Professional Documents
Culture Documents
Midterm
Answers of the midterm exam See Blackboard Midterm exams available for inspection This weeks tutorial Problems with midterm registration Contact the student administration Visit Open Hours (Spreekuur) in room E1.51
Attendance
Final rules regarding missing working groups/seminars Missed 0 or 1 Safe Missed 2 Additional individual assignment to compensate for missed session Missed 3 End of story -> Resit Note: only applies to absence without valid reason For all other cases: talk to student counsellor Assignment Will be posted in Blackboard a.s.a.p. To be handed in via email to course coordinator Dr. Joris Ebbers J.j.ebbers@uva.nl Deadline: 3 days before exam, i.e. Monday October 24, before 17.00h
From competition
to acquisition!
Transition in topics
Up to this point, we have focused on competition Analysis of the competitive environment E.g. competitive rivalry as one of Porters 5 forces Competitive advantage Create value in a way that competitors cannot Etc.etc. This week we focus on Collaborative Strategies and Takeovers Cooperation in stead of competition But still with the objective to create competitive advantage So many of previous weeks theories and models will come back today! Outline Part 1. Part 2.
Economic logic
Vehicles
Economic logic
Differentiators
Vehicles
How will returns be obtained? Lowest costs through scale advantages? Lowest costs through scope and replication advantages Premium prices due to unmatchable service? Premium prices due to proprietary product features?
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WHY?
Joint investment Sharing business risk E.g. between supplier and buyer (Value Chain) Knowledge sharing Learning from partners Effective management Make, buy or ally decision Complementary resources Create shared advantage
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HOW?
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Alliance types
Equity alliances Ownership interest (in alliance/partner) Often unequal ownership Joint venture Specific form of equity alliance Equity investments in third legal entity Non-equity alliances No equity interest or creation of new organization Contract-based Franchising, co-branding, licensing, sole-sourcing
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Member benefits Higher seat occupation through seats supplied by alliance members Less competition by avoiding competitors / alliance members routes Selling seats for flights that airline does not perform itself Increased reputation of the airline brand Higher efficiency through sharing check-in services and lounges Joint promotions How VRINE-worthy is the STAR alliance?
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VRINE?
Which criterion does this refer to?
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WHO?
Consider activities in the value chain (week 2) Vertical alliances With different stage in value chain Vertical Often supplier or customer Reduce costs, improve customer value
Horizontal alliance With same stage in value chain Often (potential) competitor Horizontal Gain access to segments, reduce risk, improve efficiency, foster learning etc. Concept of co-opetition
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Arenas
Staging
Economic logic
Vehicles
Differentiators
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Merger Consolidation or combination of 2 or more firms Acquisition: One firm acquires another through stock purchase or exchange Vs. Alliances With alliances, the original organisations stay intact!
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WHY?
Motives for M&A Managerial motivations Managerialism, hubris Synergy! Value of firms combined > value of individual firms Remember reasons for diversification last week? Threat reduction Market power & access Cost savings Sharing & leveraging capabilities
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1. More expensive (premium) 2. Inherit unnecessary adjunct businesses 1. Speed 2. Critical mass & scale 3. Access to complementary assets & resources 4. Reduced competition 3. All or nothing decision 4. Potential cultural conflicts
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HOW?
Types of M&As Vertical
Horizontal
Complementary relationships
Other classifications E.g. product & market expansion Gain access to markets E.g. geographic roll-up Change industry structure!
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Acquisition process
Understand conditions for synergy Control timing (internal and external) Establish a walk-away price
Results
Acquisition integration
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Market Size
Time Embryonic Niche market selected products for selected markets Participants emphasize problem solving product as solution Technological uncertainty Growing Market expands beyond niche More competitors enter Mature Proliferation of products and markets served Market volatility and beginnings of industry consolidation Aggressive customers In Decline Product/market contraction Further consolidation and industry regeneration
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Introduction
Growth
Maturity
M&As tend to be for acquiring products that are proven and gaining acceptance > Industry convergence
M&As primarily for dealing with overcapacity in the industry > Consolidation
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Recap
Alliances, M&As as PART of strategy Vehicles But with impact on other components And (thus) a potential driver for competitive advantage! Linked to many tools/concepts discussed earlier E.g. strategy diamond, RBV, VRINE, five forces model, value chain, life cycle etc. Next week Final topic/part in the book Overview of core models/theories/concepts and their relationships!
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