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38649 results in Cambridge Textbooks

Page 1435 of 1933

  • 7 - Divestiture: stay or exit

  • from PART III - Decisions about portfolio Composition: reducing the scope of the corporation
  • Phanish Puranam, Bart Vanneste, University College London
  • Book:
    Corporate Strategy
    Published online:
    28 May 2018
    Print publication:
    21 March 2016, pp 135-152

  • Summary

    Let's say you are the CEO of ABC Sports, which began its corporate life making footballs. It now has a leading brand in this product line. A few years ago, the management decided to leverage their strengths in the football business to enter footwear. The experiment has not been deemed successful, as your shareholders kindly pointed out to you during the most recent annual shareholder meeting. You are thinking of getting out of the footwear business and of refocusing on making footballs. Should you exit the footwear business and, if so, in what manner?

    Divestiture refers to the process of reducing the portfolio of the businesses a firm owns. It is one of the two important ways in which a corporation reduces its scope. The other is outsourcing (the subject of Chapter 8). Divestiture occurs when the firm reduces the number of businesses it is active in by completely pulling out of the value chain and ceasing to offer the products from that value chain to the relevant customers. Consider ABC Sports, which is active in two businesses: footballs and footwear. If ABC Sports decides to divest the footwear business, this implies that it will no longer offer footwear. Alternatively, it may decide to outsource the manufacturing of the footwear, while still designing them and distributing them. The difference can be visualized as in Figure 7.1.

    The two basic modes of divestiture are sell-offs and spin-offs. In a sell-off, the divested business is sold to another company. When the other company uses a significant amount of debt to finance its purchase, the transaction is called a leveraged buy-out (LBO). A special case of this is when the incumbent management of a business unit takes over the ownership of the business (again typically using debt finance); this is called a management buy-out (MBO). In a spin-off, the shares of the divested business B are distributed to the shareholders (of the parent business A) and business B is listed on the capital market. Thus, the shareholders can choose whether they want to hold both shares or sell their stakes in business B. The parent business A may also choose to hold some residual stake in business B. This can be a tax free event, if the parent divests a minimum threshold of shares.

  • 10 - Designing the corporate HQ

  • from PART IV - Decisions about portfolio organization
  • Phanish Puranam, Bart Vanneste, University College London
  • Book:
    Corporate Strategy
    Published online:
    28 May 2018
    Print publication:
    21 March 2016, pp 199-226

  • Summary

    A2G, Inc. is a multi-business corporation with seven business divisions. These vary in size and range from relatively small (fewer than 100 employees, $50 million in annual sales) to quite large (10,000 employees, $2 billion in annual sales). The businesses span a range of industries, some of which are related (e.g., heavy earth moving equipment, construction) and others which are not (e.g., publishing services). The corporate HQ currently has 20 employees. The newly appointed CEO of A2G has asked you to analyze the role of corporate HQ and recommend what changes, if any, you would make to how it is organized. Where would you start?

    Recall from Chapter 1 that the goal of the corporate strategist is to exploit synergies through administrative control that cannot be replicated by mere investors. The HQ, where the corporate strategists reside, is ultimately the custodian of corporate advantage. Its goal is to ask (and help answer) the question of why the collection of businesses they administer is worth more than what they would be worth if operated independently.

    We will use “HQ” to refer not only to the corporate HQ in a multi-divisional corporation but in fact to any administrative unit making strategic decisions that cut across multiple businesses. These could be regional, national, or divisional HQ, or indeed the holding company of a portfolio of companies (as in a business group). To the extent that any of these entities is responsible for ensuring that the set of businesses they administer creates more value than what they would if operated independently, they are in effect pursuing corporate advantage. In addition, the HQ may also be the organizational or physical location of shared service units.

    This chapter focuses on the mechanisms of influence, or the influence models, available to the HQ to achieve this objective, given a fixed portfolio composition. This focus is critical in order to understand each component of corporate advantage clearly; HQs create corporate advantage through the decisions they make about portfolio composition (the topics of Chapters 4–8), but also about how they manage the businesses that exist in the portfolio (this chapter and Chapter 9, which focuses on the organizational structures used to manage the portfolio), as well as how they manage the process of bringing businesses into the portfolio (Chapters 11 and 12).

  • 3 - Motor action and motor skills

  • Arnold Lewis Glass, Rutgers University, New Jersey
  • Book:
    Cognition
    Published online:
    28 May 2018
    Print publication:
    21 March 2016, pp 41-68

  • Summary

    There is a sense in which the entire modern age is a fortuitous consequence of the human ability to make an ad hoc voluntary response. People did not specifically evolve to be able to drive a car or to be able to type a text message into a smartphone. However, we did evolve to be able to do whatever we were able to imagine. There once was a one-legged high school athlete who played football without an artificial leg but who nevertheless could hop so quickly and forcefully that he could catch and tackle a runner. Such a skill demonstrates the flexibility, hence the robustness, of the motor system.

    In this chapter, we shall see that voluntary action involves two distinct stages: planning and performance.

  • • During the planning stage, involving the parietal and the premotor or supplementary motor cortex, various final postures from previous successful acts are retrieved, and one is selected and modified for the current situation.

  • • During the performance stage the plan is encoded for specific body parts in the motor cortex, initiated by the basal ganglia, and translated into a motor program for making the necessary muscle movements by the cerebellum. The neural system includes multiple top-down pathways that exert multiple levels of control of the action towards its target under the guidance of feedback. Furthermore, unrelated perceptual and motor activity is inhibited.

  • • A successful action results in the encoding of the final posture of the action. Over time, when a familiar action is repeated in a similar context, it is necessary only to retrieve and execute a posture plan for rapid, errorless performance. Skill learning is the result of the accumulation of posture plans.

  • • The ability to learn skills makes a wide range of actions possible. A boy does not even need two legs to be able to play football.

    • Consider all that is involved in the simple act of pointing at a target. In order to perform the action, the motor system must be able to encode the location of the target and the hand, initiate the movement of the hand, encode the changing location of the hand in real time, and use this information to adjust its motion to the target and initiate the movement of the fingers into a pointing posture.

  • 4 - Mental action: attention and consciousness

  • Arnold Lewis Glass, Rutgers University, New Jersey
  • Book:
    Cognition
    Published online:
    28 May 2018
    Print publication:
    21 March 2016, pp 69-99

  • Summary

    People like to look for things. From Where's Waldo? to countless video games, searching for visual targets is considered by many people to be fun. Paleontologists hunt for dinosaur bones, anthropologists hunt for human bones, and archeologists hunt for the debris of ancient civilizations. Quarterbacks search for the open receiver and point guards search for the open shooter. Merchants stock miles of shelves in giant stores with confidence that customers will be able to find what they look for. People can routinely detect and respond to task relevant targets so quickly that they can drive vehicles through crowded streets safely much more quickly than any person can walk or run. The general name for this ability to control perception so that what is important is seen or heard is attention.

    Attention refers to voluntary actions that are used to control perception. Seeing and hearing are the consequence of looking and listening. The control of perception involves either of two tasks. One task is to select a single target for processing, such as when you listen to a single conversation during a party. The other task is to divide attention among several targets, such as when you drive a car down a crowded street. In this chapter we will see the following.

  • • Selective attention involves three stages: target specification, search, and target identification. The frontal cortex, where the target is specified, selects for the target by the inhibition of all perceptual input that is not target-related.

  • • Because the human information-processing system can plan and perform only one ad hoc voluntary response at a time, the bottleneck imposed by serial responding limits the number of targets that can be identified and responded to. Tasks that require independent ad hoc responses to multiple targets are called divided attention tasks. Divided attention inevitably results in missed targets and lower responses. Multitasking results in poorer performance than performing the tasks separately.

  • • Target selection is not entirely determined by top-down control from the prefrontal cortex and parietal cortex. Emotional arousal may also play a role. Emotional arousal increases the inhibition of distracters, narrowing perceptual processing to just the emotionally significant target. In other words, one cannot ignore something sufficiently threatening.

    • About attention

    People do not passively see and hear but actively look and listen. The same neural systems that evolved to control motor movements control perception as well.

  • 5 - Ally or acquire?

  • from PART II - Decisions about portfolio Composition: increasing the scope of the corporation
  • Phanish Puranam, Bart Vanneste, University College London
  • Book:
    Corporate Strategy
    Published online:
    28 May 2018
    Print publication:
    21 March 2016, pp 100-119

  • Summary

    Burger Behemoth Plc is a successful chain of fast-food restaurants, with a large network of restaurants around the country, some of which are franchised and others fully owned. Its brand has come to stand for standard, tasty, convenient, and quick meals, and it has enormous customer loyalty among families with young children below 12, and also among busy executives on the road. However, growth is slowing, and greater health awareness among consumers has led to a general disenchantment with fast food. The CEO of Burger Behemoth is contemplating some new businesses that they might enter. A candidate has emerged from internal discussion: the children's theme park business.

    During the same discussion it was suggested that Mighty Monkey, Inc., an experienced player in the theme park business, might be a good partner to collaborate with. If Burger Behemoth were to decide to enter the theme park business through a collaboration with Mighty Monkey, which mode should they choose: non-equity alliance, equity alliance, or acquisition?

    Inorganic growth: the costs and benefits of equity ownership in strategic partnerships

    Broadly speaking, there are three modes of inorganic growth: non-equity alliances, equity alliances, and outright acquisition. Note that these forms of strategic relationship may also occur for reasons other than entering a new business – for instance, growth within a business or to help exit a business through outsourcing. However, most of what we know about choosing between these modes of growth will still apply.

    It is useful to think about all strategic relationships as relationships between firms that cannot be managed by a contract alone. Non-equity alliances typically rely on contracts. However, they constitute alliances (rather than, say, simple procurement agreements) if the contract alone is insufficient, and a close working relationship is also needed between partners to adapt to changing circumstances and issues not specified in the contract.

    Equity ownership can serve as an important supplement to contracts in alliances. Equity alliances involve one party taking an equity ownership stake in the other, and this could be reciprocal. When the equity stake of one party exceeds a threshold of around 25 percent in the other (this level varies across countries), then a right to veto is created. If a party's stake exceeds 50 percent in the other, then in effect it has gained control over it.

  • 3 - Governance costs: impediments to collaboration

  • from PART I - Foundations
  • Phanish Puranam, Bart Vanneste, University College London
  • Book:
    Corporate Strategy
    Published online:
    28 May 2018
    Print publication:
    21 March 2016, pp 70-82

  • Summary

    You are a Vice President of Strategic Alliances at WonderWorld, a producer of candy. You are contemplating entering into an alliance with one of two candidates. With company A, a producer of children's animation movies, the goal is to use the movie's main characters to promote the candy. With company B, a supplier of one of the main ingredients, the idea is to set up a just-in-time (JIT) supply relationship to lower inventories. Which alliance would be easier to manage?

    When discussing the synergy operators in Chapter 2, we noted that these provide potential benefits from jointly operating two businesses. Yet, collaboration does not automatically arise if there are synergies. There are impediments to be overcome and these generate costs, which we refer to as governance costs. Governance costs are the frictions that prevent two businesses operating smoothly together to realize synergies. They act as “taxes” that eat into the potential benefits from synergies when they are attempted to be extracted.

    Governance costs, along with synergies, constitute two of the most important concepts in corporate strategy. The reason is that together they determine governance structure – the choice about joint or separate ownership of businesses between which there are synergies. The fundamental idea linking these concepts can be stated very simply: to exploit a potential synergy, pick a governance structure that unlocks the most value net of the costs of governance. In Part II of this book (Decisions about portfolio composition: increasing the scope of the corporation, Chapters 4 through 6), we analyze in great detail how synergies and governance costs impact decisions on the ownership choices of the corporation (e.g., whether to diversify, to ally or acquire, or to grow inorganically or organically). In this chapter, we highlight the origins of governance costs.

    Where do governance costs come from?

    Governance costs are the costs of achieving effective collaboration, over and above the direct cost of what is being exchanged. The governance costs that arise under common ownership are referred to as the ownership costs. The governance costs that arise in interactions between independent firms are referred to as transaction costs. In both cases, governance costs arise from impediments to cooperation and coordination (which are both necessary for successful collaboration) and the measures needed to control these (see Figure 3.1).

  • 11 - Managing the M&A process

  • from PART IV - Decisions about portfolio organization
  • Phanish Puranam, Bart Vanneste, University College London
  • Book:
    Corporate Strategy
    Published online:
    28 May 2018
    Print publication:
    21 March 2016, pp 227-255

  • Summary

    TechnoSystems Plc is a successful software company that specializes in operating systems. It sees an opportunity to expand into a new niche software sector, productivity applications. LittleCo. is a small unlisted company that has developed award winning products in the productivity applications domain, but does not have much of a brand name or customer base yet. It has emerged as a candidate for acquisition by TechnoSystems. How would you value the firm? How would you plan the post-merger integration?

    An acquisition occurs when one company buys another company, or a business of that other company. A merger occurs when a new company is formed and the acquirer and target companies are dissolved. Mergers and acquisitions (M&As) are different for tax purposes and similar for many strategic purposes. We focus on their communalities rather than differences and will mostly use the term “acquisitions” to talk about both.

    There are several stages in an M&A process involving people and experts from within and outside the acquirer–target firms: target selection, valuation and negotiation, due diligence, integration, and post-deal evaluation (see Figure 11.1).

    Much of the strategic thinking on when to do an M&A (as opposed to an alliance or organic growth), described in Chapters 4, 5, and 6, must be completed before beginning the first step of the M&A process, target selection. During the valuation and negotiation phase, the acquirer estimates how much the target is worth and finds a price that is acceptable to both. Due diligence refers to a period in which the acquirer, having made an offer, is granted access to private data by the target to verify its valuation. Implementation refers to the process of achieving the desired level of integration of activities across acquirer and target in order to extract synergies. Evaluation refers to a post-transaction review of what went right and wrong. This is particularly useful for serial acquirers, whose transactions tend to be similar enough to apply learning from prior transactions to future ones.

    There are enormous technical complexities at each stage, and in all likelihood professional outside advisors (investment bankers, consultants, lawyers, and technical experts) will be involved. Our aim is to give the reader a map of the terrain, and a broad framework to bound and manage this complexity.

  • 2 - The evolution of cognition

  • Arnold Lewis Glass, Rutgers University, New Jersey
  • Book:
    Cognition
    Published online:
    28 May 2018
    Print publication:
    21 March 2016, pp 20-40

  • Summary

    Automatic responses play only a limited role in our behavior because life is not perfectly predictable. If a lifetime of events was perfectly predictable then every animal could be born able to automatically make every response it would ever need to make, and cognition would be unnecessary. However, life is not perfectly predictable. To make it possible to respond to unpredicted challenges in the world, an elaborated nervous system evolved that made voluntary action possible. The advantage of voluntary over automatic, involuntary action is that it can be ad hoc. Faced with something unexpected, an animal can craft a response it has never made before. Social creatures face a lifetime of new social experiences that require ad hoc responses. For example, dogs that are allowed on furniture often sit where other family members sit. This is how I came to share a chair with my golden retriever. The dog would have to move whenever I wanted to sit down. Across the room was the sliding door to the backyard. The retriever learned that, to go out, he should touch the door. One day, when I was sitting in the chair, the dog touched the door. I got up and walked over to the door. Before I could open it, the dog ran back and sat in the chair!

    Cognition begins with the control of voluntary action. In this chapter we will see that cognition evolved to make it possible for an animal to perform novel actions in response to novel, hence unexpected, events.

  • • To make voluntary action possible, at the top of the spinal cord, layer upon layer of representational, computational, and control structure was added, forming brains of increasing complexity, which provided increasingly sophisticated control of voluntary action. The great advantage of a voluntary ad hoc system of action is that it can craft new responses to novel situations, and so respond to change. The great advantage of learning is that successful new actions can be incorporated into future behaviors.

  • • Voluntary action is synonymous with consciousness. The control of voluntary action is synonymous with cognition.

  • • Social groups are so effective at dominating their environments that a member's success at raising a family depends more on his or her social standing than any other factor. […]

  • 12 - Recall

  • Arnold Lewis Glass, Rutgers University, New Jersey
  • Book:
    Cognition
    Published online:
    28 May 2018
    Print publication:
    21 March 2016, pp 312-336

  • Summary

    Before we went to Paris, I suggested to my eight-year-old son that it would be fun to walk to the top of the Eiffel Tower. At first he was dubious, but when we got there he embraced the task with great enthusiasm. Soon he was bounding up the stairs at rapid clip, and we reached the top far in advance of the rest of our party, who waited for the elevator. Very much pleased with myself, when we returned home I asked him what he enjoyed most about the trip to Paris. He answered, unhesitatingly, “The Empire State Building.”

    Clearly, this was a retrieval error. It demonstrates that encoding the representation of an object or event is not sufficient to ensure an accurate memory later on. A recall task requires you to respond with information not in the question – for example, what you enjoyed best on your trip to Paris. In a recall task, the cue may be distinguished from the target response it elicits. In a question-and-answer format, the question is the cue, and the answer is the target of the recollection. In a navigation task, the goal is the cue, the location of the goal is the target, and the mental map containing the sequence of movements to the goal is the recollection.

    Recall frees human thought and action from the constraints of the immediate environment. Recognition makes it possible to respond to whatever is immediately at hand (Chapter 10). However, self-cuing makes it possible to recall, hence think about, anything one has experienced.

Page 1435 of 1933