Topics: Real estate, Mergers and acquisitions, Real estate development Pages: 3 (999 words) Published: April 14, 2013
C. Growth Options:
Overview: Any company want to achieve growth, it faces a combination or one of three options: growing organically, cooperative growth and/or merger and acquisitions. Organic growth means to preserve the company’s profit, plus outside financing, to achieve internal growth, such as Apple Corporation. Also, the cooperative growth is to tap into different industries, or markets, with the help of another established business in that market segment/industry, such as American Airlines. Finally, the merger and acquisition strategy is to buy, or merge, with other competitors to arrive at a better market share, such as Google. To determine which growth strategy fits better, it depends on the overall industry growth stage and company specific growth stage. Every industry has a preferable growth strategy and each case is subjective. However, the main objective of any growth strategy is to better position the company in its industry. Hence, to determine which growth strategy should be followed, we can refer to Porter’s five forces model and see the influence of each growth strategy on each force. In addition, we need to look at the growth stage of the industry as a whole. When analyzing Majid Al Futtaim holding, we will apply the above criterion on each of the group’s segments. Accordingly, we will determine which growth strategy is most effective. 1- Majid Al Futtaim Properties: the primary focus of this segment is to develop shopping malls, hotels and mixed-use communities. It operates in the MENA region (Middle East and North Africa). This segment’s main goal is to expand into other countries within the region. To see the possible growth prospects, we take the effect of each growth prospect on each of Porter’s forces: ➢Organic growth: The barriers to entry for this business are relatively easy. Also, for a property development business, organic growth depends not only the overall performance of the company, but also on the overall economic...
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