Normally, a small company merges with large company or a sick company with healthy company. However in some cases, reverse merger is done. When a healthy company merges with a sick or a small company is called reverse merger. This may be for various reasons. Some reasons for reverse merger are: The transferee company is a sick company and has carry forward losses and transferor Company is profit making company. If transferor Company merges with the sick transferee company, it gets advantage of setting off carry forward losses without any conditions. If sick company merges with healthy company, many restrictions are applicable for allowing set off. The transferee company may be listed company. In such case, if transferor Company merges Continue reading
Strategic Management Terms
External Expansion or Business Combination Strategies
External expansion refers to business combination where two or more concerns combines and expand their business activities. The ownership and control of the combined concerns may be undertaken by a single agency. Business combination is a method of economic organization by which a common control, of greater or lesser completeness is exercised over a number of firms which either is operating in competition or independently. This control may either be temporary or permanent, for all or only for some purposes. This control over the combining firm can be exercised by a number of methods which in turn give rise to various forms of combinations. In the process of combination, two or more units engage in similar business or in different Continue reading
Firm That is Stuck in the Middle
The three Porters generic competitive strategies are alternative, viable approaches to dealing with the competitive forces. The converse of the previous discussion is that the firm failing to develop its strategy in at least one of the three directions – a firm that is stuck in the middle – is in an extremely poor strategic situation. According to Porter, a company’s failure to make a choice between cost leadership and differentiation essentially implies that the company is stuck in the middle. Porter argued that cost leadership and differentiation are such fundamentally contradictory strategies, requiring such different sets of resources, that any ï¬rm attempting to combine them would wind up “stuck in the middle” and fail to enjoy superior performance, Cost Continue reading
Retrenchment Strategies Followed by Organizations
A retrenchment grand strategy is followed when an organization aims at a contraction of its activities through substantial reduction or the elimination of the scope of one or more of its businesses in terms of their respective customer groups, customer functions, or alternative technologies either singly or jointly in order to improve its overall performance. Eg: A corporate hospital decides to focus only on special treatment and realize higher revenues by reducing its commitment to general case which is less profitable. The growth of industries and markets are threatened by various external and internal developments (External developments – government policies, demand saturation, emergence of substitute products, or changing customer needs. Internal Developments — poor management, wrong strategies, poor quality of Continue reading
The 10-P Framework of Global Strategic Management
The 10-P framework for globalization symbolizes the aspirations and needs of employees and organizations in the new competitive settings. It comes a long way from the initial impetus provided to the subject by Michael Porter in his book Competitive Strategy (1980), and goes beyond his purely industrial organization perspective. The framework operationalizes the 4-Diamonds for a nation’s competitive advantage of Porter. The 10-P framework integrates theory of strategic management and practice of business policy and provides a structure for the practicing manager to evaluate competitiveness at regular intervals. The 10-P framework explores a fine `fit’ between the soft and hard strategic choices. It seeks a self-motivated network of stakeholders who are able to self-actualize a high sense of satisfaction, self-worth, Continue reading