF DIVERSIFICATION/ REASONS FOR PURSUINGEfficiency gains (underused resources), Stretching parenting capability, Increasing market power, Expectation of powerful stakeholders, Response to market decline, Spreading risk, Corporate hubris.
  78. 78DIVERSIFICATION AND PERFORMANCERELATED LIMITED DIVERSIFICATION- outperforms undiversified and unrelated extensively diversified. Links to maximizing use of resources/comps. Profitable in first stages- know when to stop
  79. 79DIVERSIFICATION AND PERFORMANCE, 2Research claiming diversification destroys corporations, particularly at the beginning, may need to be extremely LT strategy (methodology poss questionable)
  80. 80SYNERGY ANALYSISLeverage resources and competencies (cost efficiency). Teams/partners- lobbying, learning and leaning (market and bargaining power). Value chain integration. Corp parent value adding
  81. 81ANALYZING THE TYPE OF SYNERGY/VALUE CREATIONOperational relatedness vs corporate relatedness (Related constrained, Rare caps, Related limited, Unrelated)
  82. 82WHEN UNRELATED DIVERSIFICATION?1. Attractiveness test
    2. capital expenditure vs. operational return
    3. Better off test (stand alone or synergy?)
  83. 83DIVERSIFICATION SUCCESS STORYDISNEY- horizontal diversification by acquiring Pixar and Marval. Transplanted Pixar's culture. Related, acquiring TV channels ABC. Also through joint ventures, licensing, organic growth

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Flashcards on CORPORATE LEVEL STRATEGY, created by starry_eyed_ on 28/04/2013.
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starry_eyed_
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