Honorable chief guest, respected members and dear guests AoA.
My name is Aamir A. and on this even 21st MAC09 I have phrased out my topic as “Goggle for Growth”.
In the article first I’ll be telling u what is business world? And why it requires growth? Following it where do companies goggle for growth? Then the options the companies have for growth. After it I’ll move to external growth option and I’d love to give details about corporate marriages and how to manage these marriages. Finally I conclude it giving a view of the future. And at the end I’ll appreciate ur questions. So allow me to begin my presentation. Thanks
World of business is world of actions, where people are hired, materials are gathered, machines are run, and words are spread to markets of the world. all is done to achieve gain, to grow wealth.
the question arises how to gain age on others? How to grow? The answer is first decide what u want to become in the future through growth.
identify your core because it is the first building block of your growth strategy.
and in this whole play CMA has vital role to play. They can help org by communicating information for DM and assure businesses effective utilization of resources.
infact business world can not afford to ignore CMA. When it ignores it faces the dumbest moment like MCdonald did. The fast food giant in 2003 posted its first qrtly loss in 38 yrs. The reason it discovered was a tiny flaw in its dollar menu strategy.
Actually when u hire a specialist, he adds value of his expertise to the business by improving the ways of doing business, by offering ideas, by formulating strategies. Infact, he backs the business on track and moves it in a forward motion.
CEOs around the world have accepted that growth is their top most challenge. It is because investors pressure for healthy return, people in the organization get benefits and in certain industries it is option of survival.
And CMA can play their role as growth agents. They can create pure growth strategies, improve the leads, find prospects and turn them in quality leads. While all of this can cost a considerable amount of money, it’s important to keep in mind that what u put into this type of service can ultimately increase profits by huge margins in a shorter period of time.
There is a question “where do companies goggle for growth” definitely they have two options; either to grow within its own resources or grow by partnering with others.
in internal growth an organization can exploit new market position through penetrating or product development as MS did recently by introducing bing.com when it find that 2/3 of its own employees use Google rather than MSN.
Or take existing product into new markets or diversify into new opportunities. The three options have respective sequential risk, which must be considered.
The other growth option is grow by joining hands with others, either by pursuing alliance with other business or merge with or acquire another organization.
And in these transactions management accountants can be employed as advisors of corporations to research new market or as transformation agent to make change profitable.
Before the financial meltdown CEOs favored internal growth but the scenario has change now. The economic turndown is forcing businesses to cut back in all areas, lowering prices and freezing wages.
Because of these cost cutting measures, lots of businesses are looking for joining hands not to grow but just to survive.
Now businesses are making strategic alliances by making their competitors as their partners as in our country a consortium of six major banks formed NIFT. This not only helped the financial sector but economy and country as well.
CMA may be involved in identification and cross fertilization of best practices & strategic development.
A CMA can assess true image and potential risks and rewards of the alliance.
The other in growth option is Corporate marriages i.e. merge with or acquire another organization. In a merger two or more organizations combine forces as one. While in an acquisition one takes over the other by purchasing its assets.
A merger does not create new wealth, nor does it create new product and neither a factory.
You can call it “its rearranging the deck chairs on the Titanic.”
As NIB and PICIC did. They didn’t create new wealth, nor they created any new technology but just rearranged the chairs and become the 7th largest bank in terms of distribution network with 240 branches and 2nd highest capitalized bank with some around Rs. 27 billions.
In Pakistan these marriages are regulated under Competition (Merger Control) Regulations 2007 by Competition Control Authority (CCP).
the financial sector is also fragmented and it requires mergers and restructuring, massive infusion of capital, human resource, technical upgradation.
so some banks have chosen M&A in order to comply with the statutory requirements of SBP of raising their paid up capital at least Rs. 6 billion by end of 2009.
LinkdotNet also expanded its operation and acquired WOL and Dancom to become the largest ISP provider in the country.
While Dalda foods acquired Tullo brand and eliminated competition in the edible oil market and increased its market share.
These marriages have many benefits that include: Revenue enhancement, cost reduction, diversification of business activities, wider market access, transfer of talent and resources, and tax benefits.
And the biggest benefit is that mergers could be the answer to economic downturn.
