Week 16

In your own words and using referenced quotes describe the difference between organic growth, merger & acquisition and strategic alliance.

  

Organic development or growth refers to any company who has developed its own it house strategy by its own capability. They do not take any help of other firm for its development . The main reason for firms opting for organic development is

•       Knowledge can be enhanced
•      No need to search for suitable partner to merge
•       It enjoys independence and no need to make compromise

Merger is the coming of two different firm and joining as one. Both of the firm that mergers are more or less equal partners .  In the case of acquisition it is the taking over of total ownership of the other firm by more dominant company. Hence in acquisition there is no such thing as equal partner, but a total control by the company who just both a smaller company. The main reason for merger and acquisition are

•       Extension of market in terms of geography , products etc
•     Increasing efficiency
•        Enchaining its own capabilities 

Strategic alliance is when two or more firms comes together to form a positive partnership relationship to pursue its strategies. Strategic alliance are formed when different firms share its resources and activities to meet their common goal  The main reason firms that firms opt for strategic alliance are

•     Scale of economics , by reducing costs
•    Accessing alliances enabling them a wider distribution channel and brand name
•    Complementary alliances, hence all the firms can use their strength to helps its partner to overcome their weakness

Give an example of a company that has grown through organic growth , merger & acquisition and strategic alliance .

fig :- Kindle Ebook reader

Organic growth :- Kindle , Amazon used its vast resources to develop kindle to for e-book reader instead of asking Samsung or other company for development . Instead they used their in house resources to develop kindle tablet

Fig:- Merger of 2big giants

Merger & Acquisition:-  Compaq and HP merger together to compete against IBM in the laptop market, this merger was successful and it forced IBM to shift away from laptop market.

SPSS itself was a very good product but due to its limited resources it was not able to promote itself, IBM acquired SPSS then used IBM resources and its brand image to sell SPSS product

Fig:- Alliance of Nokia and Microsoft

 Strategic Alliance :-   Nokia and Microsoft has come together to compete in the smartphone market. Nokia has a vast experience in making mobile hardware and Microsoft has great experience in developing software. Both are using their best point to full advantage

Briefly discuss the merger between Britvic and AG Barr. What advice would you give to the new board?

My advice to the board is that since Barr has already good sales and good customer base, the merged company should use the brand name of Barr in its drink as it already a proven brand.  If they try to use a new brand name the old customers may be confused and not buy their products, and the new customers will not be ready to by a new brand drink from the market.

The newly merged can take advantage of its Britvic partnership with pespi for better distribution.  The newly formed company should also be able to utilized Britvic’s strength of lower  cost on margin bottling in order to have a better scales of economies.

References 
Johnson, Whittington and Scholes (2011) Exploring Strategy, 9 th Edition, Pearson Education, Chapter 6

Johnson, Whittington and Scholes (2011) Exploring Strategy, 9 th Edition, Pearson Education, Chapter 10

Phillippe Haspeslagh, 1999, FT Mastering Strategy

Week 14

In your own words and using referenced quotes describe the difference between ‘business unit level’ strategy and ‘corporate level ‘strategy.

‘Corporate level’ strategy usually is concerned with the selection of businesses, by the top level tier managers and directors in which firm should compete and with the development and coordination of that portfolio of businesses. Its decision usually involves the direction of firm as a whole

‘ Business level’ is usually concerned for a particular product line or division. They can be planned independently, without the involvement of other business units of the firm. The strategies are developed by front line managers. They concentrate on developing and sustaining a competitive advantage for the goods and services of the firm

Discuss the corporate parenting style of Virgin group.

The Virgin Group is a group of independently run British companies with the Virgin brand under the leadership Sir Richard Branson. It was founded in 1970 and its core business area lies in entertainment , travel , lifestyle among others .

Virgin Group is different from many traditional firms , Virgin unlike many traditional firms has decentralized its organizational structure.  The power of decision making if given to the managers, this enables the managers to learn about business tactics and reduce the decision workload of chairman. Virgin Group also allows small firm to use its brand name as it gets international recognition. This would help both company to mutually benefit , small firm can promote itself very easily while Virgin will able to enjoy both the large scale and small scale company’s profits and worldwide recognition. 

The firm also takes full advantage of its chairman and founder celebrity status Sir Richard Branson. His entrepreneurial flair and charismatic style is a valuable assets which no firm can ever replicate. His personal qualities has enable Virgin to create and establish partnership with other organization. This will enable Virgin to gain more skills , knowledge and operational expertise from a whole range of different industries.

Fig:-Sir Richard Branson the face of Virgin Group

The parenting style of Virgin group is giving more freedom to different business unit.  Synergies are created between individual business unit office and corporate head office by regular interaction.  The freedom given to individual business encourages entrepreneurial skills in smaller business unit to pursue their goals effectively.  This freedom encourages better relationship and a good synergy between the parent  company and its different business unit 

Refernces 

Dess, G., (2007) “Strategic Management: Creating Competitive Advantages,” McGraw-Hill Australia

Dick, deVries and d’Avaucourt (2000) “The house that Branson built: Virgin’s entry into the new millennium,” INSEAD, Fontainebleau, France