1. Managing Multi-Unit Organizations Strategic Factors II

2. You don't get a gazelle by breeding dinosaurs.
Corporate Growth
A major acquisition is the fastest way to compensate for a company's failure to grow organically (via internal means)
You don't get a gazelle by breeding dinosaurs.
“When Dinosaurs Mate,” G. Hamel, WSJ

3. Best Path to Growth? Ford Starbuck’s Southwest Airlines General Motors
Jaguar
Mazda
General Motors
Saab
Hewlett-Packard
Compaq
Unilever
Knorr
Ben & Jerry
Daimler-Benz
Chrysler
Corporate strategy solutions
Starbuck’s
Southwest Airlines
Toyota
Dell
Wal-Mart
Nike
Business strategy solutions

4. Entering New Businesses
WHY?
Does business fit?
Financially
Strategically
Culturally
HOW?
Acquisition or merger
Internal start-up
Joint ventures
Alliance

5. Justifications for M&A
Attractiveness test
Industry factors
Core competencies
Strategic position
Cost of entry test
Buy outstanding shares
Cash
Contributions to merger or JV
Better off test
Synergies, econ. of scale/scope
Consolidation of resources, activities
Leverage strategic assets for competitive advantage?

6. Blue Circle Unrelated Diversified FirmHQ
Cement
Bricks
Gas
Stoves OK
Cement
Products
Lawn
Mowers
Unrelated to Other Units or
Core Competence

7. Boddingtons Related Horizontal Diversified FirmHQ
Pubs
Hotels
Health
Clubs
Restaurants
Nursing
Homes
Related to Other Units
via
Core Competence

8. Adidas-Reebok Merger +
vs.

9. Adidas-Reebok Merger + 26,100 24,600 21.1% 36.3% 25.0% 33.2%
Employees
26,100
24,600
U.S. Market Share
21.1%
36.3%
Global Market Share
25.0%
33.2%
Net Income
$517.9 mil
$1.2 bil
Hot Product
SmartShoe
+ Nelly’s shoe line
L. Armstrong apparel
+ iPod Sport Kit

10. Gillette
Personal
Grooming
Small
Appliances
Oral
Care
Portable
Power

11. PROCTER & GAMBLE Gillette Soaps Food Beverages Paper Products Razors
Core Product
Mr. Coffee
Machines
Duracell
Batteries
Oral-B
Toothbrush

12. Unilever Matrix …it’s complicated
Margarine Unie
Rotterdam
Lever Bros.
London
Finance
Marketing
R&D
Food
Household
Beauty
Health/Hygiene EU US
Asia
Pacific

13. The “Un-Matrix” Oracle - Vienna Guenther Goeschl (CFO) and his “troll”
Specialists
Problems
Generalists
Guenther Goeschl (CFO)
and his “troll”

14. Integrating Newly-Merged Multi-Unit Organizations
Processes and costs associated with…
Integration hubris, rose-colored lenses
Rationalizing value chain activities
Duplicate
Eliminate
Integrate
Meshing people, systems, and cultures
Conflicting stakeholder and politics