To begin, to be honest, within the strategy development realm we ascend to the shoulders of thought leaders like Drucker, Peters, Porter and Collins. The world’s top business schools and leading consultancies apply frameworks that have been incubated from the pioneering work of these innovators. Bad strategy, misaligned M&A, and poorly executed post merger integrations fertilize the company turnaround industry’s bumper crop. This phenomenon is grounded within the ironic reality that it’s the turnaround professional that frequently mops up the work of the failed strategist, often delving in the bailout of derailed M&A. As corporate performance experts, we now have found out that the whole process of developing strategy must account for 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 both is rare; being excellent in both is seldom, at any time, attained. So, let’s talk about 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, could be the hunt for profitable growth and sustained competitive advantage. Strategic initiatives have to have a deep knowledge of strengths, weaknesses, opportunities and threats, and also the balance of power inside the company’s ecosystem. The organization must segregate attributes that are either ripe for value creation or vulnerable to value destruction including distinctive core competencies, privileged assets, and special relationships, in addition to areas at risk of discontinuity. Within these attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic real estate, networks and data.
The business’s potential essentially pivots on both capabilities and opportunities that may be leveraged. But regaining competitive advantage by acquisitive repositioning is often a path potentially brimming with mines and pitfalls. And, although acquiring an underperforming business with hidden assets and various types of strategic real-estate can certainly transition a firm into to untapped markets and new profitability, it is advisable to avoid getting a problem. After all, a poor clients are simply a bad business. To commence a successful strategic process, a firm must set direction by crafting its vision and mission. After the corporate identity and congruent goals have established yourself the road might be paved the next:
First, articulate growth aspirations and comprehend the basis of competition
Second, measure the life cycle stage and core competencies from the company (or subsidiary/division regarding conglomerates)
Third, structure an organic assessment method that evaluates markets, products, channels, services, talent and financial wherewithal
Fourth, prioritize growth opportunities ranging from organic to M&A to joint ventures/partnerships-the classic “make vs. buy” matrices
Fifth, decide where you can invest and where to divest
Sixth, develop an M&A program with objectives, frequency, size and timing of deals
Finally, have a seasoned and proven team prepared to integrate and realize the worth.
Regarding its M&A program, a corporation must first notice that most inorganic initiatives usually do not yield desired shareholders returns. Given this harsh reality, it can be paramount to approach the process using a spirit of rigor.
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