Since companies are born until they dissolve takes place rather a continuous process of development that aims to harness the business opportunities arising in the market for higher profits.
Business Development is the process by which the entrepreneur and his personal skills and acquire or strengthen skills that promote the efficient and effective resource for your company, product and process innovation, so that contributes to sustainable growth of the company.
expansion and diversification.
The expansion is a business development based on strengthening the effort in the company's current activity.
a) expansion strategies.
.- Market penetration: is based on increasing sales using marketing techniques to find new customers.
.- Market Development: in this case is about finding new markets for our product, even in other countries, as we have seen the multinational study.
.- Product Development: some companies choose to enhance their traditional products, making it evolve, as can a manufacturer of special tools designed handles to fit the shape of the hands of the workers to become more comfortable handling.
b) Diversification .
expansion strategies have in common the maintenance of the products and the company's main activity. Through the diversification of their activities, companies enter new markets offering new products for different fields of activity.
A highly used form of diversification is called vertical integration : When a company makes all processes la cadena productiva, desde la obtención de la materia prima hasta la distribución de los productos a los clientes, se dice que está integrada verticalmente.
Por lo tanto, podemos observar que la integración vertical corresponde a una diversificación de tipo heterogéneo, pues agrupa actividades muy distintas.
EL CRECIMIENTO Y DESARROLLO DE LA EMPRESA.
El concepto de crecimiento de la empresa hace referencia a modificaciones e incrementos de tamaño que originan que ésta sea diferente de su estado anterior.El crecimiento de la empresa ha constituido desde siempre uno de los ingredientes fundamentales en la definición the strategy itself. This is due to several reasons. First, business organizations, as they grow, reflecting a steady progression, a feeling of being stagnant and have potential for future development. On the other hand, in highly dynamic economies such as the Western, economic growth is one of the key benchmarks of the system. Therefore, because the environment is competitive, companies must continually grow and develop, if only to maintain its competitive position relative to other firms to grow. If the company intends to improve its relative position, then has to grow at rates higher than those of his nearest competitors.
However, when we talk about growth strategies or development "we are referring to the level of corporate strategy and global.
The company has, in general, various options to achieve its objectives of growth and development, in terms of pursuing strategic factors. We note that in formulating a development strategy, the company must take into account two basic problems:
• Which direction to go in development (specializing in traditional activities or diversify into new fields)
• Which means or methods used to achieve development goals (internal growth, new investments within the company, external growth, mergers and acquisitions and cooperation agreements as an intermediate form between the two).
The most popular and widespread types of growth or development is due to Ansoff. This author based his classification on the relationship between the current situation or the company's traditional and new developments, both in terms of products and the markets. Thus, we identify two basic strategies that can be called for expansion and diversification.
Figure .- Various Forms of Growth.
Before going into more areas of business relationships nationally and internationally, talk about business cooperation:
In the competitive business world is increasing , making survival difficult for many companies and difficult to obtain benefits. This phenomenon is inevitable, but as far as possible, employers should try to collaborate with their competitors in ways that benefit both.
Sometimes these agreements between companies may harm consumers, because are intended to establish a monopoly that makes companies take advantage of its dominant position. Let
rates more importasntes link between firms: Union
venture (JV)
This figure is intended to establish a temporary agreement of collaboration between two or more companies for the purpose to undertake a particular project. Each company maintains its own legal personality, the marriage lasts while the project is underway, dissolving into its completion.
European Economic Interest Grouping (EEIG)
is a figure who promotes the European Union to promote cooperation among EU companies. The duration is in principle indefinitely, and not just a project as with the TUC.
The Cartel
The cartel is a link between independent enterprises engaged in the same activity, and establishes a covenant not to compete among them go so that all benefit by establishing a virtual monopoly. Therefore, they are prohibited in the legislation of most countries.
Technology Agreements
The technology is very expensive to obtain, on all innovations. Therefore, it is common that several companies get together to try to develop a new technology that each one separately would not be able to obtain. They are produced in different sectors: consumer electronics, cars, computers etc. The result of cooperation jointly exploit the participating companies.
Agreement
providers to ensure supplies of raw materials, critical manufacturing processes, many companies in the industrial sector agreements establishing medium and long term relationships with its suppliers. These agreements are also very common in the commercial sector, including supermarkets and their suppliers.
ECONOMIC AND SOCIAL CAUSES OF THE ECONOMIC EMERGENCE OF GROUP.
• The maturation of industrial capitalism has made the company the need to rethink their goals (growth vs. profit).
• financial capitalism is characterized by the rise of capital markets. It facilitates inter-company relations, may become more simple economic groups when they are created for acquisition and control of companies or parts of them.
The impact of technological progress in the market produces a lot of competition between those economic units que intentan incorporar constantemente la innovación, a la vez que una gran dependencia de aquellas que no pueden alcanzar ese nivel tecnológico.
”Separación entre la propiedad y la administración” ha propiciado la existencia de un mercado de directivos-profesionales, cuya incidencia en el comportamiento de las empresas ha sido evidente, ya que persiguen metas de que ponen mayor énfasis en el objetivo del crecimiento y por tanto, propician la creación de grupos de sociedades.
EXPANSIÓN DE LA ACTIVIDAD.
Las estrategias de expansión son aquellas que se dirigen hacia el desarrollo de los productos y mercados tradicionales de la empresa. Se basan en el crecimiento on one line, maintaining a close relationship with the company's current situation. Therefore, strategies are usually developed using the same technical, financial and trade that are used for the initial product line. The main strategies are to expand market penetration, product development and market development.
DIVERSIFICATION OF THE ACTIVITY. TYPES OF DIVERSIFICATION.
The diversification strategy is that the company simultaneously add new products and new markets for existing. This access to new activities, either by internal or external growth that the company does operate in competitive environments, new result is a set of physical and organizational changes that affect the structure of the company and represents a clear break with its past trajectory.
Entering new markets with new products is that they and those may or may not be related in some way with the current.
From this consideration, Ansoff was the classic type of diversification in terms of the technological relationship of new products with the traditional and the relationship of markets in terms of types of customers. So attempts to organize the industry to to achieve a monopolistic control of the market, tending to reduce competition, may be diverse and distinguished between: strategies for horizontal, vertical, concentric and conglomerate.
• A combination vertical merger involves companies that control different stages of the production process of a product.
• A horizontal combination is one formed by companies in an industry that develop these products.
• A conglomerate merger combines independent companies of different industries within the same organization.
• HISTORICAL LOCATION :
In the 1960 and 1970 many companies merged creating a multitude of clusters to achieve economies of scale or synergies. In the 1980's there was a sudden change in this trend and many clusters were detached from much of their business and focused on a core business. This solution is encouraged in most developed countries, increasing bids (OPAs), which mainly sought to appropriate parts of the conglomerates.
For example, certain oil companies have oil fields, refinerías, compañías de transportes y gasolineras.
Analizaré exclusivamente la diversificación conglomerada ya que se trata del objetivo fundamental de este estudio.
La diversificación conglomerada, supone que los productos y mercados nuevos no tienen ninguna relación con los tradicionales. Representa, por tanto, la estrategia más ambiciosa y con más riesgo.
La actividad principal de la empresa se diluye en el conglomerado y se suele llevar a cabo mediante crecimiento externo más que interno.
LA ESTRATEGIA DE DIVERSIFICACIÓN NO RELACIONADA: LOS CONGLOMERADOS EMPRESARIALES .
Definiciones de conglomerado
.
A generic way: Cluster is in the business, the corporation formed by several independent companies, interconnected by ties of ownership, whose merger increases and diversifies the company assets. This function reduces the company's dependence on a single product or service.
The term cluster, according to Ramon Tamames, is widespread in the U.S. to refer to all businesses owned by links interrelated exchange of shares, via holding relationships, etc ... As global conglomerates he cites the ATT, Alcatel, Mitsubishi, Mitsui, and even organizations like the IRI and INI.
The company unrelated or conglomerate diversification is also known as a holding company, which is defined as one company that controls the activities of others, through the acquisition of all or a majority of shares.
What is unrelated diversification or conglomerate.
unrelated diversification or cluster is the most dramatic growth for the company in the absence of any relationship between the company's traditional business and new business in which it invests. This would not be trying to use the skills nor is excess leverage to new activities.
The objective of conglomerate diversification is therefore looking for financial type of business risk reduction globally by investing in multiple industries. Usually carried out through processes of acquisition and merger
REASONS FOR unrelated diversification.
Here are some of the reasons that can advise a company track a conglomerate diversification strategy:
- Better allocation of resources: consideration of the company as an investment portfolio can improve management of the company's financial resources, channeling resources that may occur in some activities to others in which there is a net demand for resources. Be sought financial synergies in the portfolio management business.
is ultimately the basis of the reasoning of the BCG portfolio matrix in which the "cash cows (net generating resources) fund, for example a dilemma products (net absorbers of resources). This comes to say the owner of the business with lower profit expectations can be devoted to acquiring and expanding businesses with high growth potential and profit. So a company with a portfolio of businesses can look unbalanced, with investment in other sectors, the desired balance.
- high yield Search: a company with significant financial surplus or installed in a mature industry with low growth can search through unrelated diversification, investment opportunities that increase the overall profitability of the company.
This can be achieved by investing in industries of the future (emerging or growth). You may also be undervalued companies locating in the market, so that with a relatively small investment can be obtained adequate profitability.
- Risk Reduction: this is a major motivations for conglomerate diversification. This motivation will be more rife traditional activity of the company is highly concentrated in an industry that may be vulnerable in the medium term. While entering an unrelated business is taking on more risk with this investment, the result for the company as a whole is a reduction in the variability of profits and, therefore, a global risk reduction.
- objectives address: achieving other objectives of the professional class of directors, such as power, status, promotion opportunities, increased wages, etc. Can justify this type of strategy.
DISADVANTAGES OF CLUSTERS.
The Achilles heel of the diversified conglomerate is the requirement imposed on the corporate level management as to make smart decisions with respect to businesses operating in entirely different industries and environments totally different.
The higher the number of businesses participating in the company and the more mixed results, the harder it is to monitor corporate managers each subsidiary and detect problems early, to become experts in evaluating the attractiveness of the industry and Environment competitive in business and judge the quality of actions and strategic plans proposed by the business managers.
Managers should be smart enough and qualified to:
1. - Differentiate a good addition to a bad one.
2. "Selecting managers able to lead each business.
3. - Discerning intelligent strategic proposals.
4. - Know what to do if a business unit encountered.
Because every business faces difficult circumstances, a good way to gauge the risk of diversification is to ask the question: "If the business had problems, would you know how solve? ". If the answer is no, diversification do an excellent job in negotiating the acquisition prices (pass the test of cost of entry) not connected has a significant financial risk and profit expectations are more risky business. As expressed by the ex-president of a Fortune 500 company: "Never buy a business who can not lead."
only takes a few strategic mistakes:
- Poor assessment of industry attractiveness
- Unexpected in a newly acquired business
- Too much optimism
Any of them we can cause a severe drop in corporate earnings and a collapse in the price of company stock.
Another serious problem that this type of diversification as a strategic development path is that, except for additional financial support from a cash rich corporate parent, the diversification strategy does not help to improve the competitive strength of business units individual.
Each business is just to try and build a competitive position, since in this type of strategy does not provide a basis for cost reduction, transfer of skills or technology exchange.
also In theory we could compare the diversification offers the potential for greater stability in sales and profits of the business cycle, in practice do not always work attempts to achieve a diversification counter. Normally, all businesses (whether more or less attractive) also respond to the upward or downward, affected by cyclical conditions in the economy.
Finally, another serious problem unrelated diversification or conglomerate cover is how to build the business portfolio:
- situation to which I raises two questions: • Should
corporate portfolio contain few or many unrelated businesses?
business • How much diversity can successfully manage corporate executives?
- A reasonable way to solve the problem is to answer two questions:
• What is the minimum diversification the company needs to achieve an acceptable growth and profitability?
• What is the maximum diversification that can run the company, given the added complexity?
In general, the optimal response is between the two extremes.
worth mentioning that all mergers and business combinations have the potential to eliminate competition between them, thus creating monopolies. Mergers are usually analyzed by the authorities in all countries within the European Union, the European Commission so that any merger that seeks to achieve monopoly power and work against the public interest will be banned. Debacle
this that keeps Microsoft in the U.S. today.
Well, with this, we completed a review to questions 5 and 6 Unit II Business Economics, 2 º de Bachillerato. Morale and teamwork!.
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