Menjelaskan mengenai strategi corporate

1. CORPORATE
STRATEGY
Presented By : GROUP 1
YULIA 360096
AFRIMAWIDANTI 372406
ST. IBRAH MUSTAFA KAMAL 372571
DIAH ASTRINIAMIR 372634
AHMAD MAULIN NAUFA 374007

2. VERTICAL
INTEGRATION
STRATEGIES
Presented By: St. Ibrah Mustafa Kamal
Barney (2007)

3. Definisi
Market governance
Hierarchical governance
(vertical integration)
Intermediate
governance
The Range Of
Exchange
Management
Devices
Vertical integration =
𝑣𝑎𝑙𝑢𝑒 𝑎𝑑𝑑𝑒𝑑 𝑖 −(𝑛𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 𝑖+𝑖𝑛𝑐𝑜𝑚𝑒 𝑡𝑎𝑥𝑒𝑠 𝑖)
𝑠𝑎𝑙𝑒𝑠 𝑖 −(𝑛𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 𝑖+𝑖𝑛𝑐𝑜𝑚𝑒 𝑡𝑎𝑥𝑒𝑠 𝑖)
Value added= 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 +
𝑎𝑚𝑜𝑟𝑡𝑖𝑧𝑎𝑡𝑖𝑜𝑛 +
𝑓𝑖𝑥𝑒𝑑 𝑐ℎ𝑎𝑟𝑔𝑒𝑠 +
𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 +
𝑙𝑎𝑏𝑜𝑟 𝑎𝑛𝑑 𝑟𝑒𝑙𝑎𝑡𝑒𝑑 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠 +
𝑝𝑒𝑛𝑠𝑖𝑜𝑛 𝑎𝑛𝑑 𝑟𝑒𝑡𝑖𝑟𝑒𝑚𝑒𝑛𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠 +
𝑖𝑛𝑐𝑜𝑚𝑒 𝑡𝑎𝑥𝑒𝑠 +
𝑛𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 𝑎𝑓𝑡𝑒𝑟 𝑡𝑎𝑥𝑒𝑠 +
𝑟𝑒𝑛𝑡𝑎𝑙 𝑒𝑥𝑝𝑒𝑛𝑠𝑒
Forward vertical
integration
Backward vertical
integration
Vertical
Integration

4. THREE EXPLANATIONS OFWHEN VERTICAL INTEGRATION OR
HIERARCHICAL GOVERNANCE, CAN CREATE VALUE FOR A FIRM
Transactioncost
economics
• Exchange subject to high
threats of opportunism
due to high transaction-
specific investments
should be vertically
integrated
• Exchange subject to high
threats of opportunism
due to uncertainty and
complexity should be
vertically integrated
Capabilitytheory
• When another firm has
valuable, rare, and costly to
imitate resources that are too
costly to acquire, don’t
vertically integrate the
exchange with this firm
(despite threats of
opportunism)
• Vertically integrate in
business function in which a
firm enjoys valuable, rare and
costly to imitate resources
and capabilities
Realoptionstheory
• To retain
flexibility,
exchenges
characterized
by high levels
of
uncertainty
should not be
vertically
integrated
Don’t do it unless there are really good reasons
to do so!

6. VERTICAL
INTEGRATION
STRATEGIES (CONT...)
Presented By:Yulia
Barney (2007)

7. Rare Vertical Integration Strategies
 Differences in the ability to analyze uncertain
and complex transactions.
 Differences in the ability to conceive of and
implement governance mechanism.
 Differences in the propensity to behave
opportunistically.
 Rare uncertainty and vertical integration.
 Rare vertical disintegration.
The Imitability of Vertical Integration
 Direct duplication of vertical integration
 Substitutes for vertical integration

8. ORGANIZING TO IMPLEMENT
VERTICAL INTEGRATION
Organizational
Structure
Unitary
Functional
Structure, U-form
structure with
cross-functional
teams.
Management
Controls
• Flexibility
• Broad
guidelines
• Creativity
encouraged
Compensation
Policies
Reward:
• Cross-functional
cooperation
• Creativity
• Risk taking

9. MERGER AND
ACQUISITION
STRATEGIES
Presented By:Yulia
Barney (2007)

10. THE VALUE OF MERGER AND
ACQUISITION STRATEGIES
Market Context
Merger dan akuisisi
memungkinkan suatu
perusahaan
menggunakan
competitive opportunities
atau neutralize threats,
dimana M&A
memungkinkan
perusahaan untuk
mengurangi cost dan
meningkatkan revenue.
Strategi ini economically
valuable.
Dua konteks M&A:
1. The unrelated case
2. The related case

11. Mergers & Acquisitions Defined
MERGERS ACQUISITION
Two firms are combined
on a relatively co-equal
basis
One firm buys another
firm
The words are often used interchangeably
even though they mean something very
different
Merger sounds more amicable, less
threatening

12. Mergers & Acquisitions Defined
Parent stocks are
usually retired and
new stock issued.
Name may be one
of the parent’ or a
combination.
One of the parents
usually emerges as
the dominant
management.
Can be a controlling
share, a majority, or
all of the target
firm’s stock.
Can be friendly or
hostile.
Usually done
through a tender
offer.
MERGERS ACQUISITION

13. Do Mergers and Acquisitions
Create Value?• The Logic
Unrelated M&A Activity
• There would be no expectation of value creation
due to the lack of synergies between businesses.
• There might be value creation due to efficiencies
from an internal capital market.
• There might be value creation due to the
exploitation of a conglomerate discount.
A corporate raider who buys and restructures
firms

14. Mergers and Acquisitions: The Unrelated Case
NPV(A+B) = NPV (A) + NPV (B)
P = NPV (A+B) – NPV (A)
Mergers and Acquisitions: The Related Case
Types of Strategic Relatedness:
1. FTC Categories of M&A
2. Lubatkin’s (1983)
3. Jensen and Ruback’s (1983)

15. Types of M&A Activity
RELATED:
• Vertical Supplier or customers
• Horizontal Competitors
• Product Extension Complementary products
• Market Extension Complementary markets
UNRELATED
• Conglomerate Everything else
FTC
Categories

16. •Technical economies
•Pecuniary economies
•Diversification
economies
•To reduce production or
distribution costs.
•Financial motivations
•To gain market power
in product markets
•To eliminate inefficient
target management
Lubatkin’s (1983)
Jensen and
Ruback’s (1983)

17. Do Mergers and Acquisitions
Create Value?
• The Logic
• Transferring
competencies
• Sharing
infrastructure, etc.
Related M&A Activity
Value creation would be expected due to synergies
between divisions
Economies of scale
Economies of scope

18. The Empirical Evidence
Research is based on stock market reaction to the
announcement of M&A activity.
 This reflects the market’s assessment of the
expected value of the merger or acquisition.
 These studies look at what happens to the
price of both the acquirer’s stock and the
target’s stock.
Thus, we can see who is capturing any expected
value that may be created.

19. The Empirical Evidence
•M&A activity creates value, on average, as
follows:
•Related M&A activity creates more value
than unrelated M&A activity.
Target
Firms
Acquiring
Firms
No value created
Value increases by
about 25%
M&A activity creates value, but target firms capture it

20. MERGER AND
ACQUISITION
STRATEGIES (CONT...)
Presented By: Afrima Widanti
Barney (2007)

21. Free Cash Flow
•Perusahaan yang memiliki excess FCF harus
bisa memutuskan apa yang harus dilakukan
dengan excess FCF tersebut.
•Alternatif:
-Memberi stock dividen atau stock buyback
-Strategi merger dan akuisisi

22. Agency Problem
•Merger dan akuisisi memberi pengaruh positif
langsung kepada manajer, yaitu:
a) Membantu manager mendiversifikasi
investasi human capital dalam perusahaan
b) Membantu mempercepat peningkatan
ukuran perusahaaan, diukur baik penjualan
atau aset

23. Managerial Hubris
•Keyakinan atau percaya diri manajer bahwa
mereka mampu mengatasi aset perusahaan yang
ditargetkan lebih efisien dibandingkan
perusahaan yang ditargetkan yang menangani.
•Asumsinya: economic value bidding firm akan
turun saat melakukan merger atau akuisisi

24. Merger and Acquisitions and
Sustained Competitive Advantage
•Valuable, rare and private economies of scope
between bidding and target firms
•Valuable, rare and costly-to-imitate economies of
scope between bidding and target firms
•Unexpected valueable economies of scope between
bidding and target firms

25. Rules for Bidding Firm Managers: (to get superior
performance after merger and acquisition)
• Search for valuable and rare economies of scope (avoid to
multiple bidders value a target in the same way)
• Keep information away from other bidder (tetap menjaga
rahasia informasi mengenai bidding process)
• Keep information away from target (menjaga rahasia nilai
yang dimiliki target firm agar tidak memberi tahu bidding
company yang lain)
• Avoid winning bidding wars (biasanya perusahaan yang
memenangkan akan membayar lebih tinggi daripada nilai
yang dimiliki perusahaan yang ditargetkan)
• Close the deal quickly
• Operate in “thinly traded” acquistion markets.
(Beroperasi pada pasar yang hanya sedikit penjual dan
pembeli dan informasi mengenai ini tidak terlalu
diketahui banyak orang)

26. Rules forTarget Firm Managers
•Seek information from bidder
•Invite other bidders to join the bidding competition
•Delay but do not stop the acquistion

27. Pengaruh dari Delay target firms:
•Menurunkan kesejahteraan pemegang model target
firm (green mail, standstill agreements, poison pilss)
•Tidak berpengaruh pada kesejahteraan pemegang
modal target firm (shark repellents, the “pac man”
defense, crown jewel sale, lawsuits)
•Meningkatkan kesejahteraan pemegang modal
target firm (Search for white knight, creation of
bidding auctions, golden parachutes)

28. THE QUEST FOR
PARENTING
ADVANTAGE
Presented By: Diah Astrini
Andrew Campbell, Michael Goold, and Marcus Alexander (2000)

29. Background
The best parent companies create more value in their businesses than rivals would
Two crucial questions
What businesses should this company rather than rival companies,
own, and why ?
What organizational structure management processes and
philosophy will foster superior performance from its businesses ?
1
2
Planning frameworks that corporate
level strategists have commonly used
have proven inappropriate/impractical
Most planning processes focus on
developing business level
Growth/Share
Matrix
Core
Competence
Parenting
Approach
Poor performance of companies using the
portfolio management technique and
disillusionment with diversification
Has not provided practical guidlenes for
developing corporate level strategy 
lacking reliable analytical tools
Focus on the competencies of the parent organization
and on the value created from the reationship between
the parent and its businesses

30. Fit between a parent and its
businesses is a two edged sword
OIL COMPANIES
(sales : -17 %)
MINERAL BUSINESS
Fit between a parent and its businesses is a two edged sword: a good fit can create value;
a bad one can destroy it.

31. Assessing Fit
1. Examine the critical success factors
of each business
2. Document areas in the businesses in
which performance can be improved
A structure analysis cannot replace judgement. Managers must be hinest about their own
strenths and weaknesses.

32. Making Changes to Improve Fit
Managers make their biggest mistake with businesses that fit in parenting opportunities
but not in critical success factors
2
Have opportunities to improve that the parent
knows how to address and they have critical
success factors the parent understand well
Some parenting characteristics fit, others
not
Potential for further value creation is low but
the business fits comfortably with the
parenting approach
Little potential for value creation and some
possiblity of value destruction
Businesses with a fit in parenting
opportunities but misfit in critical success
factors

33. Changing Parenting Characteristics
Which businesses belong in a parents portfolio ?
Parenting Advantage = semakin fit antara parent dan
businesses maka create value
Parenting Disadvantage = semakin missfit antara
parent dan businesses maka akan destroy value

34. CREATING CORPORATE
ADVANTAGE
Presented By: Ahmad Maulin Naufa
Collins, D.J. And C.A. Montgomery (1998)
“How can you tell if your company is really more than the sum of its parts? “

35. Introduction
•Most multibusiness companies are the sum of their
parts and nothing more.
•Don’t destroy value at the corporate level, but neither
do they create it
•Executives were focusing on individual elements of
corporate strategy: resources, business or organization.
•The essence of corporate advantage - the way a
company creates value through the configuration and
and coordination of its multibusiness activities

37. Choices
along the
resource
continuum

38. Newell's Corporate Advantage
•In 1966, Daniel Ferguson, a Stanford M.B.A., he became
CEO of Newell,"We realized we knew how to make a high-
volume, low-cost product, and we knew how to relate to and
sell to the large mass retailer.“
•In July 1967, Ferguson wrote out his strategy for Newell,
identifying its focus as the market for hardware and do-it-
yourself products. "Newell defines its basic business as that
of manufacturing and distrihuting volume merchandise lines
to the volume merchandisers. A combination or package of
lines going to the large retailers carries more marketing
impact than each line separately, and Newell intends to build
its growth through performance and marketing leverage of
this package."

39. Resources and Businesses
•The relatedness across its businesses comes not from
similarities in the products themselves but from the
common resources they draw.
•How do we know tbat Newell has the right balance of
resources and businesses? Because the firm's corporate
capabilities enhance the competitiveness of every
business it owns.
•The company's resources define the businesses that
make sense for it to own and those that do not. Newell
will never eompete in high-tech, seasonal, or fashion
produets hecause they require skills the company
doesn't have.

40. Organization
•A great corporate strategy begins with a vision of how a
eompany's resources will differentiate it from
competitors across multiple businesses.
•Much of Newell's know-how and experience is
embedded in its managers. To leverage that resource,
Newell deliberately moves managers across business
units and from the husiness to the corporate level
•the benefits of such transfers can be fully realized
because of the commonalities across its businesses-and
that is not an accident hut a result of forethought

41. Control Systems
•Without the appropriate control systems, the corporate
center can quickly lose its ability to determine strategic
direction and influence performance in the individual
businesses.
•Newell's system of operating controls fits its strategy of
leveraging the experience of senior managers.
•Compensation systems are always central to control
systems. Newell’s, To facilitate transfers, compensation
is uniform across divisions,- base salaries are
determined by position and division size.

42. Corporate Office
•A thoughtful observer would understand Newell's
corporate strategy by walking around its headquarters
and noting who was there and what they were doing-a
simple mirror of any strategy.
•From the top down, Newell maintains a culture deeply
permeated hy the expectation that it will he a leader in
serving the needs of discount retailers
•As Daniel Ferguson explains, "Like everything else we do
in marketing to the mass retailer, the more they see us as
an effective partner, the greater the edge we have when a
certain product comes up for review."

43. The Lessons of Newell
•First, corporate strategy is guided by a vision of how a
firm, as a whole, will create value.
•Second, corporate strategy is a system of
interdependent parts.
•Third, corporate strategy must be consistent with, and
capitalize on, opportunities outside tbe company.
•Fourth, tbe benefits of corporate membership must be
greater than the costs.

44. Sharing Resources at Sharp
• Resources and Businesses. Sharp's valuable resources are a set of
specialized optoelectronics technologies that contributes to the
competitive advantage of the company's core businesses.
• Organization. Sharp's technological investments share several
characteristics: they tend to he expensive, they often have substantial
lead times, and the advantages they confer in produets may be
shortlived because of imitation or brief life cycles
• Coordination. The need to share activities determines Sharp's basic
structure.
• Control Systems. Because of the blurred accountability that results
from its functional structure. Sharp requires a very different control
system than a simple divisional P&L.

45. Controls and Incentives atTyco
• Resources and Businesses. "Wbat's special aboutTyco," says CEO
Dennis Kozlowski, "are its financial controls, good incentive
programs, strong manufacturing, and operating managers who are
highly motivated by incentives and who enjoy working witbout a
whole lot of group support.“
• Organization. Ratber than reaching for specific synergies across its
groups, Tyco uses the general resources of the corporation to
encourage the division presidents to act like entrepreneurs within
their groups, and to focus on expanding the scope and profitability
of those units.

47. No One Right Strategy
• That's because every company starts at a different point, operates
in a different context, and has fundamentally different kinds of
resources. There is no best prescription for all multibusiness
corporations.
• When corporate strategy adheres to this logic, a company can
create a meaningful corporate advantage. failure of Saatchi and
Saatchi - at one time the world's largest advertising agency and
now, renamed Gordiant, a shadow of its former self.
• Saatchi’s failure to understand the control requirements of
different business undercut the enterprise.

49. ManyWays to Succeed
• The fact that there are potentially an unlimited variety of effective
corporate strategies does not mean that most corporate strategies
are effective.
• The resource continuum and the range of strategies it
encompasses provides a useful starting point for benchmarking the
effectiveness of your corporate strategy.
• There are many ways to succeed. Creativity and intuition are
hallmarks of great corporate strategies. Ultimately, strategies that
prevail are well-constructed systems that deliver tangible benefits.