1. 15 Summary Acquisitions and Global Expansion
Opportunity is rare, and a wise person will never let it go by him. Bayard Taylor
Summary
How can entrepreneurs best manage expansion via acquisitions and entry into new geographic markets?
A new venture may start as a purchase of an existing company by a team of entrepreneurs. Most, if not all, acquisitions are justified on the basis of an expected synergy, which is the increased effectiveness of the combined firms.
Chapter 15: Summary
Technology Ventures: From Idea to Enterprise

2. 15 Acquisitions and Global Expansion
Acquisition: when one firm purchases another.
Synergy: the increased effectiveness and achievement produced as a result of the combined action of the united firms.
Syn = VN - V
Chapter 15: Acquisition and Synergy
Technology Ventures: From Idea to Enterprise

3. 15 Acquisitions and Global Expansion Type Overcapacity Reduction
Geographic Extension (Roll‑Up)
Product or Market Extension
Technology Acquisition
Industry Convergence
Objective
To reduce excess capacity and increase efficiencies
To extend a companies reach geographically and build economies of scale and scope
To extend the product line or reach a new market segment
To quickly add new technologies and capabilities
To establish a position during the convergence of an industry or sector
Example
Daimler-Benz
and
Chrysler
Hewlett-Packard and
Compaq
Bank of America
Nations Bank
Waste Management and
numerous local firms
Tyco
Raychem
J.M. Smucker and
Jif peanut butter
Cisco Systems acquired
60 companies in
Medtronic acquired
7 companies in
AOL
Time Warner
Disney
ABC-TV
and Radio
The Five Different Types of Mergers and Acquisitions
Chapter 15: Table 15.1
Technology Ventures: From Idea to Enterprise

4. 15 Acquisitions and Global Expansion Issues
Type
Overcapacity Reduction
Geographic Extension (Roll‑Up)
Product or Market Extension
Technology Acquisition
Industry Convergence
Issues
What to eliminate in the merged company and how to get it done in a timely way
How to merge two firms with different cultures
Merging two cultures and distribution channels
Overvaluation of the technology acquisition and loss of leaders from the acquired firm
The convergence may not materialize or be of low value
The Five Different Types of Mergers and Acquisitions (cont.)
Chapter 15: Table 15.1
Technology Ventures: From Idea to Enterprise

5. 15 Acquisitions and Global Expansion
Rules for the Acquiring Firm and the Acquired Firm
The Acquiring Firm
Use your highly valued stock as payment
Identify the key people and get their agreement to stay
Decide who to keep and build relationships fast
Contain the tendency toward hubris
Integrate the culture and the operations of the two firms
Appoint an integration manager or team
The Acquired Firm
Demand cash, not stock as payment
Agree to stay for a short period
Avoid a non-compete agreement or keep its duration short
Explain the benefits that accrue to the employees and managers of the acquired firm
Tell people who will have and who will not a job
Restructure with respect for people
Chapter 15: Table 15.2
Technology Ventures: From Idea to Enterprise

6. 15 Acquisitions and Global Expansion
The Four Roles of the Integration Manager
Inject Speed into the Process
Push for decisions and progress
Keep the pace
2. Create a New Structure
Create joint teams
Lead an integration team
Provide the new structure framework
3. Make Social Connections
Interpret the cultures of both companies
Actively be present in both companies
Bring people together
4. Build Success
Identify and communicate synergies
Show short-term benefits
Demonstrate corporate efficiency gains
Chapter 15: Table 15.3
Technology Ventures: From Idea to Enterprise

7. 15 Acquisitions and Global Expansion
Globalization involves the integration of markets, nation-states, and technologies, enabling people and companies to reach around the world to offer and sell their products in any country in the world.
What????
Chapter 15: Globalization
Technology Ventures: From Idea to Enterprise

8. 15 Acquisitions and Global Expansion What???? Chapter 15: Figure 15.1
Technology Ventures: From Idea to Enterprise

9. 15 Acquisitions and Global Expansion
The Advantages and Disadvantages of the Four Global Strategies
Advantages
Disadvantages
Multidomestic
Ability to customize products for local markets.
Failure to reduce costs and to appropriate learning from other nations.
Transnational
Ability to reduce costs and learn from other nations.
Ability to be locally responsive.
Difficult to implement due to many independent organizations.
International
Transfer of unique products and competencies to other nations.
Low local responsiveness.
Failure to reduce costs.
Global
Ability to reduce costs and gain worldwide learning.
Lack of local responsiveness.
Difficult to coordinate.
Chapter 15: Table 15.4
Technology Ventures: From Idea to Enterprise

10. 15 Acquisitions and Global Expansion
Reasons to Develop A Global Strategy for A New Venture
Access low cost labor or materials
Work around trade barriers
Access unique capabilities and learning from others
Obtain economies of scale
Access attractive markets for the firm's products
The industry is global and all competitors are worldwide
Possession of a strong brand that is known worldwide
Chapter 15: Table 14.6
Technology Ventures: From Idea to Enterprise

11. 15 Acquisitions and Global Expansion
All new technology business ventures should formulate a clear acquisition and global strategy.
Chapter 15: Principle
Technology Ventures: From Idea to Enterprise

12. 15 Acquisitions and Global Expansion
A new electronic game firm has launched its first
product in the US with good initial success. Select
and design a global strategy for this firm.
Chapter 15: Exercise
Technology Ventures: From Idea to Enterprise

13. Acquisitions and Global Expansion15
VENTURE CHALLENGE
Describe your approach to acquisitions and mergers as a growth strategy.
Discuss the plans for acting globally and describe your approach using table 15.6.
Chapter 15: Venture Challenge
Technology Ventures: From Idea to Enterprise

14. DVD Video 15 “Global Acquisition: eBay” Stephanie Tilenius (eBay)
Acquisitions and Global Expansion 15
DVD Video
“Global Acquisition: eBay”
Stephanie Tilenius (eBay)
Chapter 15: DVD Video
Technology Ventures: From Idea to Enterprise