Corporate Strategies

INTERNAL VENTURE STRATEGY AND EXTERNAL VENTURE STRATEGY

by: Mary Ynde O. Araño

STATEGIC VARIATIONS EXPANSION
       INTERNAL EXTERNAL UNRELATED HORIZONTAL VERTICAL ACTIVE PASSIVE

WHY VENTURE STRATEGIES?
The most successful companies are those that have developed aggressive venture strategies and have made ventures critical components of their strategic and operating success.

Venture strategy can be…
• Internal venture strategy • External venture strategy

INTERNAL VENTURE STRATEGY
• A vehicle used to create new business • Managing new products/services, development projects as in company ventures

Creating new business SPIN OUT

INTERNAL VENTURE STRATEGY

ALLIANCE

Joint ventures, venture acquisitions, Partnering

EXTERNAL VENTURE STRATEGY
• Acquisition of product, market, • Investing in new technologies and emerging market, technology, or management control

As an external ventures MANAGING PROJECT

EXTERNAL VENTURE SRTATEGY

Acquisition of product, market, technology

EXTERNAL INVESTMENT

TAKE OVER

EXTERNAL GROWTH STRATEGIES

ACQUISITION

MERGER

• Take Over- acquire controlling interests • Acquisition- acquire assets and liabilities of selling firm • Merger- acquire and merge of assets and liabilities of both firms

REASONS FOR EXTERNAL EXPANSION
• • • • • • • Increase stock; Increase the growth rate; Make good investments; Improve earnings and stability; Balance or fill out the product line; Diversified the product line in mature state; Reduce the competition;

REASONS FOR EXTERNAL EXPANSION
• • • • • Acquire the needed resources; Tax purposes; Increase the efficiency and profitability; Diversify the owner’s holdings; and Deal with top management problems

STRATEGIC FINANCIAL ENVIRONMENT

ECONOMIC

CRITICAL ISSUES RELATED TO MERGER & ACQUISITIONS

MANAGERIAL

SOCIETAL LEGAL LABOR CULTURAL

REASONS FOR FAILURE OF EXTERNAL GROWTH
 Paying too much for the acquired firm.  Assuming that a growing market or product will be out standing in