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 the company pursue? Why?
If IBM did decide to enter into the cellular telecommunication business, it would probably use a combination of entry strategies. It might try to gain access to some critical competencies by acquiring firms that possess those competencies or entering into strategic alliances by joint ventures with such firms. In addition, the company might well use its own digital know-how to build the businesses.
1. In what ways is Oracle seeking to create value from its acquisitions? Oracle seeks to strengthen its product offerings, accelerate innovation, meet customer demand more rapidly, and expand partner opportunities. Consistent commitment to customer service and product support while achieving financial return objectives and creating value for our shareholders. Long term growth focused on growing global market share. Expanding into Asia and India markets. By acquiring new companies, Oracle has consolidated the industry and taken over some of its largest competition. All of the previous companies’ customers become Oracle’s potential customers Oracle can bundle the new software with its own, creating an integrated system that creates a one-stop shop for its customers Increases efficiency, quality, innovation, and customer responsiveness
2. Based upon the ways it is seeking to increase the value it creates, what is its corporate-level strategy? 1. Obtain a customer base that increases market share and revenue. Oracle’s purchases of PeopleSoft, Siebel and BEA Systems are illustrative of acquisitions driven by financial imperatives and intended to increase recurring revenues and profits. 2. Buy into a new product line that fills a market gap. SAP’s acquisition of Business Objects, IBM’s purchase of Cognos, and Oracle’s purchase of Hyperion exemplify acquisitions that help the acquiring vendor to push into new market segments. 3. Technology deals that improve a core capability. Deals in which a vendor acquires another vendor specifically for its technology, such as SAP’s Frictionless Commerce acquisition.