To start, to be honest, within the strategy development realm we stand on shoulders of thought leaders including Drucker, Peters, Porter and Collins. Perhaps the world’s top business schools and leading consultancies apply frameworks which were incubated with the pioneering work of these innovators. Bad strategy, misaligned M&A, and poorly executed post merger integrations fertilize the corporate turnaround industry’s bumper crop. This phenomenon is grounded inside the ironic reality that it’s the turnaround professional that frequently mops in the work with the failed strategist, often delving in the bailout of derailed M&A. As corporate performance experts, we now have found that the operation of developing strategy must be the cause of critical resource constraints-capital, talent and time; as well, implementing strategy have to take into consideration execution leadership, communication skills and slippage. Being excellent in both is rare; being excellent in both is seldom, if, attained. So, let’s discuss a turnaround expert’s check out proper M&A strategy and execution.
Within 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 have to have a deep knowledge of strengths, weaknesses, opportunities and threats, along with the balance of power from the company’s ecosystem. The business must segregate attributes which can be either ripe for value creation or at risk of value destruction such as distinctive core competencies, privileged assets, and special relationships, along with areas susceptible to discontinuity. With these attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic real estate property, networks and information.
Their potential essentially pivots on capabilities and opportunities that may 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 other forms of strategic real-estate can certainly transition an organization into to untapped markets and new profitability, it’s always best to avoid getting a problem. All things considered, an undesirable clients are merely a bad business. To commence an effective strategic process, a company must set direction by crafting its vision and mission. When the corporate identity and congruent goals have established yourself the road may be paved the next:
First, articulate growth aspirations and comprehend the foundation of competition
Second, look at the life-cycle stage and core competencies from the company (or even the subsidiary/division when it comes to conglomerates)
Third, structure a healthy assessment procedure 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 and where to divest
Sixth, develop an M&A program with objectives, frequency, size and timing of deals
Finally, possess a seasoned and proven team able to integrate and realize the value.
Regarding its M&A program, an organization must first notice that most inorganic initiatives do not yield desired shareholders returns. Given this harsh reality, it is paramount to approach the process using a spirit of rigor.
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