To start out, let’s face it, from the strategy development realm we ascend to shoulders of thought leaders for example Drucker, Peters, Porter and Collins. Perhaps the world’s top business schools and leading consultancies apply frameworks which were incubated by the pioneering work of the innovators. Bad strategy, misaligned M&A, and poorly executed post merger integrations fertilize the corporate turnaround industry’s bumper crop. This phenomenon is grounded from the ironic reality that it is the turnaround professional that frequently mops up the work in the failed strategist, often delving into the bailout of derailed M&A. As corporate performance experts, we’ve learned that the whole process of developing strategy must account for critical resource constraints-capital, talent and time; as well, implementing strategy need to take into account execution leadership, communication skills and slippage. Being excellent in a choice of is rare; being excellent both in is seldom, at any time, attained. So, let’s discuss a turnaround expert’s check out proper M&A strategy and execution.
Inside our opinion, the essence of corporate strategy, involving both organic and acquisition-related activities, could be the quest for profitable growth and sustained competitive advantage. Strategic initiatives need a deep understanding of strengths, weaknesses, opportunities and threats, as well as the balance of power inside the company’s ecosystem. The corporation must segregate attributes which can be either ripe for value creation or at risk of value destruction like distinctive core competencies, privileged assets, and special relationships, along with 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 capabilities and opportunities that can be leveraged. But regaining competitive advantage by acquisitive repositioning can be a path potentially brimming with mines and pitfalls. And, although acquiring an underperforming business with hidden assets and other types of strategic real-estate can certainly transition a firm into to untapped markets and new profitability, it is best to avoid purchasing a problem. After all, an undesirable clients are only a bad business. To commence a prosperous strategic process, a firm must set direction by crafting its vision and mission. As soon as the corporate identity and congruent goals are established the road could possibly be paved the following:
First, articulate growth aspirations and comprehend the foundation 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 process 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 should invest where to divest
Sixth, develop an M&A program with objectives, frequency, size and timing of deals
Finally, have a very seasoned and proven team willing to integrate and realize the value.
Regarding its M&A program, a company must first observe that most inorganic initiatives don’t yield desired shareholders returns. With all this harsh reality, it is paramount to approach the task having a spirit of rigor.
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