Strategic Growth MGU Graduate School of Business Gerald J Rohan December 16, 2011
Model for growth
Related Diversification
Reasons for M&A • Geographical growth • Expand into a growing sector • Enter a new market • Acquire brand/additional services • Cost Synergies • Acquire intellectual property or new technology • Investment opportunity • Transformation strategy • Diversify • Other
M&A Success
Successful Mergers 1. Disney-Pixar 2. Sirius/XM radio merger 3. Exxon-Mobil
The other side
The final result
Failed Mergers 1. 2. 3. 4. 5. 6. 7. New York Central and Pennsylvania Railroad Daimler Benz/Chrysler ($37 B) Mattel/The Learning Company ($3. 5 B) Sears / Kmart Sprint/Nextel AOL/Time Warner Quaker/Snapple
Synergy – The Myth “When someone mentions SYNERGY, I hide my wallet” Warren Buffet
Items that were more difficult to control • Aligning accounting policies/converting to IFRS • Meeting internal reporting deadlines • Close books in normal timeframe for first two months • Understanding current performance • Obtaining accurate figures from systems • Establishing opening balance sheet • Working with a new finance team • Getting control of bank accounts
HR Items to improve success • • Introduce measures to retain key talent Revise incentive and bonus structures Revise salaries and benefits Relocate staff Reduce workforce Manage employee relationships Revise job gradings Revise pensions arrangements
Strategy guidelines & directional policy matrix e
International strategy framework
Market entry modes: advantages and disadvantages
Advantages/Disadvantages
Summary • • • Strategic Growth is necessary Strategic Growth is challenging Strategic Growth is complex Strategic Growth often fails Strategic Growth succeeds when: • All members of management are clear and committed • There are real benefits and no so-called synergies • All assets of the other company are properly evaluated Physical, Financial, Intellectual, Human
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