McDonald Case

MGNT 7090 Strategic Management

Professor Li Ji

Assignment 4

11412100 Siu Chiu Shun Patrick

1/. If my firm is a food producer, the name of the new strategy is :

Unrelated Diversification

- a firm entering a different business that has little horizontal

integration with other business of a firm

-take for example in Hong Kong: Four Seas Mercantile Holding

Ltd(四州食品集團 ) acquire Apple Daily（蘋果日報）

2/. If my firm is a newspaper publisher, the name of the new strategy is:

Horizontal Integration through Merge and Acquisition (M & A)

-a firm entering the same business that obtain valuable resources that

can help an organization expand its product offering and provide the

opportunity for firms to obtain three bases of synergy: leveraging core

core competencies, sharing activities and building market power,

where as sometime enter new market segments.

-take for example in Hong Kong: Oriental Daily (東方曰報）acquire

Apple Daily（蘋果日報）

3/. A Sensitivity Analysis for the two different strategies can be

summarized as follows:

a: Unrelated Diversification - food industry and newspaper publisher

-with unrelated diversification , even though there are few similarities

in the resources and capabilities among firms business's units, but

we can still make use the key resources to make the strategy

successful. We can examine the resources in terms of tangible

resources, intangible resources, and organizational capabilities.

-for tangible resources, they include the physical and financial assets

that an organization uses to create value for its customers. Among

them are financial resources(e.g. a firm cash, account receivables, and

its ability to borrow funds); physical resources(e.g.the company's plant,

equipment, and machinery as well as its proximity to customers and

suppliers); organizational resources(e.g.the company's strategic

planning process and its employee development, evaluation , and

rewards systems); and the technological resources(e.g. Trade secrets,

patents, and copyrights).

For newspaper publisher, the physical resources are difficult to share

with the food industry, e.g. Those food packing machines can't be used

for printing the newspaper as well as the lorry to transport the frozen

food can't be used to transport the newspaper. Also the major raw

materials of newspaper publisher is paper where as no any relation

food industry. But somehow the financial resources may be shared

by each other e.g. The firm can borrow money from bank only if the

the firm has positive cash flow and account receivable.

-for intangible resources which include organizational assets that are

difficult to identify and account for and are typically embedded in

unique routines and practices, including human resources, innovation

resources, and reputation resources. In this part, the resources are

more difficult to be shared between food industry and newspaper

industry. The manpower in newspaper publisher industry such as

editor, reporter, there scope of work are quite a big different with the

manpower in the food industry. Trade secrets cannot be shared with

the two industries. Moreover, the brand name and reputation in food

industry cannot benefit the newspaper industry e,g. Good reputation of

Four Seas(四州）in food industry cannot bring any brand loyalty to

customers when they step in the newspaper industry.

-for organizational capabilities are the competencies and skills that a

firm employs to transform inputs into outputs. In this case, the

competencies and skills are quite different between newspaper and

food industry, e.g. The butcher of food industry cannot find any

suitable job in the newspaper industry.