To start out, to be honest, within the strategy development realm we climb onto the shoulders of thought leaders such as Drucker, Peters, Porter and Collins. The world’s top business schools and leading consultancies apply frameworks that have been incubated through the pioneering work of the innovators. Bad strategy, misaligned M&A, and poorly executed post merger integrations fertilize the business turnaround industry’s bumper crop. This phenomenon is grounded from the ironic reality that it is the turnaround professional that often mops inside the work with the failed strategist, often delving into the bailout of derailed M&A. As corporate performance experts, we have discovered that the whole process of developing strategy must account for critical resource constraints-capital, talent and time; at the same time, implementing strategy must take under consideration execution leadership, communication skills and slippage. Being excellent in both is rare; being excellent both in is seldom, if ever, attained. So, when it concerns a turnaround expert’s take a look at proper M&A strategy and execution.
Inside our opinion, the essence of corporate strategy, involving both organic and acquisition-related activities, is the search for profitable growth and sustained competitive advantage. Strategic initiatives need a deep idea of strengths, weaknesses, opportunities and threats, along with the balance of power inside company’s ecosystem. The corporation must segregate attributes which are either ripe for value creation or at risk of value destruction for example distinctive core competencies, privileged assets, and special relationships, as well as areas at risk of discontinuity. Within these attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic real-estate, networks and information.
The business’s potential essentially pivots for both capabilities and opportunities that can be leveraged. But regaining competitive advantage by acquisitive repositioning is a path potentially filled with mines and pitfalls. And, although acquiring an underperforming business with hidden assets as well as types of strategic property can certainly transition a firm into to untapped markets and new profitability, it is best to avoid buying a problem. In the end, a negative customers are simply a bad business. To commence an excellent strategic process, a firm must set direction by crafting its vision and mission. As soon as the corporate identity and congruent goals have established yourself the road could be paved the subsequent:
First, articulate growth aspirations and see the foundation competition
Second, look at the life-cycle stage and core competencies in the company (or the subsidiary/division in the matter of conglomerates)
Third, structure an organic assessment procedure that evaluates markets, products, channels, services, talent and financial wherewithal
Fourth, prioritize growth opportunities ranging from organic to M&A to joint ventures/partnerships-the classic “make vs. buy” matrices
Fifth, decide where to invest where to divest
Sixth, develop an M&A program with objectives, frequency, size and timing of deals
Finally, have a very seasoned and proven team willing to integrate and realize the worthiness.
Regarding its M&A program, a corporation must first observe that most inorganic initiatives usually do not yield desired shareholders returns. Given this harsh reality, it’s paramount to approach the process with a spirit of rigor.
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