To start, let’s be honest, from the strategy development realm we ascend to shoulders of thought leaders including Drucker, Peters, Porter and Collins. The world’s top business schools and leading consultancies apply frameworks which were incubated through the pioneering work of those innovators. Bad strategy, misaligned M&A, and poorly executed post merger integrations fertilize the organization turnaround industry’s bumper crop. This phenomenon is grounded inside the ironic reality that it’s the turnaround professional that often mops inside the work from the failed strategist, often delving to the bailout of derailed M&A. As corporate performance experts, we’ve got found that the process of developing strategy must are the cause of critical resource constraints-capital, talent and time; as well, implementing strategy will need to take into account execution leadership, communication skills and slippage. Being excellent in both is rare; being excellent in is seldom, if, attained. So, let’s discuss 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, could be the quest for profitable growth and sustained competitive advantage. Strategic initiatives require a deep idea of strengths, weaknesses, opportunities and threats, along with the balance of power inside company’s ecosystem. The business must segregate attributes that are either ripe for value creation or at risk of value destruction like distinctive core competencies, privileged assets, and special relationships, and also areas prone to discontinuity. Within these attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic real-estate, networks and information.
The company’s potential essentially pivots on both capabilities and opportunities that can be leveraged. But regaining competitive advantage by acquisitive repositioning is really a path potentially brimming with mines and pitfalls. And, although acquiring an underperforming business with hidden assets as well as types of strategic real estate property can certainly transition a business into to untapped markets and new profitability, it is best to avoid getting a problem. After all, a negative customers are simply a bad business. To commence an excellent strategic process, a firm must set direction by crafting its vision and mission. Once the corporate identity and congruent goals have established yourself the trail may be paved as follows:
First, articulate growth aspirations and comprehend the basis of competition
Second, appraise the lifetime stage and core competencies in the company (or subsidiary/division regarding 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 to invest and where to divest
Sixth, develop an M&A program with objectives, frequency, size and timing of deals
Finally, use a seasoned and proven team able to integrate and realize the value.
Regarding its M&A program, a corporation must first recognize that most inorganic initiatives do not yield desired shareholders returns. Considering this harsh reality, it can be paramount to approach the task having a spirit of rigor.
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