[15:43:36] ysbq: P3 --------- STRATEGIC CHOICES --------PART 1. ----------- [15:44:21] ysbq: ok guys these al models are mainly for corporate strategy , so what is corporate strategy [15:44:22] ysbq: ? [15:44:50] unknown: decision to make an exit or entry [15:45:02] unknown: into new industry/market [15:45:11] unknown: decision is made at top level [15:45:17] ysbq: ok [15:45:24] ysbq: what else [15:45:26] unknown: right? [15:46:41] savvy2012: decisions which utilise resources and competencies of the company [15:47:02] savvy2012: in the given environment [15:47:03] unknown: {savvy2012} is that not business strategy? [15:47:19] unknown: or operational [15:47:23] ysbq: Corporate Strategy determines the Scope of Organisation's activites , this means that the in this strategy we define ; - diversity of products and markets & - markets and international operations [15:47:23] savvy2012: {unknown} probably.. isnt it the same? :) [15:47:47] yaroslava: looks at the direction and scope of the entire org in the longterm, by using resources and competences in line with the external envirn in order to meeet stakeholders expectations [15:48:12] ysbq: so basically u will define the industry in whihc u gonna operate and the markets that u gonna target [15:48:20] ysbq: ...does that make sense [15:49:16] ysbq: {yaroslava} u r right [15:50:12] savvy2012: {ysbq} yeah [15:51:10] ysbq: so can any one tell me that how diversity in products and markets can help an organisaion [15:51:27] savvy2012: reduce risk [15:51:35] ysbq: or u could say diversity in SBUs [15:51:52] savvy2012: explore different markets [15:51:55] ysbq: {savvy2012} yeah that is right , what else? [15:52:05] yaroslava: {savvy2012} yes [15:52:30] ysbq: has anyone heard the concept of synergies [15:52:31] savvy2012: being able to achieve economies of scope...? [15:52:32] ysbq: ? [15:52:38] savvy2012: yeah [15:52:52] ysbq: exactly what economies of scope entail [15:53:13] savvy2012: i think they can use same resources.. like IT department? [15:53:19] shamajee: economies of scope mean extension of business [15:53:22] yaroslava: but by diversifying the co should also be aware that it is entering into the unkown world and may be faced with its own busioness risk plus financial and have to regear to fit in [15:54:23] ms1689: share resources and expertise [15:54:24] ysbq: they entail synergies that can be experienced by SBUs due to expertise and infrastructure of coporate parent [15:54:43] shamajee: n extension causes the usage of existing resources 4 newly developed business [15:54:58] ysbq: {shamajee} yeah [15:55:35] yaroslava: sharing resouces, increasing buying power, cross marketing [15:55:48] ysbq: ok i am not gonna go into details of different synergies, so i guess that u all can think abt that [15:56:00] shamajee: markeeting ..operational investmnt .... managemnt synergy can b achived [15:56:47] ysbq: so main benefits would be synergies, risk reduction by diversification and better availabilty of corporate management skills [15:57:06] yaroslava: example could be a holiday co buying a car-hire co so that complete package can be offered to travellers [15:57:35] ysbq: ok [15:57:58] ysbq: like Virgin group of diversified porfolios of SBUs [15:58:28] ysbq: ok lets move on [15:58:45] ysbq: what are the types of diversifications [15:59:26] potter2009: related (vertical & horitzontal) & unrelated = conglomerate [15:59:30] ysbq: explain for me plz [15:59:52] yaroslava: Related divided into {vertical} foward and backward intergration and horisontal [16:00:27] yaroslava: and unrelated diversification..venturing into the unkwon(non..core business} [16:00:28] potter2009: unrela ted is where a company moves into a new market with the resources they already have eg electric comapny moving into gas mkt [16:01:05] potter2009: related is becoming your own supplier or distributor [16:01:48] ysbq: ok so u guys all know the major concept [16:01:54] yaroslava: related..here there is some sort of connection btwn businesses [16:01:56] unknown: when you acquire your own supplier its backward [16:02:02] ysbq: yeah [16:02:11] unknown: acquire customer forward [16:02:13] ysbq: going back on the value network [16:02:35] ysbq: is supplied and acuquiring a retaiil oulet will be forward [16:02:53] yaroslava: unrealted{coglomerate} where there is nothing common btwn different businesses [16:03:18] unknown: {ysbq} yeah [16:03:27] ysbq: so can any one tell me that, where vertical integration would reap most benefits... [16:03:39] ysbq: tricky tricky question [16:03:42] ysbq: lolz [16:04:02] potter2009: if the end users needs are not being met? [16:04:09] shamajee: in the value chain [16:04:16] ratna1238: u know for sure u will not run out of stock, cuz u have the control of ur supplier [16:04:25] ysbq: {potter2009} ok u got me [16:05:07] yaroslava: assurance of supply of vital components or distribution channels [16:05:28] yaroslava: through backward [16:05:47] ysbq: this will be where there are shortages in timely deiliveries, lackof appropriate qualty where cusotmer what differentiated producs etc [16:05:57] ysbq: want [16:06:23] ysbq: any real life example [16:06:30] yaroslava: saving costs through better coordination btewn dif stages in supply chain [16:07:33] ysbq: i was thinking that it can also help u to reduce cost significantly because the individuals margins would be eliminated between the stages of production [16:07:43] yaroslava: eg Takes over a dairy farm in order to constantly supply its customers with dary products [16:07:58] ysbq: {yaroslava} real life not bookish [16:08:11] yaroslava: {ysbq} haha [16:09:06] ysbq: like toyota acquires yokohama tyres ... [16:09:23] unknown: {ysbq} tesco own products [16:09:24] ysbq: or oracle acquired java [16:09:25] shamajee: {ysbq} 4 the basic necessities vertical integeration is most imp....??? [16:09:37] unknown: they sell in their shops [16:09:44] ysbq: {unknown} yeah [16:09:49] unknown: specially there own brands [16:09:58] ysbq: {shamajee} what r they [16:10:03] potter2009: warehouse that sells cloth decides to make clothes...they expand mkt share but can be putting eggs into one basket [16:10:20] ysbq: {potter2009} yeah [16:10:39] ysbq: ok wht are the drawback of this ..... [16:10:49] ysbq: type of integration [16:11:07] unknown: horizontal? [16:11:14] ysbq: vertical [16:11:25] yaroslava: yes [16:11:38] ysbq: drawbacks [16:11:40] ysbq: ? [16:12:02] potter2009: they may not have the reources or knowledge [16:12:06] potter2009: ? [16:12:39] yaroslava: foward and backwards a vertical interg forms..horizontal is a stand alone [16:12:44] ysbq: overconcerntration in one sector ..... [16:13:11] ysbq: is not good , since they will loose out of the product gets out of demand [16:13:53] ysbq: {potter2009} u are rite they might not be able to benefit due to lack of managerial expertise [16:13:58] yaroslava: {ysbq} {ysbq} wots the question? [16:14:22] ysbq: Drawback of vertical integration? [16:14:44] ysbq: ok lets move on [16:14:54] ysbq: unrelated diversification [16:14:56] ysbq: ? [16:15:06] ysbq: pros and cons? [16:15:40] ysbq: no one interested in answering [16:15:54] yaroslava: there is no cost saving [16:16:11] ysbq: {yaroslava} plz. explain for me that [16:16:14] unknown: {ysbq} sorry on the phone [16:16:26] yaroslava: because of the fact that business are not related [16:16:29] unknown: brb [16:16:35] ysbq: ok [16:17:04] potter2009: you can penetrate a market with a new product and charge your own price [16:17:05] ysbq: lack of management expetise to manage an unrelated business [16:17:13] potter2009: but it could be a product no one wants [16:17:33] ysbq: so this lead to the fact the poor performance might drag u down to grave [16:17:38] yaroslava: {ysbq} yes [16:18:46] ysbq: tht is why u might can seen that in real life the loss making operations and entities in group are classified discountined operaitions immiediately to keep the eps intact of continuing operations [16:18:47] ysbq: :D [16:19:10] ysbq: since eps in performance indicator [16:19:26] sanrac15: What abt pros? the opportunity for risks to spread [16:19:32] ysbq: yeah [16:20:10] ysbq: risk is spread hence, if one sector is not performing well they other might be able to cover up [16:20:26] sanrac15: yeah [16:20:29] yaroslava: one can say that unrelated diversification offers less risk shareholders less risk becoz of more diversified business. This is false because becoz shareholders can diversify according to their needs. [16:20:50] potter2009: agree [16:21:07] ysbq: {yaroslava} ok Porter's argument quoted good [16:21:23] ysbq: ok lets move on [16:21:52] yaroslava: when isd diversification justified?> [16:22:33] ysbq: what is a really good question [16:22:48] ysbq: anyone wanna answer before i do [16:22:50] ratna1238: when the orgi wants to grow [16:23:18] ysbq: i will give a hint , have u guys studied economics [16:23:27] ratna1238: no [16:23:28] ratna1238: :D [16:23:33] potter2009: i would say when when a company has a new/ existing product or wants to increase / decrease market share [16:23:52] yaroslava: {ratna1238} you will find that orgs that a grown do want to diversify..not sure [16:24:24] ratna1238: well I think when the orgi wants to grow they can either grow organically or diversify [16:24:24] sanrac15: when your resources can be used to satisfy the demand in another mkt. [16:24:27] ysbq: ok u diverify the portfolio till the marginal gains equal marginal costs for adding a new SBU to group [16:24:42] shamajee: if the cmpnay hve enough resources to manage the unrelated diversification..thn go 4 it ..other wise it would b risky...so related divesrification is gud if we r the risk averse ....n don,t hve the resources to overcme the risk [16:24:42] ysbq: economic stance :) [16:24:43] ratna1238: one other reason to diversify is possibly to reduce risk of going down / bankcrupt [16:25:11] ysbq: beyond that it wouldn not be an economic decision [16:25:22] ysbq: it is clear or i am speaking greek [16:25:30] ysbq: ? [16:25:30] savvy2012: greek [16:25:34] ratna1238: greek [16:25:35] ysbq: lolz [16:25:38] savvy2012: lol [16:26:05] potter2009: would it also involve mergers, withdrawals from mkts [16:26:20] yaroslava: ThE ANSWER IS: there is not justification for diversifying except in a situation where an unrelated business is taken over if its run poorly and new owners believe they can turn it round using expertise in mgment [16:26:51] yaroslava: most of the times they will do stripping or digest it if it eventually makes a profit [16:27:14] yaroslava: to make profit [16:27:28] ysbq: ok let me explain u guys , in economies we say the u continue ur production till the additional revenue equals addition costs [16:27:31] yaroslava: i promise is read this [16:27:35] ysbq: so apply this here [16:28:07] ysbq: ko [16:28:08] ysbq: ok [16:28:29] yaroslava: but of coz if you can meet the j&s SAF test [16:28:58] ratna1238: I am thinking.. I might only want to diversify my business only if it would give me some advantages [16:29:15] savvy2012: {ysbq} so ur saying that...diversification is justofied when risk between different companies is negatively correlated and very related and what you gav in one business will equal what you lose in other business? [16:29:49] savvy2012: what you gane in one business - u lose in other? [16:29:50] ratna1238: {savvy2012} u tell him :D [16:30:07] savvy2012: gain* [16:30:21] savvy2012: like unmbellas and icecream... [16:30:24] ratna1238: by diversifying it would automatically mean that I am actually expanding my business.... [16:30:56] ratna1238: {savvy2012} good example of diversification [16:31:15] ratna1238: that is to cover the seasonal business right? [16:32:19] yaroslava: {ratna1238} but you have to justify your reason,,,maybe you can product develop,,devep a market..why diversify? you can expand its unrelated there is a risk of failure, [16:33:05] yaroslava: {ratna1238} you cant i meant [16:33:29] ysbq: well i meant sth different , lets me explain by an example lets say that u have a porfolio of businesses that u run and they are all making profits , but u can continue to add more new business / SBUs to ur current porfolio till the additions are profitable to portfolio since they will keep a total [16:33:35] ysbq: gain situation [16:34:11] ysbq: forget it if u find it hard ,its an economic concept [16:35:15] ysbq: i guess lets move on and stick to yaro''s justification [16:37:22] ysbq: what are the methods of international diversification? [16:37:38] ysbq: {yaroslava} seems u r up to sth bug [16:37:42] ysbq: big [16:37:45] ysbq: lolz [16:38:10] savvy2012: no, he fell alseep on keyboard [16:38:15] ysbq: lolz [16:38:27] ysbq: what are the methods of international diversification? [16:38:31] yaroslava: divesification means that {f9) you are going into an unrelated area..think of gearing. The proxy co has its own bus and fin risk,you have to consider your own based on your pallning based approach? Should you be diversifying..do you have the capabilities? I say SAF test..justfies diversification. [16:39:05] unknown: {ysbq} methods? [16:39:06] yaroslava: planning i mean [16:39:11] potter2009: exporting, overseas branches, overseas production, insiderisation and gloal company? [16:39:30] ms1689: {ysbq} acquisition [16:39:41] ms1689: of SBU [16:39:57] ysbq: {yaroslava} saf justifies a strategy , if it justifed the diversification , then, why did we need to study this chapter [16:40:15] ms1689: opening a subsidiary overseas [16:40:22] ysbq: ok what is insiderisation [16:40:23] ms1689: opening a branch [16:40:24] ysbq: ? [16:40:48] potter2009: no idea i read it somewhere it sounds good [16:41:06] ysbq: oh so cute name i guess [16:41:07] ysbq: :D [16:41:11] yaroslava: {ysbq} diversification is a strategy. sorry carry own [16:41:34] unknown: {ysbq} never heard of it [16:42:18] ysbq: anybody ,............. wanna tell me before i do [16:42:33] unknown: is it insideration? [16:42:38] yaroslava: {ysbq} what is that relating to? [16:43:04] potter2009: its when a company becomes an insider in a country important to its market share [16:43:11] ysbq: global business development [16:43:20] ysbq: {potter2009} no [16:43:30] potter2009: through alliance or partnership? [16:43:39] unknown: Getting local people to think about a career with the company from a long term perspective. Motivating employees to want to take on leadership roles. Empower local people with the opportunity to be leaders of the foreign company. [16:44:02] ysbq: guys what is happeningn here........ :( [16:44:17] unknown: {ysbq} sorry is it me? [16:44:36] potter2009: lol [16:45:07] yaroslava: {ysbq} explain insideration [16:45:23] ysbq: insideration is when u clone for company in overseas , so that u market and produce products based on local needs [16:45:35] ysbq: for - your* [16:46:11] yaroslava: {ysbq} so unknown is right ? [16:46:37] ysbq: i guess that is HR [16:47:04] ms1689: {ysbq} is that not like lecensing? [16:48:06] ysbq: well in that u cannot modify the product to local needs [16:48:16] yaroslava: that is also known as ethnocentric [16:48:37] yaroslava: or homebased oriantation [16:48:50] ysbq: ok [16:49:11] ysbq: Why companies go toward global markets? [16:49:23] sanrac15: (ysbq) did we get to mthds of intern'l diversification? [16:49:43] yaroslava: Harold Perlmutter's model on managing international business [16:50:00] yaroslava: {sanrac15} we didnt [16:50:52] ysbq: we just did those but not in detail [16:51:14] savvy2012: {ysbq} because whole worlds economy becomes more globalised, theres many more cross border transactions, it is more efficient for companies to have branches all over the world to maximise use of opportunities [16:51:22] ysbq: {sanrac15} the methods of internstional diversification [16:51:46] ysbq: {savvy2012} good what else [16:51:53] potter2009: if the company thinks it will achieve their objectiveor corp strategy/ cld be for currency issues/ competitive issues/ [16:51:55] ysbq: 5 C's [16:52:01] sanrac15: ok. Today is my first so I'm trying to keep on track. [16:52:15] yaroslava: {savvy2012} thus Geocentric..i recommend the model above [16:52:39] savvy2012: {yaroslava} i havent heard of either [16:52:56] ysbq: {yaroslava} me also, i have not heard of it [16:53:14] ysbq: Ohmaw any one heard [16:53:19] ysbq: ohmae [16:53:23] potter2009: yup [16:53:25] yaroslava: In lsbf text [16:53:45] ysbq: ok what r 5 C's of ohmae [16:54:27] potter2009: currency, competition, country , company, [16:54:33] potter2009: stuck with the 5th one [16:55:06] yaroslava: {ysbq} no sure please explain [16:55:13] ysbq: what is the most important thing for business, who is the king [16:55:17] ysbq: Customer [16:55:28] potter2009: thansk [16:55:33] potter2009: thanks [16:55:48] yaroslava: costs [16:56:19] ysbq: these are the 5Cs why business go for global stage [16:56:29] potter2009: not according to ohmae but that could fit in with competition [16:56:37] ysbq: because of larger customer [16:57:29] ysbq: because of competition , that would help them to reduce costs by alliances [16:58:06] ysbq: because of company since it would help them to gain economies of scale [16:58:44] ysbq: because of currency, since it helps them to manage exchange rate risk [16:59:36] ysbq: because of country , since it enables the companies to exploit absolute and comparative advantage [16:59:52] yaroslava: country..depending on PESTEL issues and Porters diamond [17:00:10] ysbq: for example nike in china, producing , in UK sellin , in US dollars dealing etc [17:01:19] ysbq: is it clear [17:01:43] savvy2012: yeah [17:02:05] yaroslava: why is ohmae 5cs relevant for the exam? [17:02:46] ysbq: well if u are given a question on global expansion , how willl be tackle it [17:03:00] ysbq: for a choices perspective [17:03:46] yaroslava: {ysbq} as in why should the co consider these for its global expansion? [17:04:48] yaroslava: not to worry i get it [17:04:56] ysbq: ok [17:05:00] ysbq: lets move in [17:05:01] ysbq: on [17:05:10] yaroslava: yes [17:06:13] ysbq: ok we have a matrix of Barlett and Ghoshat on globalisation,,anyone familiar [17:06:49] potter2009: no [17:06:55] savvy2012: nope [17:07:05] ysbq: ok [17:08:40] ysbq: i want u guys to read that [17:08:45] ysbq: brb in 5 min [17:09:05] yaroslava: brb in 5 [17:10:15] ratna1238: I think it is about the intergration between the Parent company with itīs sub abroad [17:10:23] ysbq: no [17:10:30] ratna1238: what is it then? [17:14:04] yaroslava: did i miss anything? [17:14:20] yaroslava: {ysbq} wots that model abt? [17:14:26] savvy2012: i searched barlett in emile woolf book and ot notes and lsbf its not there so it cant be that important for exam.. [17:15:05] yaroslava: {savvy2012} oh thanks you [17:15:38] ysbq: brb in 5 min [17:15:58] ratna1238: its not in Kaplan text book either [17:16:14] ratna1238: I donno why we need to know about this Barlett n G [17:16:24] yaroslava: i rule it out [17:16:28] ratna1238: maybe it is a new syllabus [17:17:45] ms1689: I am somehow lost today [17:18:41] ratna1238: join the club. :D [17:19:08] ratna1238: so we r waiting here [17:19:19] ratna1238: shall we talk about something else while waiting? [17:19:24] ratna1238: something useful of cours [17:20:18] ratna1238: Tell me what Ansoff think about growth in an organisation [17:20:40] yaroslava: maybe we shall read the topic all week since its big and revise it together just before the exam,,examiner likes this stuff [17:21:35] yaroslava: Ansoff does these four quadriants [17:21:39] ratna1238: apparently this B n G thing is on OT notes? [17:22:20] ysbq: i want u guys to read this concept and disucss [17:22:30] ysbq: 5 min Reading time [17:22:36] ms1689: As far as I know the main models in strategic choice are J &S Strategic Rationale, J&S SFA, and Ashridge Portofolio display [17:24:50] yaroslava: {ms1689} Ansoff is choice one because it covers ever choice the co has [17:25:32] savvy2012: {ysbq} but where can we read this... [17:25:32] yaroslava: {ms1689} you can call it an options model if you like but either way [17:25:44] savvy2012: im just waiting... [17:25:47] ratna1238: so am I [17:25:50] savvy2012: as i couldnt find it anywhere [17:25:58] yaroslava: me too [17:26:00] ratna1238: checking the OT course note.. the closest I get is BCG Matrix [17:26:18] ms1689: {yaroslava} which one of Ansoff? [17:27:00] ms1689: {ms1689} Is that the Product/market matrix? [17:27:11] yaroslava: {ms1689} it has penetration...market devment...product devment and diversification as optios or choices [17:27:24] yaroslava: {ms1689} yes [17:27:49] ms1689: {yaroslava} that is more of a strategic option as you said, I think [17:28:10] yaroslava: {ms1689} you are right [17:29:36] ysbq: so have any one got what is it [17:29:57] yaroslava: {ysbq} cant find it sorry [17:30:10] ysbq: http://www.business.illinois.edu/aguilera/Teaching/Bartlett%20Ghoshal%20What%20is%20a%20global%20manager%202003.pdf [17:30:18] ms1689: {yaroslava} For option, the main models are: Ansoff, Poter's generic strategy, Strategic Clock, Management orientation, and BCG [17:30:51] sanrac15: I just check out Bar and Ghos on businessmate.org it has some details on how mgrs of Multi. nat'l Coc. can make decisions on responsiveness to envir. pressures and diff. of pdts & serv....It's interest'g [17:31:06] yaroslava: {ms1689} you know wot, i gonna copy all that you wrote, so it gives me structure, cheers [17:31:21] ysbq: {sanrac15} share ur link [17:32:18] yaroslava: {ysbq} why is it not in any relevant text, i am sure its not that up there? just saying [17:32:27] sanrac15: http://www.businessmate.org [17:32:33] ysbq: have u got BPP text [17:32:41] ms1689: {ysbq} it is not in most of the books we have, can't we ignore it and move on? [17:32:41] ysbq: it is in there [17:33:02] ysbq: i see this model is becomin a bugger [17:33:07] ysbq: lets move on [17:33:19] yaroslava: yes [17:33:29] sanrac15: yes. ok [17:33:40] ms1689: yes, pls [17:34:27] ysbq: lets go directly to corporate parent and value creation [17:34:59] ysbq: what are porfolio managers [17:35:03] ysbq: ? [17:36:28] ysbq: i guess i need to break the session here and now. since i want u guys to be welll prepared [17:36:38] ysbq: guys????????? [17:37:03] savvy2012: everyone just lost confidence [17:37:18] savvy2012: because we (at least me) didnt know what you were talking about [17:37:19] ysbq: its fine i can feel the vibe in the room [17:37:38] ms1689: most of it sounds greek to me [17:37:42] yaroslava: this is head office acting as an agent btwn SBU and the investor [17:38:01] ysbq: so i want u guys to take a week and prepare for the chapter and we will discuss on Saturday [17:38:31] savvy2012: but whats the point reading theory which BPP has put in text book just for illustration and which is not really required by syllabus [17:38:35] ms1689: shall we do past exam question then today? [17:38:35] yaroslava: value is added by acquiring and exploiting opportunities [17:38:49] savvy2012: i thinking we are wasting too much time on such details [17:38:54] ysbq: ok [17:39:20] ysbq: then lets so a question of past papers then , to boost confidence [17:39:27] yaroslava: enforcing regorous performance targets and digesting when businesses do not add value anymore [17:39:35] sanrac15: Saturday? I know I'm 5 hrs diff. but I thought it was on Sunday. [17:39:55] savvy2012: {sanrac15} we are doing both saturday and sunday now [17:40:01] ysbq: yes [17:40:22] sanrac15: Ok. That's great news. [17:40:30] ysbq: i am on going forward . take out JUNE-10 Q.2. [17:40:47] ysbq: http://www.accaglobal.com/en/student/qualification-resources/acca-qualification/acca-exams/p3-exams/exams-p30.html [17:41:49] ysbq: i guess i am being good today..... [17:43:05] yaroslava: wots the reading time? [17:43:19] ysbq: 10 min [17:43:36] ysbq: Ambion [17:43:42] savvy2012: Q19 BPP kit [17:53:39] ysbq: guys are u done reading [17:54:16] ms1689: done [17:54:28] ysbq: lets wait for others [17:54:51] yaroslava: done, its unlike me, i am normally slow [17:55:00] sanrac15: done [17:55:24] ms1689: may be we can start with the unfinancial measures [17:55:24] ysbq: lets wait for savvy and ratna [17:56:06] yaroslava: yeah savvy will do the calcs for us [17:56:18] savvy2012: im ready [17:56:23] savvy2012: not for calculations tho [17:56:27] savvy2012: i have headache [17:56:32] ysbq: oh ... [17:56:39] ysbq: lets do part b. first [17:56:42] ms1689: {savvy2012} u r the queen of calcualtions [17:57:19] ysbq: when did calculations have kingdoms and queens...lol [17:57:40] ysbq: ok what are the elements of porters diamond [17:58:03] yaroslava: factor conditions [17:58:12] yaroslava: demand condtions [17:58:32] yaroslava: will just do two dont want to be greed [17:58:46] ms1689: related and supporting industries [17:59:14] ysbq: now relate to the question [17:59:36] ysbq: i mean EUcria [17:59:38] yaroslava: firm strategy,structure and rivalry [17:59:47] yaroslava: ok [18:00:07] yaroslava: starting with which? [18:00:23] ysbq: factor conditions [18:00:51] ysbq: what are the factor condidtions in EUcRIA [18:01:35] yaroslava: this is an industrial country, therefore good in tertiary [18:02:04] ysbq: ok any one else wanna contribute [18:02:10] yaroslava: thus knowledge based logistic system [18:02:11] savvy2012: strong work ethics and precision in that country [18:02:26] yaroslava: thus my factor condition [18:02:27] ms1689: the government invested heavily in road infrastructure [18:02:37] savvy2012: High standard of living so high demand [18:02:57] sanrac15: strong workforce ethics [18:03:01] ysbq: so the factor conditions are favourable [18:03:06] ms1689: increased economic activity [18:03:22] ysbq: wht abt demand condtions [18:03:49] ms1689: it already has a reputation for prompt service [18:03:51] savvy2012: government seems to be supporvite of this industry, unline govt of Ambion, by taxing heavily makes it difficult for businesses to exist [18:04:12] yaroslava: They are in a mature market [18:04:25] ms1689: they have 700 trucks so demand must be high [18:04:44] ysbq: {yaroslava} so this means stifff competition and lesser margins [18:04:49] ysbq: {yaroslava} do u agree [18:05:31] ms1689: the market is actually immature so competition is low [18:05:35] yaroslava: {ysbq} yep [18:06:49] ms1689: they have high market share as they are they get the major logistics contracts in the country [18:08:04] ysbq: {ms1689 ok [18:08:40] yaroslava: {ms1689} i thought it says the logistic market is mature but they are a cost leader [18:09:38] yaroslava: {ms1689} sorry, u are rit [18:09:50] ysbq: i agree [18:10:04] ysbq: related and supporting industries [18:10:05] ysbq: ? [18:10:30] ms1689: {yaroslava} their competitors are small family owned and have problems in raising finance making it easy for EVM to dominate the market [18:10:58] yaroslava: {ms1689} true [18:11:01] ysbq: good point [18:11:15] ysbq: since they are resource ful [18:11:23] ysbq: ok what abt firm strategy,structure and rivalry? [18:12:39] yaroslava: rivalry is not fierce, most are family firms [18:12:49] ratna1238: they donīt really have so much rival [18:12:57] ratna1238: most of them are small companies [18:13:02] sanrac15: EVM strategy, strucrure and rivalry may not be as strong as Swift [18:13:18] ysbq: ok [18:13:45] yaroslava: family owned firms are finding it dif to raise finance thus little comp to this co [18:13:48] ysbq: any thing else we can add here [18:14:17] ysbq: {yaroslava} good we can relate that here to support our point [18:15:04] yaroslava: they hold all major logistic contracts...poor family firms..they have no chance [18:15:10] ratna1238: the government is supporting the infrastructure of transport [18:15:17] ysbq: ok guys this is a 10 mark question what else can we do here [18:16:17] ratna1238: the strong economic growth can help the company to carry on surviving n growing [18:16:42] yaroslava: we can however mention the downside to the possible pros and cons to this move, just as a however [18:16:44] ratna1238: I think they can be classified as the Structure. :D [18:17:19] sanrac15: The cap. mkt. in Ecuria are immature what can we read into this re: Governance and strategy .. [18:17:55] ms1689: EVM's main advntage is external and with the help of bigger company like Swift, have the possibity to even become bigger [18:19:38] ysbq: ok [18:19:48] ysbq: what else can we add here [18:19:50] yaroslava: If its immature that means it is at an intro stage of the industry cycle and therefore heav is promo costs [18:20:55] sanrac15: (yaroslava) thanks for that spin on it. [18:21:33] yaroslava: it think expanding on each element of the diamond will do 10. lets not over do. [18:21:53] ysbq: ok [18:22:03] ysbq: lets move to PART a. [18:22:54] yaroslava: lets do the nonfin first then fin? [18:23:09] ysbq: yeah i was thinking the same [18:23:37] ms1689: support from government with less taxes and regulations [18:23:42] ms1689: to follow [18:24:30] sanrac15: value chain - prompt delivery of goods [18:24:39] ysbq: ok what else [18:24:50] yaroslava: they have capabilities in logistics, so they will be able to help improve CRM [18:26:10] yaroslava: they have localk knowledge since they have acquired other businesses in the same makert for the past decate [18:26:25] ysbq: {yaroslava} good point [18:26:35] ysbq: what more can we add here [18:27:21] ms1689: increased economic activity means and demand for goods ensures sustainability of EVM [18:28:03] yaroslava: They will be able to cut competition with their economies of scope and scale plus the competiotn is made out of local family firms who are struggling to convince banks of their capabilites to pay back [18:28:31] ysbq: ok lets move on to financial factors [18:28:59] ysbq: savvy....................................................................................u feeling fine wanna add sth here [18:29:27] yaroslava: However, lack of experience in acquring foreign firms can be costly [18:29:57] ysbq: financial factors??? [18:30:05] yaroslava: yeah wher is Savvy,? financial analyst [18:30:18] savvy2012: im here.. [18:30:22] ratna1238: sheīs fallen asleep on her keyboard [18:30:48] ysbq: {savvy2012} u fine , wanna contribute to finacial measures [18:31:01] yaroslava: so here our analysis shall look at the sector v EVM RIGHT? [18:31:37] ysbq: yes [18:31:40] sanrac15: GP margiv EVM 20% and NP margin 5.75% .. ROCE - someone else [18:31:43] yaroslava: IM SURE THEY WANT US TO USE THE RATIOS THEY PUT FOR US [18:31:52] ysbq: yeah [18:32:06] ysbq: compare with sector averages the ratios [18:34:00] ysbq: calc the gearinng ratios [18:34:09] yaroslava: ROCE 1200/9300=12% COMPARED TO SECTOR [18:34:27] yaroslava: 18% [18:35:26] yaroslava: Thus quite low but since swft is cost leader, they may be able to turn this round using thier capabilities in logistics [18:35:33] ms1689: Swift has lower NPM in comparison to EVM. This shows the heavy regulations in Ambition and lower fixed costs in Ecarcia. [18:37:46] yaroslava: gross profit margin 4000/20000=20 compare to 17% [18:38:26] yaroslava: what will that tell use abot swift, ability to acquire this co? please dont sleep on me [18:38:53] ysbq: well [18:40:46] ysbq: its operating ratios are not good but its gearing is better than swift so they can acquire it to dilute the gearing and afterwards work on the operational side since the have got the right expereince and expertise [18:40:47] yaroslava: that means they have significantly low costs but operating efficiently enough to be profitable that their rival and this is not a big diffence compared to the sector margin [18:41:31] yaroslava: {ysbq} good point right there [18:41:46] ysbq: thanks u are welcome [18:42:08] ysbq: i think we can close the session for today [18:42:12] sanrac15: Gearing - 18%? pls. show me [18:42:38] ysbq: {sanrac15} sorry did not get u [18:42:42] yaroslava: {sanrac15} debt/ equity [18:43:06] sanrac15: yeah I got 2500/5750 [18:43:36] yaroslava: {sanrac15} it that 43% [18:43:56] sanrac15: yeah [18:44:30] ysbq: ok can we conclde the session here [18:44:47] yaroslava: That will mean they are doing better than the expected sector average and therefore financially feasible to be acquired on thoses bases [18:45:05] sanrac15: Ok. Thanks everyone [18:45:14] yaroslava: {ysbq} yes. so question dec09 saturday? [18:45:47] yaroslava: i think everyone got drained by the saturday question [18:45:48] ysbq: nope we will do this chapter and discuss the models [18:45:55] ysbq: i agree [18:46:04] yaroslava: {ysbq} which chapter [18:46:14] ysbq: Strategic Choices [18:46:33] ysbq: savvy in action [18:46:38] yaroslava: thus true, hope we all read it this time