To start out, let’s be honest, in the strategy development realm we get up on the shoulders of thought leaders including Drucker, Peters, Porter and Collins. Even world’s top business schools and leading consultancies apply frameworks which were incubated through 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’s 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 got found that the operation of developing strategy must take into account critical resource constraints-capital, talent and time; at the same time, implementing strategy need to take into mind execution leadership, communication skills and slippage. Being excellent either in is rare; being excellent both in is seldom, if ever, attained. So, when it concerns a turnaround expert’s take a look at proper M&A strategy and execution.
In our opinion, the essence of corporate strategy, involving both organic and acquisition-related activities, is the quest for profitable growth and sustained competitive advantage. Strategic initiatives require a deep comprehension of strengths, weaknesses, opportunities and threats, and also the balance of power from the company’s ecosystem. The business must segregate attributes that are either ripe for value creation or susceptible to value destruction such as distinctive core competencies, privileged assets, and special relationships, in addition to areas vulnerable to discontinuity. With these attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic real estate, networks and details.
Their potential essentially pivots for both capabilities and opportunities that can be leveraged. But regaining competitive advantage by acquisitive repositioning is often a path potentially full of mines and pitfalls. And, although acquiring an underperforming business with hidden assets and various forms of strategic property can indeed transition a firm into to untapped markets and new profitability, it’s always best to avoid buying a problem. All things considered, a negative business is only a bad business. To commence a prosperous strategic process, a firm must set direction by crafting its vision and mission. After the corporate identity and congruent goals are in place the path may be paved the next:
First, articulate growth aspirations and view the foundation competition
Second, look at the life-cycle stage and core competencies in the company (or subsidiary/division in the case of conglomerates)
Third, structure a natural assessment procedure that evaluates markets, products, channels, services, talent and financial wherewithal
Fourth, prioritize growth opportunities including 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 prepared to integrate and realize the worthiness.
Regarding its M&A program, a corporation must first notice that most inorganic initiatives don’t yield desired shareholders returns. Given this harsh reality, it really is paramount to approach the task having a spirit of rigor.
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