Chapter 12 Powerpoint Presentation
- 1. Chapter 12 Learning Objectives After studying this chapter, you should be able to: articulate how institutions and resources affect alliances and acquisitions gain insights into the formation, evolution, and performance of alliances understand the motives and performance of acquisitions participate in two leading debates on alliances and acquisitions draw implications for action
- 3. Institutions, Alliances, and Acquisitions formal institutions – set of formal legal and regulatory frameworks impacting: (1) antitrust concerns (2) entry mode requirements informal institutions - imitation drives many alliance/acquisition decisions yet some firms rush into alliances and acquisitions without adequate due diligence and then get burned
- 5. RESOURCES AND ALLIANCES VRIO Framework Value alliances - must create value by reducing costs, risks, and uncertainties real option - investment in real operations as opposed to financial capital learning race - competitive situation in which partners aim to outrun each other by learning the “tricks” from the other side as fast as possible acquisition premium - difference between the acquisition price and the market value of target firms
- 6. RESOURCES AND ALLIANCES VRIO Framework Rarity - ability to successfully manage interfirm relationships—often called relational (or collaborative) capabilities— may be rare relational (or collaborative ) capabilities relationships that occur within an organization firms must have unique skills to execute strategy
- 7. RESOURCES AND ALLIANCES VRIO framework Imitability - one firm’s resources and capabilities may be imitated by partners - trust and understanding -firms without good “chemistry” may have a hard time imitating such activities - firms that excel in integration possess hard-to-imitate capabilities
- 8. RESOURCES AND ALLIANCES VRIO framework Organization - alliance relationships are organized in a way that makes it difficult for others to replicate - whether acquisitions add value boils down to how merged firms are organized to take advantage of the benefits while minimizing costs
- 11. PERFORMANCE OF ALLIANCES Factors that may influence alliance performance: (1) equity (2) learning and experience (3) nationality (4) relational capabilities None of these is able to assert an unambiguous, direct impact on performance