combining factors of production to achieve growth objectives: land securities group case study 1...

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Combining Factors of Production to Achieve Growth Objectives: Land Securities Group Case Study

IntroductionSuppose you wanted to start a business. What would you need?

1. You would have to decide what products your business would offer 2. This decision would influence your view on what premises (or land) you needed3. the kind of machinery required4. the type of labor to be employed5. In addition, you would need to find the money (capital) to pay for setting up all these things6. Above all, you would need organizational skills

http://businesscasestudies.co.uk/land-securities-group/combining-factors-of-production-to-achieve-growth-objectives/enterprise-and-risk.html#axzz3TxMOkB5P

Factors of Production

Product or Service

Land Labor

CapitalEnterprise

http://businesscasestudies.co.uk/land-securities-group/combining-factors-of-production-to-achieve-growth-objectives/enterprise-and-risk.html

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Land Securities: Co. Profile

- Land Securities has been at the forefront of the UK commercial property investment and development industry for over 60 years- It manages property and generates rental income- It remains market leader by providing commercial accommodation and property services to more than 2,000 customers- Land Securities develops large scale building projects such as office blocks and retail centres- Land Securities does not actually build properties itself, but contracts out the building work to other businesses


0.4

3.2

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1.3

Investment Portfolio in 2004 (in Billion Pounds)

Industrial PremisesRentalOfficesRetail Warehouse

Land Securities: Investment

Portfolio


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Enterprise & Risk

- Enterprise refers to all the organizational skills that go into creating a product or service- It also includes a willingness and ability to take risks in order to gain rewards and to think up new products or services- Land Securities manages its risks by making sure it has a balanced portfolio- The portfolio will contain some developments that carry a substantial element of risk but which, if successful, will bring high returns- It will also contain lower risk activities, which ensure a steady income stream


Risk Management & Land Securities

- Risk management strategy that follows the six steps; 1. Identify the business goals and objectives (the reasons why risks are taken) 2. Identify the risks 3. Measure the level of risk 4. Develop action plans to manage the risks 5. Assess the risks again after they have been managed 6. Report at each stage


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Combine Risk Strategy with

Innovation

Examples of these include:1. Property outsourcing - Land Securities Trillium is the market leader here2. Additional client services - e.g. building maintenance, cleaning, reception and security.3. Landflex - this enables clients to change the size of their accommodation over time and to have flexible leases on property


Land

- When firms use land efficiently, the land rises in value- Land Securities often puts land to new uses- If the buildings already on it are no longer serviceable, the company will demolish them and redevelop the site- If, however, the buildings still have potential, Land Securities will save resources by refurbishing them- Taking care of the environment is a big issue in the case of land use- Land Securities recycles rubble from old buildings into new projects, such as Heathrow's new Terminal 5, which was built using recycled aggregate- It works with subcontractors to ensure that buildings are as energy efficient as possible- Land Securities also develops brownfield sites e.g. the Kent Thameside

Development of mixed housing and commercial property

Land & Environment


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Land & Environment

- As part of its Land Securities Trillium ISO14001 Environmental Certification, it checks all of its potential suppliers' policies on health, safety and the environment to ensure that its environmental footprint is as small as possible

Labor

- Labor is the work done by an economy's workforce- Different people do different jobs requiring different skills and attributes- Labor does not just mean physical effort, refers to all work done, whether by hand or brain- Land Securities employs nearly 2,000 people across the UK- They are responsible for the management of the property portfolio, development and delivery of all the business property services- It uses pay, incentives and benefits to help motivate its staff- The business communicates openly with employees, so that management and employees can easily exchange ideas or solve problems. Communication includes: - an intranet that regularly updates employees - regular presentations on business activities and future plans - - management and staff 'away days‘ - email updates - various magazines, both on paper and online, including a monthly environmental newsletter


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Labor

- The Group looks to recruit and develop the best people for its various business roles- It offers them ongoing comprehensive training programmes- It sets targets for internal promotion and constantly monitors staff to ensure that people maximize their career opportunities- It runs a 'Values into Action' award programme, which rewards employees for demonstrating in the workplace the company's core values; 1. integrity 2. respect for the individual 3. customer service 4. excellence 5. innovation- The company also encourages its employees to be involved in community activities in the areas where they are based. This helps to build good working relationships between the company and local communities


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Workplace Legislation

- Labor is an important factor of production and managing labor effectively involves understanding workplace legislation- Land Securities looks to comply with all laws relating to the workplace - - It ensures nobody is harassed or treated differently because of their age, race, color, disability, creed, religion, or sexual orientation- The legislation that Land Securities must follow includes:1. Health and Safety at Work Act: Both employers and employees have a duty to work in as safe and healthy a way as possible2. Equal Pay Act: Men and women should receive equal pay for equal work3. Sex Discrimination Act: This extended the law to include such matters

as recruitment, training, and promotion opportunities. Employers may

not discriminate on grounds of an employee's or applicant's gender. The government set up the Equal Opportunities Commission to enforce the Act.4. Race Relations Act: This made it illegal to discriminate between people on the grounds of race, colour, marital status, nationality or ethnic group. It also set up the Race Relations Board to investigate complaints. The Act applies to all aspects of employment including job

advertisements, recruitment processes such as interviews, and training and promotion opportunities


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Workplace Legislation

5. Disability Discrimination Act: Employers with 20 or more staff must not discriminate against applicants or employees on grounds of disability, providing that the applicant is capable of doing the job

Capital

- In the context of factors of production, capital refers to the buildings, machinery, equipment (including vehicles) and tools that businesses use to create goods and services- In this context, capital does not mean 'money' but means the real assets that businesses purchase or hire, using money- Land Securities operates in the property market, where capital is a key factor of production- The company's 2,000 employees manage a portfolio of investment assets worth around £8 billion- Businesses like Land Securities have to borrow large amounts of money

because their activities depend so heavily on physical capital, financed through bank loans, bond sales and share issues- Land Securities is a public limited company so it has shareholders who expect a return on their investment. Land Securities' three divisions compete to see which can generate the best financial performance


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CapitalThe company's three main divisions are:1. Central London - Its £8.7 billion investment portfolio includes more than 810,000 m2 of office space in London and substantial retail holdings in Oxford Street and Tottenham Court Road. The main driver is to recycle capital in a cyclical market, for example the selective acquisition of properties with active management opportunities rather than simple asset accumulation2. Retail - The Group owns 18 shopping centres and 25 retail parks located across the UK and its vision is to acquire or develop long-term

assets. Land Securities has been selling high street retail (directly with the customers), to enable it to drive higher returns through the active management of larger assets3. Property Outsourcing - This division manages properties on behalf of the clients who own them. It offers a complete buildings management and support service. This leaves the businesses who occupy the buildings to concentrate on what they are good at. They no longer have to deal with day-to-day problems such as caretaking, cleaning and buildings maintenance. Clients for this service include government departments, the BBC and BTLand Securities have an Urban Community Development division, which is overseeing and master planning

one of Europe's largest regeneration schemes in Kent Thameside. In such a capital-intensive business, the company has to ensure that it is managing risk and also working to achieve the best returns for all of its stakeholder groups


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Conclusion

- Land Securities' stated aim is to create sustainable shareholder returns through good financial management- This relies on careful management of all four factors of Production (Land, Labor and Capital are all important, but Enterprise is arguably the most important of all)- With its sound organizational and entrepreneurial skills, Land Securities

continues to be the market leader in the UK property market


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Strategic Alliance

http://iveybusinessjournal.com/publication/leveraging-knowledge-management-across-strategic-alliances/(Harbison J.R., and Pekar P. A Practical Guide to Repeatable Success, Jossey-Bass Publishers, San Francisco, 1998; “Alliance Management,” December 1999/January 2000, CMA Management, 73(10); 14-15)Doz, Y.L., and Hamel, G., Alliance Advantage, Harvard Business School Press, Boston, 1998

With an annual growth rate of 25 per cent and a projected value of $40 trillion by the year 2004, there is little doubt that alliances will have a major impact on management in the 21st century

When to partner ?With whom to partnerHow to structure the partnership?How to manage & sustain the partnership till objectives are met?

Several Truths

- Companies expect that by 2003, 35 per cent of their revenues will come from alliances, up from 21 per cent in 1998 and 15 per cent in 1995- But alliances do more than contribute to a firm’s bottom line. Firms can

no longer develop all the resources, technologies and products to compete in today’s dynamic marketplace, and so many of those firms use alliances to acquire the critical skills, knowledge and capabilities that they lack- Companies form R&D alliances, not simply to reach short-term financial milestones, but to observe, learn and internalize the know- how of their partners. In U.S.-Japanese alliances in the past, for example, Japanese companies saw these partnerships as a way to learn from their partner, while their U.S. counterparts used these alliances as a substitute for more competitive skills, ultimately resulting in an erosion of their own internal skills

http://iveybusinessjournal.com/publication/leveraging-knowledge-management-across-strategic-alliances/

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Strategic Alliance

Kale,P., and Singh, H., Alliance Capability and Success: A Knowledge Based Approach, Wharton School of Business WhitePaper, 1999http://iveybusinessjournal.com/publication/leveraging-knowledge-management-across-strategic-alliances/http://study.com/academy/lesson/strategic-alliance-in-business-definition-advantages-disadvantages.html

Several Truths

- An alliance knowledge management capability is both an important component of alliance success and a differentiating factor. Managing knowledge resources in an alliance is extremely challenging. This implies that companies should learn from their past and institutionalize their knowledge. Those companies who employed standard, effective alliance processes or systematically captured alliance and partner information were more successful than those companies that did not have a knowledge management capability

Definition

- A strategic alliance in business is a business relationship between two or more businesses that enables each to achieve certain strategic objectives neither would be able to achieve on their own- The strategic partners maintain their status as independent and separate entities, share the benefits and control over the partnership, and continue to make contributions to the alliance until it is terminated- Strategic alliances are often formed in the global marketplace between businesses that are based in different regions of the world- Culture clashes, procedural differences and even technological incompatibilities create problems in some strategic alliances. Successful

strategic alliances require ongoing communication between the businesses at all levels


http://study.com/academy/lesson/strategic-alliance-in-business-definition-advantages-disadvantages.html

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Strategic Alliance

http://study.com/academy/lesson/strategic-alliance-in-business-definition-advantages-disadvantages.htmlhttp://smallbusiness.chron.com/strategic-alliances-strategy-81504.htmlhttp://iveybusinessjournal.com/publication/leveraging-knowledge-management-across-strategic-alliances/

Example

- The partnership between Nortel Networks and Accenture is one example of a strategic alliance- These two independent organizations are co-operating to offer service providers networking solutions, software, equipment and necessary skills for building emerging internet protocol networks and service and business strategies- Nortel Networks brings a rich portfolio of networking products and services to the alliance- Accenture offers business and systems integration consulting servicesUsing complementary skills and capabilities, both companies benefit by improving their ability to respond to clients’ needs

- The multi-year alliance between Intel and Hewlett-Packard to develop a next-generation computer chip, which began in the mid-1990s, is an example of a very complex alliance- The two companies had to learn to integrate and coordinate not only their respective technologies, but also teams of chip designers working together to develop and validate a very complex product

The strategic alliance is usually a long-term endeavor that consists of multi-projects, is mutually dependent and beneficial, and integrates people, process, technologies or products. Unlike shorter-term partnerships or arrangements between companies that are highly contractual, the strategic alliance provides the companies involved with the opportunity to learn and acquire know-how


http://smallbusiness.chron.com/strategic-alliances-strategy-81504.html


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Strategic Alliance

http://study.com/academy/lesson/strategic-alliance-in-business-definition-advantages-disadvantages.htmlhttp://smallbusiness.chron.com/strategic-alliances-strategy-81504.html

Considerations for Establishing Vision & Goals

- Starting a business with a partner requires agreement on vision and goals- Allies start by developing a clear definition of what essential function the alliance serves, such as sharing risks in research and development, intended market segments and the anticipated duration of the strategic

alliance- A clear view of the function, markets and duration improves the odds of finding viable strategic allies that share a similar perspective

Strategic Alliances Critical to Organizations

Today

1. Organic growth alone is insufficient for meeting most organizations’ required rate of growth2. Complexity is increasing, and no one organization has the required total expertise to best serve the customer3. Partnerships can defray rising research and development costs4. Alliances facilitate access to global markets



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Strategic Alliance: Phases


- The first phase involves making alliance strategy decisions as well as screening and selecting potential partners- At this stage, a record of past and current alliance projects is important for senior leadership to understand the resource capabilities or gaps- Corporate strategy documents and vision statements are also useful for developing alliance goals- As these internal objectives are developed and evaluated, it is equally important that they are communicated to the appropriate people in the organization, such as alliance managers and team members- Ideal partners have compatible objectives, complementary resources and skills, organizational fit in terms of culture and processes and a willingness to ally with each other- During first phase legal knowledge is needed to understand the ramifications of aligning with a particular organization. For instance, in the pharmaceutical arena, where competition is fierce and R&D costs are high, joining forces with one company may leave another partner feeling uneasy; it may also breach existing contracts with that partner- In the Find phase, industry knowledge is also important when selecting partners

Find Phase1


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For instance, one financial services organization always examines various industries such as telecommunications and retail to identify key e-commerce strategies in those areas- By identifying the key players and strategies in these spaces, the organization is better able to target compatible and complementary partners

Find Phase1

- The Design phase includes structuring and negotiating an agreement with the partner- During negotiations, successful partners evaluate and align the strategic objectives for the alliance- Knowledge about a partner’s strategic objectives, products and services

is important at this point in the alliance process - Staffing decisions are usually made during the Design phase- In successful alliances, partners strive for a reasonable share of control that encourages equal involvement from both sides- Another key success factor in the Design phase is to commit the best personnel to the alliance and to strive for long-term resource placement rather than high turnover- Knowledge about your own company’s skills is particularly important for defining work roles and support requirements with your partner

Design Phase2


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- In the Manage phase, organizations develop an effective working environment with the partner to facilitate the completion of the actual work- The types of information and knowledge that are critical at this stage include; - performance measures - feedback from both partners on how they think the alliance is progressing- The social aspects of the partnership become important, since team members from both partners are communicating and interacting with each other- Managing relationships and maintaining trust are critical during this phase. Often associated with alliance success, trust between partners reduces the need for the strict monitoring of the alliance and time- consuming contract renegotiations. Many companies involved in alliances organize non-work-related activities for alliance teams on both sides- It is extremely important to promote and maintain open communication about both organizations’ performance in the alliance and to incorporate feedback formally

Manage Phase3

•Maintaining a positive bond with the partner even after the project is complete is useful. •Also critical is a company’s willingness to capture and disseminate lessons learned after a project is

complete


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Strategic Alliance

http://iveybusinessjournal.com/publication/strategic-alliances-the-right-way-to-compete-in-the-21st-century/

Examples of Strategic Alliances

1. In an effort to establish itself as a force in European and Japanese markets, the Nasdaq formed a joint venture with SSI Technologies of India to develop an Internet-based trading and market system to launch Nasdaq Europe and Nasdaq Japan

2. In February 2001, The Coca-Cola Company and Procter & Gamble announced a $4.2-billion joint venture to use Coca-Cola’s huge distribution system to increase reach and reduce time to market for the P&G products Pringles and Sunny Delight

3. EPOST was the world’s first national, secure electronic mail-delivery system, an alliance between Bank of Montreal and Canada Post Corp. This partnership connects billers and users in an efficient and secure environment

4. Star Alliance is the largest partnership in the airline industry; its reach extends to 130 countries and more than 815 destinations, with collective revenue for the partnership at more than $63 billion

5. Hewlett-Packard and NTT DoCoMo created a partnership to conduct joint research on technology for fourth-generation mobile phones, bringing together HP’s network infrastructure and computer servers with DoCoMo’s wireless broadband technology


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Strategic Alliance


Advantages

2. Economic advantages: Strategic alliance could reduce costs and risks by distributing them across the members of the alliance

Strategic alliance could obtain greater economies of scale in an alliance, as production volume can increase, causing the cost per unit to decline

Strategic alliance could take advantage of ‘cospecialization’ where the specialization of both the partners could be bundled together, creating additional value - such as when a leading computer manufacturer bundles its desktop with a leading monitor manufacturer's monitor

1. Organizational advantages: Strategic Alliances are formed to learn necessary skills and obtain certain capabilities from the strategic partner

Strategic partners may help to enhance the productive capacity, provide a distribution system, or extend the supply chain

The strategic partner may provide a good or service that complements a good or service the other partner provides, thereby creating a synergy

If a partner is relatively new or untried in a certain industry, having a strategic partner who is well-known and respected will help add legitimacy and creditability to the venture


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Strategic Alliance


Advantages

4. Political advantages: To form a strategic alliance with a local foreign business to gain entry into a foreign market either because of local prejudices or legal barriers to entry

Forming strategic alliances with politically influential partners may also help improve other partner’s own influence and position

3. Strategic advantages: Strategic alliance could happen with even the rival to cooperate instead of compete

Alliances are created for vertical integration where the partners are part of the supply chain

Strategic alliances may also be useful to create a competitive advantage by the pooling of resources and skills. This may also help with future business opportunities and the development of new products and technologies.

Strategic alliances may also be used to get access to new technologies or to pursue joint research and development


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Strategic Alliancehttp://smallbusiness.chron.com/disadvantages-forming-business-alliances-73390.htmlhttp://smallbusiness.chron.com/strategic-alliances-strategy-81504.html

Disadvantages1. Lack of Control When you align with another company, you lose some degree of control over the way your business is perceived2. Unequal Benefits Unless you have a carefully vetted contractual agreement, you have no assurance that your business alliance will be beneficial to you, or that you'll get as much as you give in terms of referrals3. Merged Reputation When you form an alliance, you open yourself up to being judged based on the actions of your alliance partner4. Liability In the event something goes wrong with your business alliance partner, you can be held liable as well5. Lack of Trust Among Employees Lack of trust among employees from both organizations or cultural differences often create antagonistic relationships that slow or derail the alliance6. Operational Inefficiency Even with apparently ideal strategic partners, agreement in principle between business owners or upper management does not always translate into operational success

http://smallbusiness.chron.com/disadvantages-forming-business-alliances-73390.html


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Strategic Alliancehttp://iveybusinessjournal.com/publication/strategic-alliances-the-right-way-to-compete-in-the-21st-century/

According to a 1999 survey on global alliances by Accenture

Consulting

1. Eighty-two percent of executives surveyed believe alliances will be a prime vehicle for future growth

2. Alliances account for an average of 26 percent of Fortune 500 companies’ revenues, up from 11 percent five years ago

3. Alliances account for six to 15 percent of the market value of the average company

4. U.S. banks expect to hold a portfolio of more than 50 alliances within three years, accounting for as much as 50 percent of revenue

5. Within five years, alliances are projected to account for 16 to 25 percent of the average company’s market value

6. Senior management at 25 percent of firms surveyed expects alliances to contribute more than 40 percent of their company’s market value within five years

Risks• As many as 70 percent of alliances fail• Studies have found that although the 15 most successful alliances increased shareholder value by $72 billion, the 15 least successful alliances decreased market capitalization by $43 billion


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Strategic Alliance

Hewlett Packard and Disney

https://prezi.com/m9dtqz0-hsrk/alliance-of-hewlett-packard-and-disney/

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Strategic Alliancehttp://iveybusinessjournal.com/publication/strategic-alliances-the-right-way-to-compete-in-the-21st-century/http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-newsArticle&ID=1515804

Starbucks- Starbucks partnered with Barnes and Nobles bookstores in 1993 to provide in-house coffee shops, benefiting retailers- In 1996, Starbucks partnered with Pepsico to bottle, distribute and sell the popular coffee-based drink, Frappacino- A Starbucks-United Airlines alliance has resulted in their coffee being offered on flights with the Starbucks logo on the cups- A partnership with Kraft foods has resulted in Starbucks coffee being marketed in grocery stores- In 2006, Starbucks formed an alliance with the NAACP (National Association for the Advancement of Colored People), the sole purpose of which was to advance the company's and the NAACP's goals

of social and economic justiceStarbucks In India

- In a significant step toward market entry in India, Starbucks Coffee Company signed an MoU with Tata Coffee Limited, one of the region's leading providers of premium arabica coffee beans- The MoU will create avenues of collaboration between the two companies for sourcing and roasting high-quality green coffee beans in Tata Coffee's Coorg, India facility- Tata and Starbucks will jointly explore the development of Starbucks retail stores in associated retail outlets and hotels- Building on Tata's commitment to community development, the two companies also will explore social projects to positively impact communities in coffee growing regions where Tata operates


http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-newsArticle&ID=1515804

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Strategic Alliancehttp://www.apple.com/pr/library/2014/07/15Apple-and-IBM-Forge-Global-Partnership-to-Transform-Enterprise-Mobility.html

Apple- Apple has partnered with Sony, Motorola, Phillips, and AT&T in the past- Apple has also partnered with Clearwell in order to jointly develop Clearwell's E-Discovery platform for the Apple iPad. E-Discovery is used by enterprises and legal entities to obtain documents and information in a "legally defensible" manner, according to a 2010 press release

- In 2014, Apple and IBM announced an exclusive partnership that teams

the market-leading strengths of each company to transform enterprise mobility through a new class of business apps—bringing IBM’s big data and analytics capabilities to iPhone and iPad• a new class of more than 100 industry-specific enterprise solutions including native apps, developed exclusively from the ground up, for iPhone and iPad;• unique IBM cloud services optimized for iOS, including device management, security, analytics and mobile integration;• new AppleCare service and support offering tailored to the needs of the enterprise; and • new packaged offerings from IBM for device activation, supply and management

Apple & IBM’s Strategic Alliance

http://www.apple.com/pr/library/2014/07/15Apple-and-IBM-Forge-Global-Partnership-to-Transform-Enterprise-Mobility.html

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Merger & Acquisitionhttp://www.investopedia.com/terms/m/mergersandacquisitions.asp

What

- A merger is a combination of two companies to form a new company Example: the merging of JDS Fitel Inc. and Uniphase Corp. in 1999 to form JDS Uniphase (is a company that designs and manufactures products for optical communications networks, communications test and measurement equipment, lasers, optical solutions for authentication and decorative applications, and other custom optics)- An acquisition is the purchase of one company by another in which no new company is formed Example: Acquisition by Manulife Financial Corporation in 2004 (is a

Canadian insurance company and financial services provider) of John Hancock Financial Services Inc

Why Merge?

- The combined entity would be larger, and have corresponding larger resources for marketing, product expansion, and obtaining financing. This could help them better compete in the marketplace- The combined entity could merge similar operations to reduce costs. Corporate and administrative functions, such as human resources and marketing, are often targets for combinations. They might also combine the production areas if the companies produce similar products, and reduce costs by having fewer plants or facilities in operation

A.T. Kearney analyzed mergers and acquisitions involving some 25,000 companies globally, from 1988 to 2001

These companies accounted for 98 percent of the world’s market capitalization As we focused on 1,345 of the largest mergers and acquisitions that involved by 945

companies and had a value of more than US$500 million

http://www.investopedia.com/terms/m/mergersandacquisitions.asp

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Merger & Acquisitionhttp://study.com/academy/lesson/what-are-mergers-and-acquisitions-definition-examples-quiz.html

Why Acquire?

- A company might acquire another company to obtain a specific product. It can be less expensive to purchase a company offering a product you'd like to sell than building the product yourself. Software companies often purchase smaller companies that offer extensions to their product line if they become popular with customers, so they can add the functionality to their primary offering- A company might acquire other companies to increase its size. A larger company may have more visibility in the marketplace, and also better access to credit and other resources- A company might acquire another to obtain control over a critical resource. For example, a jewelry company might acquire a gold mine, to ensure they have access to gold without market price fluctuations

Why Merge?

- The combined entity might have less competition in the marketplace. They could combine their offerings and use resources for improving the

product, rather than marketing against each other- The combined entity might have synergy in operations. Synergy is when combined operations show lower costs or higher profits than would be expected. This could be due to economies of scale, where costs are lower due to higher volume of production, or due to vertical integration, where greater control over the production process is achieved due to owning more steps in the production process

http://study.com/academy/lesson/what-are-mergers-and-acquisitions-definition-examples-quiz.html

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Merger & Acquisition: China’s Move to Acquire Firms in USAChina’s Strategic

Investment Scenario

- As of April 2013, China had about US$3.44 trillion worth of foreign reserves and approximately US$1 trillion in related sovereign wealth funds- But when it comes to how to invest them strategically, China has a problem- Significant deal failures have occurred- China’s investment capital resource base is substantial. And yet, according to The Economist, the nation owns only six per cent of the total global investment in international business, leaving a sizable portion of Chinese funds invested in developed-country government bonds

China’s Specialized Agencies

- The search for global investment opportunities is assigned to specialized agencies whose sole function is identification of opportunities with rewarding and strategic investment potential - The State Administration of Foreign Exchange (SAFE): focuses on managing China’s foreign exchange reserves - The China Investment Corporation ( CIC): attends to investment and management of overseas assets - The National Social Security Fund (NSSF): invests domestically (although it is moving towards foreign investments in traditional capital market instruments)

http://iveybusinessjournal.com/publication/how-china-could-improve-its-global-acquisition-game/


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Merger & Acquisition: China

Dilemma for Specialized Agencies

Contradiction between ;Generic capital investment requirements (such as high rate of return

and manageable investment risk) And

The specifics of China as an investor

China is not just an investor. It is also a formidable global market competitor. Indeed, it seeks strategic supremacy in industries

China is also a centre of political and economic gravity for many developing economies, especially in the African continent

China is a rising military power with ambitions, visions and challenges

Important Highlights About

China

- China’s favorable export balance, its sizable foreign currency reserves and its strong business balance sheets have induced a decade of foreign direct investment (FDI) outflow- Entry into the foreign asset acquisition arena began around 2001

China’s Foreign Asset

Acquisition Performance



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Merger & Acquisition: Chinahttp://iveybusinessjournal.com/publication/how-china-could-improve-its-global-acquisition-game/

- In the face of strong political resistance, an attempt by China’s National Offshore Oil Corp (CNOOC) at acquiring Unocal, an independent U.S. oil and gas operator, was abandoned in 2005- The move was followed by a takeover of Unocal by Chevron- CNOOC’s interest in Unocal was triggered by its strategic Southeast Asian assets and the enhanced regional profile- According to Business Week, CNOOC would have paid US$18.5 billion if the transaction was consummated- But Washington viewed CNOOC as a Chinese state-run enterprise that could pose a threat to American national interests- Statements made in Congress alluded to the fact that CNOOC’s “Communist government ownership is not consistent with free market principles.”

Case 1:CNOOC AND

UNOCAL

- In 2005, Haier Group, China’s largest domestic appliance maker, expressed interest in buying Maytag, an established American appliance brand that suffered from structural cost pressures- Haier was voted China’s most valuable brand name by Forbes in 2004 Maytag could have enhanced the brand, provided a strategically located manufacturing facility and helped battle possible American anti-dumping charges- Haier abandoned the acquisition attempt, when Maytag’s rival Whirlpool proposed a US$17-per-share deal. Haier, which had been willing to pay US$14-per-share (about US$ 1.5 billion in total)

Case 2:HAIER AND

MAYTAG


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• http://executive-education.insead.edu/interviews-tips-insights/Strategic_Alliances.php

• http://smallbusiness.chron.com/examples-successful-strategic-alliances-13859.html

• http://iveybusinessjournal.com/publication/strategic-alliances-the-right-way-to-compete-in-the-21st-century/

• http://iveybusinessjournal.com/?s=Case+Study+on+Strategic+Alliance

http://executive-education.insead.edu/interviews-tips-insights/Strategic_Alliances.php

http://executive-education.insead.edu/interviews-tips-insights/Strategic_Alliances.php

http://smallbusiness.chron.com/examples-successful-strategic-alliances-13859.html

http://smallbusiness.chron.com/examples-successful-strategic-alliances-13859.html




http://iveybusinessjournal.com/?s=Case+Study+on+Strategic+Alliance

http://iveybusinessjournal.com/?s=Case+Study+on+Strategic+Alliance

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Mergers & Acquisitions

• http://iveybusinessjournal.com/publication/mastering-industry-consolidation-strategies-for-winning-the-merger/

• http://iveybusinessjournal.com/publication/how-china-could-improve-its-global-acquisition-game/

• http://iveybusinessjournal.com/publication/reaping-the-rewards-of-cross-business-collaboration-in-mergers-and-acquisitions/

http://iveybusinessjournal.com/publication/mastering-industry-consolidation-strategies-for-winning-the-merger/






http://iveybusinessjournal.com/publication/reaping-the-rewards-of-cross-business-collaboration-in-mergers-and-acquisitions/



combining factors of production to achieve growth objectives: land securities group case study 1...

Documents

services land securities

customers land securities

profile land securities

retail centres land

growth objectives

property http

level of risk

property services