7. So, is BIGGER better?
The fly outlived the Dinosaur!
Responsiveness &
flexibility to change
8. So, is BIGGER better?
“Only 23 percent of companies involved in a
merger or acquisition are able to recover the
costs of the Merge or the acquisition”- McKinsey
study (2008)
10. Advantages and Disadvantages of
External Growth Strategies
Advantages Disadvantages
• Reducing competition • Incompatibility of top management
• Vertical or horizontal Integration • Clash of corporate cultures
• Gaining access to new products and • Operational problems
markets
• Increased business complexity
• Access to technical expertise
• Loss of organizational flexibility
• Access to an established brand name
• Economies of scale • Antitrust environment
• Diversification of business risk
12. Partnership and strategic alliancing
1+1= +3
“Partnership and strategic alliancing
leverage the resources, abilities and gifts
while getting around the weaknesses”.
Mohamed Essam
13. PARTNERSHIP & STRATEGIC
ALLIANCING
FIGURE Potential Partnership Participants -
Dr. Syed M. Ahmed, Ph.D.
College of Engineering & Computing
Florida International University, Miami, Florida
14. PARTNERSHIP
“A partnership is an arrangement where
parties agree to cooperate to advance their
mutual interests”. - (1000ventures, 2010)
“Our success has really been based
on partnerships from the very
beginning.” Bill Gates
(American Entrepreneur and Founder of
Microsoft Co., b.1980)
1
15. Strategic Alliance
"A strategic alliance is a partnership between
firms whereby resources, capabilities, and
core competences are blended to follow
mutual interests”. - (Answers.com, 1996)
2/3
16. Joint ventures
“Two or more "parent" financial gatherings
accept to share capital, technical
knowledge, human supplies, and threats
and compensates in a formation of a new
entity under divided control”. - (1000ventures, 2010)
"If you do not seek out allies
and helpers, then you will be
isolated and weak.“
Sun Tzu, "The Art of War"
17. Mergers
“A merger occurs when the net assets of two
or more cooperatives merge into one
surviving cooperative. Mergers usually
involve horizontal growth”. - (Institute of Mergers,
Acquisitions and Alliances, 2008)
18. Acquisition - Takeover
• “In business, an Acquisition or a
takeover is the purchase of
one company (the target) by another
(the acquirer, or bidder)”. - Investopedia.com
4
19. Nestlé’s Acquisition Strategy
All acquisitions are measured against a list of
key criteria for Nestlé
Possible transition into Nutrition, Health and Wellness
To be category No. 1 or strong No. 2
Strong brands in leadership positions
Focused approach on value-added growth categories
Enhancing RIG (Real internal growth), cash flow and earnings
Generate value for shareholders
Maintain strong credit ratings and financial flexibility
High degree of certainty of successful integration
21. About half of Nestlé’s billionaire brands
In- come from acquisitions
Acquired
in 1996
Acquired
in 2002
Acquired JV with
Acquired L'Oréal
in 1988 in 2002
JV with Acquired
Acquired Coke in 1985
Acquired
in 2007 in 2002
Acquired
in 1998
Acquired
Acquired in 1977
Acquired
in 2004 in 1985
Acquired
Acquired
in 1973
in 1986
Acquired
“An alliance with a powerful
in 1988
person is never safe.” Phaedrus
(Roman fabuliste, 15-50 B.C.)
21
22. WATERS’ BUSINESS IN EGYPT
MARKETSHARE
Schweppes Siwa Nahl
4% 3% Safi 1%
1%
Aqua
Hayat 5%
Aquafina
5% 26%
Baraka
Baraka 12% Dasani
+ 25%
Nestle Nestle
30 % 18%
24. Top 10 M&A deals worldwide by value
(in mil. USD) from 2000 to 2010
Transaction
value (in mil.
Rank Year Purchaser Purchased USD)
Fusion: America Online
1 2000 Inc. (AOL) Time Warner 164,747
SmithKline
2 2000 Glaxo Wellcome Plc. Beecham Plc. 75,961
Royal Dutch Petroleum Shell Transport &
3 2004 Co. Trading Co 74,559
4 2006 AT&T Inc. BellSouth Corporation 72,671
AT&T Broadband &
5 2001 Comcast Corporation Internet Svcs 72,041
6 2009 Pfizer Inc. Wyeth 68,000
Spin-off: Nortel
7 2000 Networks Corporation 59,974
8 2002 Pfizer Inc. Pharmacia Corporation 59,515
JP Morgan Chase &
9 2004 Co Banc One Corp 58,761
Anheuser-Busch
10 2008 Inbev Inc. Companies, Inc 52,000
TABLE INSTITUTE OF MERGERS, ACQUISITIONS AND
ALLIANCES
25. Licensing
“The granting of permission to
use intellectual property rights, such
as trademarks, patents, or technology,
under defined conditions. Licensing, in the
business world, is a contractual agreement
to use a brand name, patent or property that
is owned by another business entity ”. -
(investorwords.com, 2009)
.
26. Franchising
“A business arrangement which permits for
the reputation, (goodwill) breakthrough,
scientific experience and technology of the
innovator (franchisor) to be blended with
the energy, industry and finance of another
party (franchisee) to conduct the commerce
of supplying and selling of products and
services”. - (Wipo.int, 2011)
5
28. Bibliography
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• 1000ventures.com. (2011). Strategic Alliances "Why and How To Build Them". Retrieved Oct 8, 2011, from
http://www.1000ventures.com/business_guide/strategic_alliances_main.html
• Answers.com. (1996). strategic-alliance. Retrieved Oct 2011, from http://www.answers.com/topic/strategic-alliance
• chaurasiya, K. (2010). advantages and disadvantages of acquisition. Retrieved 2011, from businessofaccouting.com:
http://businessofaccouting.blogspot.com/2010/04/advantages-and-disadvantages-of.html
• Cheryl Munson, eHow Contributor. (2011). Definition-licensing-franchising. Retrieved Oct 2011, from
http://www.ehow.com/about_6068927_definition-licensing-franchising.html
• Evancarmichael.com. (2011). Franchising--Licensing---What-exactly-are-they--and-why-are-more-and-more-people-looking-at-this-option.
Retrieved Oct 2011, from http://www.evancarmichael.com/Branding/508/Franchising--Licensing---What-exactly-are-they--and-why-are-
more-and-more-people-looking-at-this-option.html
• Hoffman, I. (2007). strategic. Retrieved October 8, 2011, from http://www.ivanhoffman.com/strategic.html
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institute.org/statistics-mergers-acquisitions.html#TopMergersAcquisitions_Worldwide
• Investopedia.com. (2010). Merger. Retrieved Oct 17, 2011, from http://www.investopedia.com/terms/m/merger.asp#ixzz1b25GYRMl
• investorwords.com. (2009). licensing. Retrieved Oct 9, 2011, from http://www.investorwords.com/2799/licensing.html#ixzz1b2P5Mohe
• Lenin. (2009, Nov 19). Partnership and Types of Partnerships. Retrieved Oct 8, 2011, from
http://www.indiastudychannel.com/resources/95609-Partnership-Types-Partnerships.aspx
• MBASkool. (2011, April 17). mergers-vs-strategic-alliances-vs-joint-ventures-the-difference. Retrieved October 10, 2011, from
http://www.mbaskool.com/business-articles/finance/94-mergers-vs-strategic-alliances-vs-joint-ventures-the-difference.html
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http://www.wipo.int/sme/en/documents/franchising.htm#what
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•
