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GST 5103 STRATEGIC MANAGEMENT PROF DR SAZALI ABDUL WAHAB

Case Study 7 - 1 1. How does a cross order ac!u"s"t"o# strate$y eco%e cr"t"ca& source o' co%(et"t")e ad)a#ta$e 'or U#"ted States* U#"ted +"#$do%* S(a#"s,* -a(a#ese a#d I#d"a# '"r%s. Reduce trade arr"ers o' e#try.
Barr"ers to e#try are des"$#ed to &oc/ (ote#t"a& e#tra#ts 'ro% e#ter"#$ a %ar/et (ro'"ta &y. 0,ey see/ to (rotect t,e %o#o(o&y (ower o' e1"st"#$ '"r%s "# a# "#dustry a#d t,ere'ore %a"#ta"# %o#o(o&y (ro'"ts "# t,e &o#$ ru#. Barr"ers to e#try ,a)e t,e e''ect o' %a/"#$ a %ar/et &ess co#testa &e . W,e# t,e or$a#"2at"o# ca# cross t,e order o' t,e

ac!u"s"t"o# * t,e co%(et"t"o# ca# e reduce "# t,e %ar/et w,e# t,e do%"#a# or$a#"2at"o# ac!u"re t,e wea/ co%(a#y.

Better ser)e t,e &oca& %ar/et y us"#$ &oca& ta&e#t. Us"#$ &oca& ta&e#t "s "%(orta#t w,e# t,e co%(a#y o(e# t,e #ew ra#c,es "# ot,er cou#tr"es. Sure * t,e #ew (&ace ,a)e #ew cu&tures a#d (o&"c"es. 0,e d"''ere#t"at"o# t,at e1"st so%et"%es w"&& $")e "$ "%(act o# sa&es a#d (er'or%a#ce o' t,e or$a#"2at"o#. 0,e re&e)a#t use t,e &oca& ta&e#t "s a out t,e &oca& (eo(&e %uc, /#ow t,e #ecess"t"es * cu&ture a#d do a#d do #ot o' t,e &oca& (&aces. For t,e e1a%(&e * t,e 3cDo#a&d s,ou&d ,"re t,e &oca& ta&e#t "# I#d"a. It "s ecause * t,e &oca& e%(&oyees * %uc, /#ow t,e t,e I#d"a# #eeds.Bes"des t,at * t,e I#d"a#s ca##ot e (ro)"ded t,e (roducts t,at co#ta"#s ee' ecause o' re&"$"o# e&"e)"#$.

4. I# your o("#"o#* as C5O 'or o#e o' t,ese "$ '"r%s* w,at are t,e %a"# e1(ected c,a&&e#$es t,at your or$a#"2at"o# %ay e#cou#ter w,e# "%(&e%e#t"#$ cross order %er$er a#d ac!u"s"t"o# strate$y. D"''"cu&t"es "# ada(t"#$ t,e &oca& cu&tures.
L")"#$ "# a 'ore"$# cou#try "s ,ard e#ou$, as "t "s* w"t, a&& t,e ad%"#"strat"o#a& "ssues t,at t,e or$a#"2at"o# ,a)e to dea& w"t,. But "' t,e or$a#"2at"o# do#6t wa#t to $et stuc/ "# t,e e1(at u &e* t,ey #eed to &ear# to ad7ust to &"'e "# a 'ore"$# cou#try. For t,e e1a%(&e *

I' 3cDo#a&d wa#t to o(e# t,e ra#c,es "# I#d"a * t,ey #eed to %a/e sure ee' w"&&

e (ro)"ded.As we /#ow * I#d"a# e&"e' t,at ee' !u"te se#s"t")e to t,e"r re&"$"o# e&"e)"#$.

Le$a& c,a&&e#$es a#d d"''"cu&t"es.


0,e #e$ot"at"o# a#d docu%e#tat"o# o' t,e ac!u"s"t"o# o' a co%(a#y "#c&udes %a#y &e$a& "ssues. W,e# ac!u"r"#$ a co%(a#y* you s,ou&d co#su&t &e$a& cou#se& e'ore t,e co#tract #e$ot"at"o#s e$"# to deter%"#e t,e structure* (r"ce* a#d a#y &"a "&"ty "ssues. Be&ow (&ease '"#d a su%%ary o' t,e &e$a& "ssues to e addressed "# a#y tra#sact"o#. 0,e ac!u"s"t"o# o' a co%(a#y w"&& "#)o&)e t,e (urc,ase o' a&& or a co#tro&&"#$ "#terest "# t,e stoc/* (art#ers,"(* or %e% ers,"( "#terests or t,e ac!u"s"t"o# o' a&& or su sta#t"a&&y a&& o' t,e co%(a#y6s us"#ess assets. 0,e uyer o'te# (re'ers to ac!u"re o#&y t,e co%(a#y6s assets* "# a# e''ort to a)o"d assu%"#$ u#/#ow# co#t"#$e#t &"a "&"t"es.

8. I# rece#t years* t,e '"r%s "# t,e de)e&o(ed cou#tr"es suc, as U#"ted States a#d U#"ted +"#$do% ,a)e eco%e t,e %a"# tar$et o' cross order ac!u"s"t"o#s. Ot,er t,a# ,a)"#$ o(e# (o&"c"es* w,at are t,e '"r%s6 ot,er %ot")at"o#s. Curre#cy d"''ere#t"at"o#* wea/e#"#$ o' cou#try6s curre#cy t,ey wa#t to ac!u"re. 3uc, o' t,e ac!u"s"t"o# act")"ty y 5uro(ea# a#d -a(a#ese '"r%s ,a)e ee# dr")e# y curre#cy )a&uat"o#s * es(ec"a&&y re&at")e to t,e U#"ted States * ecause t,e do&&ar "s %uc, &ower "# )a&ue t,a# e"t,er t,e euro or t,e -a(a#ese ye# curre#c"es co%(ared to t,e 199:s.

I#crease usa$e o' ce%e#t dur"#$ t,e oo%"#$ o' ,ous"#$ %ar/et. 3a#y Lat"# A%er"ca# '"r%s ,a)e ee# uy"#$ U.S. '"r%s. 0,e &ar$est (roducers o' ce%e#t "# U.S. were ow#ed y 'ore"$# (roducers.3a#y o' t,e (urc,ases o' t,e ce%e#t were dr")e# y t,e ,"$, co#su%(t"o# rate dur"#$ t,e u"&d"#$ oo% w,e# t,e ce%et was "# a se&&er6s %ar/et.

Low;easy trade arr"ers. 0,e de)e&o(ed cou#tr"es o''er %ore o(e# (o&"c"es t,at a&&ow t,e e%er$"#$ < cou#try eco#o%"es to %a/e "#roads * es(ec"a&&y "# %ature $&o a&"2"#$ us"#ess suc, as stee& * a&u%"#u% * a#d ce%e#t or as"c ser)"ces "#c&ud"#$ %a#a$"#$ a"r(orts a#d ra"&roads * or "#'rastructure %a#a$e%e#t ser)"ces.

Case Study 7 < 4 1. How does acquisition of Sk !e cou"d c#eate co$!etiti%e ad%anta&e fo# Mic#osoft' i. Gain e(istin& $a#ket wit)out in%est ot)e# ca!ita" to &#a* t)e new $a#ket. By ac!u"r"#$ a co%(a#y "# sa%e re&ated "#dustry %ar/et s,are "%%ed"ate&y ca# e $a"# a#d t,e %ar/et "#'&ue#ce t,at co%es w"t, "t. A co%(a#y w"t, a 'or%"da &e %ar/et s,are ca# %ore co#'"de#t&y %a/e (r"c"#$ a#d ot,er us"#ess dec"s"o#s rat,er t,a# %ere&y res(o#d to w,at ot,ers are do"#$. 3"croso't ca# eas"&y access S/y(e e1"st"#$ custo%ers a#d (ro%ote t,e"r (roduct w"t,out "#)est add"t"o#a& cost "# ad)ert"s"#$.

ii.

Added a diffe#entiation towa#ds e(istin& !#oducts t)at can *e easi" inte&#ated wit) Sk !e. By "#te$rat"#$ S/y(e "#to 3"croso't (roduct =so'tware>* t,ey ca# add t,e )a&ue to t,e"r e1"st"#$ (roduct. 0,e"r custo%ers w"&& ,a)e add"t"o#a& 'eatures t,at ca# e#e'"t t,e% "# (art"cu&ar ways. 0,ey w"&& ,a)e t,e u($raded )ers"o# o' 3"croso't (roducts auto%at"ca&&y a#d o' course "t w"&& create d"''ere#t"at"o# to t,e"r (roduct a#d "t ca# e co%(et"t")e ad)a#ta$e o)er t,e"r co%(et"tors.

+. As t)e $ana&e$ent tea$ of Mic#osoft, w)at do ou t)ink t)e $ain st#ate&ic o*-ecti%es to in%est in .ace*ook/ es!ecia"" w)en it )ad 100 $i""ion use#s' i. T)e si0e is o*%ious to in%est, and it kee!s inc#easin&. It "s )ery $ood dec"s"o# 'or 3"croso't to "#)est "# Face oo/ ecause e1"st"#$ %ar/et o' Face oo/ a&%ost ?:: %"&&"o#s arou#d t,e wor&d a#d "t /ee( "#creas"#$ day y day. 0,e (ower o' co%(ou#d"#$ $")es a )ery ,u$e "%(act to 3"croso't ecause t,ey ca# reac, a )ery "$ #u% er o' %ar/ets to (ro%ote t,e"r (roducts.

ii.

1oostin& t)e ad%e#tisin&, es!ecia"" in t)e we* ad%e#tisin&. Ad)ert"s"#$ "s )ery cruc"a& to (ro%ote t,e (roduct a#d ,ow %a#y (ros(ects o' uyer t,at co%(a#y ca# reac, to (ro%ote t,e"r (roducts a&so "%(orta#t. @owadays* co%(a#"es te#d to %o)e 'ro% trad"t"o#a& ad)ert"s"#$ to t,e we ad)ert"s"#$ a#d w"t, Face oo/ "# t,e"r ,a#d* t,e tas/ eco%e %ore eas"er ecause t,ey ca# ser)e e1"st"#$ %ar/et.

iii.

Make t)ei# co$!etito#s wo## , es!ecia"" Goo&"e Inc. I' "# t,e (re)"ous Aoo$&e I#c ca# stay ca&% ut #ot today. A&t,ou$, at (re)"ous 3"croso't a#d Aoo$&e I#c co%(et"#$ "# d"''ere#t se$%e#t ut #ot today. W"t, Face oo/ as t,e"r a&&y* #ow t,ey co%(ete "# sa%e d"rect"o# a#d w"t, 3"croso't a#d Face oo/ wor/ as a tea%* t,ey #ow ,a)e a )ery $ood reaso# to worry.

8. W,at are t,e &esso#s &ear#t y Face oo/ "# t,e"r ac!u"s"t"o# strate$y o' S#a(tu. W,at do you t,"#/ Face oo/ s,ou&d ,a)e do#e. ". 0,ere are se)era& as(ect Face oo/ #eed to co#s"der e'ore dec"ded to ac!u"re S#a(tu. Pre)"ous&y* a&%ost 11 ac!u"s"t"o#s ,a)e ee# %ade y Face oo/ ut t,e co%(a#y ca##ot sta#d o# t,e"r ow# ut "t eco%e Face oo/6s &"a "&"ty a#d urde#. Face oo/ s,ou&d (ro(er&y a#a&y2e t,e co%(a#y t,at t,ey wa#t to ac!u"re a#d Face oo/ 'a"& to do so. I# %y o("#"o#* t,ere are ru&es a#d strate$y Face oo/ #eed to e co#s"der e'ore dec"ded to ac!u"re a co%(a#yB

T)e %a"ue t)at an acqui#e# &ains f#o$ an acquisition is equa" to t)e inc#e$enta" %a"ue t)at can *e c#eated f#o$ t)e dea" "ess t)e !#e$iu$ !aid fo# t)e ta#&et co$!an . 0,"s (re%"u% "s 7ust"'"ed y t,e "%(ro)e%e#ts a#d sy#er$"es t,at ca# e created w,e# t,e two co%(a#"es are co% "#ed. He#ce* t,e )a&ue t,at t,e ac!u"rer (oc/ets "s t,e d"''ere#ce etwee# t,e "#cre%e#ta& e#e'"ts o' t,e dea& a#d t,e (re%"u%. 0,ere "s o' course o#e ot,er 'actor to ta/e "#to accou#t < t,e cost o' t,e dea& "# ter%s o' ad)"sors 'ees a#d %a#a$e%e#t t"%e o# ot, s"des.

Co$!anies face si&nificant "ea#nin& costs in unfa$i"ia# acti%ities. Lear#"#$ costs are o'te# o)er&oo/ed "# ac!u"s"t"o# a#a&ys"s. Lear#"#$ costs are #ot t,e %a# ,ours "t ta/es to tra"# "# a #ew area or to u#dersta#d a #ew us"#ess. Lear#"#$ costs are t,e %"sta/es %a#a$ers %a/e y a((&y"#$ t,e ru&es o' t,u% 'ro% o#e area to a#ot,er co#te1t.

T)e %a"ue c#eated f#o$ t)e dea" s)ou"d *e &#eate# t)an t)e %a"ue t)at can *e c#eated * a!!" in& t)e #esou#ces to a -oint %entu#e o# so$e ot)e# acti%it . Ac!u"s"t"o#s "#)o&)e a &ot o' %o#ey a#d a &ot o' %a#a$e%e#t t"%e. 0,e "%(act o' ac!u"s"t"o# %ust etter or %ore (ro'"ta &e 'ro% t,e cost o' ac!u"r"#$ t,e co%(a#y. 0,ey s,ou&d /#ow t,e (ro7ected (ro'"t "# t,e 'uture w,e# t,ey dec"ded to ac!u"re a '"r% a#d t,e (ro'"t %ust ,u$e e#ou$, to co)er t,e cost o' ac!u"r"#$.

Case Study C - 1

1. W,at are t,e e#e'"ts a#d c,a&&e#$es o' strate$"c 7o"#t )e#tures 'ore"$# '"r%s.

etwee# SAIC a#d

4. W,e# co%(et"#$ "# US6s auto%ot")e "#dustry* w,at are t,e %ar/et (&ayer suc, as SAIC.

est strate$"es 'or #ew

8. W,y do you t,"#/ t,e -a(a#ese car %a#u'acturers ,a)e eco%e %a7or (&ayer "# US6s auto%ot")e "#dustry. 0,ey were t,e '"rst to "#troduce !ua&"ty u"&t cars. 0,e"r cars cou&d eas"&y &ast o)er 1::*::: %"&es w,e# t,ey were "#troduced. P&us t,e"r cars were $ett"#$ %uc, etter 'ue& eco#o%y e)e# t,ou$, #o o#e was e)e# ot,ered y t,at ecause o' c,ea( $as (r"ces. At t,at t"%e A%er"ca# a#d Aer%a# car ty("ca&&y were wore out a#d 'a&&"#$ a(art y 7?*::: %"&es. It too/ se)era& years e'ore A%er"ca# a#d Aer%a# car %a/ers cou&d du(&"cate w,at t,e -a(a#ese were do"#$. A#d* ID% #ot so sure t,ey ,a)e as o' yetE. @ow -a(a#ese cars ca# &ast o)er 4?:*::: %"&es w"t,out %a7or wor/ e"#$ #eeded w"t, s"%(&e %a"#te#a#ce. A#ot,er t,"#$ t,at ,e&(ed t,e -a(a#ese was t,e 'act t,at t,e"r cars were a out ,a&' t,e (r"ce o' A%er"ca# cars e'ore t,e Feds attac,ed a tar"'' o# t,e%. I ca# re%e% er %y #e"$, or uy"#$ a 0oyota ("c/-u( 'or ,a&' t,e (r"ce o' a s"%"&ar Ford or C,e)y ac/ "# t,e &ate 7:s. Stro#$ ase s"#ce 19?C a#d u"&t w,o&&y ow#ed 'actory "# 197C. 0,ey too/ ad)a#ta$e o# US o(e# (o&"cy a#d t,ey te#d to ta/e o((ortu#"ty.

Case Study C - 4 1. W,y $&o a& strate$y "s so "%(orta#t to Star uc/.

4. P&ease d"scuss t,e "#ter#at"o#a& us"#ess-&e)e& strate$y and tra#s#at"o#a& "#ter#at"o#a& cor(orate-&e)e& strate$y "%(&e%e#ted y Star uc/.