Factors to Consider in a Cross-border Merger or Acquisition

Cross border mergers and acquisitions are playing an important role in the growth of international production. Not only they dominate FDI flows in developing countries, they have also begun to take hold as a mode of entry into developing countries and economies in transition. Although the basic merger or acquisition is the same worldwide, undertaking a cross-border transaction is more complex than those conducted ‘‘in market’’ because of the multiple sets of laws, customs, cultures, currencies, and other factors that impact the process. How should the Transaction be Financed? The financial structure of the transaction might be impacted by which country the target is in. For example, from a valuation perspective, ‘‘flowback’’ can have a negative impact on the acquirer’s stock price and cause regulatory problems (i.e. stock ‘‘flowing’’ back to the acquirer’s home jurisdiction). Other types of considerations include the change in the nature of the investments held by Continue reading

External Factor Evaluation (EFE) Matrix

An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information. EFE Matrix indicates whether the firm is able to effectively take advantage of existing opportunities along with minimizing the external threats. Similarly, it will help the strategists to formulate new strategies and policies on the basis of existing position of the company. External factors are extracted after deep internal analysis of external environment. Obviously there are some good and some bad for the company in the external environment. That’s the reason external factors are divided into two categories opportunities and threats. Opportunities are the chances exist in the external environment, it depends firm whether the firm is willing to exploit the opportunities or may be they ignore the opportunities due to lack of resources. Threats are always evil for the firm, minimum no of threats in Continue reading

Formalized Strategic Planning in Organizations

Strategic planning is an organization’s process of understanding its strategy and making decisions on where to allocate the companies resources in order to peruse the strategy. Using strategic planning can help organizations with many things like improving organizational performance, build teamwork, expertise and foresee future problems and opportunities. If strategic planning were to be used successfully it could benefit public agencies, departments, and major organizational divisions. The strategy is used to carry out the organization’s comprehensive goals. Nature of Formalized Strategic Planning The nature of strategic planning is to understand how a company will work over a period of years in order to work from where it is to where it wants to be by deciding the companies’ institutional directions, intended results, how the results will be carried out to be accomplished and how success can be measured and evaluated, having a strategic plan means the company will be able to Continue reading

Core Competencies – Competitive Base for Organizational Success

Competence is considered as the most important attribute without which a business cannot enter or survive in an industry. Competences develop from resources and skills, technology and know-how all together makes up competences. For example in the pharma industry in order to survive or operate successfully a very specific understanding of the special equipment’s needed to manufacture medicines and how a medicine works on the human body is important. That is every player in the industry needs to possess each of these competences in order for it to survive long term. Core Competences are the skills and abilities by which resources are deployed through an organisations activities and processes such as to achieve competitive advantage in ways that others cannot imitate or obtain.  Core competence is a distinctive capability that enables an organisation to perform above the average industry performance. In the 1990s this concept gained momentum after the introduction Continue reading

Defensive Strategies Against Hostile Takeovers

With the development of economy and technology, competition among enterprises is becoming increasingly intense. Many companies decide to expand their companies scale and business through mergers and acquisitions to achieve maximum profits. Takeover is a business behavior that one company is purchased by another one. There are several types of takeover, including friendly takeovers, hostile takeovers, reverse takeovers and back-flip takeovers. Even though some mergers and acquisitions can bring about synergy and more substantial profits, some takeovers are not welcome. Therefore, a large numbers of measures are taken by target companies to defend the hostile takeover. Different Types of Defensive Strategies  Against Hostile Takeovers Defensive strategies can be classified into active measures and preventive measures. Active measures consist of greenmail, standstill agreement, white knight, and so on, while preventive measures are made up of poison pills, people pill and other defenses. In particular, greenmail, poison pills, staggered board terms and Continue reading

Corporate Social Responsibility (CSR) – Definition, Perspectives and Approaches

A company must make a competitive return for its shareholders and treat its employees fairly. A company also has wider responsibilities. It should minimize any harm to the environment and work in ways that do not damage the communities in which it operates. This is known as corporate social responsibility. Bowen argued that corporate social responsibility rests on two premises: social contract, which is an implied set of rights and obligations that are inherent to social policy and assumed by business, and moral agent, which suggests that businesses have an obligation to act honorably and to reflect and enforce values that are consistent with those of society. Companies that operate in a socially responsible way strengthen their reputations. In business, reputation is everything. It determines the extent to which customers want to buy from you, partners are willing to work with you and your standing in the community. Corporate Social Continue reading