Group Strategy Project Assignment: Firm Analysis
A. General Instructions
1. Only use scholarly and reliable non-scholarly sources such as Bloomberg, Reuters, Money, Forbes, and Fortune (no answer.com, QuickMBA, eHow, Wikipedia.......), in addition to the weekly readings, multimedia and data resources listed in the classroom.
**Please use a couple of these references:
• Schmitz, A. (Trans.). 2012. Selecting corporate-level strategies.
• Kte'pi, B. (2009). Acquisitions, takeovers, and mergers. In C. Wankel (Ed.), Encyclopedia of business in today's world (pp. 18-22). Thousand Oaks: CA: SAGE Publications Ltd. Doi: 10.4135/9781412964289.n12
• Dyer, J.H., Kale, P., & Singh, H. (2001). How to make strategic alliances work. MIT Sloan Management Review, 42(4), 37-43. (UMUC Library)
MBA Reference Guides
• Foreign market entry modes
• Vertical integration
• Mark, R.M., & Bishop, W.V. (2007). The flexibility of RAROC: The many values of a risk-adjusted return on capital approach. Teradata Magazine, (pp. 1-2).
2. Assignment should be written in a paper format; not a question and answer format.
3. Use APA format for in-text citations and the reference list.
B. Overview & Deliverables
Identify a short list of potential target companies (at least two) for acquisition or as joint venture partners in the country you have selected for the project and provide a rationale for considering each one, and select one to be the target based upon your analysis. Provide reasons for your decision based upon your research and on the various assigned readings/multimedia so far this semester or from prior semesters (properly cite these). Specify whether this will be an acquisition or joint venture and your reasons why.
The first sentence of your Executive Summary should read as follows:
"Team _____________ recommends that _______________, a major multinational company in the ______________industry, target ___________ as the first country, through an acquisition (or joint venture with) ___________, one of the key local companies in the ___________industry.
The following is the outline for your Week 7 paper.
VI. Determination of the Target Company for Acquisition or Joint Venture
**Only responsible for the first question. No introduction, executive summary or conclusion needed
**at least 3 full pages
** Industry: Air Travel from US (International)
Client: Southwest Airlines (US based)
Countries of interest: England (London), France (Paris), Spain (Madrid), Italy (Rome)
1. Short list and profile potential company candidates and provide comparative benefits to your client company.
2. Selection of the Target Company for Acquisition or Joint Venture.
3. Description of the target company and its fit with strategic objectives of Client Company. Use comparative analysis of the potential companies in terms of strategic fit with your client. What is the structure of your partnership: joint venture/acquisition?
4. Suggest operational roles and activities of the partners of the new venture. What will your client firm and target firm each be responsible for in terms of the new venture? Break this into strategic responsibilities and operating responsibilities. How will these responsibilities be broken out?
Use the following models to analyze the benefits of the acquisition:
• Internal resources: Competitive advantage rationale / Value chain rationale / Resource Based View of the firm rationale. In other words, focus on the skills transfer potential between the two firms. How will the two firms strengthen each other as a result of their partnership?
• Shared resources: Vertical integration rationale / Horizontal integration rationale. How will efficiency be increased as a result of the combined operation?
• Financial rationale: Consider the deal from a financial point of view and effects on rate of return and debt load for example. Note: Acquisitions in the past have focused on the first two issues but ignored this dimension and incurred huge debts to make the deal only to find the financial aspects undermined or negated the strategic benefits.