presentation in strategic management... it might help.

1. By,

2. 1. Is
there any way in which Xerox might
have been able to add value to financial
services operations if acquired in early
1980’s? if not, why do you think the
company persued this strategy?

3. 2. Do youthink that the interests of
Xerox’s share-holders are best
served with the disinvestment of
Xerox’s financial services business?

5.  Acquisitions involves buying an existing business.
 Internal new ventures involves starting a new
business from scratch.
 Joint ventures involve starting a new business from
scratch with the assistance of a partner.

6.  Choice between acquisition and internal new
venturing is influenced by the following factors:
1. Entry barrier.
2. Relatedness of new business to existing operations.
3. Competitive speed and development costs of the two
entry modes.
4. Risk involved in different entry modes.
5. Industrial life cycle factors.

7. EXAMPLES OF ACQUISITIONS:
 Tata acquired Corus.
 HP acquisition DEC.
 Times Group Acquired Virgin
Radio.
 ONGC acquired Imperial
Energy.

8. Guidelines For Successful Acquisition:
 Screening
 Bidding Strategy
 Integration

9. Why Acquisitions Fail:
 Integration
 Over Estimating the Economic Benefits
 Expenses of Acquisition
 Inadequate Preacquisition Screening

10.  To execute corporate-level strategies when a company
has a set of valuable competencies in its existing
businesses that can be leveraged to enter the new
business area.
 When entering a newly emerging or embryonic
industry.

11. Scale of entry
 Large-scale entry is initially more than
small-scale entry, but it brings higher
returns in the long run.
 Failing to realize their anticipated benefits.
 As per a survey by McKinskey & Co.
“acquisitions destroy than create
value”

13.  Commercialization
 Technological possibilities should not overshadow
market needs and opportunities
 Poor implementation
 Demands on cash flow
 Clear strategic objectives are needed
 Anticipating time and costs

14. Research aimed at advancing basic science and
technology.
Development research aimed at finding and refining
commercial applications for the technology.
Foster close links between R&D and marketing; between
R&D and manufacturing.
Project is selected, management needs to monitor
progress of venture.
Selection process for choosing only the ventures that
demonstrate the greatest probability of commercial
success.

15. Examples of Internal New
Venture
 Gillette. Co ‘s successful diversification of felt-tip pens.
 John Degree diversified into snowmobiles.

16.  Teaming with another company that has
complementary skills and assets may increase the
probability of success
 Helps avoid the risks and costs of building a new
operation up from the ground floor

17. Requires the sharing of profits if the new business
succeeds
Venture partners must share control; conflicts on how
to run the joint venture can cause failure
Conflict over how to run the joint venture can tear it
apart and result in business failure

18. Examples Of Joint Ventures:
 Sony-Ericsson is a joint venture by the Japanese
consumer electronics company Sony Corporation and
the Swedish telecommunications company Ericsson .
 Virgin Mobile India Limited is a joint venture
between Tata Tele service and Richard Branson's
Service Group.

19.  Reducing the scope of the company by exiting
business areas
 Why restructure?
– Diversification discount: investors see highly diversified
companies as less attractive
 Complexity and lack of transparency in financial statements
 Too much diversification or for the wrong reasons
– Response to failed acquisitions
– Innovations have diminished the advantages of vertical
integration or diversification

20.  Exit strategies
1. Divestment
(A)Spinoff: selling off business unit to independent
investors
ex: timber products company Weyerhaeuser spun off its
paragon brand to independent investors.
(B)Selling to another company
ex: Glidden paint sold to Imperial chemicals Industry.
(C)Management buyout (MBO)
2. Harvest
3. Liquidation

21.  Strategies adopted by companies take to turnaround the
troubled business areas.
Causes for corporate Decline
Poor Management.
Over Expansion.
Inadequate Financial controls.
High Costs.
New Competition.
Unforeseen Demand shifts.
Organizational Inertia.

22.  Changing the leadership
 Redefining the Strategic Focus
 Assets Sales and Closures
 Improving Profitability
 Acquisitions

23. Defining and evaluating strategic
business units.
Comparing strategic business units.
Strategic implications.

24.  The planning process is reasonable but simplistic in
nature.
 The connection between the relative market share and
the cost savings is not as straightforward as suggested.
 Low-growth industries can be very competitive.
 None of the portfolio planning techniques pay
attention to the source of value creation from
diversification.