Chapter 12 Powerpoint Presentation

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Chapter 12 Powerpoint Presentation

  1. 1. Chapter 12 Learning Objectives <ul><li>After studying this chapter, you should be able to: </li></ul><ul><li>articulate how institutions and resources affect alliances and acquisitions </li></ul><ul><li>gain insights into the formation, evolution, and performance of alliances </li></ul><ul><li>understand the motives and performance of acquisitions </li></ul><ul><li>participate in two leading debates on alliances and acquisitions </li></ul><ul><li>draw implications for action </li></ul>
  2. 3. Institutions, Alliances, and Acquisitions <ul><li>formal institutions – set of formal legal and regulatory frameworks impacting: </li></ul><ul><li>(1) antitrust concerns </li></ul><ul><li>(2) entry mode requirements </li></ul><ul><li>informal institutions - imitation drives many alliance/acquisition decisions yet some firms rush into alliances and acquisitions without adequate due diligence and then get burned </li></ul>
  3. 5. RESOURCES AND ALLIANCES VRIO Framework <ul><li>Value alliances - must create value by reducing costs, risks, and uncertainties </li></ul><ul><li>real option - investment in real operations as opposed to financial capital </li></ul><ul><li>learning race - competitive situation in which partners aim to outrun each other by learning the “tricks” from the other side as fast as possible </li></ul><ul><li>acquisition premium - difference between the acquisition price and the market value of target firms </li></ul>
  4. 6. RESOURCES AND ALLIANCES VRIO Framework <ul><li>Rarity - ability to successfully manage interfirm relationships—often called relational (or collaborative) capabilities— may be rare </li></ul><ul><li>relational (or collaborative ) capabilities </li></ul><ul><li>relationships that occur within an organization firms must have unique skills to execute strategy </li></ul>
  5. 7. RESOURCES AND ALLIANCES VRIO framework <ul><li>Imitability - one firm’s resources and capabilities may be imitated by partners </li></ul><ul><li>- trust and understanding -firms without good “chemistry” may have a hard time imitating such activities </li></ul><ul><li> - firms that excel in integration possess hard-to-imitate capabilities </li></ul>
  6. 8. RESOURCES AND ALLIANCES VRIO framework <ul><li>Organization - alliance relationships are organized in a way that makes it difficult for others to replicate </li></ul><ul><li>- whether acquisitions add value boils down to how merged firms are organized to take advantage of the benefits while minimizing costs </li></ul>
  7. 11. PERFORMANCE OF ALLIANCES <ul><li>Factors that may influence alliance performance: </li></ul><ul><li>(1) equity </li></ul><ul><li>(2) learning and experience </li></ul><ul><li>(3) nationality </li></ul><ul><li>(4) relational capabilities </li></ul><ul><li>None of these is able to assert an unambiguous, direct impact on performance </li></ul>

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