Core Activity A - Develop Business Strategy Flashcards
What are the three things to do with strategy evaluation?
Feasibility
Suitability
Acceptability
What is included under feasibility?
Resources
Competencies
Implementation
What is included under suitability?
Objectives
Stengths
Opportunity
What are the methods of expanision?
Acquisition V Organic Growth
Joint Methods
What are the reasons for acquisition/merger?
Increased market share/power
Economies of scale
Combining complementary needs
Improving efficiency
A lack of profitable investment opportunities - surplus cash
Tax relief
Reduced Competition
Asset stripping
Big data opportunities
Synergy
What are the sources of synergy?
Operating economies (e.g. economies of scale, combining complementary resources)
Financial Synergy (e.g. better credit rating, lower cost of capital)
Other Synergistic effects (e.g. greater bargaining power over customers/suppliers)
What are the pre bid defences against a takeover?
Poison Pill
Revalue Assets
Communicate
Super Majority
What is the poison pill strategy?
Target company makes itself less attractive to potential bidders.
What is the super majority strategy?
Articles of association altered to require that a higher percentage of shareholders have to vote for the takeover.
What is the revalue assets strategy?
Non-current assets revalued to current values to ensure that shareholders are aware of true asset value per share.
What are the post bid defences against a takeover?
Appeal to shareholders
White knight
Counterbid
Refer to competition authorities
What is the white knight strategy?
Directors of target company offer themselves to a more friendly outside interest. Tactic should be adopted in the last resort as it means company will lose its independence.
How do we finance takeovers?
Cash - cheap but need to find the cash
Share exchange - can finance large acquisitions but price risk
What is divestment?
Disposal of part of its activities by an entity
What are the reasons for divestment?
Sum of the parts of the entity may be worth more than the whole
Divesting unwanted or less profitable parts
Strategic change
Response to crisis
What are the common methods of divestment?
Sell off (Trade sale)
Spin off (Demerger)
MBO
What is a sell off?
Sale of part of an entity to a third party, usually in return for cash
What is a spin off?
New entity is created, where shares of new entity are owned by the shareholders of the entity that made the transfer of assets into the new entity
What are the 5 emerging trends of digital disruption?
Outcome economy
Platform (r)evolution
Intelligent Enterprise
Workforce Reimagined
Internet of me
What are the 3 major types of machine learning?
Supervised learning
Unsupervised learning
Reinforced learning
What is big data?
Collection of data so large that it becomes difficult to store and process using traditional databases and processing applications
What are the features of big data?
Volume
Variety
Velocity
Veracity
What are the benefits of big data?
Innovation
Competitive Advantage
Improved productivity
What are the problems with big data?
Lack of skills and support
Lack of useful information gathered
Data security
Legal and privacy issues
