Growth Strategies


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Growth strategies in era of turbulence.

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  • Honorable chief guest, respected members and dear guests AoA.
  • My name is Aamir A. and on this even 21st MAC09 I have phrased out my topic as “Goggle for Growth”.
  • In the article first I’ll be telling u what is business world? And why it requires growth? Following it where do companies goggle for growth? Then the options the companies have for growth. After it I’ll move to external growth option and I’d love to give details about corporate marriages and how to manage these marriages. Finally I conclude it giving a view of the future. And at the end I’ll appreciate ur questions. So allow me to begin my presentation. Thanks
  • World of business is world of actions, where people are hired, materials are gathered, machines are run, and words are spread to markets of the world. all is done to achieve gain, to grow wealth.
  • the question arises how to gain age on others? How to grow? The answer is first decide what u want to become in the future through growth.
  • identify your core because it is the first building block of your growth strategy.
  • and in this whole play CMA has vital role to play. They can help org by communicating information for DM and assure businesses effective utilization of resources.
  • infact business world can not afford to ignore CMA. When it ignores it faces the dumbest moment like MCdonald did. The fast food giant in 2003 posted its first qrtly loss in 38 yrs. The reason it discovered was a tiny flaw in its dollar menu strategy.
  • Actually when u hire a specialist, he adds value of his expertise to the business by improving the ways of doing business, by offering ideas, by formulating strategies. Infact, he backs the business on track and moves it in a forward motion.
  • CEOs around the world have accepted that growth is their top most challenge. It is because investors pressure for healthy return, people in the organization get benefits and in certain industries it is option of survival.
  • And CMA can play their role as growth agents. They can create pure growth strategies, improve the leads, find prospects and turn them in quality leads. While all of this can cost a considerable amount of money, it’s important to keep in mind that what u put into this type of service can ultimately increase profits by huge margins in a shorter period of time.
  • There is a question “where do companies goggle for growth” definitely they have two options; either to grow within its own resources or grow by partnering with others.
  • in internal growth an organization can exploit new market position through penetrating or product development as MS did recently by introducing when it find that 2/3 of its own employees use Google rather than MSN.
  • Or take existing product into new markets or diversify into new opportunities. The three options have respective sequential risk, which must be considered.
  • The other growth option is grow by joining hands with others, either by pursuing alliance with other business or merge with or acquire another organization.
  • And in these transactions management accountants can be employed as advisors of corporations to research new market or as transformation agent to make change profitable.
  • Before the financial meltdown CEOs favored internal growth but the scenario has change now. The economic turndown is forcing businesses to cut back in all areas, lowering prices and freezing wages.
  • Because of these cost cutting measures, lots of businesses are looking for joining hands not to grow but just to survive.
  • Now businesses are making strategic alliances by making their competitors as their partners as in our country a consortium of six major banks formed NIFT. This not only helped the financial sector but economy and country as well.
  • CMA may be involved in identification and cross fertilization of best practices & strategic development.
  • A CMA can assess true image and potential risks and rewards of the alliance.
  • The other in growth option is Corporate marriages i.e. merge with or acquire another organization. In a merger two or more organizations combine forces as one. While in an acquisition one takes over the other by purchasing its assets.
  • A merger does not create new wealth, nor does it create new product and neither a factory.
  • You can call it “its rearranging the deck chairs on the Titanic.”
  • As NIB and PICIC did. They didn’t create new wealth, nor they created any new technology but just rearranged the chairs and become the 7th largest bank in terms of distribution network with 240 branches and 2nd highest capitalized bank with some around Rs. 27 billions.
  • In Pakistan these marriages are regulated under Competition (Merger Control) Regulations 2007 by Competition Control Authority (CCP).
  • the financial sector is also fragmented and it requires mergers and restructuring, massive infusion of capital, human resource, technical upgradation.
  • so some banks have chosen M&A in order to comply with the statutory requirements of SBP of raising their paid up capital at least Rs. 6 billion by end of 2009.
  • LinkdotNet also expanded its operation and acquired WOL and Dancom to become the largest ISP provider in the country.
  • While Dalda foods acquired Tullo brand and eliminated competition in the edible oil market and increased its market share.
  • These marriages have many benefits that include: Revenue enhancement, cost reduction, diversification of business activities, wider market access, transfer of talent and resources, and tax benefits.
  • And the biggest benefit is that mergers could be the answer to economic downturn.
  • Growth Strategies

    1. 1. Event: 21 st Management Accounting Students’ Conference 2009 15 th August 2009 Marriott Hotel, Karachi
    2. 2. Goggle for Growth By: Aamir Ali Reg # 20061233 Stage IV
    3. 3. OUTLINE <ul><li>Business World … </li></ul><ul><li>Why Growth </li></ul><ul><li>Goggle for Growth </li></ul><ul><li>Turbulent Economy </li></ul><ul><li>Strategic Alliances </li></ul><ul><li>Corporate Marriages </li></ul><ul><li>Managing Marriages </li></ul><ul><li>Next … </li></ul>
    4. 4. BUSINESS WORLD….. <ul><li>People </li></ul><ul><li>Material </li></ul><ul><li>Machine </li></ul><ul><li>Information </li></ul>
    5. 5. How to grow? <ul><li>Identify the CORE </li></ul><ul><li>What to become in the future? </li></ul>
    6. 6. Understanding your CORE is the first block of your growth strategy.
    7. 7. Role <ul><li>Communicate information for Decision Making </li></ul><ul><li>Assurance of effective utilization of resources </li></ul>
    8. 8. The Dumbest Moment !! <ul><li>First quarterly loss in 38 years ! </li></ul><ul><li>CEO resigned ! </li></ul>
    9. 9. When you hire a specialist .. <ul><li>Backs your business on track </li></ul><ul><li>& </li></ul><ul><li>Moves it in a forward motion </li></ul>
    10. 10. WHY GROWTH? <ul><li>The path of success </li></ul><ul><li>Pressure from interest holders </li></ul><ul><li>Managers get benefits </li></ul><ul><li>Survival option </li></ul>Top Most Challenge
    11. 11. Growth Agents <ul><ul><li>Create strategies </li></ul></ul><ul><ul><li>improve the leads </li></ul></ul><ul><ul><li>find prospects : turn them in quality leads </li></ul></ul>
    12. 12. GOGGLE FOR GROWTH <ul><ul><li>Internal Growth </li></ul></ul><ul><ul><li>External Growth </li></ul></ul>
    13. 13. Internal Growth Market Share Growth
    14. 14. Internal Growth Market Leverage Growth Market Share Growth Customer Leverage Growth
    15. 15. External Growth <ul><li>Strategic alliance </li></ul><ul><li>Merger and acquisition </li></ul>
    16. 16. Advisors <ul><ul><li>Research new markets </li></ul></ul>
    17. 17. TURBULENT ECONOMY <ul><li>Economic downturn forces businesses to: </li></ul><ul><ul><li>Cut back in all areas </li></ul></ul><ul><ul><ul><li>Making people redundant </li></ul></ul></ul><ul><ul><ul><li>Lowering prices </li></ul></ul></ul><ul><ul><ul><li>Freezing wages </li></ul></ul></ul>
    18. 18. Cost Cutting Options… <ul><li>Lots of businesses are joining hands </li></ul>Not to grow but just to Survive !!!
    19. 19. STRATEGIC ALLIANCE <ul><li>When competitors become partners.. </li></ul>NIFT National Institutional Facilitation Technologies (Pvt.) Limited NIFTeTRUST
    20. 20. Management Consultants <ul><ul><li>Cross-fertilization of Best Practices </li></ul></ul><ul><ul><li>Strategic Development </li></ul></ul>
    21. 21. Analysts Assess True image and potential risks and rewards of the alliance
    22. 22. Corporate Marriages <ul><li>Mergers & Acquisitions </li></ul>
    23. 23. Merger <ul><li>Merger ? </li></ul><ul><li>Combine forces </li></ul><ul><li>Does a merger create : </li></ul><ul><li>new wealth </li></ul><ul><li>new factories </li></ul><ul><li>new technologies </li></ul><ul><li>new products </li></ul>
    24. 24. <ul><ul><li>Rearranging the deck chairs on the Titanic </li></ul></ul>
    25. 26. Acquisition <ul><li>Take over of Control </li></ul>
    26. 27. Marriages in Pakistan <ul><li>Competition (Merger Control) Regulations 2007 </li></ul>Regulated under : <ul><li>Regulated by : </li></ul><ul><ul><li>Competition Commission of Pakistan </li></ul></ul>
    27. 28. Some Recent Marriages
    28. 29. Arif Habib Securities Limited Aisha Steel Mills Limited 30 June 2009
    29. 30. KP Chemical Corporation Pakistan PTA Limited 23 June 2009
    30. 31. Merck & Co. Inc. & Schering Plough Corp
    31. 32. Marriages in Financial Institution <ul><li>Massive restructuring </li></ul><ul><li>Huge infusion of capital </li></ul><ul><li>Cutting edge technology up-gradation </li></ul>
    32. 33. KASB Bank Limited with Atlas Bank Limited
    33. 34. Factors Forcing Marriages <ul><li>Privatization Policy </li></ul><ul><li>State Bank of Pakistan (SBP) </li></ul><ul><li>Economic Downturn </li></ul>
    34. 36. Dalda Acquired Tullo
    35. 37. Benefits of Marriages <ul><li>Revenue enhancement </li></ul><ul><li>Cost reduction </li></ul><ul><li>Diversification of business activities </li></ul><ul><li>Wider market access </li></ul><ul><li>Transfer of talent and resources </li></ul>
    36. 38. Tax benefits <ul><li>Set off business losses </li></ul><ul><li>unabsorbed depreciation </li></ul><ul><li>an allowable expense </li></ul><ul><li>option to be taxed as one unit </li></ul>Under the Income Tax Ordinance, 2001
    37. 39. Answer to the downturn ! <ul><li>No extra help </li></ul><ul><ul><ul><li>Cash Injection </li></ul></ul></ul><ul><li>Cost Cutting Options </li></ul>
    38. 40. If you fail to plan, you plan to fail <ul><li>Lipton merged with Brooke Bond </li></ul>MCA approved merger on the condition “ the company will develop tea cultivation at 600 hectares by the year 2004” The company failed and MCA can not revise its order !!!
    39. 41. Its <ul><li>More than laying off people </li></ul><ul><li>. . . . . </li></ul><ul><li>Changing Top Management </li></ul><ul><li>Changing Product Quality </li></ul><ul><li>Changing Manufacturing Process </li></ul>
    40. 42. Really make a fundamental change in the efficiency of the companies. Mergers that succeed
    41. 43. Strategy Consultants <ul><ul><ul><li>Improve performance </li></ul></ul></ul><ul><ul><ul><li>Analysis of problems </li></ul></ul></ul><ul><ul><ul><li>Development of future plans </li></ul></ul></ul>
    42. 44. Why a marriage fail after honeymoon ends <ul><li>Two single parents </li></ul><ul><ul><li>Each with their own </li></ul></ul><ul><ul><ul><li>Pets </li></ul></ul></ul><ul><ul><ul><li> & </li></ul></ul></ul><ul><ul><ul><li>Habits </li></ul></ul></ul>Difficulty of creating ideal marriage <ul><ul><ul><ul><li>Decide to marry </li></ul></ul></ul></ul>
    43. 45. Mom & Dad so busy in love .. <ul><li>Fail to see kids don’t get along </li></ul>
    44. 46. Choice ? <ul><ul><li>How to face challenges as unified family? </li></ul></ul><ul><ul><li>Identify the differences </li></ul></ul><ul><ul><li>Recognize what’s the best? </li></ul></ul><ul><ul><li>Select ways that fits the challenges </li></ul></ul>Live happily ever after !  
    45. 47. Managing Marriages <ul><li>Ongoing process </li></ul><ul><li>Develop a clear, logical and replicable approach </li></ul><ul><li>Two way communication </li></ul>GSK a history of managing marriages all the way!!
    46. 48. System Managers <ul><li>Design such system </li></ul><ul><li>Implement system </li></ul>a
    47. 49. NEXT - - - - <ul><li>Capital </li></ul><ul><li>Knowledge </li></ul>The chief strategic resource of the future But the ability to form powerful partnership NO X
    48. 50. <ul><li>But Remember ! </li></ul><ul><li>If not lead by effective leadership efficiently then a complete disaster </li></ul>M&A felt as nutritious a
    49. 51. Leaders <ul><li>Goggle for new strategies for growth </li></ul><ul><li>Lead organization efficiently and effectively </li></ul>a
    50. 52. Growth Specialists <ul><ul><li>Achieve success in a variety of ways </li></ul></ul><ul><ul><li>Help in ways you may never have thought of </li></ul></ul><ul><ul><ul><li>A specialist’s job is to </li></ul></ul></ul><ul><ul><ul><li>maximize </li></ul></ul></ul><ul><ul><ul><li>your potential. </li></ul></ul></ul>
    51. 53. To achieve new levels with your business, may be its time to find a specialist. If you are ready …
    52. 54. Q & A