Having both complementary and compatible alliance partners was essential fundamental for MDT’s alliance strategy. In the second-degree perspective, interrelated-partner relationships are examined (Greve et al., 2014). Although each partner have their own alliances, not one interrelated partnership among MDT’s partners has been found. Therefore, MDT has a hub-and-spoke configuration and it is actually the same picture as Figure 1. Because MDT is at the centre of a hub-and-spoke portfolio, MDT has an easy access to new information, cooperation and power from each alliance partners that allow MDT to create new innovations (Greve et al., 2014). The medical device industry can be considered rather dynamic. As mentioned, the macro-environment of …show more content…
The largest acquisition of Covidien is obviously a complementary strategy of MDT on medical technology especially in the surgical field. Figure 3 demonstrates the MDT’s acquisitions and the geographical distances to the acquired company. The acquisitions of Covidien and Sophono Inc increased not only the MDT’s industry position in size, but also it increased the MDT’s ability for resource transfer and capabilities, since these two firms have a greater multinational scope with their distribution and R&D environment (Anand, Capron and Mitchell, 2005). According to Vermeulen and Barkema, acquisitions have benefits of achieving greater market power, overcoming entry barriers, acquiring new knowledge and resources, however it involves high risks of the cost for acquiring firms and the cost of integrating the acquired companies (2001). Through the acquisition of Covidien, MDT acquired partially new surgical domain, and related domains such as vascular, which is preferable condition for acquisition (Vermeulen and Barkema, 2001). Although acquisition in high-tech sector is not recommended by Hagedoorn and Duysters (2002) since the degree of flexibility and learning might be limited, however Vermeulen and Barkema (2001) support the acquisitions in a way that acquisition broaden the company’s knowledge from external input which can break inertia that stimulates the development of integrating skills for combining new and existing domains. Nevertheless, MDT should be very careful with the port-M&A performance in innovation. Since the empirical theory expects the gain from the innovative performance of acquiring firm, thus from Covidien and other M&A firms, will be maximized in the first years, and it tends to drop (Cloodt, Hagendoorn and Van Kranenburg,
Technological advancement is another condition that enhances complex linkage. The Apple Company should employ modern technology to link its suppliers. The method of coordinating the suppliers sho...
Genicon is a manufacturer and distributor of surgical instrumentation which are focused specially on laparoscopic surgery. The company is in growth phase and is driven to meet the needs of contemporary healthcare system through identification of clinical needs and meeting the economic demands of healthcare systems worldwide. To continue with its growth initiatives, the organization needs to find international market to expand its operations. The case pertains to evaluation of four growth opportunities for the organization – namely, Brazil, China, India and Russia. The paper carries of the evaluation with respect to various criteria.
1. What are the primary business risks associated with UST Inc.? What are the attributes of UST Inc.? Evaluate from the viewpoint of credit analyst or bond holder.
A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate clinical and managerial interventions.
And finally LVMH diversification strategy (Bernard Arnault) is making acquisitions outside the company’s sector. In sector where they don’t have the “know-how” and don’t match the company Image. The current CEO (Arnault Bernard) is also the major shareholder which makes him easier to make decisions on new acquisitions
The 5-Force Industry Analysis first introduced by Michel Porter, Harvard Business School professor, a quarter-century ago. This theory examines the suppliers, buyers, product substitutes, existing firms’ rivalry and new entrants in a firm’s product market.
The soft factors can make or break a successful change process, since new structures and strategies are difficult to build upon inappropriate cultures and values. These problems often come up in the dissatisfying results of spectacular mega-mergers. The lack of success and synergies in such mergers is often based in a clash of completely different cultures, values, and styles, which make it difficult to establish effective common systems and structuresBased on the case study, extensive research and annual reports of AT&T the writer has mapped AT&T in the different domains. AT&T should strive to attain a perfect circle as close to the centre as possible, which indicates total synergy, order and equilibrium. Where the circle is skewed drastic change is needed as it moves closer to the outer ring of chaos:
I agree with you, operating in a highly regulated industry, the healthcare organizations need to consider several factors when it comes to forming an alliance or entering into a merger deal with other healthcare provider. As you mentioned, healthcare practice (patient care) is the one of the most important factor to consider because the ultimate goal of any healthcare organization is the quality patient care, so when organizations decide to merge the must consider how their new operation will contribute to patient care. You have provided very good reasons for the necessity of healthcare mergers. Merger can help organization cut the costs and share technology which can lead to improved patient
Before the alliance the two firms were in totally different market and they were also in different country but the industry was of same type. Both of the firms were aware about their future plan and lacking.
Ensign PC 2004, ‘A resource based view of interrelationships among organizational groups in the diversified firms’, Strategic Change, Vol. 13. pp. 125-137.
This video provides an overview of product diversification. It explains that there are two types of diversification, which are related diversification and unrelated diversification. In addition, the video informs that diversification often involves merger and acquisition activities. Furthermore, it stresses the importance of keeping diversifications balanced, as in some instances, companies that do not take advantage of diversification, can miss out on some benefits, and/or could experience negative effects. However, on the other hand, the opposite could also occur, because some companies that over-diversify, extend themselves too far and can experience detrimental and disadvantageous effects as well. The key is staying
12.Seth A, 1990, Sources of value creation in acquisitions: am empirical investigation, Strategic management Journal, 11, pp.431-446
Both the companies intend to maximize synergies through their strengths in product line, R&D, marketing, procurement, and personnel training. This would result in cost reductions and greater market penetration globally through better cooperation.
When entrepreneurs plan their business future they will consider how they can increase their business size or profit in a short period. Entrepreneurs may consider growing their business or company by using a merger or an acquisition. These methods can be a speed up tool and a short cut to enlarge their business. (Burns, 2011) Also they can reduce competition, make it easier for entrepreneurs to think about the market and product development and risk reduction. Furthermore, some lesser – known companies can improve their firm’s image and market power by using merger and acquisition with larger firms. However, there may be risks associated with merger and acquisition related to lack of finance and time. (Burns, 2011) This essay will discuss more deeply the advantages and disadvantages of using mergers and acquisitions, showing how it can affect firms and market with the case study.