Page 1 Managing Multi-Unit Organizations Strategic Factors II.
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Transcript of Page 1 Managing Multi-Unit Organizations Strategic Factors II.
Page 1
Managing Multi-Unit OrganizationsStrategic Factors II
Corporate Growth
• A major acquisition is the fastest way to compensate for a company's failure to grow organically (via internal means)
• You don't get a gazelle by breeding dinosaurs.
– “When Dinosaurs Mate,” G. Hamel, WSJ
Best Path to Growth?
Ford– Jaguar– Mazda
General Motors– Saab
Hewlett-Packard– Compaq
Unilever– Knorr– Ben & Jerry
Daimler-Benz– Chrysler
Corporate strategy solutions
Starbuck’s
Southwest Airlines
Toyota
Dell
Wal-Mart
Nike
Business strategy
solutions
Entering New Businesses
•WHY?– Does business fit?
o Financiallyo Strategicallyo Culturally
•HOW?– Acquisition or merger– Internal start-up– Joint ventures– Alliance
Justifications for M&A
•Attractiveness test– Industry factors– Core competencies– Strategic position
•Cost of entry test– Buy outstanding shares– Cash– Contributions to merger or JV
•Better off test– Synergies, econ. of scale/scope– Consolidation of resources, activities – Leverage strategic assets for competitive advantage?
Blue CircleUnrelated Diversified Firm
HQ
Cement
CementProducts
Bricks GasStoves
LawnMowers
Unrelated to Other Units or
Core Competence
OK
BoddingtonsRelated Horizontal Diversified Firm
HQ
Pubs
Restaurants
Hotels HealthClubs
NursingHomes
Related to Other Units via
Core Competence
Adidas-Reebok Merger
+
vs.
+
Employees 26,100 24,600
U.S. Market Share 21.1% 36.3%
Global Market Share 25.0% 33.2%
Net Income $517.9 mil $1.2 bil
Hot ProductSmartShoe
+ Nelly’s shoe lineL. Armstrong apparel
+ iPod Sport Kit
Adidas-Reebok Merger
Gillette
Personal Grooming
SmallAppliances
Oral Care
PortablePower
PROCTER & GAMBLE
Soaps Food Beverages PaperProducts
Gillette
RazorsCore Product
Mr. CoffeeMachines
DuracellBatteries
Oral-BToothbrush
Unilever Matrix …it’s complicated
Lever Bros.London
Margarine UnieRotterdam
Food Household Beauty Health/Hygiene
R&D
MarketingFinance
EU
US
Pacific
Asia
The “Un-Matrix”
•Oracle - Vienna
Page 13
Problems
Specialists
Generalists Guenther Goeschl (CFO)
and his “troll”
Integrating Newly-Merged Multi-Unit Organizations
• Processes and costs associated with…– Integration hubris, rose-colored lenses– Rationalizing value chain activities
•Duplicate•Eliminate•Integrate
– Meshing people, systems, and cultures– Conflicting stakeholder and politics