Ch. 9: Alliances, Mergers, Acquisitions (Corporate)
real options perspective
approach to strategic decision making that breaks down a larger investment decision into smaller decisions that are staged sequentially over time allowing the firm to gain additional information.
build borrow or buy framework
conceptual model that aids strategists in deciding whether to pursue internal development, enter a contract arrangement, or acquire new resources, capabilities, or competencies
co-opetition
cooperation by competitors to achieve a strategic objective
corporate venture capital
equity investments by established firms in entrepreneurial ventures
explicit knowledge
knowledge that can be codified, information, facts, instructions
tacit knowledge
knowledge that can not be codified, knowing how to do a certain task
non-equity alliance
partnership based on contracts between the firms. Supply agreements, licensing agreements.
equity alliance
partnership in which at least one partner takes ownership in the other
alliance manager
provides alliance training and development
benefits of horizontal integration
reduced competition in industry, lower costs, increased differentiation
alliance leader
responsible for day to fay management, possesses technical knowledge
alliance champion
responsible for high level support and oversight
learning races
situations which both partners in a strategic alliance are motivated to form an alliances for learning, but the rate at which the firms learn may vary. The firm who accomplishes its goal first is likely to exit the alliance.
relational view of competitive advantage
strategic management framework that proposes that critical resources and capabilities frequently are embedded in strategic alliances that span firm boundaries
merger
the joining of two independent companies to form a combined entity
horizontal integration
the process of merging with competitors, leading to industry consolidation
acquisition
the purchase or take over of one company by another, can be friendly or unfriendly
gain access to new markets, new capabilities, or preempt rivals
Why do firms do acquisitions?
strengthen competitive position, enter new markets, hedge against uncertainty, access critical complementary assets, learn new capabilities
Why do firms enter strategic alliances
alliance management capability
a firm's ability to manage three alliance related tasks; partner selection, alliance design and governance, and post formation alliance management
managerial hubris
a form of self delusion in which managers convince themselves of their superior skills in the face of clear evidence to the contrary
strategic alliances
a voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products or services
hostile take over
acquisition in which the target company doesn't wish to be acquired