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Corporate Restructuring and Strategic Financial Management CRSFM

Saurav Snehvrat
Trimester VI

Class Structure:
Sl. Topic Area 1. Introduction - Strategy Introduction - Strategic Financial 2. Management Corporate Restructuring - Meaning, 3. Types Financial Restructuring - Capital 4. Structure 5. Mergers 6. Acquisitions 7. Buyouts 8. Management Control

Class Hours
2 2 2 2 2 2 2 2

Class Structure:
9. Takeovers 10. Valuation of Firm - Enterprise Value 11. Divestitures - Why and How 12. Managing Bankruptcy 13. Problem Solving and Practice 14. Case Discussion & Presentation Total Class Hours 2 3 3 3 3 2 32

Scoring Structure:
1. Class Attendance 2. Class Participation 10 5

3. Mid Trimester Test


4. Project Presentation 5. Final Exam Total

20
15 50 100

Stake holders and Share holders


Investopedia: A shareholder owns part of a company through stock ownership A Stakeholder is interested in the performance of a company for reasons other than just stock appreciation.

Shareholders are Stakeholders but Stakeholders are not always shareholders.

What is Strategy?
Johnson and Scholes Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations.

Michael E Porter on competitive strategy: A combination of the ends (goals) for which the firm is striving and the means (policies) by which it is seeking to get there..

What is Strategy?...features
Strategy is about winning important for success Strategy is about being different from your competitors. Strategy is long term, directional and large scale. Strategy aims to provide sustainable advantage to the firm. Strategys scope covers all organizational activities: Planning, Directing, Organizing and Controlling. Strategy leverages the unique set of resources a company has.

Hence.
Strategy requires significant change. Strategy always deals with uncertainty.

It affects every aspect of operations.


Strategies can become complex. Strategic decisions are generally very tough to reverse in the short to middle term.

What a strategy is not?


Strategy is not a plan. Why?

Strategy is not a tactic. Why? Strategy is not a SWOT analysis.


Strategy is not a PEST analysis. Strategy is not just a vision or mission statement.

Where to find the strategy of the firm?


In the heads of CEOs and senior management. Speeches and documents of the firm. Decisions through which the strategy is executed.

Hierarchy of strategy statements:


Mission statement: Why we exist? Purpose. Values/principles statement: What we believe in and how we will behave? Vision statement: What we want to be? Strategy statement: What will be the competitive game plan? - objectives - scope (where will we compete) - advantage (how will we compete)

Example of strategy statement:


Apple Inc.: Business Strategy The company is committed to bringing the best personal computing and music experience to students, educators, creative professionals, businesses, government agencies and consumers through its innovative hardware, software peripherals, service and internet offerings. The companys business strategy leverages its unique ability through the design and development of its own operating system, hardware, and many software applications and technologies, to bring to its customers new products and solutions with superior ease of use, seamless integration, and innovative industrial design. The company believes continual investment in R&D and is critical to facilitate innovation of new and improved products and technologies. The companys strategy also includes expanding its distribution network to reach more of its targeted customers effectively and provide them a high quality sales and after sales support experience.

Exercise I: Match the following


Lose weight and strengthen muscles. Lose 5 kilos by Sept 1. Proximity to a fitness centre, a successful diet. Join a fitness club. To run the London marathon. Exercise regularly, compete in marathons, stick to appropriate diet. Be healthy and fit. Monitor weight, kilometres run, measure times and adjust. Goal. Mission. Objective. Vision. Business Model. Control.

Strategies. Strategic Capability.

Exercise I: Answers
(Johnson, Scholl and Whittington)

Exercise II: Match the following


Reliance Life Insurance would strive hard to achieve the 3 goals mentioned below: Emerge as transnational Life Insurer of global scale and standard Create best value for Customers, Shareholders and all Stake holders Achieve impeccable reputation and credentials through best business practices Vision.

Empowering everyone live their dreams. Create unmatched value for everyone through dependable, effective, transparent and profitable life insurance and pension plans. 1. Retention of its existing 90 lakh customers; 2. Minimising mis-selling and orphan policies; and three 3. Offering the security of regular salaries for its agents, a first-of-its-kind initiative in India

Mission.

Goal.

Strategy.

Operating Strategy.

Basic Components of Strategy

INDUSTRY ATTRACTIVENESS Which industries should we be in ? RATE OF RETURN > COST OF CAPITAL How do we make money?
COMPETITIVE ADVANTAGE How should we compete?

CORPORATE STRATEGY

BUSINESS STRATEGY

Levels of Strategy

Corporate level

Determine overall scope of the organisation Add value to the different business units Meet expectations of stakeholders How to compete successfully in particular markets

Business level (SBU)

Operational

How different parts of organisation deliver strategy

Evolution of strategic management


FINANCIAL BUDGETING DCF based capital budgeting Financial Control through operating budgets. CORPORATE PLANNING Medium term forecasting Diversification and synergy

1950

1960
COMPETITIVE ADVANTAGE Resources and Capabilities Shareholder Value Maximization Alliances

STRATEGY AS POSITIONING Industry Analysis Market Segmentation

1970

1980

1990

Evolution of strategic management

STRATEGY FOR THE NEW ECONOMY Disruptive Technology Strategic Innovation

STRATEGY IN THE NEW MILLENIUM CSR, business ethics Global strategies Winner take all strategies

2000

2009

A model of the elements of strategic management

Exhibit 1.3 Johnson, Scholl and Whittington

Strategic management
Strategic Management is the set of managerial decisions and actions that determine the long run performance of an organization. It includes: Environmental and Internal Scanning Strategy Formulation Strategy Implementation Evaluation and Control - Wheelen and Hunger

What are the key forces of a successful strategy?

Successful strategy

Effective Implementation

Simple, consistent, long term goals

Profound understanding of the competitive environment

Objective appraisal of resources