Description
Read the attached PPT and answer following questions for below topic:
AUTOMOBILE AUTONOMOUS WINDSHIELD
Plans for going global and approaches using Figure 15.1 and Table 15.6 in PPT
EMGT 5130
New Business
Development
CHAPTER 15 Acquisitions and Global Expansion
1
Important Notes
The information that appears in many of these
slides is based on support materials that
accompany the primary text book for this course:
◼
Technology Ventures from Idea to Enterprises,
Byers, Dorf and Nelson 5th ed.
All other sources are cited whenever necessary.
2
DVD Video
“Getting Acquired by Google”
Brett Crosby, PeerStreet
3
15.1 Acquisitions and the Quest for Synergy
◼
Acquisition
When one company buys another
acquired one gives up its independence
acquiring one assumes all assets and liabilities
▪ Synergy: the increased effectiveness and achievement
produced as a result of the combined action of the united
firms.
Syn = VN – V,
where
VN Value of the newly revitalized firm,
V is the price of the acquired firm
4
15.2 Acquisitions as a Growth Strategy
◼
◼
Acquisition
When one company buys another
acquired one gives up its independence
acquiring one assumes all assets and liabilities
Merger
fusing together of two companies
Maybe 50-50 control between two
Higher degree of cooperation and integration
between two
5
Table 15.1 Five Different Types of Mergers and acquisitions
Type
Overcapacity
Reduction
Geographic
Extension
(Roll-Up)
Product or
Market
Extension
Technology
Acquisition
Industry
Convergence
Objective To reduce
excess
capacity and
increase
efficiencies
To extend a
companies
reach
geographically
and build
economies of
scale and scope
To extend the
product line
or reach a
new market
segment
To quickly
add new
technologies
and
capabilities
To establish a
position
during the
convergence
of an industry
or sector
Example
Bank of
Tyco
Cisco
AOL
America
and
Systems
and
and
Raychem
acquired
Time Warner
Nations Bank —————– 60 companies ———————————-in 1980-2000
Waste
J.M. Smucker —————-Disney
Management
and
–and
and
Jif peanut
Medtronic
ABC-TV
numerous local
butter
acquired
and Radio
firms
7 companies
in 1998-2000
6
Daimler-Benz
and
Chrysler
—————-HewlettPackard and
Compaq
Type
Issues
Overcapacity
Reduction
Geographic
Extension
(Roll-Up)
Product or
Market
Extension
What to
eliminate in
the merged
company and
how to get it
done in a
timely way
How to merge
two firms with
different
cultures
Merging two
cultures and
distribution
channels
Technology
Acquisition
Overvaluatio
n of the
technology
acquisition
and loss of
leaders from
the acquired
The Five Different Types of Mergers and Acquisitions firm
(cont.)
Industry
Convergence
The
convergence
may not
materialize
or be of low
value
7
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15.3 Global Business
Globalization involves the integration of markets, nation-states,
and technologies, enabling people and companies to reach around
the world to offer and sell their products in any country in the
world.
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Table 15.1. Strategies for Globalization
High
Pressures
for Cost
Reductions
Global —
Operations in many
nations provide
worldwide creation
and coordination of
products, sales, and
marketing
Transnational —
A set of coordinated
subsidiaries in many
nations
International —
Products are
created and
transferred from
the home market to
other nations
Multidomestic —
A set of semiindependent
subsidiaries in
Selected
Only
nations.
Local
Medium
or
Regional
Low
Low
Medium
High
Pressures for Local Responsiveness
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12
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Table 15.6. Five Forms of Entry mode into International Markets
Mode
Description
Advantages
Disadvantage
Exporting
Send goods abroad
for sale in another
nation
Ability to sell
elsewhere
Transportation cost
Licensing
Legal permit to use
knowledge or patent
to make product
Low cost entry
Weak control of the
license
Franchising
Rights granted to
business to sell
product using brand,
name and method of
operations
Low cost entry
Lack of control over
quality
Joint Venture
Corporation held
jointly with a local
entity
Access to partner’s
capabilities, shared
costs
Lack of control
Wholly owned
subsidiary
Company
incorporated in
another nation
Ability to act directly
High costs
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15.5 Summary
• A new venture may start as a purchase of an existing company by
a team of entrepreneurs.
•
• Alternatively, entrepreneurs can start their new venture and acquire
other small firms to grow their own company.
•
• Most, if not all, acquisitions are justified on the basis of an
expected synergy, which is the increased effectiveness of the
combined firms.
• Acquisitions can be used for efficiency improvement, geographic
expansion, product or market extension, and technology
acquisition.
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