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The document discusses several examples of companies that grew too quickly through aggressive acquisitions and borrowing, which ultimately led to financial difficulties. These include GM, Dacia, Dell, Compaq, Suzlon, and Gateway. It also provides contrasting examples of companies like Micron and Research In Motion that made well-timed acquisitions and strategic decisions.
![Dell hell -- grievence portal
Under promise and over deliver is always a good
Over promise and under deliver --> Novelis promised not to increase prices -->
Hindalco acquire
Intuit --> faced many problems
quality of service was very high
Unsustained growth is not favourable --> Alexandrian growth
Market share
Customer satisfaction -- holistic
Balanced scorecard -- Metrics
Novalis Antilog higher market share ---
Kodak should have segregated digital photography -- Employee satisfaction
Xerox -- New Product developed = No. of products commercialized / No. of
products innovated
flexible product developed -- External variety / internal variety --- IKEA, LEGO
No of products transformed into a platform / No of products developed --
Barbie, Mattel, IOS
Lag indicators -- towards the end
Lead indicators -- predictive
Output, throughput metrics
Core product share -- B2B
End product market share-- B2C
Core products is a platform - -- can be internal orr external -- B2B firms
Opportunity share -- fujifilm
Blue ocean = Delta penetration / Untapped market = penetration ratio
Refrigirators 18% -- electricity
Battery powered reefrigirators -- blueocean
Redocean -- Rivals' Customers
Suzlon 90% to 100% too much greed [2Mn debt]](https://image.slidesharecdn.com/smnotes-170520141801/85/Sm-notes-4-320.jpg)
Sm notes
- 1. General Motors - too much of build - highly inefficient EMI - Electric and Music Industries - building too much Dacia - Too much of borrow - Dacia acquired the tooling and basic designs of the Renault - Renault saw an oppotunity and acquired Dell - borrowed too much - competitors were sluggish and did not sense opportunity - this gave a 10 years window for dell to grow - one trick pony Too much buy - Too much Buy - Compaq acquired Digital Equipment Corporation, Tandem computers - too costly - didnt know how to integrate - Suzlon has aggressively pushed for growth, setting up manufacturing units across the country and globally too, and buying international companies. Ambitious acquisitions it made one was Hansen Transmission International of Belgium, a� leading gear manufacturer for wind turbines. And, the other, REpower Systems of Germany 10500 crore - RE Power 2500 crore - Hansen Suzlon entered into a bidding war for the first part of the stake-buy in the German wind turbine manufacturer, whose technology it hoped to acquire and sell. German law made it difficult for Suzlon to do this, because of which it had to increase its stake beyond 90 per cent. It now owns about 94 per cent of REpower. Gateway growing for sake of growth - No proper plan and it ultimately got acquired by acer. Acer acquired gateway and followed disintegrated business models. *************************************************************************** Temporal and Spatial context Analog Micron - Good timing - bought semi conductor fabrication units when economy was in doldrums. Due diligence is importaant. Research In Motion acquired pager Networks at right time without alliance - this increased its bargaining power Antilog Compaq - Bad timing - acquired DEC and Tandem but had no clue to proceed further Hp acquired Compaq and had a proper plan to integrate (Horizantal Integration) ************************************* Blend the cultures of the partners Cisco acquires and leaves the companies as they were withut interfering into their businesses. Cisco balanced portfolio of build-borrow-buy Cisco acquired 71 companies at an average price of approx $350 mn from 1993 to 2000. Their revenue increased from $650 million to $22 bn *********************************** Michellin - wear and tear - Market penetration Market development - Lead batteries, washing machine -- geographically new territory or new segment Whirlpool, Sensigerator -- 17 hours power backup -- product development related Diversification -- Canon, Sony, Honda, 3M, SPIC, Sharp Toshiba, Coca- cola-FEMSA
- 2. Unrelated diversification -- Birla group -- Hindalco, Grasim, Aditya birla nuvo, Idea Eli Lilly - Strategic Alliance with ICOS ICOS unaware of Cialis drug as cancer treat Elililly acquires ICOS ******************************************************************************** ***************************************************** Too much Euphoria & Dysphoria is useless M&A - Control high Risht choice >>> Good Execution Familiarity trap, Inertia of Direction, Curse of Success Ambidexterous, Discovery Driven planning Strategic Alliances in the Indian Context ----------------------------------------- Blue Star (Sales, Service)+ISA, Italy (Manufacturing) Commercial Refrigeration Products / Solutions Biocon (Clinical Devt, Mfg and Supply) + Pfizer (Worldwide Commercialization) Biosimilar Analog Insulin Products: Recombinant Human Insulin, Glargine, Aspart and Lispro) Godrej & Boyce (Manufacturing) + Swayam Sikshan Prayog (an NGO for distribution) Chotukool Bajaj Tempo (Mfg of Tractors) + State Bank of Indore (Special terms of finance to customers for the purchase of Balwan range of Tractors) Promotion of Agricultural Mechanization in the country Positive - crow culture - evolution of synergies - competencies, values Negative - Crab culture - both lose Strategic Alliances Sony + Ericsson Joint Venture (to take on larger competitors like Nokia and Motorola) Chevron + Texaco Energy Business >$11 billion in revenues in the Middle East Three Major Airline Alliances (Star Alliance, Oneworld, SkyTeam) Alliance-savvy firms like Eli Lilly, IBM, Procter & Gamble Strategic Alliance To form ecosystem If you know everything go for contracts instead of alliance inter-firm links Contractual agreement Equity agreement Non-equity | Equity | Acquisition Modular Synergy - Hotel & Airline, HP&MS Sequential Synergy - Drug discovery & approval
- 3. Reciprocal -- interdependent -- Exxon & Mobil *********************************************************** IBM prematurely divested Intel --> GE Portable Medical equipment Decentralization doomed HP Vonage thinks telephone operators dont know PC dont suppress common sense Multidomestic - Build from scratch in every country Transnational strategy - 80-90% same | 10-20% change True life global - All over board Intl market Licensing/frannchising Acquisition strategy Green field / Brownfield Alliance & Joint venture strategy Reasons for locating value chain Better govt policies --> Better place -- electric cars -- govt provided electric chargers Risks of adverse exchange rate Modern gadgets -- vernacular interfaces -- 3D printer -- zero transportation Overture Akon Risk Machine (ARM) Equidistant thinking Psychological distance Hofsteads dimensions Dumping -- AAA triangle -- Hofsteads 5 dimensions of nations -- Power distance Disclosure at any cost -- Disney -- 30000 acres -- florida Sukam -- speciality plastic -- Non disclosure -- not always corrupt Antilog -- satyam disclosed everything regarding
- 4. Dell hell -- grievence portal Under promise and over deliver is always a good Over promise and under deliver --> Novelis promised not to increase prices --> Hindalco acquire Intuit --> faced many problems quality of service was very high Unsustained growth is not favourable --> Alexandrian growth Market share Customer satisfaction -- holistic Balanced scorecard -- Metrics Novalis Antilog higher market share --- Kodak should have segregated digital photography -- Employee satisfaction Xerox -- New Product developed = No. of products commercialized / No. of products innovated flexible product developed -- External variety / internal variety --- IKEA, LEGO No of products transformed into a platform / No of products developed -- Barbie, Mattel, IOS Lag indicators -- towards the end Lead indicators -- predictive Output, throughput metrics Core product share -- B2B End product market share-- B2C Core products is a platform - -- can be internal orr external -- B2B firms Opportunity share -- fujifilm Blue ocean = Delta penetration / Untapped market = penetration ratio Refrigirators 18% -- electricity Battery powered reefrigirators -- blueocean Redocean -- Rivals' Customers Suzlon 90% to 100% too much greed [2Mn debt]
- 5. Revenue from new products -- Xerox parking model Rain making / Smoke stacking -- New customers / existing customers Customer metrics Up-selling vs cross selling SCM Proccess metrics Dell - 3 days Micro management -- Inventory management vs mgmt of business cycles Navistar -- lost out --- precise micro mgmt PACCAR -- handled ups and downs of business economy -- Macro mgmt but good understanding of business cycles Honda -- flexibility to shift between operations shouldn't Miss forest for trees | First see the forest, miss the trees too much finer details -- motorala -- lost Growth through Innovation Tata nano -- sustaining innovation -- provide improved products or services to customers by aopting established policies Disruptive innovation -- New product by implementing entirely new policies Maruti 2005 -- 1 lakh car is not feasible -- 2008 -- we will compete Hero honda -- car will not really impact us Sukam worked silently -- competitive advantage Tata Sactor - M&M intermediary between Car and tractor Deliberate vs emergent strategy -- Intuit quick book -- Quickbook was innovated because intuit sensed a demand. Candle industry -- good because of branding GE Medical Equipment -- refeaturing and defeaturing -- too create unique medical products for rich and not so rich hospitals Emergency Medical Research Institute - EMRI -- creating new value creation for customer Lupin pharma -- low cost strategy -- innovate medicines cheaper than american counterparts which gained market
- 6. Revenue from new products -- Xerox parking model Rain making / Smoke stacking -- New customers / existing customers Customer metrics Up-selling vs cross selling SCM Proccess metrics Dell - 3 days Micro management -- Inventory management vs mgmt of business cycles Navistar -- lost out --- precise micro mgmt PACCAR -- handled ups and downs of business economy -- Macro mgmt but good understanding of business cycles Honda -- flexibility to shift between operations shouldn't Miss forest for trees | First see the forest, miss the trees too much finer details -- motorala -- lost Growth through Innovation Tata nano -- sustaining innovation -- provide improved products or services to customers by aopting established policies Disruptive innovation -- New product by implementing entirely new policies Maruti 2005 -- 1 lakh car is not feasible -- 2008 -- we will compete Hero honda -- car will not really impact us Sukam worked silently -- competitive advantage Tata Sactor - M&M intermediary between Car and tractor Deliberate vs emergent strategy -- Intuit quick book -- Quickbook was innovated because intuit sensed a demand. Candle industry -- good because of branding GE Medical Equipment -- refeaturing and defeaturing -- too create unique medical products for rich and not so rich hospitals Emergency Medical Research Institute - EMRI -- creating new value creation for customer Lupin pharma -- low cost strategy -- innovate medicines cheaper than american counterparts which gained market