Please enable JavaScript.

Coggle requires JavaScript to display documents.

SMMCG2[CS-2]LN9&LN12 - Coggle Diagram

- - - - separation of a business unit from the company
      - breaks up a larger corporation
  - - - similar to spin off
        
        shares aren't distributed to the parents shareholders :green_cross:
        
        exchange their shares for that of the unit
    - - Partial sale of a business unit′s shares(ownership) to investors
    - - unit is separated from the parent company
        
        shares are distributed to the parents shareholders :check:
    - - Sale of a business unit to another firm (usually for a cash compensation)
    - - Lack of strategic fit (low synergies)
      - Refocus on core business
      - Reduce risk or liability
      - Free up and redeploy resources/capabilities
      - Low profitability of unit
      - Free up entrepreneurial/innovative potential units
      - Raise cash for parent company
      - Example of Xerox
        
        35 projects that were spun out of Xerox PARC
        
        only 11 spin-offs succeeded
        
        Reasons of success
        
        Freeing units from parent company
        
        Freedom to pursue new business models (be entrepreneurial and innovative)
        
        How to manage
        
        Identify the right divestiture mode
        
        Ensure units have right resources
        
        Be clear about the goals
        
        Pay attention to post-divestiture governance mechanisms
        
        Be open to divesting units
- - - - market size
      - market growth
      - competitive positioning
      - different growth opportunities
    - - What are the size of those opportunities versus
      - Are these just hypothetical or theoretical growth opportunities?
    - - organize project and structure
        
        thinking about objective
      - Prove
        
        Gather data and information
        
        confirm statement
        
        Concern
        
        opportunities for improvement
        
        pressure test
        
        open mind
        
        independent opinions
        
        maintain prudent attitude
  - - - Where to use?
        
        Creating a next-generation value proposition, next generation offering
        
        The ideas based on what customers care about.
      - Make the customer happy
        
        Maslow's hierarchy
      - How to creating the lasting change ?
        
        People change
        
        One by one get every person that company to want to change
        
        Creating that vision of we call it the beach or that point of arrival
        
        Really communicating that in a way that's accessible to all types of learners
      - Post-merger integration
        
        Puttiing 80% of the energy on that 20% is going to do it.
        
        Let people in charge of executing their acquisition ideas
        
        Merge often
        
        Practice makes perfect
        
        The ways you can create a clearly thesis
        
        Quantified
        
        Enumerated
        
        Written down
- - - - Organic growth v.s. transaction
        
        transaction provides another approach to changing scope
        
        always involves another firm
        
        transaction is not the only way
        
        can grow new businesses form within or exit businesses
      - change or manage the scope of the firm
        
        divestiture
        
        alliances and contracts
        
        merger and acquisitions
    - - coordinating synergies across businesses
      - scope of the firm
      - corporate transaction
- - - - For access to technology and loyalties
    - - One or both firms take an equity stake in the other
    - - Long term
        
        For service or product from another company
    - - Partners co-own and co-invest a new separate legal entity
    - - Reducing asset commitment and increasing flexibility
      - Learn from partner and upgrade resources
      - Access capabilities or markets
      - Share costs and risks
      - Building cooperation around a common standard
      - Problems
        
        Managing joint investment
        
        May not have the same view of this action
        
        Adverse selection , moral hazard and hold up
        
        Competitors gain access to capability, technology, market
  - - - Contractual term
      - Credible commitment
        
        Using hostages
        
        To make sure partners did what they promise
    - - Learn form your partner
      - Adapt structure and management over time
      - Build and reinforce trust
    - - Help all participants advance their strategic goals
- - - - Similar size
        
        Combining two company
  - - - purchase or take over
      - hostile takeover
  - - - value goes to target shareholders
    - - Short run
        
        on average
        
        neutral
      - Long run
        
        excessive premium
        
        significant decline
  - - - increase diversification for own company
      - reduce overall risk for own company
      - managerial hubris
        
        enlarge corporate empire
  - - - investors impute the value target and reflected in the target market value
        
        acquire are only expected to make market rates of return from M&A
    - - acquirer would typically have more optimistic valuation
        
        acquirer has to be the highest bidder
        
        potential acquirers get the valuation, winning bidder
        would overvalue the target
- - - - Long-term interaction
- - - - Increased speed to marke
      - Lower risk compared to developing new products
      - Cost of new product development
      - Increased diversification
      - Overcome entry barriers
      - Avoid excessive competition
      - Increased market power
    - - Large debt
      - Inability to achieve synergy
      - Inadequate evaluation of target
      - Too much diversification
      - Integration difficulties
  - - - Not dissipated by cost of acquisition
      - Credible, post-merger plan
      - Potential for valuable synergies
    - - Objective evaluation and bidding
      - Maintain financial slack
      - Complementary resources and cabilities
      - Well-managed implementation plan
- - - - Helping the acquirer develop new capabilities
    - - Applying own capabilities
  - - - Identify targets that be understand
      - Identify how much target firm's value can be improved
  - - - Poorly prepared
      - Take on too much debt on risk
      - Poor evaluation
      - Integration difficulties
    - - Ensuring the synergies are there
      - Faithfully executing the integration plans
      - Evaluating the product
      - Planning for post-merger integration