Chapter 12 Powerpoint Presentation

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1. Chapter 12 Learning Objectives After studying this chapter, you should be able to: articulate how institutions and resources affect alliances and acquisitions gain insights into the formation, evolution, and performance of alliances understand the motives and performance of acquisitions participate in two leading debates on alliances and acquisitions draw implications for action 2. 3. Institutions, Alliances, and Acquisitions formal institutions set of formal legal and regulatory frameworks impacting: (1) antitrust concerns (2) entry mode requirements informal institutions -imitation drives many alliance/acquisition decisions yet some firms rush into alliances and acquisitions without adequate due diligence and then get burned 4. 5. RESOURCES AND ALLIANCES VRIO Framework Valuealliances-must create value by reducingcosts, risks, and uncertainties real option -investment in real operations asopposed to financial capital learning race -competitive situation in whichpartners aim to outrun each otherby learning the tricks from theother side as fast as possible acquisition premium-difference between theacquisition price and the market value of targetfirms 6. RESOURCES AND ALLIANCES VRIO Framework Rarity -ability to successfully manageinterfirm relationshipsoften calledrelational (or collaborative) capabilities may be rare relational(orcollaborative )capabilities relationships that occur within anorganization firms must have unique skillsto execute strategy 7. RESOURCES AND ALLIANCES VRIO framework Imitability - one firms resources and capabilities maybe imitated by partners -trust and understanding -firms withoutgood chemistry may have a hard timeimitating such activities -firms that excel in integration possesshard-to-imitatecapabilities 8. RESOURCES AND ALLIANCES VRIO framework Organization - alliance relationships are organized in a way that makes it difficult for others to replicate - whether acquisitions add value boils down to how merged firms are organized to take advantage of the benefits while minimizing costs 9. 10. 11. PERFORMANCE OF ALLIANCES Factors that may influence alliance performance:(1) equity (2) learning and experience (3) nationality (4) relational capabilities None of these is able to assert an unambiguous, direct impact on performance 12. 13. 14.