34538 - Diversification and Acquisition

Learning outcomes

The student explores many dimensions of firms growth. He is particularly focused on: 1) acquiring the ability of applying diversification strategies: starting from the analysis of the different reasons that push a company to diversify its business he studies the challenge of building competitive advantage from managing a diversified business portfolio; 2) merger and acquisition strategies: he can understand the reasons that push towards acquisition strategies and knows the critical factors that influence the acquisition success in the most critical phase, the post acquisition integration of the two companies.

Course contents

THE CASE FOR DIVERSIFICATION

• Why to diversify?
• What is diversification?
• Types of diversification
• Costs and value creation mechanisms

• Related diversification
• Unrelated diversification
• Vertical integration
• Geographical expansion

• NEW! Diversification in the Digital Age

MANAGEMENT AND OPERATING MODELS FOR THE DIVERSIFIED CORPORATION

• When to integrate and when to separate business units

Managing the ACQUISITION process

• Due diligence
• Bidding prices

Readings/Bibliography

Puranam, P. and B. Vanneste “Corporate Strategy,” Cambridge University Press, 2016.

Palich, Leslie E., Laura B. Cardinal, and C. Chet Miller. "Curvilinearity in the diversification–performance linkage: an examination of over three decades of research." Strategic Management Journal 21.2 (2000): 155-174.

Zhou, Yue Maggie. "Synergy, coordination costs, and diversification choices." Strategic Management Journal 32.6 (2011): 624-639.

Martin and Sayrak, 2001. “Corporate diversification and shareholder value: a survey of recent literature”. Journal of Corporate Finance

Wan, William P., et al. "Resource-Based Theory and Corporate Diversification Accomplishments and Opportunities." Journal of Management 37.5 (2011): 1335-1368.

NEW!Adner, Ron. "Ecosystem as structure: An actionable construct for strategy."Journal of management43.1 (2017): 39-58.

GE two decade transformations: Jack Welch’s Leadership 399150-PDF-ENG

Puranam, P. and B. Vanneste “Corporate Strategy,” Cambridge University Press, 2016.

https://www.mckinsey.com/business-functions/organization/our-insights/eight-basic-beliefs-about-capturing-value-in-a-merger

https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/seven-rules-to-crack-the-code-on-revenue-synergies-in-ma

https://www.mckinsey.com/business-functions/organization/our-insights/equipping-leaders-for-merger-integration-success

The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire? (HBSP 709462-PDF-ENG

 

Follow up readings:

§ “Does corporate strategy matter?”, EH Bowman, CE Helfat - Strategic Management Journal, 2001

§ “The death of diversification? The focusing of the world's industrial firms, 1980 – 2000”, LC Franko – Business Horizon, 2004

§ “Corporate strategy: the quest for parenting advantage”, A Campbell, M Goold, M Alexander - Harvard Business Review, 1995

§ “Does Diversification Cause the" Diversification Discount"?, B Villalonga - Financial Management, 2004

§ “Creating corporate advantage”, DJ Collis, CA Montgomery - Harvard Business Review

• “Desperately seeking synergy”, M Goold, A Campbell - Harvard Business Review, 1998

§ “When to ally and when to acquire”, JH Dyer, P Kale, H Singh - Harvard Business Review, 2004

§ “The composition of boards of directors and strategic control: Effects on corporate strategy”, B Baysinger, RE Hoskisson - Academy of Management Review, 1990

§ “Vertical integration and corporate strategy”, KR Harrigan - Academy of Management journal, 1985

Teaching methods

Conceptual understanding is developed through lectures, group discussion, case studies and textbook/course readings. You are expected to prepare the assigned cases and readings before each class. Informed and engaged participation is an essential part of this course and is expected from everyone. Active engagement means that you are listening carefully to the comments of your peers and seeking opportunities to make comments that move the class discussion forward.

Assessment methods

For non-attending students:

§ 50% individual exam

§ 50% individual coursework (please contact the course leader for the assignment)

For attending students:

§ 30% individual exam

§ 70% group coursework (to be assigned during the course)

Teaching tools

Given the “state-of-the-art” and nature of the course, no textbook adequately covers the scope of this course. Yet, the suggested textbook is a good introduction to the topics. The course relies on readings, cases (as per the above course outline), and foremost Slides which will be distributed at the end of the course.

Office hours

See the website of Gianvito Lanzolla