Top Banner

of 45

Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

Apr 13, 2018

Download

Documents

butwalservice
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    1/45

    Strategic analysis and

    Choice in a MultiBusiness Company

    12/2/15 1Strategic Management II by Mr.Kabi Raj Khanal for BBA EightSemester

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    2/45

    The Corporate Parent Role

    Realiing synergies from share!ca"abilities an! core com"etenciesis a #ey $ay %al&e is a!!e! inm&ltib&siness com"anies.

    'he cor"orate managers has toanalye those synergies an! (n! o&t$ays to ca"t&re.

    )or"orate "arent can a!! %al&e toits b&sinesses by the follo$ing t$o$ays.

    1. 'he "arenting frame$or#12/2/15 Strategic Management II by Mr.Kabi Raj Khanal for BBA EightSemester

    2

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    3/45

    The Parenting Framework

    'his a""roach sees m&ltib&siness com"anies ascreating %al&e by in*&encing or "arenting theb&sinesses they o$n.

    'he best "arent com"anies create more %al&ethan any other b&sinesses !o if they o$ne! the

    same b&sinesses.

    'o a!! %al&e a "arent m&st im"ro%e itsb&sinesses.

    'his a""roach call the "otential forim"ro%ement $ithin the b&siness +a "arentingo""ort&nities,.

    -ere are some ten "laces to loo# for "arentingo""ort&nities.

    12/2/15 Strategic Management II by Mr.Kabi Raj Khanal for BBA EightSemester

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    4/45

    1.Size and age

    .l!0 large0 s&ccessf&l b&sinesses fre&ently

    "ro!&ce $ellestablishe! b&rea&cracies an!o%erhea! str&ct&res that are har! to ta#ea"art from insi!e the b&siness.

    . It co&l! a!! %al&e beca&se of an e3ternal

    catalyst the "arent..Some SMEs may lac# some #ey f&nctional

    s#ills0 managerial ca"abilities or lac# ofca"ital to !e"loy in reso&rces so as to

    accelerate! gro$th "otential..4arenting o""ort&nities may a!! %al&e in

    these circ&mstances.

    12/2/15 Strategic Management II by Mr.Kabi Raj Khanal for BBA EightSemester

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    5/45

    Management

    Some of the iss&es in the b&sinesses are

    the &se ine6cient man"o$er0 high labort&rno%er0 an! &se of lo$ le%el of s#ills$or#ers in the job.

    Some managers ha%e less objecti%es

    "ers"ecti%es.'he "arenting o""ort&nities ens&re an!

    a!!ress these iss&es objecti%ely an! assist

    in any resol&tion in the coming "erio!.'hese "arenting o""ort&nities co&l! !irect

    an! "ro%i!e ne$ sha"e for theorganiation.

    12/2/15 Strategic Management II by Mr.Kabi Raj Khanal for BBA EightSemester

    5

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    6/45

    Business e!nition

    B&siness &nit managers may ha%e a

    erroneo&s %ision of $hat their b&sinesssho&l! be.

    Some managers may em"loy %erticalintegration not to others.

    -o$e%er accelerate! tren!s to$ar!o&tso&rcing an! strategic alliances arechanging the !e(nitions of manyb&sinesses.

    'hese creates "arenting o""ort&nity to hel"re!e(ne a b&siness &nit in a $ay thatcreates greater %al&e.

    12/2/15 Strategic Management II by Mr.Kabi Raj Khanal for BBA EightSemester

    7

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    7/45

    Predicta"le #rrors

    Managers are res"onsible for "re%io&s strategic!ecisions are %este! in the s&ccess of those!ecisions $hich may "re%ent o"enness to ne$alternati%es.

    l!er or mat&re b&sinesses often acc&m&late a%ariety of "ro!&cts an! mar#ets0 $hich becomes

    e3cessi%e !i%ersi(cation $ithin the "artic&larb&siness.

    )yclical mar#ets can lea! to &n!erin%estment !&ring!o$nt&rns an! o%erin%estment !&ring &"s$ing.

    8engthy life cycles can lea! to o%erreliance on ol!"ro!&cts.

    All of these are "re!ictable errors a "arent canmonitor an! attem"ts to create %al&e.

    12/2/15 Strategic Management II by Mr.Kabi Raj Khanal for BBA EightSemester

    9

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    8/45

    $inkages

    B&siness &nits may be able toim"ro%e mar#et "osition ore6ciency by lin#ing $ith otherb&sinesses.

    8in#ages among b&siness &nits$ithin or o&tsi!e the "arentcom"any may be com"le3 or !i6c&lt

    to establish $itho&t "arent com"anyhel".

    An o""ort&nity to a!! %al&e may

    e3ist.12/2/15 Strategic Management II by Mr.Kabi Raj Khanal for BBA EightSemester :

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    9/45

    Common Capa"ilities

    ;&n!amental to s&ccessf&l

    !i%ersi(cation is the notion ofsharing ca"abilities an!com"etencies nee!e! by m&lti"le

    b&siness &nits. 4arenting o""ort&nities may arise

    time to time thro&gh reg&lar scr&tiny

    of o""ort&nities to share ca"abilitiesor a!! share! ca"abilities that $o&l!other$ise go &nnotice! by b&siness

    &nit managers closer to !ailyb&siness o erations.12/2/15 Strategic Management II by Mr.Kabi Raj Khanal for BBA Eight

    Semesterensi%e strategies

    Cro$th Inno%ation

    Ma3imie com"anystrengths

    ;e$er ties $ith "ast

    strategy Dolatile in!&stry

    Early "ro!&ct/mar#ete%ol&tion

    12/2/15 2Strategic Management II by Mr.Kabi Raj Khanal for BBA Eight

    Semester

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    25/45

    0nternal Political Considerations

    4o$er/"olitical factors in*&ence strategic choice.

    'he e3istence an! &se of "o$er to f&rther in!i%i!&al

    or gro&" interests is common in organiational life. A major so&rce of "o$er in most organiations is the

    chief e3ec&ti%e o6cer.

    In smaller an! big organiation if the )E is strong

    or !ominant an! he $ill begins to fa%or a "artic&larchoice it is &nanimo&sly selecte!.

    In some large organiations0 s&b&nits an! in!i%i!&als"artic&larly #ey managers ha%e to reason to s&""ortsome alternati%es an! o""ose others.

    'he costs are li#ely to be increase! time s"ent on!ecision ma#ing an! incremental as o""ose! to!rasticF change if there is the "ossibility of formalan! informal negotiation.

    12/2/15 25Strategic Management II by Mr.Kabi Raj Khanal for BBA Eight

    Semester

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    26/45

    Timing Considerations

    Strategic choice $ill be stronglyin*&ence! by the match bet$eenmanagement@s c&rrent time horionan! the lea! time associate! $ith

    !i>erent choices.'ime !imensions in%ol%es the lea!

    time re&ire! for alternati%e choices

    an! the time horion management iscontem"lating.

    Management@s "rimary attention

    may be on the short or long r&n012/2/15 27Strategic Management II by Mr.Kabi Raj Khanal for BBA Eight

    Semester

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    27/45

    Competiti)e Reaction

    'o" management fre&ently

    incor"orates "erce"tions of li#elycom"etitor reactions to !i>erento"tions.

    If management chooses an!aggressi%e strategy that !irectlychallenges a #ey com"etitor0 that

    com"etitor can be e3"ecte! tomo&nt aggressi%e co&nterstrategy.

    'he ca"acity of the com"etitor toreact an! the "robable im"act onthe chosen strate @s s&ccess.

    12/2/15 29Strategic Management II by Mr.Kabi Raj Khanal for BBA Eight

    Semester

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    28/45

    i)ersi!cation A !i%ersi(e! com"any is a collection of

    in!i%i!&al b&sinesses.'he strategy ma#ing tas# $ill be more com"le3

    than in!i%i!&al b&sinesses.

    In !i%ersi(e! com"any strategy ma#ing in%ol%es

    assessing m&lti"le in!&stry en%ironments an!!e%elo"ing a set of b&siness strategies.

    In !i%ersi(e! com"any cor"orate le%ele3ec&ti%es !elegate consi!erable strategy

    ma#ing a&thority to the hea!s of each b&siness&nits.

    'hey "ro%i!e latit&!e to craft a b&sinessstrategy s&ite! to their "artic&lar in!&stry.

    12/2/15 2:Strategic Management II by Mr.Kabi Raj Khanal for BBA Eight

    Semester

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    29/45

    In !i%ersi(cation the cor"orate managers tas# isto (n!ing the follo$ings

    1. 4ic#ing ne$ in!&stries to enter an! !eci!ing on

    the means of entry.'he "artic&lar concern are ne$ in!&stries to get

    into an! $hether to entry by starting a ne$b&siness from the gro&n! &"0 ac&iring a

    com"any alrea!y in the target in!&stry0 orforming a joint %ent&re or strategic alliance $ithanother com"any.

    2. Initiating actions to boost the combine!

    "erformance of the b&sinesses the (rm hasentere!.

    .)or"orate strategists m&st strengthen the longterm com"etiti%e "ositions an! "ro(ts of the

    b&sinesses the (rm has in%este! in.12/2/15 2erent b&sinessesare s&6ciently as to "resent o""ort&nities for

    1. 'ransferring com"etiti%ely %al&able e3"ertise0technological #no$ho$0or other ca"abilities fromone b&siness to another.

    2. )ombining the relate! %al&e chain acti%ities of

    se"arate b&sinesses into a single o"eration toachie%e lo$er costs.

    . E3"loiting common &se of a $ell #no$n an! "otentbran! name

    . )ross b&siness collaboration to create com"etiti%ely%al&able reso&rce strengths an! ca"abilities.

    12/2/15 9

    Strategic Management II by Mr.

    Kabi Raj Khanal for BBA EightSemester

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    38/45

    3nrelated i)ersi!cation

    An &nrelate! !i%ersi(cation strategyfoc&ses on entering an! o"eratingb&sinesses in in!&stries that allo$the com"any as a $hole to gro$ its

    re%en&es an! earnings.'he basic of this strategy is that any

    com"any or b&siness that can be

    ac&ire! on goo! (nancial termsan! that has satisfactory gro$th an!earnings "otential re"resents a goo!

    ac&isition an! a goo! b&siness12/2/15 :Strategic Management II by Mr.

    Kabi Raj Khanal for BBA EightSemester

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    39/45

    'he cor"orate manager has to consi!er follo$ing criteria$hile ta#ing &nrelate! !i%ersi(cation strategy

    1. hether the b&siness can meet cor"orate targets for

    "ro(tability an! ret&rn on in%estment2. hether the b&siness is in an in!&stry $ith attracti%e

    gro$th "otential

    . hether the b&siness is big eno&gh to contrib&tesigni(cantly to the "arent (rm@s bottom line

    . hether the b&siness has b&r!ensome ca"italre&irements

    5. hether the b&siness is "lag&e! $ith chronic &nion!i6c&lties an! labor "roblems

    7. hether there is in!&stry %&lnerability torecession0in*ation0high interest rates0 to&gh go%ernmentreg&lations concerning "ro!&ct safety or the en%ironment

    an! other "otentially negati%e factors.

    12/2/15

    Strategic Management II by Mr.

    Kabi Raj Khanal for BBA EightSemester

    erent b&sinesses an! being$itho&t the a!!e! so&rce of com"etiti%ea!%antage that cross b&siness strategic (t"ro%i!es.

    Relying solely on the e3"ertise of cor"oratee3ec&ti%es to $isely manage a set of&nrelate! b&sinesses is a m&ch $ea#er

    fo&n!ation for enhancing sharehol!er %al&ethan is a strategy of relate! !i%ersi(cation$here cor"orate "erformance can bebooste! by com"etiti%ely %al&able cross

    b&siness strategic (ts.12/2/15Strategic Management II by Mr.

    Kabi Raj Khanal for BBA EightSemester

    1

    u ng are o er

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    42/45

    u ng are o er2alue

    )reating a!!e! %al&e for sharehol!ers %ia

    !i%ersi(cation re&ires b&il!ing a m&ltib&sinesscom"any $here the $hole is greater than the s&m ofits "arts.

    i%ersi(cation m&st !o more for a com"any thansim"ly s"rea! its b&siness ris# across %ario&sin!&stries.

    i%ersi(cation can not be consi!ere! a s&ccess&nless it res&lts in a!!e! sharehol!er %al&e.

    'o raise the %al&e of the sharehol!ers economically

    the follo$ing tests sho&l! ha%e "asse! before!i%ersify.

    1. 'he in!&stry attracti%eness test

    2. 'he cost of energy test

    . 'he better o> test12/2/15Strategic Management II by Mr.

    Kabi Raj Khanal for BBA EightSemester

    2

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    43/45

    The industry attracti)eness test

    'he in!&stry to be entere! m&st be attracti%e eno&gh to

    yiel! goo! RI or Get 4ro(t than in "resent b&sinesses.

    The cost o* entry test'he cost to enter the target in!&stry m&st not be so high

    as to ero!e the "otential for goo! "ro(tability.

    -o$e%er the more attracti%e an in!&stry@s "ros"ects arefor gro$th an! goo! long term "ro(tability0 the more

    e3"ensi%e it can be to get into.

    Entry barriers for start &" com"anies are li#ely to behigh in attracti%e in!&stries $here as lo$ in otherin!&stries.

    If entry barriers are lo$ "ro(t "otentials can be share!among the ne$ entrants.

    B&ying a $ell "ositione! com"any in an a""ealingin!&stry often entails a high ac&isition cost that ma#es

    "assing the cost of entry test less li#ely.

    12/2/15

    Strategic Management II by Mr.

    Kabi Raj Khanal for BBA EightSemester

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    44/45

    The "etter o/ test

    i%ersifying into a ne$ b&siness

    m&st o>er "otential for thecom"any@s e3isting b&sinesses an!the ne$ b&siness to "erform better

    together &n!er a single cor"orate&mbrella than they $o&l! "erformo"erating as in!e"en!ent stan!alone b&sinesses1H1F.

    12/2/15

    Strategic Management II by Mr.

    Kabi Raj Khanal for BBA EightSemester

  • 7/23/2019 Chapter three Strategic Analysis and Choice in Multibusiness Company.pptx

    45/45

    Thank 4ou

    Strategic Management II by Mr.