Resource based view (RBV) focuses on the internal factors that contribute to a firm’s growth and performance. It highlights the importance of firm’s resources and capabilities. Both of them will together form a competency that can create a competitive advantage. Resources can also be divided into tangible resources and intangible resources. Capabilities of the firm in utilizing the resources have a big impact on how a firm will be able to stand out among other competitors. Competitive advantage arises when a firm has a lower cost structure, products differentiation and niche markets. RBV also concerns in value creation in order to compete with others. On the other hand, in order to survive in this competitive world, a firm needs to fully prepare itself to achieve sustainable competitive advantage (SCA), which means having a superior performance in a longer term compared to other rivals. According to Jay Barney (1991), resources need Continue reading
Corporate Strategies
Harmon’s Process-Strategy Matrix
Process-Strategy matrix by Paul Harmon will be useful in deciding how the process should be managed, it gives two variable one Is importance and other is complexity and dynamics. There may be other variables to consider in practice such as culture, cost and savings and quality. It should be used flexibly by considering all the variable affecting the current and future prospects of the organization. Advantages and disadvantages should be considered before reaching the final decision. How To Assess The strategic Importance? Strategic importance can be assessed by asking what would happen if a process is abandoned. If it impacts the business objective (Quality, cost control and reputation etc.) materially (more than insignificant) than it can be assessed as high strategic importance like threatening to the survival of business. Strategic importance can also be assessed by identifying key stakeholders. If the process affecting the key stakeholders like customers, Tax authorities Continue reading
Importance of Stakeholder Engagement in Business
Stakeholders are all those people or businesses that are essential for a company, because they contribute to keep it afloat or in operation. They can be affected if their expectations or needs are not met. There are three interested parties: suppliers, customers and investors. Each of them is an indispensable part. Without its essential contribution, the business could not be sustained or built. Suppliers provide the input, customers are those who consume our products and refer us to new prospects and investors or owners, contribute their capital for the sustainable development of the business. Stakeholders can benefit or be harmed by any action or decision taken. That is why every business or company must identify them and know their needs and expectations to fulfill them. Since above all, they are the ones that contribute in a special way to our business. Stakeholders have increasingly become an essential component of business Continue reading
Acquisition Strategy Development
Not all firms that make acquisitions have acquisition strategies, and not all firms that have acquisition strategies stick with them. In this section, we consider a number of different motives for acquisitions and suggest that a coherent acquisition strategy has to be based on one or another of these motives. Firms that are undervalued by financial markets can be targeted for acquisition by those who recognize this mispricing. The acquirer can then gain the difference between the value and the purchase price as surplus. For this strategy to work, however, three basic components need to come together. A capacity to find firms that trade at less than their true value: This capacity would require either access to better information than is available to other investors in the market, or better analytical tools than those used by other market participants. Access to the funds that will be needed to complete the Continue reading
Motives for Mergers and Acquisitions
Mergers and acquisitions are strategic decisions leading to the maximization of a company’s growth by enhancing its production and marketing operations. They have become popular in the recent times because of the enhanced competition, breaking of trade barriers, free flow of capital across countries and globalization of business as a number of economies are being deregulated and integrated with other economies. A number of motives are attributed for the occurrence of mergers and acquisitions. In this section, we consider a number of different motives for mergers and acquisitions. 1. Synergies through Consolidation Synergy implies a situation where the combined firm is more valuable than the sum of the individual combining firms. It is defined as ‘two plus two equal to five’ (2+2=5) phenomenon. Synergy refers to benefits other than those related to economies of scale. Operating economies are one form of synergy benefits. But apart from operating economies, synergy may Continue reading
Merger Through Board for Industrial and Financial Reconstruction (BIFR)
The companies (Amendment) Act, 2001 has repealed the Sick Industrial Companies Act (SICA) 1985, in order to bring sick industrial companies within the purview of companies Act 1956 from the jurisdiction of SICA, 1985. The Act has introduced new provisions for the constitution of a tribunal known as the National Company Law Tribunal with regional benches which are empowered with the powers earlier vested with the Board for Industrial and Financial reconstruction (BIFR). (Note: Board for Industrial and Financial Reconstruction (BIFR) was established by central government under SICA, 1985 for detection of sick and potentially sick industrial units and speedy determination pf their remedial measures and to exercise the jurisdiction and powers and discharge the functioning and duties imposed on the Board by or under the Act.) Before the evolution of SICA, the power to sanction the scheme of amalgamation was vested only with the high court. However, sec.18 of Continue reading