strategic tuto 8
Discussion Questions
1. Outline the issues and problems involved in identifying a company’s desired future state.
a. Determine the need for change: need to determine the current state and recognise the “core competencies”; and practically characterise its desired future state. Determine whether the company needs reengineering or restructuring.
b. Identify the obstacles: need to identify the obstacles to change at all level.
2. Under what circumstances might it be best to enter a new business area by acquisition? Under what circumstances might internal new venturing be the preferred mode of entry?
It would be better to enter a new business area by acquisition when a company is considering implementing horizontal integration or when they are pursuing vertical integration and the company is lacking the distinctive competencies to compete in an industry and uses capital to purchase a company that possesses those competencies to establish a quick presence and reputation. Acquisition allows a company to purchase quicker than it takes to establish its own company that is similar. Also, acquisitions are less risky because there is less commercial uncertainty and the company is able research the firm they are interested and they have an established reputation. Lastly, they are attractive because there are high barriers to entry.
It would be better to enter a new business area by internal new venturing when a company possesses one or more generic distinctive competencies in its core business model that can be leveraged or recombined to enter a new industry. Usually companies that focus on innovation and technological advancements to create new products favour this model. If the company has limited distinctive competencies it is beneficial because the company is entering the embryonic stage, where you do not have to be established to compete.
3. If IBM decides to diversify into the wireless telecommunications business, what entry strategy would you recommend that
1. Outline the issues and problems involved in identifying a company’s desired future state.
a. Determine the need for change: need to determine the current state and recognise the “core competencies”; and practically characterise its desired future state. Determine whether the company needs reengineering or restructuring.
b. Identify the obstacles: need to identify the obstacles to change at all level.
2. Under what circumstances might it be best to enter a new business area by acquisition? Under what circumstances might internal new venturing be the preferred mode of entry?
It would be better to enter a new business area by acquisition when a company is considering implementing horizontal integration or when they are pursuing vertical integration and the company is lacking the distinctive competencies to compete in an industry and uses capital to purchase a company that possesses those competencies to establish a quick presence and reputation. Acquisition allows a company to purchase quicker than it takes to establish its own company that is similar. Also, acquisitions are less risky because there is less commercial uncertainty and the company is able research the firm they are interested and they have an established reputation. Lastly, they are attractive because there are high barriers to entry.
It would be better to enter a new business area by internal new venturing when a company possesses one or more generic distinctive competencies in its core business model that can be leveraged or recombined to enter a new industry. Usually companies that focus on innovation and technological advancements to create new products favour this model. If the company has limited distinctive competencies it is beneficial because the company is entering the embryonic stage, where you do not have to be established to compete.
3. If IBM decides to diversify into the wireless telecommunications business, what entry strategy would you recommend that