In perspective of merger and acquisition there are different types of mergers that host a difference between each one it. Each merger derived with specific reasons depending on the fitting characteristics in cross boarder operation. Each type of merger will be discussed in detail to know the differences and their characteristics. 1. Horizontal Merger It is a merger of two or more companies that compete in the same industry. It is a merger with a direct competitor and hence expands as the firm’s operations in the same industry. Horizontal mergers are designed to produce substantial economies of scale and result in decrease in the number of competitors in the industry. The merger of Tata Oil Mills Ltd. with the Hindustan lever Ltd. was a horizontal merger. In case of horizontal merger, the top management of the company being meted is generally, replaced, by the management of the transferee company. One Continue reading
Business Strategies
Merger Approaches
Irrespective of the type of merger, there are at least two firms involved. One, the buying company that acquires the other company, and survives after merger. This firm is known as an acquiring firm or transferee company. The other is the company, which is merged and loses its identity in the process. This is called the acquired company, or transferor company or the target firm. There are various modes in which the acquiring firm can attempt a merger move and therefore, merger can also be classified on the basis of initiative style or the procedure adopted by the acquiring firm. The most important merger approaches are as follows: 1. Negotiated Merger It is also called friendly merger. In this case, the management/owners of both the firms sit together and negotiate for merger. The acquiring firm negotiates directly with the management of the target firm. So, the willingness of the management Continue reading
The Role of HRM in Developing Organizational Strategy
Human Resource Management (HRM) business strategy emphasizes the importance of individual relationships against collective relations between managers or managers and workers. Human Resource Management (HRM) refers to an activity that depends less on hierarchies, orders and mandates, and stresses the importance of active participation of all employees of the company. The aim is to foster a cooperative relationship between management and workers to prevent frequent clashes resulting from a traditional hierarchical relationship. When HRM is working properly, employees are committed to long-term goals of the organization, allowing it to adapt better to changes in markets. Human Resource Management (HRM) involves taking a range of measures which include: the commitment of employees with corporate objectives, the payment of wages according to productivity of each employee, fair treatment to them, continuing vocational training and link procurement policy to other aspects of organizing work and production, marketing and sales. Some companies carry out Continue reading
Grand Strategy Matrix
The Grand Strategy Matrix has become a popular tool for formulating feasible strategies, along with the SWOT Analysis, SPACE Matrix, BCG Matrix, and IE Matrix. Grand strategy matrix is the instrument for creating alternative and different strategies for the organization. All companies and divisions can be positioned in one of the Grand Strategy Matrix’s four strategy quadrants. The Grand Strategy Matrix is based on two dimensions: competitive position and market growth. Data needed for positioning SBUs in the matrix is derived from the portfolio analysis. This matrix offers feasible strategies for a company to consider which are listed in sequential order of attractiveness in each quadrant of the matrix. Quadrant I (Strong Competitive Position and Rapid Market Growth) – Firms located in Quadrant I of the Grand Strategy Matrix are in an excellent strategic position. The first quadrant refers to the firms or divisions with strong competitive base and operating Continue reading
Strategy Formulation and Stakeholder Influence
Strategy is defined as the direction and scope of an organization over the long term, which achieves advantage for the organization through its configuration of resources within a changing environment and to fulfil stakeholder expectations. A strategic plan is therefore large scale future oriented activities that allow interaction with the competitive environment in order to achieve company objectives. It follows that strategic management is the process whereby a strategy is formulated, evaluated, and continuously improved. Strategic planning flows from the definition of an organization’s vision, mission and objectives and subsequent environmental scanning, to understand the organization’s strategic position with respect to the macro external environment, its industry, competitors, internal resources, competencies and expectations and influence of stakeholders. This initial process establishes a basis for strategic choice by means of a match of identified strengths to opportunities. The translation of strategic choice into action is then implemented across all levels of Continue reading
Types of Defensive Strategies
The defensive strategy is mainly to discourage the challenger firms to attack and is further divided into the pre-entry (protecting a firm by making it difficult for another firm to enter in the same industry – increase the entry barriers or it takes place before the market leader firm is attacked by the challenger firm) and the other one is the post-entry (making the life difficult for the competitor firm once it has entered the market). Pre-Entry Defensive Strategies Fortify and Defend: This mainly works by convincing the challenger firm that it is absolutely unprofitable to enter the market or it decreases the profit expectations of the about-to-enter firm. This is done by creating entry barriers like location, capital requirements, access to raw materials and distribution channels etc. The related firms as an example that can use this strategy would be — aerospace and automobiles. Covering all Bases: This mainly Continue reading