Module 5: Target selection

Question 1

Difference in importance of fit for non-equity alliance, equity alliance and acquisition

Answer 1

Non-equity alliance: strategic fit important, cultural less but aids collab.
Equity alliance: strategic and cultural fit more important.
Acquisition: strategic and cultural fit crucial.

Question 2

Why can cultural distance be seen as a double-edged sword?

Answer 2

It impedes integration due to its influence on understandability, communication, and employee retention, but also some diversity is necessary to trigger learning.

Question 3

5 questions for target selection

Answer 3

1. Why are we really buying?
2. What are we really buying? –> customers, competition, cost economies, capabilities.
3. What is the level and context of the target’s capabilities? –> deploy/acquire, strong/weak, new/existing.
4. Where are the synergies and the skeletons?
5. What is the target’s standalone value and our walk-away price?