To begin with, to be honest, from the strategy development realm we get up on shoulders of thought leaders including Drucker, Peters, Porter and Collins. Even the world’s top business schools and leading consultancies apply frameworks which are incubated from the pioneering work of these innovators. Bad strategy, misaligned M&A, and poorly executed post merger integrations fertilize the organization turnaround industry’s bumper crop. This phenomenon is grounded in the ironic reality that it’s the turnaround professional that often mops up the work with the failed strategist, often delving in the bailout of derailed M&A. As corporate performance experts, we’ve learned that the whole process of developing strategy must are the cause of critical resource constraints-capital, talent and time; concurrently, implementing strategy will need to take into mind execution leadership, communication skills and slippage. Being excellent in either is rare; being excellent in both is seldom, if ever, attained. So, when it concerns a turnaround expert’s view of 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 knowledge of strengths, weaknesses, opportunities and threats, as well as the balance of power inside the company’s ecosystem. The company must segregate attributes which can be 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 vulnerable to discontinuity. In those attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic real estate property, networks and knowledge.
The company’s potential essentially pivots on both capabilities and opportunities that can be leveraged. But regaining competitive advantage by acquisitive repositioning is really a path potentially filled with mines and pitfalls. And, although acquiring an underperforming business with hidden assets and other varieties of strategic real estate property can indeed transition a business into to untapped markets and new profitability, it’s best to avoid getting a problem. In fact, a negative clients are only a bad business. To commence an excellent strategic process, a firm must set direction by crafting its vision and mission. Once the corporate identity and congruent goals are established the road could possibly be paved the subsequent:
First, articulate growth aspirations and comprehend the basis of competition
Second, assess the life cycle stage and core competencies from the company (or even the subsidiary/division in the case of conglomerates)
Third, structure a natural assessment procedure that evaluates markets, products, channels, services, talent and financial wherewithal
Fourth, prioritize growth opportunities starting from organic to M&A to joint ventures/partnerships-the classic “make vs. buy” matrices
Fifth, decide where you should invest where to divest
Sixth, develop an M&A program with objectives, frequency, size and timing of deals
Finally, possess a seasoned and proven team willing to integrate and realize the value.
Regarding its M&A program, a corporation must first observe that most inorganic initiatives tend not to yield desired shareholders returns. Considering this harsh reality, it is paramount to approach the method having a spirit of rigor.
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