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1. Development method:
Acquisition
Advantage
Quick way to grow
Synergistics gains
Strategic capability
Overcome barrier to entries
Can choose target for best portfolio
Enhance reputation
Disadvantage
Expensive
Synergy not automatic
Cultural clashes
Legal barriers to overcome
Acquire all parts including problem
Difficult in management
Synergentic gain:
Profitability
Financial Position
Market position
Organic grow
Joint venture
Disadvantage
Barriers to organic entry
Lack of capability, knowledge in new area
May be too slow
Less attractive to finance providers
Advantage
Share setup running cost
Disadvantage
Lead to dispute
May become competitor in core area as have
access to capability
Lack of commitment
Transfer pricing, lack of performance
appraisal ( complex )
Require strong central support
share knowledge
Focus on relative strength
Reduce political and cultural risks
Strategic Alliance
Characteristics
Synergy
Positioning opportunity : one to gain
leadership position
Limited resource availability
Cooperative spirit
Clarity of purpose
Win Win
Franchising
Advantage
Disadvantage
Franchisee
Corporate parenting
Parenting Style
Strategic planning
Advantage
Focus on limited BUS where sig syn
exists-> concentration few core
areas
Copr Mana major roles in setting
strat
Good Integration across the unit
Disadvantage
Diff in com and co ordination -> slow down
development
Less ownership of strategies by operating unit
mana -> low risk strategy is pursued
Resistance to closingdown of bus as strategy
sanctioned at centre
Shorter timescales
Set a short term financial objective
Enable diversity, wide corp portfolio
Disadvantage
Strategic control
Failure = divestment
Destroying value
Strategic development or
management expertise enhance
How to add value
Portfolio manager
Synergy manager
Parental developers
Portfolio Analysis
BCG
Balance porfolio
Critic
Ballast
Alien territory
L
H
L
H
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