This document provides an overview and analysis of strategies that companies can employ to succeed in the current economic environment. It discusses how companies that focused on value, exploited opportunities, and acted quickly were able to outperform during the economic downturn of 2008. The document examines case studies of early winners and identifies three key strategies: 1) Focus on value by cutting costs strategically and increasing flexibility, 2) Exploit opportunities through acquisitions, innovation, and industry changes, and 3) Act with speed to manage change, empower leaders, and reduce risk. Specific actions are recommended under each strategy, such as reducing costs in mature markets to invest in emerging ones.
Grant Thornton - Global Private Equity Report 2012 Grant Thornton
Najnowszy raport Grant Thornton pokazuje nowe kierunki rozwoju branży private equity w otoczeniu zdominowanym przez spowolnienie gospodarcze, ograniczone zaufanie do instytucji finansowych oraz nadchodzące zmiany regulacyjne (MSSF). Sektor ten pomimo stojących przed nim wyzwań, okazuje się siłą stymulującą wzrost.
Competition Between MNCs from the North and the SouthHarry G. Broadman
Harry Broadman discusses the risks and opportunities of investing in emerging markets. While emerging markets offer high growth potential, they also pose significant risks that are often misunderstood. Companies need accurate information to understand the local business environment and mitigate risks. Forming partnerships with local players can help companies navigate challenges and exploit opportunities in emerging markets.
Successful companies in high-growth markets excel in three areas: sizing the future by accurately assessing market opportunities across time horizons; shaping the future by cultivating new demand; and seizing the future through operational agility. To develop these capabilities, companies should conduct global demand forecasting, experiment with new customer segments, build local partnerships, innovate to meet unmet needs, and develop agile operations. This will allow companies to open new windows of opportunity in emerging markets and compete effectively for future growth.
This document discusses strategies for companies to pursue growth opportunities in emerging markets. It finds that while executives see growth potential, many lack confidence in their ability to capitalize on these opportunities. Successful companies excel at sizing future demand, shaping new demand, and operating with agility. The document provides recommendations for building capabilities in market assessment, partnership, innovation, and speed of operations to accelerate growth efforts in high-potential emerging markets.
The Lloyd's insurance market had an eventful year in 2005, facing record claims from natural catastrophes including hurricanes Katrina, Rita and Wilma, totaling $65 billion in insured losses. Despite this, Lloyd's was able to pay all valid claims without accessing its central fund, demonstrating the market's financial strength and resilience. Lloyd's reported a small overall underwriting loss of £103 million for the year, but received reaffirmation of its credit ratings from major agencies. Going forward, Lloyd's aims to modernize its business processes and remain competitive through partnerships with insurers and capital providers.
The document discusses the challenges facing global business leaders in the current economic downturn and opportunities that may arise. It notes that (1) the recession has emphasized how interconnected the global economy is, (2) companies must assess their core competencies and financing strategies in light of new conditions, and (3) leaders should view the downturn as a chance to innovate and learn from emerging market competitors. Success will require a global mindset and the ability to leverage opportunities across borders.
Grant Thornton - Global Private Equity Report 2012 Grant Thornton
Najnowszy raport Grant Thornton pokazuje nowe kierunki rozwoju branży private equity w otoczeniu zdominowanym przez spowolnienie gospodarcze, ograniczone zaufanie do instytucji finansowych oraz nadchodzące zmiany regulacyjne (MSSF). Sektor ten pomimo stojących przed nim wyzwań, okazuje się siłą stymulującą wzrost.
Competition Between MNCs from the North and the SouthHarry G. Broadman
Harry Broadman discusses the risks and opportunities of investing in emerging markets. While emerging markets offer high growth potential, they also pose significant risks that are often misunderstood. Companies need accurate information to understand the local business environment and mitigate risks. Forming partnerships with local players can help companies navigate challenges and exploit opportunities in emerging markets.
Successful companies in high-growth markets excel in three areas: sizing the future by accurately assessing market opportunities across time horizons; shaping the future by cultivating new demand; and seizing the future through operational agility. To develop these capabilities, companies should conduct global demand forecasting, experiment with new customer segments, build local partnerships, innovate to meet unmet needs, and develop agile operations. This will allow companies to open new windows of opportunity in emerging markets and compete effectively for future growth.
This document discusses strategies for companies to pursue growth opportunities in emerging markets. It finds that while executives see growth potential, many lack confidence in their ability to capitalize on these opportunities. Successful companies excel at sizing future demand, shaping new demand, and operating with agility. The document provides recommendations for building capabilities in market assessment, partnership, innovation, and speed of operations to accelerate growth efforts in high-potential emerging markets.
The Lloyd's insurance market had an eventful year in 2005, facing record claims from natural catastrophes including hurricanes Katrina, Rita and Wilma, totaling $65 billion in insured losses. Despite this, Lloyd's was able to pay all valid claims without accessing its central fund, demonstrating the market's financial strength and resilience. Lloyd's reported a small overall underwriting loss of £103 million for the year, but received reaffirmation of its credit ratings from major agencies. Going forward, Lloyd's aims to modernize its business processes and remain competitive through partnerships with insurers and capital providers.
The document discusses the challenges facing global business leaders in the current economic downturn and opportunities that may arise. It notes that (1) the recession has emphasized how interconnected the global economy is, (2) companies must assess their core competencies and financing strategies in light of new conditions, and (3) leaders should view the downturn as a chance to innovate and learn from emerging market competitors. Success will require a global mindset and the ability to leverage opportunities across borders.
My task performance emergingfixedincomemanagers_joibfmresearch
1) The document discusses emerging fixed-income managers and whether their age or assets under management is a better indicator of performance.
2) It analyzes monthly return data for 317 fixed-income firms from 1985-present to determine if younger or smaller firms outperform their larger counterparts.
3) The research aims to address gaps in prior studies that focused only on equities and hedge funds, and used assets under management rather than age to define emerging managers.
1) The document discusses emerging fixed-income managers and whether their age or assets under management is a better indicator of performance.
2) It analyzes monthly return data for 317 fixed-income firms from 1985-present to determine if younger or smaller firms outperform their larger counterparts.
3) The research aims to address gaps in prior studies that focused only on equities and hedge funds, and used assets under management rather than age to define emerging managers.
SME development, constraints, credit risk & islamic banking solutionsMace Abdullah
This analytic paper examines the status of small and medium sized enterprises (SME) worldwide, provides theoretical information and explores issues regarding their development, constraints and credit risk. SME have been heralded worldwide as being the economic “engine” of economic development. Certainly, from an Islamic finance perspective, the development of SME represents a propitious opportunity, a vital step towards an epistemological response to criticism of Islamic finance and should play an indispensible role in forging a more robust Islamic capital market. Yet, SME face persistent identifiable obstacles to growth and development. This paper focuses on SME development, particularly as it relates to the so-called “credit gap” and the concomitant credit risk. The SME “credit gap” is pervasive worldwide; particularly so in emerging economies. Accordingly, this paper analyzes: the determinants and drivers of SME development; constraints on SME development; the SME “credit gap” and concomitant credit risk; and the role Islamic banking can play in meeting the challenge of SME development.
Evaluation of the Development and Performance of Selected GCC and Non-GCC St...Mace Abdullah
This paper compares and contrasts the stock markets for countries of comparable size and development as and between the GCC and non-GCC countries. The paper implicitly observes what may be considered strengths and weakness as and between markets dominated by Islamic Finance principles and those that are more or less conventionally oriented.
This document discusses the evolution and valuation of conglomerates. It notes that conglomerates typically start with a single successful business and use the capital to diversify across many sectors. However, increased competition and regulations often force conglomerates to consolidate into core businesses over time. The valuation of a conglomerate depends on the synergies across businesses, diversity of industry exposure to balance risk, and how well the mix of businesses hedges against downturns in any one sector. Finally, conglomerates become associated with their most prominent brand, which can influence or hinder growth of other entities within the group.
This document discusses differences between risk management in corporations versus financial institutions. While financial institutions led the development of modern risk management practices, their risks focus on financial and market risks and are not directly transferable to corporations. Corporations face a wider variety of risks related to their operations. The nature of risks in corporations requires customized risk management practices rather than directly applying financial institution frameworks. Overall, corporations can benefit from certain financial institution practices but need to adapt them to their own business contexts and risk environments.
The document outlines Chapter 1 of an international finance textbook. It introduces some key concepts in international finance, including foreign exchange risk, political risk, and market imperfections. It also discusses the goals of international financial management, focusing on maximizing shareholder wealth. Additionally, it covers trends driving globalization like increased trade and financial market integration, as well as the rise of multinational corporations that operate across borders.
Enterprise growth during turbulent timesIliya Rybchin
Corporate Venture Capital offers the most direct path to strategic and financial rewards from new business models, emerging technologies and disruptive innovation.
The COVID-19 crisis has driven the world toward global financial turmoil — forcing CEOs and CFOs to urgently address the immediate financial challenges resulting from this pandemic.
However, forward-looking CEOs and CFOs should use this opportunity to make critical investments through corporate venture capital (CVC) to set up their companies for long-term success and secure their company’s future.
This document provides an overview of international financial management for multinational corporations (MNCs). It discusses the goal of MNCs to maximize shareholder wealth but also potential conflicts with managers pursuing subsidiary goals instead of corporate goals. It covers theories justifying international business like comparative advantage. Methods for conducting international business include exporting, licensing, franchising, joint ventures, acquisitions, and foreign direct investment (FDI) through new subsidiaries. MNCs face risks from foreign exchange rates, economies, and politics that financial managers must address.
Telling Our Story - Small and Medium EnterprisesMelvin Mathew
This document discusses IFC's work supporting small and medium enterprises (SMEs) globally at the request of the G20. It summarizes that:
1) IFC provides financing, advisory services, and policy support to help emerging markets develop their SME sectors.
2) In 2009 and 2010, the G20 tasked IFC with advising on scaling up SME access to financial services, sharing knowledge on successful models, and launching an SME Finance Challenge competition.
3) IFC is working to implement winning proposals from the Challenge to strengthen SMEs and support the new Global SME Finance Forum knowledge-sharing initiative.
This chapter discusses globalization and multinational enterprises. It defines a multinational enterprise as a company with subsidiaries or affiliates in foreign countries. It also discusses theories of comparative advantage and how countries and firms specialize in areas where they have a relative production advantage. Market imperfections provide opportunities for multinational firms to exploit economies of scale, expertise, and financial strength across borders. Strategic motives for foreign direct investment include seeking new markets, resources, production efficiencies, and political stability.
Over the last year or so, there has been much talk about another impending recession and how it could impact channel management. The recession theory is based upon historical trends, which suggest business cycles tend to last around five to seven years each. That means every five to seven years we experience some sort of a recession.
Managing Change. Lessons From The Global Prof. SinghKelly Auto Group
This document discusses frameworks and case studies for organizational transformation. It provides lessons from successful transformations at Chrysler, British Airways, Nokia, IBM, Nissan, and NUMMI (GM-Toyota joint venture). Key lessons include the importance of visionary leadership, focusing on processes, culture change, and addressing political forces for/against change. Case studies demonstrate themes like the need to change scope, replace old strategies, and leverage lessons to transform existing operations.
Etude PwC sur les pays à forte croissance 2013PwC France
http://pwc.to/ZwPGMF
Entre 2008 et 2012, les pays à forte croissance ont investi 161 milliards de dollars dans les marchés matures, comparés aux 151 milliards de dollars investis dans le sens inverse. Une tendance qui se poursuit, notamment par les acheteurs chinois.
Driving Profitable Growth in Challenging Timesgatelyw396
The document is from The Rockland Group, a consulting firm. It provides strategies for technology and manufacturing companies to drive profitable growth in challenging economic environments. The Rockland Group helps clients with growth strategy, market strategy, product development, technology commercialization, and operations strategy to increase profitability. Contact information is provided for Bill Gately. The document then discusses perspectives on economic crises and presents five strategies companies can take: 1) Don't panic and analyze objectively, 2) Look for opportunities, 3) Develop an effective short-term strategy, 4) Align core processes, and 5) Keep an eye on developing economic conditions.
Us Talent Managing Talentina Turbulent Economy Part3Achyut Menon "AK"
Deloitte report tracks the way business leaders were shifting their talent priorities and strategies to meet the challenges of today’s economy and their plans to clear the hurdles to economic recovery.
This document provides an overview of key concepts related to globalization and international financial management. It discusses factors influencing globalization such as trade agreements and technology. Several theories of international trade are described, including comparative advantage and theories based on factor endowments. The roles of multinational corporations in facilitating globalization and risks they face are outlined. Governance models in the US and Asia are compared. Finally, structure and participants in foreign exchange markets are reviewed.
The document discusses mergers and acquisitions in the steel industry, specifically Tata Steel's acquisition of Corus Group in 2007. Some key points:
- Global steel industry was consolidating through M&A to gain scale and efficiencies. Tata's acquisition of Corus made them the 5th largest steelmaker.
- Tata paid $12 billion for Corus after a bidding war with CSN of Brazil. The acquisition gave Tata a presence in mature European markets and access to Corus' technology and high-end processing facilities.
- Benefits for Corus included addressing high costs through synergies with Tata, one of the lowest cost steel producers. Cultural compatibility between the companies also
1.1 enterprise and entrepreneurs and the uk economy (part 2) - moodleMissHowardHA
This document provides information and questions to help students learn about entrepreneurs and their importance to the economy. It discusses the motives for becoming an entrepreneur such as financial rewards and meeting customer needs. It also describes the various types of support available from government and other organizations. Finally, it evaluates the benefits of entrepreneurship including job creation, tax revenue, and helping the economy recover from recessions. Students are asked to research different support programs, analyze case studies, and create revision notes to consolidate their learning.
Expectations of Risk Management Outpacing Capabilities. It's Time For Actionmichaelszot
Developed world economies face more complex regulatory and compliance environments in the aftermath of the financial crisis, while capitalizing on opportunities in the emerging world requires companies to understand new markets and navigate attendant risks. Consequently, risk management remains at the top of the global corporate agenda.
The document summarizes revenue growth rates across the global outsourcing industry in 2010. It finds that overall growth fell to modest levels of 15.7%. Growth was particularly difficult for small companies under $10M and mid-sized companies between $100M-1B, which saw growth rates of 14% and 5% respectively due to pricing pressures and reduced demand. Larger companies over $1B grew by 18.4% but this was skewed by one large merger; otherwise growth was a modest 3.5%. The document lists the fastest growing companies by revenue size.
Mergers & Acquisitions are often used as part of a
company's globalization strategy, for both intra-regional and international deals. However, substantial number of them fail. Read more to find out the challenges or visit us at: http://www.verityconsult.com
My task performance emergingfixedincomemanagers_joibfmresearch
1) The document discusses emerging fixed-income managers and whether their age or assets under management is a better indicator of performance.
2) It analyzes monthly return data for 317 fixed-income firms from 1985-present to determine if younger or smaller firms outperform their larger counterparts.
3) The research aims to address gaps in prior studies that focused only on equities and hedge funds, and used assets under management rather than age to define emerging managers.
1) The document discusses emerging fixed-income managers and whether their age or assets under management is a better indicator of performance.
2) It analyzes monthly return data for 317 fixed-income firms from 1985-present to determine if younger or smaller firms outperform their larger counterparts.
3) The research aims to address gaps in prior studies that focused only on equities and hedge funds, and used assets under management rather than age to define emerging managers.
SME development, constraints, credit risk & islamic banking solutionsMace Abdullah
This analytic paper examines the status of small and medium sized enterprises (SME) worldwide, provides theoretical information and explores issues regarding their development, constraints and credit risk. SME have been heralded worldwide as being the economic “engine” of economic development. Certainly, from an Islamic finance perspective, the development of SME represents a propitious opportunity, a vital step towards an epistemological response to criticism of Islamic finance and should play an indispensible role in forging a more robust Islamic capital market. Yet, SME face persistent identifiable obstacles to growth and development. This paper focuses on SME development, particularly as it relates to the so-called “credit gap” and the concomitant credit risk. The SME “credit gap” is pervasive worldwide; particularly so in emerging economies. Accordingly, this paper analyzes: the determinants and drivers of SME development; constraints on SME development; the SME “credit gap” and concomitant credit risk; and the role Islamic banking can play in meeting the challenge of SME development.
Evaluation of the Development and Performance of Selected GCC and Non-GCC St...Mace Abdullah
This paper compares and contrasts the stock markets for countries of comparable size and development as and between the GCC and non-GCC countries. The paper implicitly observes what may be considered strengths and weakness as and between markets dominated by Islamic Finance principles and those that are more or less conventionally oriented.
This document discusses the evolution and valuation of conglomerates. It notes that conglomerates typically start with a single successful business and use the capital to diversify across many sectors. However, increased competition and regulations often force conglomerates to consolidate into core businesses over time. The valuation of a conglomerate depends on the synergies across businesses, diversity of industry exposure to balance risk, and how well the mix of businesses hedges against downturns in any one sector. Finally, conglomerates become associated with their most prominent brand, which can influence or hinder growth of other entities within the group.
This document discusses differences between risk management in corporations versus financial institutions. While financial institutions led the development of modern risk management practices, their risks focus on financial and market risks and are not directly transferable to corporations. Corporations face a wider variety of risks related to their operations. The nature of risks in corporations requires customized risk management practices rather than directly applying financial institution frameworks. Overall, corporations can benefit from certain financial institution practices but need to adapt them to their own business contexts and risk environments.
The document outlines Chapter 1 of an international finance textbook. It introduces some key concepts in international finance, including foreign exchange risk, political risk, and market imperfections. It also discusses the goals of international financial management, focusing on maximizing shareholder wealth. Additionally, it covers trends driving globalization like increased trade and financial market integration, as well as the rise of multinational corporations that operate across borders.
Enterprise growth during turbulent timesIliya Rybchin
Corporate Venture Capital offers the most direct path to strategic and financial rewards from new business models, emerging technologies and disruptive innovation.
The COVID-19 crisis has driven the world toward global financial turmoil — forcing CEOs and CFOs to urgently address the immediate financial challenges resulting from this pandemic.
However, forward-looking CEOs and CFOs should use this opportunity to make critical investments through corporate venture capital (CVC) to set up their companies for long-term success and secure their company’s future.
This document provides an overview of international financial management for multinational corporations (MNCs). It discusses the goal of MNCs to maximize shareholder wealth but also potential conflicts with managers pursuing subsidiary goals instead of corporate goals. It covers theories justifying international business like comparative advantage. Methods for conducting international business include exporting, licensing, franchising, joint ventures, acquisitions, and foreign direct investment (FDI) through new subsidiaries. MNCs face risks from foreign exchange rates, economies, and politics that financial managers must address.
Telling Our Story - Small and Medium EnterprisesMelvin Mathew
This document discusses IFC's work supporting small and medium enterprises (SMEs) globally at the request of the G20. It summarizes that:
1) IFC provides financing, advisory services, and policy support to help emerging markets develop their SME sectors.
2) In 2009 and 2010, the G20 tasked IFC with advising on scaling up SME access to financial services, sharing knowledge on successful models, and launching an SME Finance Challenge competition.
3) IFC is working to implement winning proposals from the Challenge to strengthen SMEs and support the new Global SME Finance Forum knowledge-sharing initiative.
This chapter discusses globalization and multinational enterprises. It defines a multinational enterprise as a company with subsidiaries or affiliates in foreign countries. It also discusses theories of comparative advantage and how countries and firms specialize in areas where they have a relative production advantage. Market imperfections provide opportunities for multinational firms to exploit economies of scale, expertise, and financial strength across borders. Strategic motives for foreign direct investment include seeking new markets, resources, production efficiencies, and political stability.
Over the last year or so, there has been much talk about another impending recession and how it could impact channel management. The recession theory is based upon historical trends, which suggest business cycles tend to last around five to seven years each. That means every five to seven years we experience some sort of a recession.
Managing Change. Lessons From The Global Prof. SinghKelly Auto Group
This document discusses frameworks and case studies for organizational transformation. It provides lessons from successful transformations at Chrysler, British Airways, Nokia, IBM, Nissan, and NUMMI (GM-Toyota joint venture). Key lessons include the importance of visionary leadership, focusing on processes, culture change, and addressing political forces for/against change. Case studies demonstrate themes like the need to change scope, replace old strategies, and leverage lessons to transform existing operations.
Etude PwC sur les pays à forte croissance 2013PwC France
http://pwc.to/ZwPGMF
Entre 2008 et 2012, les pays à forte croissance ont investi 161 milliards de dollars dans les marchés matures, comparés aux 151 milliards de dollars investis dans le sens inverse. Une tendance qui se poursuit, notamment par les acheteurs chinois.
Driving Profitable Growth in Challenging Timesgatelyw396
The document is from The Rockland Group, a consulting firm. It provides strategies for technology and manufacturing companies to drive profitable growth in challenging economic environments. The Rockland Group helps clients with growth strategy, market strategy, product development, technology commercialization, and operations strategy to increase profitability. Contact information is provided for Bill Gately. The document then discusses perspectives on economic crises and presents five strategies companies can take: 1) Don't panic and analyze objectively, 2) Look for opportunities, 3) Develop an effective short-term strategy, 4) Align core processes, and 5) Keep an eye on developing economic conditions.
Us Talent Managing Talentina Turbulent Economy Part3Achyut Menon "AK"
Deloitte report tracks the way business leaders were shifting their talent priorities and strategies to meet the challenges of today’s economy and their plans to clear the hurdles to economic recovery.
This document provides an overview of key concepts related to globalization and international financial management. It discusses factors influencing globalization such as trade agreements and technology. Several theories of international trade are described, including comparative advantage and theories based on factor endowments. The roles of multinational corporations in facilitating globalization and risks they face are outlined. Governance models in the US and Asia are compared. Finally, structure and participants in foreign exchange markets are reviewed.
The document discusses mergers and acquisitions in the steel industry, specifically Tata Steel's acquisition of Corus Group in 2007. Some key points:
- Global steel industry was consolidating through M&A to gain scale and efficiencies. Tata's acquisition of Corus made them the 5th largest steelmaker.
- Tata paid $12 billion for Corus after a bidding war with CSN of Brazil. The acquisition gave Tata a presence in mature European markets and access to Corus' technology and high-end processing facilities.
- Benefits for Corus included addressing high costs through synergies with Tata, one of the lowest cost steel producers. Cultural compatibility between the companies also
1.1 enterprise and entrepreneurs and the uk economy (part 2) - moodleMissHowardHA
This document provides information and questions to help students learn about entrepreneurs and their importance to the economy. It discusses the motives for becoming an entrepreneur such as financial rewards and meeting customer needs. It also describes the various types of support available from government and other organizations. Finally, it evaluates the benefits of entrepreneurship including job creation, tax revenue, and helping the economy recover from recessions. Students are asked to research different support programs, analyze case studies, and create revision notes to consolidate their learning.
Expectations of Risk Management Outpacing Capabilities. It's Time For Actionmichaelszot
Developed world economies face more complex regulatory and compliance environments in the aftermath of the financial crisis, while capitalizing on opportunities in the emerging world requires companies to understand new markets and navigate attendant risks. Consequently, risk management remains at the top of the global corporate agenda.
The document summarizes revenue growth rates across the global outsourcing industry in 2010. It finds that overall growth fell to modest levels of 15.7%. Growth was particularly difficult for small companies under $10M and mid-sized companies between $100M-1B, which saw growth rates of 14% and 5% respectively due to pricing pressures and reduced demand. Larger companies over $1B grew by 18.4% but this was skewed by one large merger; otherwise growth was a modest 3.5%. The document lists the fastest growing companies by revenue size.
Mergers & Acquisitions are often used as part of a
company's globalization strategy, for both intra-regional and international deals. However, substantial number of them fail. Read more to find out the challenges or visit us at: http://www.verityconsult.com
This document summarizes a journal article about addressing human resource issues in mergers and acquisitions. It begins by noting that while M&As are increasingly used for growth, most fail to achieve their goals due to neglected HR issues. It then presents a three-stage model for systematically addressing HR throughout the M&A process. Key points include identifying HR issues in pre-acquisition, post-acquisition integration, and post-integration stages. Attention to cultural differences, talent retention, and clear communication are highlighted as especially important for M&A success. The role of HR professionals in guiding a people-focused approach is also discussed.
Issue | McKinsey Quarterly 2013 Number 4
@McKQuarterly
Strategy to beat the odds
Examines how to make wise strategic choices, mobilize the C-suite to take advantage of big data, use social technologies to engage employees and transform organizations, and build vibrant communities with help from companies.
This document is the introduction section of the 13th Annual Global CEO Survey report. It summarizes the major impacts of the recent recession on business leaders and their strategies for moving forward. The recession caused widespread cost cutting, cash preservation, and job losses. Most CEOs recognize they could have anticipated the downturn sooner to better prepare. Looking ahead, business leaders are focused on organizational agility, balancing short-term actions with long-term growth investments, and establishing a new management agenda based on adjusting costs, capital structures, and risk practices. CEO confidence in revenue growth is rising but remains cautious, as they strive to keep debt low and liquidity high during continued economic uncertainty.
1
3
Simon Property Group
Angel Bloodworth
Strategic Planning for Organizations MGT450
University of Arizona
14 March 2022
Achieving a high level of financial stability while operating a profitable company is one of the most challenging tasks a business can face. After all, any firm facing cash flow and budgetary challenges will eventually collapse if these issues are not handled as soon as possible. One organization that has been having financial issues recently is Simon Properties Group. The company's financial woes, which partly has been caused by Covid-19, have damaged the company's reputation, and the public is slowly losing trust in the company's capabilities. Additionally, the fear of bankruptcy has adversely affected the company's long-term creditworthiness. This paper necessitates an analysis of Simon Properties Group, including its leadership, potential competition, and a recent news item posing a challenge to its strategy.
Organization
Established in the United States, Simon Property Group is a real estate investment trust specializing in outlet malls, retail malls, and lifestyle complexes. The company was founded in 1982 and currently has its headquarters in Indianapolis, Indiana. The Simon Property Group was founded in Indianapolis by brothers Herbert and Melvin Simon, who started by developing strip malls in the city. The company has locations around Europe, North America, and Asia, where the firm serves thousands of people every day and earns millions of dollars in sales each year. The company's portfolio includes properties that have gained national and international attention - assets that have proven to be the preferred destination for retailers (Jie & Jianwei, 2021). Simon is also known for its strong financial position, a senior management team that has been in place for many years and is highly regarded, as well as its innovative mindset, which is reflected in the company's history.
The industry
The corporation operates in the real estate business. Real estate has a lengthy history in the United States. The federal government sold and gave the property to private individuals for their own use after the Revolutionary War when it was no longer under the control of England. As the nation grew westward, this practice continued, most notably with the passage of the Homestead Act in 1862, which authorized individual ownership of U.S. property in return for maintaining and developing the area for at least five years (Katzler, 2017). Through the Homestead Act, the United States government granted more than 300 million acres of public land to private landowners, laying the groundwork for the real estate industry, which is currently worth $203.1 billion.
Mission and Vision
The company’s mission is to become the top retail real estate developer, owner, and manager globally.
The company's vision statement is that it wants to be the unchallenged leader in the business.
Values and purpose
Integrity, innovati ...
1
3
Simon Property Group
Angel Bloodworth
Strategic Planning for Organizations MGT450
University of Arizona
14 March 2022
Achieving a high level of financial stability while operating a profitable company is one of the most challenging tasks a business can face. After all, any firm facing cash flow and budgetary challenges will eventually collapse if these issues are not handled as soon as possible. One organization that has been having financial issues recently is Simon Properties Group. The company's financial woes, which partly has been caused by Covid-19, have damaged the company's reputation, and the public is slowly losing trust in the company's capabilities. Additionally, the fear of bankruptcy has adversely affected the company's long-term creditworthiness. This paper necessitates an analysis of Simon Properties Group, including its leadership, potential competition, and a recent news item posing a challenge to its strategy.
Organization
Established in the United States, Simon Property Group is a real estate investment trust specializing in outlet malls, retail malls, and lifestyle complexes. The company was founded in 1982 and currently has its headquarters in Indianapolis, Indiana. The Simon Property Group was founded in Indianapolis by brothers Herbert and Melvin Simon, who started by developing strip malls in the city. The company has locations around Europe, North America, and Asia, where the firm serves thousands of people every day and earns millions of dollars in sales each year. The company's portfolio includes properties that have gained national and international attention - assets that have proven to be the preferred destination for retailers (Jie & Jianwei, 2021). Simon is also known for its strong financial position, a senior management team that has been in place for many years and is highly regarded, as well as its innovative mindset, which is reflected in the company's history.
The industry
The corporation operates in the real estate business. Real estate has a lengthy history in the United States. The federal government sold and gave the property to private individuals for their own use after the Revolutionary War when it was no longer under the control of England. As the nation grew westward, this practice continued, most notably with the passage of the Homestead Act in 1862, which authorized individual ownership of U.S. property in return for maintaining and developing the area for at least five years (Katzler, 2017). Through the Homestead Act, the United States government granted more than 300 million acres of public land to private landowners, laying the groundwork for the real estate industry, which is currently worth $203.1 billion.
Mission and Vision
The company’s mission is to become the top retail real estate developer, owner, and manager globally.
The company's vision statement is that it wants to be the unchallenged leader in the business.
Values and purpose
Integrity, innovati ...
1. Political, market, and investor horizons remain out of sync as debt crisis tackling will be long and volatility continues.
2. Clients will take both cautious and opportunistic approaches to risk, blending flight and fight strategies.
3. Asset managers must develop capabilities to benefit clients from volatility through dynamic strategies, manager selection, and communication.
The document discusses M&A opportunities during economic downturns. It notes that while M&A activity declined sharply in 2008 and 2009 due to the financial crisis, downturns can present opportunities for acquisitive companies to reshape industries. The number and value of deals dropped significantly after the bankruptcy of Lehman Brothers in September 2008. However, the capital markets have started to stabilize in 2009, and never letting a crisis go to waste, some companies are already seizing transformational M&A opportunities during this period.
The PEO Industry in Transition, by Benjamin Gordon, BGSA CEOBenjamin Gordon
The PEO industry is consolidating as larger firms acquire smaller competitors. This document outlines the history and current state of the PEO industry in 4 phases:
1) Rapid growth in the 1990s as the industry enjoyed over 20% growth and several firms went public.
2) Sudden decline from 2000-2003 as the dot-com bust, 9/11, and an insurance crisis led to half of PEOs going out of business.
3) Maturation from 2004-present as recovery led to more stable growth, with industry leaders seeing share price increases of 500-1200%.
4) Consolidation is the current phase, as larger private equity backed firms acquire competitors to gain scale
2013 q4 McKinsey quarterly - Strategy to beat the oddsAhmed Al Bilal
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IBM Study
1. IBM Global Business Services
IBM Institute for Business Value
Strategy and Change
Succeeding
in the new
economic
environment
Focus on value,
opportunity, speed
2. IBM Institute for Business Value
IBM Global Business Services, through the IBM Institute for Business Value,
develops fact-based strategic insights for senior executives around critical public
and private sector issues. This executive brief is based on an in-depth study by
the Institute’s research team. It is part of an ongoing commitment by IBM Global
Business Services to provide analysis and viewpoints that help companies realize
business value. You may contact the authors or send an e-mail to iibv@us.ibm.com
for more information.
3. Succeeding in the new economic environment
Focus on value, opportunity, speed
By Saul Berman, Steven Davidson, Sara Longworth and Amy Blitz
The final months of 2008 unleashed sudden and sweeping economic change
in the global economy. Amid debates over how long and broad this period
of change will be, one thing is clear – a major transformation is underway
and “business as usual” responses are not likely to succeed. Based on our
experience, our previous studies, an analysis of early winners of this period,
as well as longer-term winners from historical economic transformations, we
advise CEOs and business leaders to focus more than ever on value, to exploit
opportunities presented by the current situation and to act on both quickly.
Navigating the economic seemingly rock-solid companies in financial
transformation services, retail, real estate, automotive and
The growing uncertainty and its widening other sectors, starting with Bear Stearns, then
impact create an urgent need for action. This Lehman Brothers and cascading through the
paper offers our perspective on what business global economy. And this trend is global, with
leaders need to do to succeed in the new many manufacturing companies, for example,
economic environment, To provide guidance, closing in Shenzhen, China, and US, European,
we have identified patterns in the chaos of Japanese and Korean auto manufacturers
2
economic transformations such as the current facing major losses. Already, Ssangyong,
1
one. On the gloomy side, many companies the South Korean automaker majority owned
without the cash reserves or fundamental by China’s SAIC Motor Corporation, filed for
3
strength do not survive such periods, as bankruptcy in January 2009. And many other
we have seen with the dramatic collapse, troubled companies are surfacing as well in
bankruptcy or threat of bankruptcy facing diverse sectors in Europe, Asia and North
America.
1 Succeeding in the new economic environment
4. On the positive side, history shows that even the emerging industries of that era, notably
periods of tremendous dislocation produce movies, radio, automotive and electricity.
4
winners. Looking back to the panic of the Today, many of the early winners are focused
1870s – a period similar to the present with on value-oriented customers, entertainment
a mortgage bubble leading to a financial and opportunities in such industries as life
collapse and an extreme tightening of credit sciences, telecommunications and the envi-
7
– those with cash, like Rockefeller, Gould and ronment, as well as “flight” sectors like gold.
Carnegie in the United States, seized oppor-
tunities to establish dominance in oil, steel, What separates the winners from the rest
railroads and other then emerging industries.
5 of the pack in times like these? What strate-
And while some financial institutions collapsed, gies and characteristics can be emulated
a new generation of innovative banks like and applied today across diverse industries,
Deutsche Bank was established on the back regions and competitive positions?
6
of the new industries. Likewise, during the
1930s, those who succeeded focused on
22 IBM Global Business Services
IBM Global Business Services
5. Succeeding in the new economic environment
Focus on value, opportunity, speed
Businesses that are Lessons from early winners We then studied each of these companies and
To help answer these questions, we identified the strategies that led to their success. From
performing well – even
early winners in the current period, beginning this, we identified patterns in their strategies that
in these economic straits
with large US-listed companies whose stock allowed these companies not just to survive the
– are employing three appreciated by at least 5 percent in 2008, at economic transformation but to thrive in it. We
common strategies: a time when the S&P declined by 37 percent.
8
then looked beyond this group of standouts to
focusing on value, In all, 61 companies emerged as early winners. companies that performed well in Europe and
exploiting opportunity Demonstrating the power of strategy over Asia in 2008 and found similar patterns applied.
industry trends, these companies span In brief, early winners focus on value, exploit
and acting quickly.
diverse sectors, with 31 percent in services, opportunity and act quickly (see Figure 1).
22 percent in financial services, 12 percent in
While some of the early winners were simply in
health care and 12 percent in basic materials,
the right place at the right time (notably a few
followed by energy, capital goods, utilities and
gold companies), most demonstrate the power
transportation. Moreover, those who won in
of having a strategic vision that can thrive in
2008, won big, with their stock appreciating
even the toughest of times.
by an average of 24 percent, well above our 5
percent hurdle.
FIGURE 1.
Firms that outperformed the S&P 500 in 2008 share three common strategies.
Average 52-week stock price change of Strategies employed by top
top performers* versus S&P 500 in 2008 performing companies
24% 1. Focus on value
2. Exploit the opportunity
3. Act quickly
+64 %
S&P 500
Change Top performers
-40%
* Performance period spanned December 21, 2007 to December 18, 2008. Criteria for top performers (n=61) included those with market
capitalization greater than US$1.4 billion and a 52-week stock price appreciation of more than 5 percent.
Source: IBM analysis of data from Google Finance.
3 Succeeding in the new economic environment
6. Overall, the early winners: vations in its broadband services and mobile
Focus on value via sustainable strategies communications offerings in 2008, including
that emphasize long-term value. For example, the world launch of its Next Generation
Dutch Rabobank Group, along with several Network, which aims to provide ubiquitous
11
other commercial banks in our 2008 data services on full IP-network infrastructures.
sample, performed well by avoiding high- Act quickly, with the agility to respond ahead
profit, high-risk offerings such as sub-prime of, or at least to keep pace with, rapid changes
mortgages, and instead held to low-risk in the new economic environment. Barclays,
9
lending principles. Companies targeting for example, acted swiftly – leaping regula-
value-oriented customers also did well. While tory and other hurdles – to acquire Lehman
several including McDonald’s provide offerings Brothers assets by September 23, 2008, just
at very low prices, others including Netflix and days after Lehman’s September 14 collapse.
Strayer Education (an online service) are using Within hours of the acquisition, the screens
technology in innovative ways to slash prices wrapped around 745 Seventh Avenue in
by introducing revolutionary new business Manhattan switched from the Lehman name
10
models. 12
to Barclays’ blue logo. Equally decisive was
Exploit opportunities presented during Tesco’s move in 2008 to introduce a new
downturns, including growing through low-cost Discount Brand line to avoid losing customers
13
acquisitions and stock buy-backs. Another to lower-cost competitors.
key area of opportunity is growth through
Succeeding in the new economic
innovation, transforming existing industries or
introducing new offerings in emerging indus-
environment
Based on our analysis, our experience, as well
tries. Early winners in this area spanned life
as several of our previous studies on related
sciences/biotech, electronics, environmental
topics, we define key elements of the three
quality and telecommunications. For example,
strategies successful companies deploy well
Japan’s Nippon Telegraph and Telephone
in times of uncertainty (see Figure 2).
continued to introduce groundbreaking inno-
FIGURE 2.
To thrive, not just survive, companies need to take action on three fronts.
1. Focus on value 2. Exploit opportunities 3. Act with speed
1.1 Do more with less 2.1 Capture share 3.1 Manage change
• Cut costs strategically • Disrupt weaker competitors • Overcome the “change gap”
• Conserve working capital • Focus on growth markets 3.2 Empower leaders
• Protect cash reserves • Acquire bargain-priced assets • Establish strong, aligned
• Increase flexibility, 2.2 Build future capabilities leadership
responsiveness • Protect and acquire critical talent • Communicate strategy clearly
1.2 Focus on the core • Establish corporate infrastructure and often
• Create value for clients for growth 3.3 Manage risk
• Reduce non-core costs • Invest in innovation • Reduce risk and increase
• Shift from fixed to variable costs 2.3 Change your industry transparency
1. 3 Understand your customers • Understand your place in new
• Target value-oriented customers environment
• Reduce complexity • Pioneer new industry approaches
• Exploit new revenue models
• Cultivate strategic partnerships
Source: IBM Institute for Business Value.
4 IBM Global Business Services
7. How and where 1. Focus on value For companies with a global presence, now is
1.1 Do more with less the time to drive robust optimization efforts to
companies cut costs
Cut costs strategically. Traditional bring down costs by locating activities in the
has a long-term
approaches often involve spreading the pain right place using the right level of resources
effect – far beyond the of cost reductions evenly across business and slashing duplication. Figure 3 illustrates
current downturn. units and geographies. This may appear how companies can take a more strategic
fair and might minimize disputes within the approach to cutting costs, driving revenue and
management team, but it avoids the difficult improving profits.
and important decisions that will drive future
Conserve working capital. Clearly, given
success. Significant cost reductions are
current restrictions on credit, companies
better accomplished through more strategic
need to focus on reducing working capital
decisions to exit whole activities, businesses
in their businesses if they have not done so
or markets. Both revenue and cost need to
already. Proactively managing working capital
be considered. Leaders need to preserve
involves driving down inventories, accounts
key investments that will drive future growth.
receivable and accounts payable. Inventory
For example, many global companies are
analysis needs to examine each item’s profit-
driving higher cost reduction targets in mature
ability, its value to the company, as well as the
markets to invest more heavily in emerging
associated variability, velocity and volume
markets. Others are considering significant
to enable significant inventory reductions.
business model innovations involving, for
Addressing accounts receivables can improve
example, more partnering or outsourcing to
cash management by, for example, adjusting
provide up-front savings and greater flexibility.
processes to focus on accounts that chroni-
cally pay late versus those that pay on time.
FIGURE 3.
Cost reduction opportunities should be evaluated in a strategic context.
• Price
Increase revenues
• Volume
Repurchase Increase
shares revenue
Increase operating • COGS
margin • SG&A
Total • Channels
Create value Use competitive
shareholder Capital Reduce costs • Process R&D
return internally advantage
• Product R&D
Decrease working • Inventory
capital • AP/AR
Invest Optimize
externally assets
Decrease capital • Utilization
expenditures • Decapitalize
Dividends Leverage
technology
Decrease cash tax • Debt/equity
paid • Tax location
Source: IBM Strategy and Change consulting practice.
5 Succeeding in the new economic environment
8. Protect cash reserves. In a credit crisis, 1.2 Focus on the core
cash is central to survival and strategic flex- Create value for clients and preserve
ibility. It serves as a buffer against lean times differentiation. It is critical to cut spending on
and enables the strategic acquisition of low-value activities, and redeploy it to invest-
undervalued, perhaps even bargain-base- ments that generate growth, margins and true
ment priced, assets. Of course companies differentiation. Being able to accurately identify
that do not have strong cash reserves today where value is generated at all levels of the
cannot reinvent history to create them; but organization – from divisions to specific prod-
a value-based reassessment of the port- ucts or offerings to particular customers – is
folio may reveal opportunities to generate an essential first step. But for those without
a greater return through divestment or liqui- strong financial systems or good manage-
dation, especially when weighed against ment information this could be a complex task.
investment opportunities to improve or However difficult, the benefits are clear. Here
expand core businesses. Leaders should also again, Ford has cut costs and raised capital
explore alliances or partnerships that provide through borrowing and divestitures, including
15
access to cash or cost-effective capabilities, Jaguar, Land Rover and Aston Martin.
particularly if their preferred strategies require Similarly, UK grocer Waitrose has performed
significant investment. well in terms of customer growth by leveraging
its strong reputation for high-quality food
Increase flexibility and responsiveness. while controlling the average cost of a shop-
Companies must understand how vulnerable ping basket by offering deeper discounts on
they are to declines in demand and revenues, commodity products.
16
and develop the flexibility in their capacity
and cost base in order to cope. They need Strip out non-value-add activities and
to engage in active scenario modeling to reduce non-core costs. Companies need to
evaluate how far production cost breakeven understand which activities contribute strategic
points must be lowered and capacity reduced value. As part of this, companies must rethink
(or used differently) to prevent losses. In doing initiatives, have more-regular capital review
this, companies must also plan for the upturn cycles and examine initiatives as an entire
by avoiding cutting too deep, so that they can portfolio not only to “trim the fat” on a project-
ramp up quickly once conditions improve. This by-project basis, but also to cut entire projects
requires a strong understanding of industry or groups of projects, allowing no “sacred
trends, competitor performance and behavior, cows.” This approach requires a commitment
as well as underlying economic conditions. to eliminate weak businesses and divest
Companies must also develop more sophisti- where needed, moving non-core activities to
cated sense-and-respond capabilities. In the shared services or to outsourced solutions. For
automotive industry, for example, Ford Motor example, many companies are reprioritizing
Company has sidestepped many of the chal- large-scale technology investments. They are
lenges others in its industry face by cutting also reducing the cost of managing today’s
factory capacity to match decreased demand, systems to free up investment for more stra-
announcing in 2005 the closing of 17 facto- tegic IT projects.
ries and the elimination of 50,000 jobs, many
14
through buyout and early retirement.
6 IBM Global Business Services
9. Investment choices Shift from fixed to variable costs. Shifting and pricing innovation can outstrip an orga-
from fixed to variable costs requires a clear nization’s ability to manage the operational
should center on
identification of and focus on core activities. complexity it creates. With margins threatened
activities that
The need for more flexible costs and capacity by falling revenues, operational complexity
differentiate and drive is leading some companies to look afresh that does not create customer value cannot
revenue growth. at their business and operating models and be tolerated. Companies should examine the
consider outsourcing some functions that case for simplifying product portfolios, pricing
they previously chose to keep in-house. For structures and the number of promotions, and
example, a significant number of multina- cease offering customizations that customers
tional companies are considering increased will not pay for – even if making these changes
outsourcing of their IT development centers requires investment.
in India and China. More holistic sourcing
strategies, from workforce management and Are you ready?
contract labor to strategic partnering, are also
Have you taken urgent steps to protect revenue,
key here.
conserve cash and reduce costs while developing
1.3 Understand your customers and implementing a more strategic approach to
Target value-oriented customers. Another such issues?
strategy likely to succeed in this environment Do you know which businesses, markets,
is to rebalance offerings to serve new, more products and customers contribute the most
value-oriented customers. Eight of the 61 early value, growth and profit to your business? Which
winners have business models that center are not aligned closely to your business strategy
on offering very low-cost goods and services and should be cut?
in diverse sectors spanning retail, entertain- Have you reviewed and prioritized your initiatives
ment, education and fast food. And this can so that you can not only survive but also seize
be a long-term strategy for success in good the opportunities presented by the new economic
times as well as in bad, as companies like environment?
McDonald’s have demonstrated.
Are you making your costs more flexible? Are
Reduce complexity. As they focus on you considering new workforce management
their core activities, companies should take strategies or innovative business models to
the opportunity to reduce or eliminate the achieve this?
complexities that may have crept into their Have you reassessed your partnering strategy
businesses during the good years, including and relationships? Are you clear about which
customization or extensive variations to a partners are strategic and which are commodity-
product or service that the customer may not based?
value or understand. In telecommunications
and banking, for example, the pace of product
7 Succeeding in the new economic environment
10. 2. Exploit opportunities markets, raising growth targets as they do so,
2.1 Capture share even in these uncertain times. Many business
Disrupt weaker competitors. For those with leaders are also reviewing how they segment
a clear vision for their companies and indus- and organize to engage their customers,
tries – and the financial resources to act – the with the growth/mature market distinction
current downturn will clearly create opportu- becoming more important.
nities to set the change agenda rather than
Acquire bargain-priced assets. Companies
respond to someone else’s, to gain share and
with significant cash reserves have the oppor-
to build key capabilities. Bold moves, disrup-
tunity to buy attractively priced assets that
tive strategies and positioning to win in a
support their overall strategies. Several of our
globally integrated economy are all part of the
early winners are focused on acquisitions or
path to success. Reaching out to and under-
stock buy-backs, taking advantage of current
standing the needs of customers, both current
bargains. Overall, we are seeing substan-
ones and those who may consider shifting
tial merger and acquisition (M&A) activity
from competitors in such unusual times, will be
throughout the global economy, particularly in
an important element of the strategy. Business
financial services, such as the acquisition of
partners should also reassure customers
Lehman Brothers segments by Nomura and
that they are allies in this era, seeking to 19
Barclays in late September 2008. We also
help reduce the impact of the current market
expect to see M&A activity in pharmaceuticals
uncertainty. A friend in need is a friend for the
as well as in other sectors. For both acquirers
long term. And before considering strategies
and targets, it is important to act quickly:
such as developing lower-cost products with
for example, UK frozen food retailer Iceland
fewer features, it is important to understand
profited from its acquisition of 51 Woolworths
fully what the customer truly wants.
stores in January 2009 after its previous higher
20
Focus efforts on growth markets. For bid in 2008 was rejected.
companies seeking growth, markets in Asia,
2.2 Build future capabilities
Central and Eastern Europe, the Middle East
Protect and acquire critical talent. Despite
and Latin America are currently proving fertile
extreme market pressures, leaders must
ground, offering stronger opportunities for
balance tactical concerns of today with a
expansion than mature markets in Western
clear focus on the longer term. To build future
Europe or North America. Vodafone, for
capabilities, it is important to stay focused
example, has performed very well in recent
on human capital issues, such as keeping
years by selling assets in saturated markets
and motivating top performers, recruiting
such as Japan and Belgium and investing in
new talent at potentially lower cost and lever-
growth markets such as Romania, India and
17 aging a global workforce. Top performers are
Turkey. Similarly, Tesco has maintained strong
the people who have the flexibility to move
growth at the group level by following an
somewhere else if they are not convinced a
international portfolio approach to investment,
company has the right strategy and execu-
which has generated strong gains in Hungary
18 tion capabilities to survive and succeed. It is
and Malaysia. Facing slowing growth in
important to engage these top performers,
mature markets, many business leaders
communicate the strategy effectively and give
are redirecting investment toward emerging
them a role and stake in the company’s future
success.
8 IBM Global Business Services
11. Amid economic Establish the corporate infrastructure to 2.3 Change your industry
seize future growth opportunities. When Understand the impact of the current
chaos, once-in-a-
markets turn, the best returns often go to transformation on your industry, and profit
lifetime opportunities
those companies that respond quickly. Recent from it with innovative new business models.
often emerge. years have shown how long it takes to build Business leaders must assess whether their
the structures, capabilities, processes and industries are apt to consolidate, grow, shrink
systems to seize growth market opportuni- or even die. They must also understand how
ties. Now is the time to invest for the mid-term. competitors, suppliers, consumers and others
Many Chinese companies, for example, are are responding to the economic changes,
currently establishing the governance, orga- and whether barriers to entry are increasing
nization structures, human capital, processes or decreasing. From this analysis, busi-
and systems to enable them to run on a ness leaders should gain insight into where
truly global basis. Likewise, many banks, a opportunities for new business models are.
sector clearly under fire, are investing in new Two-thirds of the CEOs who participated in our
assets and upgrading core banking systems Global CEO Study are implementing signifi-
in order to increase operational effective- cant business model innovations; Figure 4
ness and improve transparency for the long outlines the specific types of business model
term. A focus on forward-looking IT invest- innovation they are pursuing.
ments (funded by reductions in maintenance
costs for today’s systems) will be essential for Pioneer new industry approaches and
enabling business agility. standards. Goldman Sachs, Morgan Stanley
and other venerable investment banks have
22
Invest in innovation. Several of the outper- become bank holding companies. This
forming companies in 2008 are focused on subjects the companies to far more govern-
innovation, primarily in life sciences, telecom- ment regulation, but provides access to
munications, electronics and environmental government guarantees. In another example,
quality. By carving out a niche in a downturn, Rolls-Royce plc has designed an innovative
companies can establish long-term domi- new aircraft engine that uses fuel more effi-
nance beyond the current turmoil, a strategy ciently and, more importantly, can be scaled
IBM, for example, used effectively in the 1930s. up or down, allowing the company to compete
By investing in R&D during the depths of the across a far wider range of aircraft than its
Great Depression, IBM was well-positioned competitors. In fact, Rolls-Royce is the only
when the recovery began and customers one of the three main engine-makers with
21
needed complex data management systems. designs to fit the three newest airliners under
Today’s early winners – from Netflix and development, the Boeing 787 Dreamliner, the
Nippon Telegraph and Telephone to others in Airbus A380 and the new wide-bodied version
23
life sciences/biotech and environmental quality of the Airbus A350.
– are already demonstrating the power of inno-
vation in a downturn.
9 Succeeding in the new economic environment
12. FIGURE 4.
CEOs are focused most on reconfiguring their businesses to specialize and collaborate.
Types of business model innovation considered
Multiple types
20% Enterprise model
innovation Industry model
39% Redefine an existing industry, move into a new industry
or create an entirely new one.
Revenue model
Change how revenue is generated by introducing new
Industry
model pricing models.
innovation Enterprise model
18% Reconfigure the business by rethinking what is done
Revenue model in-house and what is done through collaboration and
innovation partnering.
23%
Source: “The Enterprise of the Future: IBM Global CEO Study 2008.” IBM Corporation. May 2008.
Identify and exploit new revenue models. With strategic partnerships, companies need
New pricing models are emerging, particularly a more collaborative approach aligned with
in digitized supply chains. In electronics, for the overall strategy and focused on the longer
example, the ongoing transition to a digital term. In the case of commodity-based rela-
supply chain has substantially reduced tionships, now may well be the time to drive
inventories and thus the potential downward down cost and look for alternatives. For those
pressure on prices caused by over-supply. relationships that continue, a shared sense of
Indeed, the strength of supply chain manage- engagement and interdependence, a tight-
ment in this sector is expected to make the ening of collaboration, can help companies
impact of the downturn shorter here than it manage demand volatility and risk, and enable
might have been otherwise. Other examples of innovative new business models. For example,
digitized supply chains include Netflix for film Indian telecommunications leader Bharti Airtel
and Apple iTunes for music, as well as Strayer has been able to grow quickly using a radical
24
for education. partnering strategy and business model.
Similarly, Lenovo was able to establish its full
Cultivate strategic partnerships. Partnering global presence much more quickly through
is a quick route to business model innovation. its purchase of the IBM PC business than
In the current environment, it’s particularly 25
through organic growth. In another creative
important to differentiate between strategic partnering strategy, companies like Nintendo
partners and those offering more easily are using Web 2.0 approaches to engage
replaced commodity goods and services. customers in new product development and
26
customer service.
10 IBM Global Business Services
13. Discontinuity will Outperformers expected even more change
Are you ready?
but were significantly more adept at managing
likely bring about What is your company’s competitive context
change than their peers. In a separate study
industry-changing (supply, demand, barriers to entry), and where
entitled “Making Change Work,” we found that
business models. do you fit?
companies that are good at change manage-
What new business models are likely to emerge 28
ment are really good at it. On average,
in your industry, and are you working to get project practitioners rated only 41 percent of
there ahead of your competitors? projects as successful. In contrast, the top
Are you watching other industries for concepts 20 percent reported an 80 percent project
and business models that could transform your success rate, nearly double the average,
market? and they did this by following a systematic
Do you have the right team – especially your top approach. They focused on:
talent? And do they believe in your strategy to
• Real insights for real actions – Striving for a
survive and succeed?
full, realistic awareness, understanding the
What capabilities do you need to develop to be upcoming challenges and complexities,
ready for the upturn, and do you have a robust and taking actions to address them
plan in place to develop them?
• Solid methods for solid benefits – Using
If you had the cash, which companies and assets a systematic approach to change that is
could you buy to change the game? Or could focused on outcomes and closely aligned
you be someone else’s acquisition target?
with formal project management methods
• Better skills for better change –
Demonstrating top management
3. Act quickly
sponsorship, assigning dedicated change
Finally, the new environment will favor the
managers and empowering employees to
fast and agile. Indeed, the urgency of the
enact change
current situation can actually provide a unique
opportunity to overcome organizational inertia • Right investment for the right impact –
and barriers to strategic transformation. Allocating the right amount for change
Transformation has never been easy, but in this management by understanding which types
environment it may be more possible than is of investments can offer the best returns, in
usually the case. terms of greater project success.
3.1 Manage change 3.2 Empower leaders
Overcome the “change gap.” We learned Establish strong and aligned leadership.
in the IBM Global CEO Study that eight out In this environment, speed is of the essence,
of ten CEOs anticipated substantial or very and strategy must be set from the top.
substantial change over the next three years, Leadership teams must make decisive “no
yet they rated their ability to manage change regrets” decisions and live with the conse-
27
lower, creating a change gap of 22 percent. quences, correcting course as necessary.
This is especially relevant for those cultures
that are very consensus-oriented, and find
quick and decisive action difficult.
11 Succeeding in the new economic environment
14. Communicate your strategy clearly and 3.3 Manage risk
often. The challenge in the current uncertainty Reduce risk and increase transparency.
is to set an achievable strategy and manage The issues of risk and transparency have
change quickly and effectively. Doing this come to the fore in the current period. To
well requires the repeated communication of address these issues, organizations must
simple goals, together with clear targets and apply analytics to improve decision making
strong follow-through (including the measure- and create greater predictive capability. They
ment of results). It also requires the dedication must also establish risk management gover-
and empowerment of high-ranking executives nance and processes. And they must integrate
to act as change leaders, able to seek and and rationalize business information into the
leverage experience throughout their organiza- overall risk management process. The recent
tions, and empower the layers beneath. It is unprecedented losses in the financial services
essential that these leaders align around an sector, as well as exposure to unseen threats
agreed vision for the future and a course of of criminal activity like the Madoff scheme,
action to achieve it. highlight compelling examples of the dangers
FIGURE 5.
Those who focused on all four facets of what we call the Change Diamond experienced an outstanding
increase in project success.
80%
Project success rate of individual facets Increase in project success due to
synergy effect of all four facets together
19 %
52% 52%
43% 43%
41%
Average
project
success rate
Real Insights: Solid Methods: Better Skills: Right Investment: Change Champions:
Awareness of Change Consistent use of Professional Change >11% Change Budget Combining All Four
Challenge Formal Methods Managers Facets
Source: “Making Change Work.” IBM Corporation. October 2008.
12 IBM Global Business Services
15. Especially now, the of poor risk management and lack of transpar- From surviving to thriving
29
ency. Our Global CFO Study confirmed that To be sure, some companies will not survive
ability to take requisite
risk management is increasingly a boardroom these uncertain times. For the strong, however,
actions depends
issue, with each member of the executive the current period may actually present rare,
on having superior team having a role and responsibility.
30
possibly once-in-a-lifetime opportunities. In
change management order to seize them, companies must first
capabilities, strong Are you ready? establish financial stability in the short term.
leadership and robust Does your organization have a consistent, tried But the winners will also invest for the medium
and accepted method for change management and even long terms. As preconditions for
risk management.
that is applied to every project? success with this, companies will need to
achieve:
Does your organization invest in building change
management skills that can be leveraged across • A robust understanding of how the transfor-
projects? mation will impact their industries as well as
Are there processes and technologies in place allied industries
that allow people to become involved in the • A keen appreciation of their own core
change, to access accurate information and to competencies and how these can be
provide feedback? leveraged to take advantage of emerging
Do your leaders share a common view of the opportunities and profitable innovation
future of the industries in which you operate? Of • Committed and aligned leadership with
your own and your competitors’ strengths and a clear strategy for creating sustain-
weaknesses? Do your leaders agree on where able competitive advantage so that their
your organization needs to go?
enterprise can move as swiftly as current
Do you understand the risks you currently circumstances demand.
harbor? Do you know how vulnerable you are to
changes in your current operating environment? While the final months of 2008 launched a
period of tremendous change and uncertainty,
How transparent is your current management
the good news is: even, perhaps especially,
information? Are you confident you are tracking
in times like these, winners do emerge. And
the variables that give you an accurate picture of
despite the noise, chaos and confusion,
the health of your company and the risks facing it?
there are patterns in the strategies winning
companies use to navigate such times. Based
on our experience, previous studies, and an
analysis of early winners of this period and
longer-term winners from historical economic
transformations, we advise business leaders to
focus more sharply than ever on value, exploit
opportunities presented by the current situa-
tion and act quickly in order to capitalize on
these opportunities.
13 Succeeding in the new economic environment
16. About the authors Dr. Amy Blitz is the Strategy and Change
Dr. Saul Berman is a Partner and Global Leader for the IBM Institute for Business
Executive of IBM Global Business Services Value. She has led major research initiatives
and leads the IBM Global Strategy and on issues related to strategy, innovation and
Change practice. He has over 25 years’ expe- economic development. Her work has been
rience consulting with senior management, featured in Harvard Business Review, The Wall
has published extensively and is a frequent Street Journal, MSNBC and other major media
keynote speaker at major conferences. He outlets. Amy can be contacted at ablitz@
was named one of the 25 most influential us.ibm.com.
consultants of 2005 by Consulting magazine.
Saul can be contacted at saul.berman@
Contributors
This paper would not have been possible
us.ibm.com.
without the substantial contributions of the IBM
Steven Davidson leads the IBM Strategy Strategy and Change team, notably Richard
and Change consulting practice for Growth Christner, Dan Barter and Ragna Bell who
Markets, including Asia Pacific and Greater helped steer the content development; Dave
China in particular. He also leads the IBM Lubowe and Eric Riddleberger who provided
Institute for Business Value in Asia Pacific. leadership and guidance throughout; Jim
Based in Hong Kong, he has 20 years of Byron for input on cost reduction strategies;
strategy consulting experience in Europe and and Anubha Jain and Madhulika Kamjula for
Asia, and works across industries to help data analysis and overall research support.
clients develop and implement strategies and
transformation programs in complex environ-
ments. Steven can be contacted at steven.
davidson@hk1.ibm.com.
Sara Longworth leads the IBM Strategy and
Change consulting practice in Europe, the
Middle East and Africa. Based in London, Sara
is particularly interested in the role of leader-
ship in transformational change, and has led
engagements for European, American and
Japanese multinationals to implement compet-
itively advantageous operating models. Sara
can be reached at saralongworth@uk.ibm.
com.
14 IBM Global Business Services
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17 Succeeding in the new economic environment