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Topic 8 Competitive Strategy and Strategic Alliances. Dr. Songporn Hansanti . Competitor Analyses. Internal Assessments External Assessments: Analyzing Competitor Operations Strategic Alliances. Who are they?. Nature of business operation Direct Competitor Indirect Competitor.

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competitor analyses
Competitor Analyses
  • Internal Assessments
  • External Assessments: Analyzing Competitor Operations
  • Strategic Alliances
who are they
Who are they?
  • Nature of business operation
  • Direct Competitor
  • Indirect Competitor
competitor analyses4
Competitor Analyses
  • Uses of Competitor Analysis
    • provides insights into rivals’ strategies and enable companies to:
  • Outwit Rivals - detect marketplace changes more quickly than competitors
  • Outmaneuver Rivals - Being the first to introduce new products and technologies
  • Outperform Rivals - In terms of new product development, market share, customer satisfaction levels and corporate reputation
competitor analysis
Competitor Analysis
  • Internal Assessments
  • Corporate missions: provide overviews of corporate priorities in terms of products, markets, technology, and corporate culture
  • Strategic intents: relate to long-term competitive aspirations
  • Core competencies: are articulations of what companies do better than others – their acknowledged expertise vis-à-vis the rest of the industry: innovation styling, value
benefits of strategic alliances
Benefits of Strategic Alliances

Potential Benefits

of Strategic Alliances

Ease of













scope of strategic alliances
Scope of Strategic Alliances
  • Significant variation
    • Comprehensive alliance
    • Narrowly defined alliance
  • Degree of collaboration depends upon basic goals of each partner
types of alliances
Types of Alliances
  • Comprehensive
  • Functional
    • Production
    • Marketing
    • Financial
    • Research and Development
implementation of strategic alliances
Implementation of Strategic Alliances
  • Selection of partners
  • Compatibility
  • Nature of potential partner’s products or services
  • Relative safeness of the alliance
  • Learning potential of the alliance
joint management considerations
Joint Management Considerations
  • Shared management agreements
  • Assigned arrangements
  • Delegated arrangements
shared management agreement
Shared Management Agreement

Partner 1

Partner 2

Both partners

participate actively


assigned arrangement
Assigned Arrangement

Partner 1

Partner 2

One partner takes

primary responsibility


delegated arrangement
Delegated Arrangement

Partner 1

Partner 2

Both partners delegate

management to the

joint venture’s


Joint Venture

pitfalls of strategic alliances
Pitfalls of Strategic Alliances


of Strategic Alliances
















Beijing Jeep – A joint venture between American Motors Company (part of Daimler Chrysler) and Beijing Auto Works
merger acquisition m a
Merger & Acquisition (M&A)
  • Technological change
  • Efficiency of operations
  • Globalization and freer trade
  • Changes in industry organization
  • New industries
  • Deregulation and regulation
  • Favorable economic and financial conditions
  • Negative trends in industries and economies
  • Widening inequalities in income and wealth
  • เป็นการรวมที่ไม่จำเป็นต้องตั้งบริษัทใหม่ ซึ่งการรวมกันจะเป็นตกลงกันว่าจะเลิกบริษัทใด แล้วแต่จะตกลงกัน
  • เช่น บริษัท สปามหาวินาศ และ บริษัท สปาเทวาบรรลัย ต่างประกอบกิจการ ได้รวมกิจการเข้าด้วยกัน เหลือเพียง บริษัท สปามหาวินาศ เพียงบริษัทเดียว
  • ซึ่งการรวมแบบนี้อาจจะเรียกได้ว่า Acquisition ซึ่งเป็นการซื้อกิจการของบริษัทอื่น
  • อาจซื้อเพียงทรัพย์สิน หรือทั้งทรัพย์สินและหนี้สิน (โอนกิจการ)
  • หรืออาจเป็นเข้าไปซื้อหุ้นเพื่อให้เพียงพอกับการเข้าไปได้บริหารกิจการ (Take Over)
  • เป็นการรวมที่ไม่จำเป็นต้องตั้งบริษัทใหม่ ซึ่งการรวมกันจะเป็นตกลงกันว่าจะเลิกบริษัทใด แล้วแต่จะตกลงกัน
  • เช่น บริษัท สปามหาวินาศ และ บริษัท สปาเทวาบรรลัย ต่างประกอบกิจการ ได้รวมกิจการเข้าด้วยกัน เหลือเพียง บริษัท สปามหาวินาศ เพียงบริษัทเดียว
  • ซึ่งการรวมแบบนี้อาจจะเรียกได้ว่า Acquisition ซึ่งเป็นการซื้อกิจการของบริษัทอื่น
  • อาจซื้อเพียงทรัพย์สิน หรือทั้งทรัพย์สินและหนี้สิน (โอนกิจการ)
  • หรืออาจเป็นเข้าไปซื้อหุ้นเพื่อให้เพียงพอกับการเข้าไปได้บริหารกิจการ (Take Over)
consolidation or amalgamation
Consolidation or Amalgamation
  • คือการรวมกิจการที่ตั้งบริษัทใหม่ และยกเลิกบริษัทเดิม
  • บริษัทใหม่นี้ต้องเป็นชื่อใหม่ มีการออกหุ้นใหม่ ผู้ถือหุ้นของบริษัทเดิมจะได้รับหุ้นสามัญของบริษัทใหม่แทนของบริษัทเดิม
  • เช่น บริษัท สูดดมอ๊อกซิไดซ์ และ บริษัท เป่าและดม ต่างประกอบกิจการผลิตยาดม ได้รวมกิจการเข้าด้วยกัน และจดทะเบียนใหม่ชื่อ บริษัท สูดเป่าและดม
m a terminology
M&A Terminology
  • Merger
    • Negotiated deals
    • Mutuality of negotiations
    • Mostly friendly
  • Restructuring — changes to improve operations, policies, and strategies
types of mergers
Types of Mergers
  • Horizontal mergers
    • Between firms in same business activity
    • Rationale
      • Economies of scale and scope
      • Synergies (ex. combining of best practices)
    • Government regulation due to potential anticompetitive effects
  • Vertical mergers
    • Combinations between firms at different stages
    • Goal is information and transaction efficiency
m a strategy
M&A Strategy
  • Defines the long-term plans, policies and culture of an organization
  • Strategic planning is a dynamic process that requires inputs from all segments of the organization
  • Acquisition and restructuring policies and decisions should be part of the company's overall strategic plans and processes
  • Ultimate responsibility for strategic planning resides in the top executive group
strategic planning processes in m a
Strategic Planning Processes in M&A
  • Essential elements in strategic planning
    • Assessment of changes in the environments
    • Evaluation of company capabilities and limitations
    • Assessment of expectations of stakeholders
    • Analysis of company, competitors, industry, domestic economy and international economies
    • Formulation of the missions, goals and policies for the master strategy
    • Development of sensitivity to critical environmental changes
strategic planning processes in m a26
Strategic Planning Processes in M&A
  • Essential elements in strategic planning
    • Formulation of organization performance measurements and benchmarks
    • Formulation of long-range strategy programs
    • Formulation of mid-range programs and short-run plans
    • Organization, funding and other methods to implement all of the preceding elements
    • Information flow and feedback system for continued repetition of above activities and for adjustments and changes at each stage
    • Review and evaluation of above processes
strategic planning processes in m a27
Strategic Planning Processes in M&A
  • Monitoring environments
    • Should encompass both domestic and international dimensions
    • Include analysis of economic, social, technological, political, and legal factors
  • Strategy also deals with stakeholders – groups with interests in the firm and its actions
  • Organization cultures
    • Firm cultures affect strategic thought and plans
    • Failure to combine cultures is a key obstacle to merger integration
alternative strategy methodologies
Alternative Strategy Methodologies
  • SWOT or WOTS UP – inventory and analysis of organizational strengths, weaknesses, environmental opportunities and threats
  • Top-down or Bottom-up – relate to company forecasts vs. aggregation segment forecasts
  • Computer models – allow detail and complexity
  • Logical incrementalism – well-supported moves from current bases
  • Comparative histories – learn from the experiences of others
alternative strategy methodologies29
Alternative Strategy Methodologies
  • Synergy – look for complementarities
  • Adaptive processes – periodic reassessment of environmental opportunities and organization capability adjustments required
  • Environmental scanning – continuous analysis of all relevant environments
  • Intuition – insights of brilliant managers
  • Entrepreneurship – creative leadership
alternative analytical frameworks
Alternative Analytical Frameworks
  • Product life cycle – introduction, growth, maturity, decline stages with changing opportunities, threats
  • Learning curve – costs decline with cumulative volume experience (first mover advantage)
  • Competitive analysis – industry, suppliers, customers, complemetors, etc.
  • Value chain analysis – seek to add product characteristics valued by customers
  • Cost leadership – low-cost advantages
alternative analytical frameworks31
Alternative Analytical Frameworks
  • Resource-based view – capabilities are inimitable
  • Relatedness matrix – unfamiliar markets and products involve greatest risk
  • Focus matrix – narrow versus broad product families
  • Growth/share matrix – aim for high market share in high growth markets
  • Attractiveness matrix – aim to be strong in attractive industries
  • Global matrix – aim for competitive strength in attractive countries
alternative analytical frameworks32
Alternative Analytical Frameworks
  • Product-market matrix
  • Competitive-position matrix
alternative analytical frameworks33
Alternative Analytical Frameworks
  • Growth-share matrix
  • Strength-market attractiveness matrix
strategy formulation approaches
Strategy Formulation Approaches
  • Boston Consulting Group Approach
    • Historical emphasis: experience curve, product life cycle, product portfolio balance
    • Recent approaches
      • Impact of the Internet and other innovations
      • Performance measurements - cash flow return on investment (CFROI)
  • Michael Porter Approach (1980, 1985, 1987)
    • Select attractive industry using “Five Forces”
    • Develop competitive advantage through cost leadership, product differentiation, or focus
    • Develop attractive value chains
evaluation of strategic approaches
Evaluation of Strategic Approaches
  • Steps taken in checklists and iterations:
    • State objectives
    • Define environment
    • Analyze strengths/weaknesses relative to environment
    • Assess potential in environment
    • Compare potential to objectives
    • If gap, search for alternative ways to close gap
    • Select alternatives for analysis
    • Cost/benefit analysis of alternatives
    • Tentative selection — formulate plans and actions
formulating a merger strategy
Formulating a Merger Strategy
  • Requires continuing reassessment
    • Industry analysis
    • Competitor analysis
    • Supplier analysis
    • Customer analysis
    • Substitute products
    • Complementors
    • Technology changes
    • Societal factors
    • Firm's strengths/weaknesses relative to present/future industry conditions
formulating a merger strategy38
Formulating a Merger Strategy
  • Goal/capability analysis
    • Are current goals, policies appropriate?
    • Do goals, policies match resources?
    • Does timing of goals/policies reflect ability of firm to change?
  • Work out strategic alternatives
    • May not include current strategy
    • Choose best
    • Mergers represent one set of alternatives
formulating a merger strategy39
Formulating a Merger Strategy
  • Grove (1996)
    • Firm must adjust to six forces
      • Existing competitors
      • Potential competitors
      • Complementors
      • Customers
      • Suppliers
      • Industry transformation
    • Eclectic adaptive processes approach to strategy
formulating a merger strategy40
Formulating a Merger Strategy
  • Business goals - general or specific, but must be quantifiable to facilitate progress assessment
    • Size objectives
      • Large enough to use fixed factors effectively
      • Critical mass necessary to attain cost levels for profitable operation at market prices
    • Growth objectives - sales, assets, EPS, values
      • To get favorable P/E multiple for shares
      • To increase market to book value of shares
formulating a merger strategy41
Formulating a Merger Strategy
  • Business goals
    • Stability objectives - two kinds of instability
      • Large erratic fluctuations in total size and abrupt program shifts (e.g., defense industry)
      • Cyclical instability of durable goods industries
    • Flexibility objectives - ability to operate in variety of product markets and responsive to consumers
      • Breadth of capabilities, e.g., research, manufacturing, marketing
      • Technological breadth
      • Stay close to customers
formulating a merger strategy42
Formulating a Merger Strategy
  • Aligning firm to changing environments
    • Gap between objectives and potential based on current capabilities
    • Various approaches:
      • Choose products related to needs of customer that provide large markets
      • Focus on technological bottlenecks
      • Be at frontier of technology and aim for attractive product fallout
      • Emphasize economic criteria – ex. value
formulating a merger strategy43
Formulating a Merger Strategy
  • Strategic planning and mergers
    • Diversification strategy may be necessary if firm must alter product-market mix or capabilities to reduce or close strategic gap
    • Both involve evaluation of current capabilities relative to those needed to reach objectives
    • Related diversification involves lower risks
strategy and structure
Strategy and Structure
  • Unitary or U-Form
    • Highly centralized under the president
    • Broken into functional departments - no departments can stand alone
    • No easy way to measure each department as a profit center
    • Allows rapid decision-making
    • Only successful in small organizations
    • Difficult to handle multiple products
strategy and structure45
Strategy and Structure
  • Holding company or H-Form
    • Arranged around various unrelated operating businesses
    • Leadership can evaluate each unit individually
    • Resources can be allocated according to projected returns
strategy and structure46
Strategy and Structure
  • Multidivisional organization (M-form)
    • Each division is autonomous enough to be judged a profit center
    • Divisions share some general staff assistance
    • Can handle related product and geographic market extensions
strategy and structure47
Strategy and Structure


  • Matrix form
    • Managers of functional departments such as finance, manufacturing and development
    • Employees are assigned to subunits organized around products, geography, or other criteria
    • Effective in firms characterized by many new products or projects

Product A

Product B

Product C








valuation and merger analysis
Valuation and Merger Analysis
  • Valuation approaches and tests
    • Comparable companies or transactions
    • Test whether transaction makes sense
    • Test whether premium paid is justified by potential synergies
  • Additional analysis
    • Nature of industry
    • Value drivers (historical and projected)
    • Competitive and antitrust effects of merger
    • Issues related to implementing the merger
trends of strategic alliances in us
Trends of Strategic Alliances in US
  • ExxonMobil =Exxon+ Mobil Oil
  • Hewlett-Packard ; with Compaq
  • Procter & Gamble buy Gillette
  • Adidas-Salomon acquire Reebok
  • Siemens; with Nokia
  • The Walt Disney Company acquiring Pixar
  • Google buys Youtube
  • Warner Bros. Entertainment & CBS Corporation = The CW Television Network
  • DaimlerChrysler = Daimler Benz + Chrysler
  • BP with Amoco
  • Alcatel+ Lucent Technologies= Alcatel-Lucent
  • Air France +KLM Royal Dutch Airlines = Air France-KLM
  • Lufthansa and SWISS
  • Mitsubishi UFJ Financial Group
  • Konica Minolta=Konica +Minolta
  • SoftBank acquiring Vodafone Japan
  • Sumitomo Mitsui Banking Corporation = Sumitomo Bank + Sakura Bank
  • EGV + Major = EGV-Major Cineplex
  • Bilsstel + TG Fone
  • LoxInfo + CS = CSLoxInfo
  • GMM + True