Mergers and strategic management

1. Strategic Perspectives and
Approaches of M&A
Dr Raju Indukoori

2. Corporate Strategy and M&As
1. Develop Corporate strategy
2. Design or derive Corporate Strategic goals
3. Viability of M&A as one of the tools to achieve
strategic goals
4. Executing M&A as a strategic Vehicle
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3. 1. Business Expansion
2. New markets entry
3. Growth
4. Synergies
5. Diversification
6. Government regulations, Licensing and legal frame work
7. Competition
8. Product development and brand image
9. Exploiting Hidden Values
10. Quick expansion
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Strategic Perspectives

4. 1) Industry Life Cycle
2) Product Life Cycle
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M&A Decision and Life cycle

5. 1) Research & Development
2) Start up or Embryonic stage
3) Consolidation or Growth Stage
4) Maturity Stage
5) Decline Stage
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Industry Life Cycle

6. • Forecast future needs and its demand accordingly.
• Research on need based like society, environment, health
or business motives.
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1) Research & Development

7. Current developments
• Artificial Intelligence
• Robots
• Space travel
• Plant travel
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1) Research & Development

8. • New business idea, new product, new service with no
competition.
• Very difficulty forecast the success and survival.
• High risk.
• 1980s computer.
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2) Start up or Embryonic stage

9. • Organic Food
• Biotech
• Bio Informatics
• Cyber Media
• Drug development
• Environment friendly green products
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2) Start up or Embryonic stage

10. • Seeing the success of the new product, many
competitors mushroom the industry.
• Startup stage survivors become stable and strong looking
at hiking the market share.
• This makes the industry to follow or track the
performance of startup survivors
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3) Consolidation or Growth stage

11. • Automobile
• IT
• Mobile Phones
• Education
• Retailing
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• Electric Vehicles
• Solar Power
• Pharma
• Health Care
3) Consolidation or Growth stage
- Indian Industry

12. • Product reaches all consumers and market becomes
matured.
• Growth is not possible. It may happen due to the
influence of economic growth.
• Price declines as it is heavily competitive hitting profit
margins.
• Referred as ‘Cash Cows’ as they have consistent profits
without growth.
• Profits are paid as dividend as there or no investment
opportunities.
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4) Maturity stage

13. • Steel
• Textile
• Manufacturing
• Oil and Gas
• BPO
• Oil run machines and vehicles
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4) Maturity stage – Indian Industry

14. • Induced costs
• Sales may decline or stabilize
• Price, revenue and profits declining
• Lay offs / pink slips
• Cost cutting and liquidation of assets in excess
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5) Decline Stage

15. • Agriculture
• Mining
• Print Media
• Tobacco
• Key pad phones
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5) Decline Stage

16. Dr Raju Indukoori

17. It refers to the life of the product in the market in terms of
business or marketing costs and its scaling measures.
It is similar to Industry life cycle in terms of cyclical
movements and respective stages. It has limited period
with different stages.
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Product Life Cycle

18. • Aggressive promotion
• New markets
• Price reduction
• Added features
• Attractive packaging
• Inducing consumer habits
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PLC extension

19. 1) SWOT Analysis
2) BCG Matrix
3) Porter’s Five Factor Model
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Strategic Approaches of M&A

20. It is a matrix to evaluate strategic position of a company in terms
of its attractiveness and competition. It is developed Bruce D
Henderson for Boston Consultancy Group in 1970. It enables to
analyze strategic management and decisions like diversification,
restructuring and mergers. It is also known as ‘Growth-Share
Matrix’
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BCG Matrix

21. Dr Raju Indukoori 21
BCG Matrix
Source : www.smartinsights.com

22. • High market share in a high growth market.
• Sell on USP
• Tendency to become monopoly.
• May become ‘Cash Cows’ if market saturates.
• Attract new investors.
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Stars

23. • High market share in a slow growing market.
• Staid and boring with no growth.
• Cash is preferred to be distributed to share holders
rather than reinvested which is known as ‘milking’.
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Cash Cows

24. • Low market share in high growth market.
• They are known as ‘Problem Children’ or ‘Wild Cats’.
• Potential to become stars by increasing the market share.
• If they don’t become stars, they may become dogs when the
market declines making them to diversify to other market.
• Potential investments.
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Questions Marks

25. • Low market share in a matured or slow growing market.
• Also known as ‘Pets’.
• Low or negative cash flows.
• No investors is interested to join in.
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Dogs

26. Dr Raju Indukoori 26
BCG Matrix
Market
Share
Market
Growth
Cash Flows New
Investments
ILS Business
Restructuring
Strategy
Cash Cows High M Low Moderate Low or No Saturation Congeneric,
Conglomerate
Mergers
Stars High High High High Growth All choice to grow.
Question
Marks
Low High Low /
Medium
Potential Growth Divestiture / New
Market entry
Dogs Low Low Low or
Negative
No Decline /
Saturation
Sell off / Divestiture
/ Hive

27. Any Questions….
27Dr Raju Indukoori

28. Thank You
28Dr Raju Indukoori