1. a plan of action designed to achieve a long-term or overall aim.

"time to develop a coherent economic strategy"

synonym
s:
master plan, grand design, game plan, plan of
action, plan, policy,proposed
action, scheme, blueprint, programme, procedure, approach,sche
dule; More
2. 2.
the art of planning and directing overall military operations and movements
in a war or battle.
"he was a genius when it came to military strategy"
synonyms: the art of war, military science, military tactics

A method or plan chosen to bring about a desired future, such as
achievement of a goal or solution to a problem.
2. The art and science of planning and marshalling resources for their most
efficient and effective use. The term is derived from the Greek word for
generalship or leading an army. See also tactics.

A plan of action designed to achieve a long-term or overall aim:time to
develop a coherent economic strategy

Three Types of Strategy
The word strategy means different things to different people, much of
which isnt really strategy at all (see A Strategy by Any Other Name for
more on this topic). But within the domain of well-defined strategy there are
uniquely different strategy types. Here are three that come to mind. What
strategy types do you see?
Business strategy
Business strategy is primarily concerned with how a company will approach
the marketplace where to play and how to win. Where to play answers
questions like, which customer segments will we target, which geographies
will we cover, and what products and services will we bring to market. How
to win answers questions like, how will we position ourselves against our
competitors, what capabilities will we employ to differentiate us from the
competition, and what unique approaches will we apply to create new
markets.
Senior managers typically create business strategy. After it is created,
business architects play an important role in clarifying the strategy, creating
tighter alignment among different strategies, and communicating the
business strategy across and down the organization in a clear and
consistent fashion. Executives are just beginning to bring advanced, highly
credible business architecture practices into the strategy discussions early
to provide tools, models, and facilitation that enable better strategy
development.
Operational strategy
Operational strategy is primarily concerned with accurately translating the
business strategy into a cohesive and actionable implementation plan. This
strategy answers the questions, which capabilities need to be created or
enhanced, what technologies do we need, which processes need
improvement, and do we have the people we need.
The vast majority of business architects are currently working in the
operational strategy domain reaching up into the business strategy domain
for direction. They work from the middle out to bring clarity and
cohesiveness to the organizations operating model typically working
vertically within a single business unit while resolving issues at the
business unit boundaries. More mature business architecture practices
work in multiple verticals or move from one vertical to another creating
common business architecture patterns.
Transformational strategy
Transformational strategy is seen less often as it represents the wholesale
transformation of an entire business or organization. This type of strategy
goes beyond typical business strategy in that it requires radical and highly
disruptive changes in people, process, and technology. Few organizations
go down this path willingly.
Transformational strategy is generally the domain of Human Resources,
organizational development, and consultants. These efforts are incredibly
complex and can experience significant benefit from applying business
architecture discipline though it is rare to see business architects playing a
significant role here.

5 types of expansion strategy
You need a growth strategy to increase the value of your business.
Examining generic growth strategies is a good start because they apply to
all types of businesses, focusing on one aspect of your operations and
specifying the actions you must take to achieve your goals. Once you
understand the generic growth strategies, you can customize the right plan
for your company and your objectives.
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New Markets
An effective idea for growth is entering new markets. If you have access to
more customers, you can sell more products. You can target new markets
by opening additional retail locations, adding an online presence, selling
internationally or reaching new types of customers. In each case, you have
to define the segments of the new markets you intend to target, identify the
needs of the potential customers as they relate to what you are selling,
promote your products to them and make it convenient for them to buy your
products.
New Products
Another way to increase business volume is to focus on your products. If
you have many different products for sale, you can increase total sales.
Sales growth is based on a broadening of your product lines and on
product diversification. Broadening a line means you can offer related
products to each customer. Product diversification lets you offer different
products to different customers, depending on customer preferences and
characteristics.
Acquisition
Sometimes the fastest way to gain new markets or diversify your product
range is to buy a company that competes with you or is active in a related
field. Company acquisition is risky because it means making a large
investment; the benefits depend on how well you can integrate the new
business into your own operations. It can be an effective growth strategy if
your acquisition target occupies the markets into which you want to
diversify.
Merger
An equally risky but less costly growth strategy is a merger with a related or
competing business. Ideally, the merger takes place between companies
that bring equal value to the table and results in a larger, more competitive
business that has the potential for improved performance. The lower
financial cost of a merger comes with a corresponding loss of control: You
share ownership with others after a merger.
Partnership
A growth strategy based on entering into partnerships with qualified
companies brings with it the advantages of a merger or acquisition without
the high cost or loss of control. You might partner with a foreign distributor
to access the market where he is based or partner with a company making
accessories for your own products. The partnership agreement specifies
the areas where you intend to cooperate, for example, in a promotional
campaign or shared sales channels. While the risks and costs are lower,
partnership also means you have to share the benefits.

Examples of growth strategies


Scenario Growth strategy Comment
Unilever introduced
Sunsilk shampoo in
US. Was sold in
Europe, Latin America
and Asia.
Market development Product not modified;
expansion to US
increased market
potential.
Coca-Cola launched
Diet Coke Sweetened
with Splenda
Product development New product; still in soft
drink market (or even
diet soft drink market),
hence no increase in
market potential.
Hasbro (toy company)
launched baby care
products under
Playskool brand.
Product diversification New product line;
market potential
increasing from toys to
toys + baby care.
JC Penney, after
repositioning of the
brand to make it more
fashionable, erected a
"pop-up" store in
Times Square.
Market penetration Product modification
already complete; no
change in market
potential.
Target added more
additional designer
collections in addition
to current designer
collections such as
Isaac Mizrahi.
Market penetration By the "special case of
retailing," there is no
change in the product;
no change in market
potential. Market is still
mid-level department
stores.
Gap introduced Forth
& Towne brand aimed
at women over 35.
Product diversification New product; market
potential increases
since no brand of Gap
(Gap, Old Navy,
Banana Republic) was
specifically targeted
toward women over 35.
Nintendo launched DS
hand-held game
device.
Product development New product; no
change in market
potential since Nintendo
already sold Game Boy
and thus had hand-held
game devices as a
target market.
Campbell developed
advertising campaign
for its soups.
Market penetration No product
modification; no change
in soup market
potential.
1

Frito-Lay removed
trans fats from its salty
snack products.
Product development Products were modified
without introducing new
brands; no change in
market potential. Still
salty snack foods
market and even those
non-buyers who didn't
buy for health reasons,
say concern over trans
fat, were in Frito-Lay's
target market. Indeed,
this was a way to reach
those non-buyers.


Many companies have mission statements that explain why they are in
business, what their products are and the consumer market they target.
Strategic management is an ongoing process organizations apply to
analyze internal processes and resources that deliver these products.
There are four main phases that must be applied with each strategy, and
decision-makers must understand the purpose of each phase.
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Traits of the Four Phases of the Business Cycle

Formulation
Formulation is the process of choosing the most profitable course of action
for success. This is the phase for setting objectives and identifying the
ways and means of achieving them. An analysis of corporate strengths,
weaknesses, opportunities and threats reveals critical areas surrounding
the products and services that need attention. Take, for example, a
company's objective to expand sales into the Internet market. If research
shows that competitors in that market are not seeing a return on their
investment, company decision-makers may explore other alternatives.
Implementation
Implementation is the execution of the necessary strategies to meet the
objectives that have been set. To ensure success, all employees should
understand their roles and responsibilities. Appropriate activity measures
provide necessary feedback with facts that identify positive impacts and
areas for change. In this phase, companies pay attention to details and
monitor processes to implement quick changes as required. For example, if
a common customer complaint is that products take too long to arrive, an
analysis of the shipping process may reveal ways to expedite delivery.
Evaluation
Evaluating strategies used in the implementation phase serve as
performance feedback. Some companies use a gap analysis to compare
how the company performed to set goals. Analyzing present state
compared to desired future state identifies the need for new products or
additions to existing products. One example is a company comparing its
anticipated consumer purchase response with the actual number of sales.
Modification
The modification phase is essential in correcting any weaknesses or
failures found during evaluation. Strengths identified can lead to
implementation in other areas. One example is a strategy to sell a selected
number of products on the Internet and sales data shows a significant
profit. A decision to add more products and refine the process can result in
a new lucrative endeavor.

5 steps process of strategic mgmt.
The strategic management process is more than just a set of rules to
follow. It is a philosophical approach to business. Upper management must
think strategically first, then apply that thought to a process. The strategic
management process is best implemented when everyone within the
business understands the strategy. The five stages of the process are goal-
setting, analysis, strategy formation, strategy implementation and strategy
monitoring.


Goal-Setting
The purpose of goal-setting is to clarify the vision for your business. This
stage consists of identifying three key facets: First, define both short- and
long-term objectives. Second, identify the process of how to accomplish
your objective. Finally, customize the process for your staff, give each
person a task with which he can succeed. Keep in mind during this process
your goals to be detailed, realistic and match the values of your vision.
Typically, the final step in this stage is to write a mission statement that
succinctly communicates your goals to both your shareholders and your
staff.
Analysis
Analysis is a key stage because the information gained in this stage will
shape the next two stages. In this stage, gather as much information and
data relevant to accomplishing your vision. The focus of the analysis should
be on understanding the needs of the business as a sustainable entity, its
strategic direction and identifying initiatives that will help your business
grow. Examine any external or internal issues that can affect your goals
and objectives. Make sure to identify both the strengths and weaknesses of
your organization as well as any threats and opportunities that may arise
along the path.
Related Reading: How to Evaluate Strategic Management
Strategy Formulation
The first step in forming a strategy is to review the information gleaned from
completing the analysis. Determine what resources the business currently
has that can help reach the defined goals and objectives. Identify any areas
of which the business must seek external resources. The issues facing the
company should be prioritized by their importance to your success. Once
prioritized, begin formulating the strategy. Because business and economic
situations are fluid, it is critical in this stage to develop alternative
approaches that target each step of the plan.
Strategy Implementation
Successful strategy implementation is critical to the success of the
business venture. This is the action stage of the strategic management
process. If the overall strategy does not work with the business' current
structure, a new structure should be installed at the beginning of this stage.
Everyone within the organization must be made clear of their
responsibilities and duties, and how that fits in with the overall goal.
Additionally, any resources or funding for the venture must be secured at
this point. Once the funding is in place and the employees are ready,
execute the plan.
Evaluation and Control
Strategy evaluation and control actions include performance
measurements, consistent review of internal and external issues and
making corrective actions when necessary. Any successful evaluation of
the strategy begins with defining the parameters to be measured. These
parameters should mirror the goals set in Stage 1. Determine your
progress by measuring the actual results versus the plan. Monitoring
internal and external issues will also enable you to react to any substantial
change in your business environment. If you determine that the strategy is
not moving the company toward its goal, take corrective actions. If those
actions are not successful, then repeat the strategic management process.
Because internal and external issues are constantly evolving, any data
gained in this stage should be retained to help with any future strategies.

retrenchment strategy
Definition
A strategy used by corporations to reduce the diversity or the overall size of
the operations of the company. This strategy is often used in order to
cut expenses with the goal of becoming a more financial stable business.
Typically the strategy involves withdrawing from certain markets or the
discontinuation of selling certain products or service in order to make a
beneficial turnaround.

Different Types of Retrenchment Strategies of Business are given below:
Retrenchment can be divided into the following categories:
1. Turn around Strategies
Turnaround strategy means backing out, withdrawing or retreating from a
decision wrongly taken earlier in order to reverse the process of decline.
There are certain conditions or indicators which point out that a turnaround
is needed if the organization has to survive. These danger signs are as
follows:
a) Persistent negative cash flow
b) Continuous losses
c) Declining market share
d) Deterioration in physical facilities
e) Over-manpower, high turnover of employees, and low morale
f) Uncompetitive products or services
g) Mismanagement
2. Divestment Strategies
Divestment strategy involves the sale or liquidation of a portion of business,
or a major division, profit centre or SBU. Divestment is usually a
restructuring plan and is adopted when a turnaround has been attempted
but has proved to be unsuccessful or it was ignored. A divestment strategy
may be adopted due to the following reasons:
a) A business cannot be integrated within the company.
b) Persistent negative cash flows from a particular business create financial
problems for the whole company.
c) Firm is unable to face competition
d) Technological up gradation is required if the business is to survive which
company cannot afford.
e) A better alternative may be available for investment
3. Liquidation Strategies
Liquidation strategy means closing down the entire firm and selling its
assets. It is considered the most extreme and the last resort because it
leads to serious consequences such as loss of employment for employees,
termination of opportunities where a firm could pursue any future activities,
and the stigma of failure.
Generally it is seen that small-scale units, proprietorship firms, and
partnership, liquidate frequently but companies rarely liquidate. The
company management, government, banks and financial institutions, trade
unions, suppliers and creditors, and other agencies do not generally prefer
liquidation.
Liquidation strategy may be unpleasant as a strategic alternative but when
a "dead business is worth more than alive", it is a good proposition. For
instance, the real estate owned by a firm may fetch it more money than the
actual returns of doing business.
Liquidation strategy may be difficult as buyers for the business may be
difficult to find. Moreover, the firm cannot expect adequate compensation
as most assets, being unusable, are considered as scrap.
Reasons for Liquidation include:
(i) Business becoming unprofitable
(ii) Obsolescence of product/process
(iii) High competition
(iv) Industry overcapacity
(v) Failure of strategy
Turnaround management is a process dedicated to corporate renewal. It
uses analysis and planning to save troubled companies and returns them
to solvency. Turnaround management involves management
review, activity based costing, root failure causes analysis, and SWOT
analysis to determine why the company is failing. Once analysis is
completed, a long term strategic plan and restructuring plan are created.
These plans may or may not involve a bankruptcy filing. Once approved,
turnaround professionals begin to implement the plan, continually reviewing
its progress and make changes to the plan as needed to ensure the
company returns to solvency.

Organizational values define the acceptable standards which
govern the
behaviourof i ndi vi dual s wi t hi n t he or gani zat i on. Wi t hout such
val ues, i ndi vi dual s wi l l pur sue behaviours that are in line with
their own individual value systems, which may lead to behaviours
that the organization doesn't wish to encourage. In a smaller, co-located
organization, the behaviour of individuals is much more visible than
in larger, disparate ones. In these smaller groups, the need for
articulated values is r educed, si nce unaccept abl e behavi our s
can be chal l enged openl y. However , f or t he larger organization,
where desired behaviour is being encouraged by different individuals in
different places with different sub-groups, an articulated statement of
values can draw an organization together. Clearly, the organization's
values must be in line with its purpose or mission, and the vision
that it is trying to achieve. So to summarize, articulated values of an
organization can provide a framework for the collective leadership of
an organization to encourage common norms of behaviour which
will support the achievement of the organizations goals and mission.
Strategy and Structure of an Organization
by David Ingram, Demand Media
Business strategy is a practical plan for achieving an organization's mission
and objectives. Organizational structure is the formal layout of a company's
hierarchy. Both strategy and structure are crucial elements of doing
business, and even companies that do not have formal strategies and
structures likely still have both in one form or another.
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The Facts
Business strategy is generally created at the upper levels of an
organization. Grand corporate strategies can be broken down into
objectives and tactics to ensure that the strategy is relevant all the way
down the organizational hierarchy. Organizational structure is put into place
relatively early in the life of a business, but it can be changed over time as
the company evolves. Business strategy and organizational structure may
seem like very different concepts at first glance, but there are a number of
important correlations between the two.
Process
Business owners generate strategies using a number of managerial tools.
Qualitative tools, such as SWOT analysis -- a tool that identifies internal
strengths and weaknesses, as well as external opportunities and threats --
can help managers to identify strategic opportunities. Quantitative tools,
such as the reports generated by a Total Quality Management software
package, can help to provide insight into a company's strengths and
uncover hidden issues using statistical models.
Structure
A company's organizational structure must support its strategy. Employees
at all levels of the company must be empowered to effectively complete the
tasks necessary to achieve organizational objectives, and company
structure can aid or hinder employees in their roles. Structure can also
dictate the means by which strategies are formed. Bureaucratic companies
tend to generate a majority of strategic ideas at the top levels of
management. Companies with flatter structures, on the other hand, often
involve a range of employees in strategy sessions.
Strategy
A business owner's initial strategy can often dictate the form of the
company's structure. An entrepreneur with dreams of employing a highly
educated and trained workforce with large leeway to innovate and try new
ideas, for example, is likely to structure his organization to be as flat as
possible. The opposite would be true of an entrepreneur who wishes to
enter a line of business with a traditionally high employee turnover rate,
such as telemarketing, since it can be difficult to retain highly skilled labor
in high turnover industries.
Considerations
Both strategy and structure need to be refined and adapted over time. No
matter how your strategy and structure evolves, however, ensure that these
two crucial elements always fully support each other, never hindering or
impeding the effectiveness of the other.
The courses in the domain Strategy, Management and Entrepreneurship
develop the necessary management knowledge and skills. The bachelor
programme focuses on the development of a broad basic knowledge in the
field of general management, corporate strategy, marketing, HRM, and on
the development of skills in communication, working together in team, and
negotiation in a business environment. In the master programme, the
students develop more advanced management skills by studying complex
management questions and solving practical business problems.
"STRATEGIC MANAGEMENT: Organizational learning and development"
builds on "Principles of Organizational Behaviour" and "Management" and
is complementary with the two other courses in the domain of Strategic
Management. It familiarises students with organizational learning,
organizational change and -development (OD). The manner in which
(strategic) decisions are developed & implemented and the quality of
interaction between different actors are emphasized. From this relational
perspective insights, theories and interventions are discussed, both
inspired by empirical research and business experiences in the field of OD.
b. Competences and competence levels to be attained (HUB-competence
scheme )
c. Key objectives of the course and competence levels to be attained
1. Being able to approach organizational processes, organizational learning
en organizational change from a psychological and relational perspective
(Competence level 2)
2. Being able to approach organizational processes, organizational learning
and organizational change from the viewpoint of three communities:
academics, consultants and actors involved (Competence level 2)
3. To gain insight and knowlegde in theories, models and methodologies in
the field of organizational development and learning (Competence level 2)
4. Being able to integrate, apply, compare and evaluate critically the
acquired knowlegde & skills (Competence level 2)
Organizational learning is an area of knowledge within organizational
theory that studies models and theories about the way an organization
learns and adapts (Vasenska, 2013:615).
In Organizational development (OD), learning is a characteristic of
an adaptive organization, i.e., an organization that is able to sense changes
in signals from its environment (both internal and external) and adapt
accordingly. OD specialists endeavor to assist their clients to learn from
experience and incorporate the learning as feedback into the planning
process.
Note a profound ambiguity in how the term adaptive system is used. The
earliest system theorists studied self-regulating organic and mechanical
systems in which a system "adapts" to environmental changes, acting so
as to maintain its organization in a steady (viable) state. System theory was
taken up in the humanities by those who use the term "adaptation" to mean
how an organization evolves so as to produce desired outcomes (or even
different outcomes chosen by the participants). When adaptation is used in
the second sense, while the organization may continue under the same
name, the nature of the system - its structure and behavior - changes.
Successive incremental changes can lead to a radically different system.
Global strategy as defined in business terms is an organization's strategic
guide to globalization. A sound global strategy should address these
questions: what must be (versus what is) the extent of market presence in
the world's major markets? How to build the necessary global presence?
What must be AND (versus what is) the optimal locations around the world
for the various value chain activities? How to run global presence into
global competitive advantage?
[1]

Academic research on global strategy came of age during the 1980s,
including work by Michael Porter and Christopher Bartlett & Sumantra
Ghoshal. Among the forces perceived to bring about the globalization of
competition were convergences in economic systems and technological
change, especially in information technology, that facilitated and required
the coordination of a multinational firm's strategy on a worldwide scale.
[2]

[3]

A global strategy may be appropriate in industries where firms are faced
with strong pressures for cost reduction but with weak pressures for local
responsiveness. Therefore, it allows these firms to sell a standardized
product worldwide. However, fixed costs (capital equipment) are
substantial. Nevertheless, these firms are able to take advantage of scale
economies and experience curve effects, because it is able to mass-
produce a standard product which can be exported (providing that demand
is greater than the costs involved).
Global strategies require firms to tightly coordinate their product and pricing
strategies across international markets and locations, and therefore firms
that pursue a global strategy are typically highly centralized.
[3

International business strategy refers to plans that guide commercial
transactions taking place between entities in different countries. Typically,
international business strategy refers to the plans and actions of private
companies rather than governments; as such, the goal is increased profit.
Most companies of any appreciable size deal with at least one international
partner at some point in their supply chain, and in most well-established
fields competition is international. Because methods of doing business vary
appreciably in different countries, an understanding of cultural and linguistic
barriers, political and legal systems, and the many complexities
of international trade is essential to commercial success.
As historically developing countries become increasingly prominent, new
markets open up and new sources of goods become available,
[1]
making it
increasingly important even for long-established firms to have a viable
international business strategy.
An acquisition or takeover is the purchase of one business or company by another company or
other business entity. Such purchase may be of 100%, or nearly 100%, of the assets or ownership
equity of the acquired entity. Consolidation occurs when two companies combine together to form a
new enterprise altogether, and neither of the previous companies remains independently.
Acquisitions are divided into "private" and "public" acquisitions, depending on whether the acquiree
or merging company (also termed a target) is or is not listed on a public stock market. An additional
dimension or categorization consists of whether an acquisition is friendly or hostile.
Achieving acquisition success has proven to be very difficult, while various studies have shown that
50% of acquisitions were unsuccessful.
[1]
The acquisition process is very complex, with many
dimensions influencing its outcome.
[2]
"Serial acquirers" appear to be more successful with M&A
than companies who only make an acquisition occasionally (see Douma & Schreuder, 2013, chapter
13). The new forms of buy out created since the crisis are based on serial type acquisitions known
as an ECO Buyout which is a co-community ownership buy out and the new generation buy outs of
the MIBO (Management Involved or Management & Institution Buy Out) and MEIBO (Management &
Employee Involved Buy Out).

Look up merger in
Wiktionary, the free
dictionary.
Whether a purchase is perceived as being a "friendly" one or a "hostile" depends significantly on
how the proposed acquisition is communicated to and perceived by the target company's board of
directors, employees and shareholders. It is normal for M&A deal communications to take place in a
so-called "confidentiality bubble" wherein the flow of information is restricted pursuant to
confidentiality agreements.
[3]
In the case of a friendly transaction, the companies cooperate in
negotiations; in the case of a hostile deal, the board and/or management of the target is unwilling to
be bought or the target's board has no prior knowledge of the offer. Hostile acquisitions can, and
often do, ultimately become "friendly", as the acquiror secures endorsement of the transaction from
the board of the acquiree company. This usually requires an improvement in the terms of the offer
and/or through negotiation.
"Acquisition" usually refers to a purchase of a smaller firm by a larger one. Sometimes, however, a
smaller firm will acquire management control of a larger and/or longer-established company and
retain the name of the latter for the post-acquisition combined entity. This is known as a reverse
takeover. Another type of acquisition is the reverse merger, a form of transaction that enables
a private company to be publicly listed in a relatively short time frame. A reverse merger occurs
when a privately held company (often one that has strong prospects and is eager to raise financing)
buys a publicly listed shell company, usually one with no business and limited assets.
[4]

When two or more companies agree to combine their operations, where
one company survives and the other loses its corporate existence, a
merger is affected. The surviving company acquires all the assets and
liabilities of the merged company. The company that survives is
generally the buyer and it either retains its identity or the merged
company is provided with a new name.
Types of Mergers
1. Horizontal Mergers
2. Vertical Mergers
3. Conglomerate Mergers
Horizontal Mergers
This type of merger involves two firms that operate and compete in a
similar kind of business. The merger is based on the assumption that it
will provide economies of scale from the larger combined unit.
Example: Glaxo Wellcome Plc. and SmithKline Beecham Plc.
megamerger
The two British pharmaceutical heavyweights Glaxo Wellcome PLC and
SmithKline Beecham PLC early this year announced plans to merge
resulting in the largest drug manufacturing company globally. The
merger created a company valued at $182.4 billion and with a 7.3 per
cent share of the global pharmaceutical market. The merged company
expected $1.6 billion in pretax cost savings after three years. The two
companies have complementary drug portfolios, and a merger would let
them pool their research and development funds and would give the

merged company a bigger sales and marketing force.
Vertical Mergers
Vertical mergers take place between firms in different stages of
production/operation, either as forward or backward integration. The
basic reason is to eliminate costs of searching for prices, contracting,
payment collection and advertising and may also reduce the cost of
communicating and coordinating production. Both production and
inventory can be improved on account of efficient information flow within
the organisation.
Unlike horizontal mergers, which have no specific timing, vertical
mergers take place when both firms plan to integrate the production
process and capitalise on the demand for the product. Forward
integration take place when a raw material supplier finds a regular
procurer of its products while backward integration takes place when a
manufacturer finds a cheap source of raw material supplier.
Example: Merger of Usha Martin and Usha Beltron
Usha Martin and Usha Beltron merged their businesses to enhance
shareholder value, through business synergies. The merger will also
enable both the companies to pool resources and streamline business
and finance with operational efficiencies and cost reduction and also
help in development of new products that require synergies.
Conglomerate Mergers
Conglomerate mergers are affected among firms that are in different or
unrelated business activity. Firms that plan to increase their product
lines carry out these types of mergers. Firms opting for conglomerate
merger control a range of activities in various industries that require
different skills in the specific managerial functions of research, applied
engineering, production, marketing and so on. This type of diversification
can be achieved mainly by external acquisition and mergers and is not
generally possible through internal development. These types of
mergers are also called concentric mergers. Firms operating in different
geographic locations also proceed with these types of mergers.
Conglomerate mergers have been sub-divided into:
Financial Conglomerates
Managerial Conglomerates
Concentric Companies
Financial Conglomerates
These conglomerates provide a flow of funds to every segment of their
operations, exercise control and are the ultimate financial risk takers.
They not only assume financial responsibility and control but also play a
chief role in operating decisions. They also:
Improve risk-return ratio
Reduce risk
Improve the quality of general and functional managerial
performance
Provide effective competitive process
Provide distinction between performance based on underlying
potentials in the product market area and results related to
managerial performance.
Managerial Conglomerates
Managerial conglomerates provide managerial counsel and interaction
on decisions thereby, increasing potential for improving performance.
When two firms of unequal managerial competence combine, the
performance of the combined firm will be greater than the sum of equal
parts that provide large economic benefits.
Concentric Companies
The primary difference between managerial conglomerate and
concentric company is its distinction between respective general and
specific management functions. The merger is termed as concentric
when there is a carry-over of specific management functions or any
complementarities in relative strengths between management functions.
ACQUISITIONS
The term acquisition means an attempt by one firm, called
the acquiring firm, to gain a majority interest in another firm,
called target firm. The effort to control may be a prelude
To a subsequent merger or
To establish a parent-subsidiary relationship or
To break-up the target firm, and dispose off its assets or
To take the target firm private by a small group of investors.
There are broadly two kinds of strategies that can be employed in
corporate acquisitions. These include:
Friendly Takeover
The acquiring firm makes a financial proposal to the target firms
management and board. This proposal might involve the merger of the
two firms, the consolidation of two firms, or the creation of
parent/subsidiary relationship.
Hostile Takeover
A hostile takeover may not follow a preliminary attempt at a friendly
takeover. For example, it is not uncommon for an acquiring firm to
embrace the target firms management in what is colloquially called a
bear hug.

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