To start, let’s face it, inside the strategy development realm we climb onto shoulders of thought leaders for example Drucker, Peters, Porter and Collins. Perhaps the world’s top business schools and leading consultancies apply frameworks that were 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 within the ironic reality that it is the turnaround professional that often mops in the work of the failed strategist, often delving in to the bailout of derailed M&A. As corporate performance experts, we have found that the entire process of developing strategy must account for critical resource constraints-capital, talent and time; as well, implementing strategy must take into consideration execution leadership, communication skills and slippage. Being excellent in both is rare; being excellent in both is seldom, at any time, attained. So, let’s discuss a turnaround expert’s view of proper M&A strategy and execution.
In your opinion, the essence of corporate strategy, involving both organic and acquisition-related activities, will be the hunt for profitable growth and sustained competitive advantage. Strategic initiatives have to have a deep idea of strengths, weaknesses, opportunities and threats, plus the balance of power from the company’s ecosystem. The organization must segregate attributes which are either ripe for value creation or susceptible to value destruction for example distinctive core competencies, privileged assets, and special relationships, and also areas vulnerable to discontinuity. With these attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic property, networks and information.
The business’s potential essentially pivots on both capabilities and opportunities that can be leveraged. But regaining competitive advantage by acquisitive repositioning is often a path potentially filled with mines and pitfalls. And, although acquiring an underperforming business with hidden assets as well as varieties of strategic real-estate can certainly transition a company into to untapped markets and new profitability, it’s always best to avoid purchasing a problem. In fact, a negative clients are just a bad business. To commence a prosperous strategic process, a business must set direction by crafting its vision and mission. Once the corporate identity and congruent goals have established yourself the path could possibly be paved the following:
First, articulate growth aspirations and comprehend the basis of competition
Second, measure the life cycle stage and core competencies from the company (or perhaps the subsidiary/division in the matter of conglomerates)
Third, structure an organic and natural assessment process that evaluates markets, products, channels, services, talent and financial wherewithal
Fourth, prioritize growth opportunities which range from organic to M&A to joint ventures/partnerships-the classic “make vs. buy” matrices
Fifth, decide where to 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 prepared to integrate and realize the significance.
Regarding its M&A program, an organization must first recognize that most inorganic initiatives usually do not yield desired shareholders returns. Given this harsh reality, it really is paramount to approach the method which has a spirit of rigor.
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