BUS_690_Chapters_7-9

BUS_690_Chapters_7-9 - Chapters 7-9 Modes of...

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Chapters 7-9 Modes of Diversification
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Overview Internal development Mergers and acquisitions Joint ventures and Strategic alliances Franchising Licensing
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Internal Development and Greenfield Investment Internal development – using existing facilities for the new production Greenfield – the establishment of a new wholly owned subsidiary
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Internal Development/ Greenfield Reasons : Resources needed Benefits Drawbacks
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Mergers, Acquisitions and Takeovers Merger – two firms agree to integrate their operations on equal basis Acquisition – one firm buys another firm Takeover – a hostile acquisition where the target firm did not solicit the acquiring firm’s bid
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Reasons Resources needed Benefits Drawbacks Mergers & Acquisitions
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Effective Acquisitions Assets complementarity High synergy Acquisition is friendly Faster and more effective integration, lower premiums Acquiring firm conducts effective due diligence
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BUS_690_Chapters_7-9 - Chapters 7-9 Modes of...

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