Term
| Alliance Types by Ownership Characteristics: |
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Definition
(1) Cooperative / Non-Equity
(2) Equity Based
(3) Franchise Alliance
(4) Joint Venture |
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Term
| Strategic Alliance Partner Types: |
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Definition
(1) Vendor / Supplier
Ex: Toyota
(2) Research / Product DevelopmentFirms. Ex: Biotech Firms
(3) customers
(4) other same channel positioned firms (5) internet firms
(6) competng firms |
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Term
| 3 Types of strategic alliance objectives |
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Definition
(1) Basic Objectives
(2) External Driven
(3) Internal needs based |
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Term
| Strategic Alliance Basic Objective Examples |
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Definition
(1) Risk Reduction
(2) Achieve Economies of Scale
(3) Technology Exchange
(4) Blocking competition
(5) Overcoming Gov't Mandated trade/investment barriers
(6) Facilitating International Expansion
(7) Linking complimentary contributions of partners in value chain: Quasi-Vertical Integration |
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Term
| The REALITY of strategic alliance basic objectives |
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Definition
| the alliance is both political and economic based: (1) it depends on internal political champions and (2) key stakeholder positions |
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Term
| Strategic Alliance: External Force Objective Examples |
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Definition
(1) Turbulence in world markets
(2) Economies of scale as comptv adv.
(3) Globalization of industry
(4) Globalization of technology
(5) Rapid changing of tech
(6) shortening prdct life cycle |
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Term
| Strat. Alliance: Internal Driven Objective Examples |
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Definition
(1) Gain skills/resources
(2) learning
(3) spread financial risk
(4) speed to market - 1st mover adv.
(5) cost minimization
(6) if poor performance - use to change business formula/model |
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Term
| Strategic Alliance: 3 types of TRUST |
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Definition
(CUBs) --
(1) Calculating
(2) Understanding
(3) Bonding |
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Term
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Definition
| Calculate the costs and benefits of actions to both parties. Cost of maintaining the relationship. |
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Term
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Definition
(1) Sharing common ways of thinking.
(2) Understanding thinking of a partner.
(3) Helps predict partner actions and behaviors. |
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Term
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Definition
(1) Sharing a common identification
(2) Hold Common values and obligations
(3) understanding others wants
(4) developing long-term relationships
(5) bonding b/w individuals |
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Term
| Phases of strat alliance development over time |
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Definition
(FInE)
Formation - Implementation - Evolution |
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Term
| Early stages of Strat Alliance need to: |
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Definition
| Explore legal and institutional safeguards. Communicate clearly and specifically who is responsible for what. |
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Term
| TRUST building initiatives |
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Definition
(1) Open communication
(2) Common controls and information systems.
(3) Conflict resolution process
(4) Clearly define mutual benefits
(5) Share information and ideas |
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Term
| Joint Collaboration Competitive Advantage |
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Definition
(1) Analyze Strategic Fit.
(2) Analyze Cultural Fit.
(3) Identify each Org's Goals.
(4) Develop methods of working together.
(5) Identify each partners contributions.
(6) Identify each partners competencies.
(7) Agreement on Termination Formuls. |
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Term
| Types/examples of Partner Assets |
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Definition
(1) fixed assets
(2) working capital
(3) expertise
(4) contact network
(5) brand names
(6) technology |
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Term
| Strategic Alliance Valuation depends primarily on? |
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Definition
(1) The Alliance Form: Joint Venture or Collaboration
(2) Contributions from each partner |
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Term
| 5 Key Rules of Engagement |
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Definition
| (1) Define Roles, Responsibilities, and Geography (2) Put an escalation process in place - dispute resolution (3) Develop Communication Plan (4) Develop Customer Proposal - customer deliverables (5) Successful delivery of solution |
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Term
| Stanford VIDEO: key points for successful merger/partnership |
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Definition
| (1) identify what bothers you about the merger. (2) define what the key characteristics of the new blended culture should be. (3) Develop a game plan to achieve #1 & 2. |
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Term
| Culture Due Diligence - 2 steps: |
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Definition
| (1) Identify Differences. (2) What to do about differences |
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Term
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Definition
(1) Tacit Knowledge - Difficult to verbalize, formalize, communicate.
(2) Explicit Knowledge - can verbalize, formalize and communicate. Can retain. |
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Term
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Definition
| recognize that one party will learn more than the other, so you must find ways to offset this |
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Term
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Definition
(1)not a strategic Priority.
(2)no rewards for learning, learning responsibilities not clear.
(3) HR Policies and culture issues. |
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Term
| Keys to effective alliance |
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Definition
(1) win-win benefits for both parties.
(2) cooperation b/w parties.
(3) open communication.
(4) Executive/Public commitment.
(5) creation of trust b/w both parties |
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Term
| Alliances can be used to: |
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Definition
| (1) gain early mover advantage. (2) lock in customers. (3) lock out competition. (4) gain synergy of resources and thinking. |
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Term
| How is Toyota's supplier relationship different than other companies |
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Definition
(1)embrace suppliers as partners
(2)encourage knowledge sharing with them
(3)help suppliers fine tune their operations |
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Term
| Toyota: consulting/problem solving |
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Definition
| Toyota provided expert consultants to assist suppliers in japan free of charge |
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Term
| Toyota competitive advntg from suppliers: |
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Definition
| providing suppliers with knowledge and tech to improve their productivity for just their operations that are dedicated to Toyota |
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Term
| Major reason why 70-75% of M&A's fail? |
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Definition
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Term
| Forces shaping/causing M&A growth: |
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Definition
(1)globalization
(2)changing economic realities
(3)increased competition
(4)technology/R&D
(5)Financial buyers - Private Equity |
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Term
| underlying strategy of M&A |
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Definition
Focus on "doing the deal".
underlying strategy is NOT the same as Deal Structure. |
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Term
| Why do OVERCAPACITY M&A's fail? |
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Definition
| Well established/large companies have entrenched processes and values -- makes it difficult to change. Acquirer has little experience with mega-deals |
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Term
| Overcapacity M&A Example: |
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Definition
Daimler-Chrysler: Daimler was an engineering centered company.
Chrysler was more sales and mktg focused. |
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Term
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Definition
| occur at earlier stage in industry life cycle than OVERCAPACITY M&A. Usually fragmented and smaller industries |
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Term
| Product or Market Extension M&A: |
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Definition
| usually involve moving into foreign markets. success depends, in part, on companies' size. generally more successful when big company acquires small company. |
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Term
| Product or Market Extension M&A: GE Example |
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Definition
| Success b/c paid attention to important differences b/w GE and the acquisition. GE systems were introduced slowly over time. *Got newly acquired company managers to use GE's resources to grow business. |
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Term
| M&A as a substitute for R&D |
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Definition
| This is a response to shortening product life cycles - builds market position quickly. IT and Biotech good examples. |
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Term
| M&A as R&D: What is the huge challenge with this type of M&A? |
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Definition
| Holding on to key people - acquisition is usually not successful if key experts leave. Speed is also an issue - speed of tech/market change vs. speed of company integration. |
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Term
| Leverage Buyouts (LBO) typically used by |
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Definition
| Private Equity. Firm is purchased and converted into a private company; heavy use of debt typical. |
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Term
| life cycle stage of business |
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Definition
| start ups -- early stage -- later stage -- mature under valued/turnaround firms |
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Term
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Definition
| industry with disappearing boundaries - inventing new industries. Ex: AT&T purchasing companies to converge computers and telecom. Ex 2:Sears entering financial services as an extension of retail. |
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Term
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Definition
| -Treat deal management as a core part of business -Well established processes -flexible - adjust as they move forward -Carefully coordinate with various actors |
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Term
| Friendly Acquisition Process - Five Distinct Stages |
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Definition
| 1. Screening potential deals 2. Reaching an initial agreement- from talking to planning 3. Conducting due diligence - gearing up for negotiations 4. Setting the final agreement - getting to final terms 5. Closing - making it happen |
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Term
| 1. Screening Deals Two Simple Rules in Screening Deals |
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Definition
| -Look at everything - Successful acquires always on the lookout for deals, look at 500, do 2 to 3. Keep a strategic focus - be strict about sticking to guidelines and overall corporate and acquisition strategy |
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Term
| 2. Reaching an initial agreement |
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Definition
| Don't get bogged down over price -Identify Must Haves -Get Friendly - relationship capital |
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Term
| 3. Conducting due diligence - gearing up for negotiations |
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Definition
| -Turn over all rocks -size up the other side -feed due diligence into business planning - keep original deal team involved throughout process |
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Term
| 4. Setting the final agreement- Getting to final terms |
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Definition
| Negotiations on price and strategy - maintain momentum Use multiple negotiation channels - Managers, Lawyers, Investment Bankers -this allows for parallel processing, easier to send info, negotiating at different levels |
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Term
| 5. Closing - making it happen |
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Definition
| Sell deal to stakeholders, p.r. and investor relations campaigns -Move fast, time is your enemy -deal management- source of competitive advantage |
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Term
| Hostile takeover Tactics - Toehold, Bearhug, Tender Offer, Proxy Contest, Litigation |
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Definition
| Toeholds- Hostile bidders generally buy target company shares prior to launching open bid. Buyer must disclose intentions on schedule 13D when holdings reach 5%. Bearhugs- State or imply hostile firm will approach shareholders with a tender offer should acquisition be turned down Tender Offers- Offer made directly to target company's shareholders Proxy Contests- Using voting rights to contest seats on board of directors, management proposals, etc Litigation- Challenges board breaches fiduciary duties to stockholders |
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Term
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Definition
| Hostile bidders generally buy target company shares prior to launching open Board members required to act in the best interest of the corporation |
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Term
| Two main fiduciary duties |
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Definition
| Duty of Care - requires a board "to make informed and reasonable decision and to exercise reasonable supervision of the business" Duty of Loyalty - Mandates that board members act in good faith and in what they believe to be the best interest of the corporation |
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Term
| M&A 7 Legal Factors to Consider |
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Definition
| 1. Company's Intrinsic Value- Not overpaying or selling too cheap 2. Nonprice Consideration 3. Reliability of Officers' Reports to the Board 4. Appropriateness of delegating negotiating authorityu to management 5. Reliability of Expert's Reports 6. Investment Banker's Fee Structure 7. Reasonableness of Any Defensive Tactics |
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Term
| Merger Implementation Challenge H.P. Compaq |
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Definition
| 1. Operational and Strategic Integration (2) Two very large high tech companies (3) Established Cultures (4) Highly dynamic competitive environment |
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Term
| Acquisition Integration Framework - 4 Integration Processes Critical |
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Definition
| Process 1: Formulating the integration logic and performance goals (2) Creating the Integration plan (3) Executing operational integration-short term Process (4) Executing Strategic Integration - Long term |
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Term
| Process 1: Formulating the Integration Logic and Performance Goals |
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Definition
| Paticipants: B.O.D., Top Management, Consultants Integration Logic- Formulate new corporate strategy logic on how combination improves positioning Assumptions - Make assumptions about external environment to formulate short term and long term strategy and goals |
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Term
| Process 2: Creating the Integration Plan - Pre-Deal Planning Activities |
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Definition
| 1. Identifying short-term goals for synergies 2. Workforce Reductions 3. Procurement rationalization 4. Phasing out redundant products 5. gettin the new organization up and running 6. preparation for process of executing operational integration |
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Term
| Process 3: Executing operational integration |
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Definition
| Focus - short term performance Difficult times - layoffs, new assignments, new org. structure, new sales teams call on worried customers |
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Term
| Most urgent short term goals |
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Definition
| 1. Hold onto customers and achieve market share goals 2. achieve quarterly financial results 3. eliminate targeted product redundancies 4. Get procurement synergies 5. Select the right people 6. Get the organization to work |
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Term
| Process 4: Executing Strategic Integration |
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Definition
| Focus- Longterm Involves: Completing longer term operational integration tasks, completing multiyear strategic initiatives necessary to get ahead of envisioned competitive dynamics, feedback loop- helps test and revise key assumptions, logic, strategic initiatives |
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Term
| Process of executing Strategic Integration - Must effectively cope with: |
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Definition
| Where key competitors will be, Based on continuing to scan evolving environment, requires forcefully executing multi-year strategic initiatives |
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