Module 9 - Mergers, acquisitions and alliances
strategic options for strategy implementation
DIY organic development
Buy merger or aquisition
Ally strategic alliance
internal: build on and develop own capabilties
external, internalize: aquisition (buy) vs merger (combine)
external, collaborative: combine resources and capabilties with other firms
Considerations?
urgency: acquisitions and mergers faster than organic growth
uncertainty: alliance is most flexible (doors open), acquisition allows slight flexibility (can be resold), organic growth least flexible
Type of capability needed: organic growth allows cultural fit
modularity and interlinkage: alliance allows right people to coordinate, natural growth preferable, if wanting to acquire one unit of other company it might be needed to buy entire company if there are strong interlinkages between units
Fortum acquisition of Uniper
Strategic motive: take advantage of transition from fossil to clean, complementaries between businesses
financial motive: low valuation of uniper, belief in strong ROI, stakeholder value
Managerial motive: sale of distribution networks allows ceo to make "big" deal
strategic motives behind mergers and acquisitions
consolidation: market power and efficiency
expansion: diversification and vertical integration- conglomerate diversification, related diversification, forward and backward integration
capability acquisition
strategic alliances
equity alliance: joint ventures, minority investment, consortium
non-equity alliance: development partnership, licensing and franchising, distribution partnership
m&a process: target choice, negotiation, integration
Summary Module 9 - Mergers, acquisitions and alliances: strategic options for strategy implementation include organic development, merger or acquisition, strategic alliance which are split between internal and external operations, but there are many considerations to think about when choosing between them. These include urgency: acquisitions and mergers faster than organic growth, uncertainty: alliance is most flexible (doors open), acquisition allows slight flexibility (can be resold), organic growth least flexible, modularity and interlinkage: alliance allows right people to coordinate, natural growth preferable, if wanting to acquire one unit of other company it might be needed to buy entire company if there are strong interlinkages between units and Type of capability needed: organic growth allows cultural fit. There are two types of strategic alliances which are: equity alliance: joint ventures, minority investment, consortium and non-equity alliance: development partnership, licensing and franchising, distribution partnership.