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External Growth
Strategies
Rely on establishing
relationships with third
parties, such as mergers,
acquisitions, strategic
alliances, joint ventures,
licensing, and
franchising.
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New product
development
International
expansion
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Advantages
Disadvantages
Encourages internal
entrepreneurship.
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Product Strategy
Description
Improving an
Existing Product or
Service
Increasing
Market
Penetration
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Product Strategy
Description
Extending Product
Lines
Geographic
Expansion
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Franchising
An agreement between a franchisor (a company like McDonalds Inc.,
that has an established business method and brand) and a franchisee
(the owner of one or more McDonalds restaurants).
Turnkey Project
A contractor from one country builds a facility in another country, trains
the personnel that will operate the facility, and turns over the keys to
the project when it is completed and ready to operate.
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2. External growth
Mergers and
Acquisitions
Licensing
Strategic Alliances
and Joint Ventures
Franchising
(Chapter 15)
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Disadvantages
Reducing competition.
Operational problems.
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Source: Rothenbuecher, J. and von Hoyningen-Huene, J. (2008) The rise of Emerging Markets in
Mergers and Acquisitions, A.T. Kearney
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Financial due
diligence
Assess all
accounts
Understand
rationale for
inconsistencies
Identify
potential areas
of consolidation
for use in the
valuation mode
Legal due
diligence
Assess legal
issues of the
deal, including:
Evaluate
existing and
future
liabilities
Review
existing
contracts
As is
situation
Understand
business
fundamentals
Confirm validity
of business plan
Highlight
business risks
Evaluate
strategy and
portfolio, among
other things
Operational
due
diligence
Future
potential
Identify hidden
values, such as:
High-level
growth and
restructurin
g
opportunitie
s
Portfolio
synergies
As Is
situation
Future
potential
Understand
current
operations
( including
footprint,
delivery, flows,
cost base,
sourcing, supply
chain, sales,
pricing)
Identify hidden
value, such as:
Evaluate
strategy
processes,
resources and
capabilities
Growth and
pricing
opportunities
Supplier
value
creation
Manufacturin
g network
improvement
Complexity
reduction
Source: Perry, S.J. and Herd, J.T. (2004) Mergers and acquisitions: Reducing M&A risk through
improved due diligence, A.T. Kearney, Vol. 32 No.2
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Source: Rothenbucher, J. and Declerq, S. (2008) Three years after the marriage, AT Kearney
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Source: Perry, S.J. and Herd, J.T. (2004) Mergers and acquisitions: Reducing M&A risk through improved due diligence, A.T. Kearney, Vol. 32
No.2
The Academy of Economic Studies
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Type of Licensing
Description
Technology
Licensing
Merchandise
and Character
Licensing
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A strategic alliance is a
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Type of Alliance
Technological
Alliances
Marketing
Alliances
Description
Feature cooperation in R&D, engineering,
and manufacturing.
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Link Joint
Venture
Description
Partners collaborate at a single point in the
value chain to gain economies of scale in
production or distribution.
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Disadvantages
Loss
of proprietary information.
Economies of scale.
Management complexities.
Learning.
Speed to market.
Neutralizing competitors.
Blocking competitors.
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