MNGT4800 Ch9 Notes
MNGT4800 Ch9 Notes MNGT 4800
Popular in Strategic Management (Section 009)
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This page Class Notes was uploaded by Peyton Oglesby on Sunday February 28, 2016. The Class Notes belongs to MNGT 4800 at Auburn University taught by Dr. Peter Stanwick in Spring 2016. Since its upload, it has received 27 views. For similar materials see Strategic Management (Section 009) in Business, management at Auburn University.
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Date Created: 02/28/16
Chapter 9 Market Analysis 0 The firm s current market strategies 0 Customer demographics and pro le 0 The four P s Pricing Product Place and Promotion See slide 3 for strategic markets framework image Integrating Companies Mergers and Acquisitions Important for exam Merger combining two independent companies 0 This approach is generally more friendly Tends to be smaller in size Acquisition takeover or purchase of a company 0 Can be either friendly or unfriendly Commonly a hostile takeover Teacher s comments on mergers and acquisitions o Technically these are two different things But in reality the vast majority of transactions are acquisitions o It is rare to have a merger because you d have two CEOs lthis means there would have to be an equal split in power 0 With an acquisition there is only one winnerone company takes control Horizontal Integration Merging wcompetitors Horizontal integration this is the process of merging and acquiring your competitors Bene ts 0 Reduce competitive intensity most important 0 Lowers costs 0 Boosts differentiation 0 Access to new markets and distribution channels Drawbacksvery important 0 Integration failure 0 Reduced exibility 0 Increased potential for legal repercussions Reduction in Competitive lntensjy Changes underlying industry structure 0 Increased industry consolidation 0 Taking out excessive capacity from rivals 0 Stable industry and more pro ts 0 Increasing bargaining power regarding suppliers and buyers 0 You usually need the govt s approval Lower Cost s through Horizontal Integration 0 How 0 Enhancing the economic value creation 0 Via economies of scale 0 This is critical for the industries that have high xed costs 0 Like a pharmaceutical company 0 With a large sales force there will be xed costs See slide 9 for Kraft acquiring Cadbury highlight Horizontal Integration Continued 0lncreased differentiationstrengthens competitive positions 0 Differentiation of services and products 0 Access to new markets and distribution channel by entering new markets via mergers and acquisitions Mergers and Acquisitions 0it is common for a MampA to destroy shareholder value 0 When there is value it will go to the acquire 70 of mergers and acquisitions fail 0 From resistance to change 0 From not having everything go through as promised oWhy do people still desire MampAs 1Overcome competitive advantage 2Superior acquisition and integration capabilityskills of the managers are such that they can take any company and make it better 3Principalagent problems Desire to overcome competitive DlSadvantage 0 Ex Adidas acquired Reebok in 2006 Bene ts from economies of scope and scale 0 Superior acquisition and integration capability 0 Only some rms have SUPERIOR MampA abilities Principalagent problems 0 Managers have the incentive to diversify through MampAs to obtain more power prestige and pay 0 Managerial hubris 0 Self delusionbeliefs in ones own capabilities despite evidence to the contrary Strategic Alliances Causes and Costs of Partnering o A strategic alliance is the voluntary arrangements between rms 0 Sharing knowledge resources and capabilities 0 Leading in order to gain and sustain a competitive advantage Relational view of competitive advantage 0 VRI ch 4 resources are embedded in alliances Why rms enter Strategic Alliances 0 Learn new capabilities Access critical complementary assets 0 Hedge against uncertainty 0 Enter new markets 0 Strengthen competitive position see slide 16 for Pixar and Disney highlight Governing Strategic Alliances Governing mechanisms 0 Equity alliancesone rm takes partial ownership of the other 0 Joint venturesstandalone org owned by two or more rms Nonequity alliances o This is the most common form of contracts 0 Licensing agreements 0 Supply agreements 0 Distribution agreements Vertical strategic alliances 0 Firms tend to share EXPLICIT KNOWLEDGE that are codi ed 0 Licensing agreements partners exchange codi ed information often Equity Alliances 0 At the least one partner takes partial OWNERSHIP position 0 This shows a stronger commitment towards the relationship 0 Allow the sharing of TACIT KNOWLEDGEthis is the quotknow howquot 0 Partners acquire tacit knowledge by exchanging personnel 0 Corporate venture capital is another equity source This establishes rm investments in new startups Can produce stronger trust and ties Joint Ventures 0 Joint venture created and owned by two or more companies o A long term commitmentexchanging both tacit and explicit knowledge frequently Stepping stone towards full integration of the partnership 0 This is the least common of the 3 alliances Used to enter into foreign markets Alliance Management Capability Alliance management capabilities are based on 3 phases 1 Partner selection amp alliance formation 2 Alliance design and governance 3 Postformation alliance management 0 Partner selection amp alliance formation 0 Ascertain that expected bene ts exceed costs 0 Must chose the best possible alliance partner Partner commitment willingness to share resources an long term view Partner compatibilitycultural t 0 Alliance design and governance 0 Choose and agree on governance structure Joint venture Equity alliance Nonequity contractual agreement 0 Interorganizational trust is crucial o The value I get from the partner in the alliance is higher than what it cost to attain 0 Alliance Management Capability l ormation Alliance management nan L IIIL 0 Stage onepartner selection is the most important stage You have to trust in the partner There has to be an equal give and take relationship Postformation alliance management 0 Tips for managing the ongoing relationship 0 Make relationshipspeci c investments 0 Create knowledge sharing routines 0 Construct inter rm trust 0 Dedicated alliance function 0 Coordinate alliancerelated tasks at the corporate level 0 Knowledge base about how to manage alliance 0 Best to develop a relational capability Strategic Networks 0 Strategic networks are the social structure of the multiple organizations and the links among the nodes 0 Network achieves goals that cant be done by a single rm Analyzing Strategic Networks 0 Enable us to understand the bene ts and costs of a network 0 Quality of the tie strong or weak 0 Firm s position in a network 0 Network centrality 0 Knowledge broker 0 Structural holes 0 Smallworld phenomenon 0 Network in local cluster 0 High degree of centrality of each rm
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