Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Political factors:
exported jobs Assisted economic development of rival nations at the expense of the home country Reduced domestic investment
The increase in world trade and the opening up of new markets that have occurred in recent decades The development of new technologies that can be transplanted between countries Liberalisation of the economies of nations throughout the globe, including removal of exchange controls and controls on the repatriation of profits Establishment of common markets and other regional trading blocs with common external tariffs
High transport costs associated with exporting Problems with licensees and the need to protect intellectual property Availability of investment grants from foreign governments Lower operating costs Faster access to the local market Undercapacity at home
A desire to protect supplies of new materials and components only available from foreign countries Local content requirements Especially favourable economic conditions in particular countries: buoyant markets, rising consumer incomes, easy access to finance, low interest rates, etc. Wanting to spread the risk of downturns in particular markets Acquisition of know-how and technical skills only available locally Desires to minimise worldwide tax burdens The need to engage in local assembly or part-manufacture
Political stability of the country being considered The extent of government investment grants and subsidies Legal matters (ease of patent protection, wage and other costs, restrictions on the repatriation of profits, and taxation)
Horizontal and vertical integration Advantages of the growth through horizontal integration:
It enables the firm with a mediocre performance record to improve its market position Economies of scale might become available The business develops a critical mass which could improve its competitive position Opportunities for diversification might arise from the process
Attempts to strengthen a hold on a market by controlling diverse activities Loss of traditional products or markets Large seasonal variations in demand for a firms existing product Overdependence on a handful of customers Successful research and technical development activities resulting in new products and applications Existing products reaching the ends of their life-cycles Increased competition within existing markets Potential for the joint marketing of a wide range of goods Spare capacity within the firm that can be utilised via the supply of fresh products
Lucrative opportunities can be exploited as they emerge so that the firms profit earning potential is extended Profits earned in certain areas of a diversified company can be used to reinforce activities elsewhere
Genuine opportunities for diversification might not be available Faulty mechanisms for researching fresh market and/ or product opportunities can lead to disastrous investment decisions that could ruin the firm Diversification might result in the firm locking up large amounts of capital in particular technologies or administrative or distribution systems from which it cannot subsequently withdraw
It develops great expertise in a particular area Product specialisation can mean improved use of labour and equipment, the development of a strong corporate image based on a single product line, and a big return of stocks The firm can maintain a position at the leading edge of the technology of its chosen field Large volumes of similar items will be supplied, leading to economies of scale, better customer care and a higher level of product quality It limits the range of problems connected with diverse multi-market multi-product operations
Outdated techniques and attitudes might passed on from one generation of employees to the next The strategy assumes that the firm can continue its current activities without hindrance and at peak efficiency There is a presupposition that the more a management and employees know about something the better at it they become The firm could become inward looking and resistant to change
TECHNIQUES OF DFI
Removal of competitors Reduction of the likelihood of company failure through spreading risks over a wider range of activities The desire to acquire businesses already trading in certain markets and/or possessing certain specialist employees and equipment Obtaining patents, licences and other intellectual property Economies of scale possibly made available though more extensive operations Acquisitions of land, buildings, and other fixed assets that can be profitably sold off
TECHNIQUES OF DFI
The ability to control supplies of raw materials Expert use of resources Desire to become involved with new technologies and management methods, particularly in risk industries The potential ability of a larger organisation to influence local and national government Tax considerations Additional financial and other resources, including greater capacity to undertake research
TECHNIQUES OF DFI
Market conditions might suddenly change following a costly acquisition New competitors may emerge Resignations of key employees in the acquired business might occur Control difficulties created by having to manage a large and diverse organisation could arise The activities, working methods and organisation structures of the amalgamating firms may turn out to be fundamentally incompatible
TECHNIQUES OF DFI
Even if the smaller of the merging businesses is more efficient than the larger, it may have little or no influence on decisions taken by the amalgamated company after the merger A firm which takes over another and pays for it in cash may subsequently become extremely short of liquid assets Senior managers in one of the firms taken over might not be worth employing in the larger company Increased size can lead to diseconomies of scale rather than improved efficiency
TECHNIQUES OF DFI
Clear specification of acquisition objectives Establishment of meaningful criteria for the choice of the firm(s) to be acquired Development of sound search procedures for finding suitable target businesses Careful planning of the entire process, using expert outside assistance where appropriate
TECHNIQUES OF DFI
The targets long-term prospects The calibre of the targets management team The number of shareholders in the target company Share price of the target The value of the target companys property and other assets
TECHNIQUES OF DFI
Divestment:
TECHNIQUES OF DFI
New start-ups Factors for the choice of a new start-up: