1、1,Acquisition and Restructuring Strategies,Michael A. HittR. Duane IrelandRobert E. Hoskisson,Chapter 7,2,Strategy Implementation,Chapter 11OrganizationalStructure and Controls,Chapter 10CorporateGovernance,Chapter 12StrategicLeadership,Strategy Formulation,StrategicCompetitivenessAbove-AverageRetur
2、ns,Strategic IntentStrategic Mission,Chapter 2The ExternalEnvironment,Chapter 3The InternalEnvironment,The Strategic Management Process,Feedback,Strategic Inputs,Strategic Actions,Strategic Outcomes,Chapter 13StrategicEntrepreneurship,Chapter 6Corporate-Level Strategy,Chapter 5Competitive Rivalryand
3、 CompetitiveDynamics,Chapter 4Business-LevelStrategy,Chapter 7Acquisition andRestructuringStrategies,3,Mergers and Acquisitions,Merger: a strategy through which two firms agree to integrate their operations on a relatively co-equal basisAcquisition: a strategy through which one firm buys a controlli
4、ng interest in another firm with the intent of making the acquired firm a subsidiary business within its own portfolioTakeover: a special type of an acquisition strategy wherein the target firm did not solicit the acquiring firms bid,4,Reasons for Making Acquisitions,5,Reasons for Making Acquisition
5、s:,Factors increasing market powerwhen a firm is able to sell its goods or services above competitive levels orwhen the costs of its primary or support activities are below those of its competitors usually is derived from the size of the firm and its resources and capabilities to compete Market powe
6、r is increased byhorizontal acquisitionsvertical acquisitionsrelated acquisitions,Increased Market Power,6,Reasons for Making Acquisitions:,Barriers to entry includeeconomies of scale in established competitorsdifferentiated products by competitorsenduring relationships with customers that create pr
7、oduct loyalties with competitorsacquisition of an established company may be more effective than entering the market as a competitor offering an unfamiliar good or service that is unfamiliar to current buyersprovides a new entrant with immediate market access,Overcome Barriers to Entry,7,Reasons for
8、 Making Acquisitions:,Significant investments of a firms resources are required toDevelop new products internallyintroduce new products into the marketplaceAcquisition of a competitor may result inmore predictable returns faster market entryrapid access to new capabilities,Cost of New Product Develo
9、pment and Speed to Market,8,Reasons for Making Acquisitions:,An acquisitions outcomes can be estimated more easily and accurately compared to the outcomes of an internal product development processTherefore managers may view acquisitions as lowering risk,Lower Risk Compared to Developing New Product
10、s,9,Reasons for Making Acquisitions:,It may be easier to develop and introduce new products in markets currently served by the firmIt may be difficult to develop new products for markets in which a firm lacks experienceit is uncommon for a firm to develop new products internally to diversify its pro
11、duct linesacquisitions are the quickest and easiest way to diversify a firm and change its portfolio of business,Increased Diversification,10,Reasons for Making Acquisitions:,Firms may use acquisitions to reduce their dependence on one or more products or marketsReducing a companys dependence on spe
12、cific markets alters the firms competitive scope,Reshaping the Firms Competitive Scope,11,Reasons for Making Acquisitions:,Acquisitions may gain capabilities that the firm does not possessAcquisitions may be used toacquire a special technological capabilitybroaden a firms knowledge basereduce inerti
13、a,Learning and Developing New Capabilities,12,Problems With Acquisitions,13,Problems With Acquisitions,Integration challenges includemelding two disparate corporate cultureslinking different financial and control systemsbuilding effective working relationships (particularly when management styles di
14、ffer)resolving problems regarding the status of the newly acquired firms executivesloss of key personnel weakens the acquired firms capabilities and reduces its value,Integration Difficulties,14,Problems With Acquisitions,Evaluation requires that hundreds of issues be closely examined, includingfina
15、ncing for the intended transactiondifferences in cultures between the acquiring and target firmtax consequences of the transactionactions that would be necessary to successfully meld the two 地位正勤勉Ineffective due-diligence process mayresult in paying excessive premium for the target company,Inadequat
16、e Evaluation of Target,15,Problems With Acquisitions,Firm may take on significant debt to acquire a companyHigh debt can increase the likelihood of bankruptcylead to a downgrade in the firms credit ratingpreclude needed investment in activities that contribute to the firms long-term success,Large or
17、 Extraordinary Debt,16,Problems With Acquisitions,Synergy exists when assets are worth more when used in conjunction with each other than when they are used separatelyFirms experience transaction costs when they use acquisition strategies to create synergyFirms tend to underestimate indirect costs w
18、hen evaluating a potential acquisition,Inability to Achieve Synergy,17,Problems With Acquisitions,Diversified firms must process more information of greater diversity Scope created by diversification may cause managers to rely too much on financial rather than strategic controls to evaluate business
19、 units performancesAcquisitions may become substitutes for innovation,Too Much Diversification,18,Problems With Acquisitions,Managers in target firms may operate in a state of virtual suspended animation during an acquisitionExecutives may become hesitant to make decisions with long-term consequence
20、s until negotiations have been completedAcquisition process can create a short-term perspective and a greater aversion to risk among top-level executives in a target firm,Managers Overly Focused on Acquisitions,19,Problems With Acquisitions,Additional costs may exceed the benefits of the economies o
21、f scale and additional market powerLarger size may lead to more bureaucratic controls Formalized controls often lead to relatively rigid and standardized managerial behavior Firm may produce less innovation,Too Large,20,Attributes of Effective Acquisitions,Attributes,Results,Complementary Assets or
22、Resources,Buying firms with assets that meet current needs to build competitiveness,Friendly Acquisitions,Friendly deals make integration go more smoothly,Careful Selection Process,Deliberate evaluation and negotiations are more likely to lead to easy integration and building synergies,Maintain Fina
23、ncial Slack,Provide enough additional financial resources so that profitable projects would not be foregone,21,Attributes of Effective Acquisitions,Attributes,Results,Low-to-Moderate Debt,Merged firm maintains financial flexibility,Flexibility,Has experience at managing change and is flexible and ad
24、aptable,Sustain Emphasis on Innovation,Continue to invest in R&D as part of the firms overall strategy,22,Restructuring Activities,DownsizingWholesale reduction of employeesDownscopingSelectively divesting or closing non-core businessesReducing scope of operationsLeads to greater focusLeveraged Buyout (LBO)A party buys a firms entire assets in order to take the firm private.,23,Restructuring and Outcomes,
