Management and Organizational Studies 4410A/B Study Guide - Mci Inc., Lululemon Athletica, Tender Offer
31 Jan 2014
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Chapter 6 - corporate-level strategy: creating value through diversification. 2006 declines revenues and net income, thousands of employees laid off. Michael sabia came in : business realignments, job cuts, divestitures, downsizings. 50% of mergers and acquisitions are divested with loss. Bce, aol-time warner, daimler-benz, and hp/compaq fail to effectively integrate their acquisitions. Ibm, microsoft, rogers communications, onex, the keg, exxon, mobil and couche-tard were all successful in diversification by acquisitions, strategic alliances and joint ventures, and internal development. Diversification initiatives must be justified by the creation of value for shareholders. Companies diversify because of synergy: diversify into related businesses (sharing intangible resources) sales force, brand names, technologies. Sharing tangible resources production facilities, distribution channels: diversify into unrelated businesses (value created by corporate office) leveraging information systems, or human resource practices. Related diversification: economies of scope and revenue enhancement. Economies of scope are cost savings from leveraging core competencies, sharing resources or sharing related activities among businesses within the corporation.
