Corporate strategy => how Apple moved from 1 business to more businesses. How is this going on? What is it that they are good at? You need a good story. In early days, they thought we are computer company => not really true: they are good in integration between hardware & software + good design => who knows what is next. Electric car industry? How do they create value: design, integration,… Verspreiden niet toegestaan | Gedownload door Lindsey VL ([email protected])lOMoARcPSD
Can they stay in one business? When is this valuable? They are always not the first one in the market but they do things better => better integration and design! Apple has to keep moving => other will follow => lower prices (more competitors) => pressure for Apple => next ideas : Tim Cook able to do this? Value based portfolio management ‘Better off’ test (creating value/capturing value by being together): is the business better off by combining the businesses? oIndustry attractiveness: how does it improve my position relative to the industry? Example? Greenyard Foods => fresh fruit and vegetables, frozen or canned. How does it help? Who is the customer? Retailers who are consolidating and becoming powerful. Mitigate 5 forces (rivalry, entry barriers (= easy to enter in the food business with fresh, frozen and canned vegetables?), buyer power, supplier power, substitutes) (Wal-Mart) Migrate out of structurally poor industry (Apple): how does it makes us better off compared with no integration? Prices go down due to the competition => unattractive business? => attractive business but this doesn’t last forever that industries are attractive oCompetitive advantage: how does it help us on the cost side/willingness to pay side? Cost effects: shared cost economies (scale & scope) synergies WTP and pricing effects: one-stop shopping (Amazon), Umbrella Branding (Virgin), cross-promotion (banking, new media) Be explicit! You need a story how this is going to create value, either by improving industry attractiveness/competitive advantage ‘Best Alternative Test’ –natural owner (do I need to own the business?) oComplexity and contractual incompleteness: Why do you need to own the company to really make sense of this connection? Will we work together (and specify in contract)? Things will happen which are not in the contract so firms need to negotiate about that. When it is not in the contract, it is better to own something and just say what is going to happen (no negotiations). oUnclear property rights (example: strategic alliance between Pixar and Disney): who owns the image of Nemo etc. Can you foresee all the possible things that we can do Verspreiden niet toegestaan | Gedownload door Lindsey VL ([email protected])lOMoARcPSD
with little Nemo in different businesses. Disney => we want sequels (grown up Nemo, changing format,..) oRelationship-specific or co-specialized assets: hold-up => when I make investments, I am stuck with you (I don’t make investments as I am not in agreement with your ideas) oExample? Coca Cola and bottlers Coca Cola has 1 plant but different bottlers in every region. They have a contract
You've reached the end of your free preview.
Want to read all 141 pages?
- Summer '17