Assignment:
Corporate Diversification Strategy and Its Impact on Social Responsibility - Strategic Management
As the CEO, you have decided to embark on a diversification strategy and have located a potential candidate to acquire and need to execute a complete due diligence on a potential acquisition. The purchase is an unrelated product and market as compared to your current business model.
You current product mix provides manufactured products to the automotive industry. In stark contrast the potential acquisition's main focus is supplying monitoring devices for cardiac care units. The monitoring device company often donates to hospitals these devices to needy patients who cannot afford them and are a significant impact on the bottom line.
Discuss the key issues of the potential acquisition in terms of the risks and rewards of going forward. How will you determine if this is simply an overzealous CEO chasing a better "bottom line" or is it a viable option for improving the performance of the auto products company?
Lastly, how would you evaluate the impact of corporate social responsibility on the decision? If you acquired the cardiac device company would you continue its device donation program to the needy patients?
Reference:
(Triple Bottomline Strategy - 3 performance Dimensions)
References
Thompson, A., Petraf, M., Gamble, J., and Strickland, A.J. (2016) Crafting and executing strategy :The Quest For Competitive Advantage : Concepts and Cases (20th ed.). New York, N.Y. : McGraw-Hill.
Outsourcing Decisions - Does Management Employ the Concept Correctly? - Managerial Accounting
Incremental Analysis for Outsourcing Decisions; the text discusses several of the nuances that management teams employ when making "make or buy decisions" on a host of product or service related issues within their organization. Please develop your own pros and cons of the topic by doing some limited research on the internet and provide at least two positions
References
Crosson, S. V., & Needles, B. E. (2014). Managerial Accounting (10th ed.). South-Western Cengage Learning.
Incremental Analysis for outsourcing Decisions
Outsourcing is the use of suppliers outside the organization to perform services or pro- duce goods that could be performed or produced internally. Make-or-buy decisions, which are decisions about whether to make a part internally or buy it from an external supplier, may lead to outsourcing. A company may decide to outsource entire operating activities, such as warehousing or human resources, that have traditionally been per- formed in-house. Outsourcing can reduce a company's investment in physical assets and human resources, which can improve cash flow. It can also help a company reduce its operating costs and improve operating income. For example, because Amazon.com out- sources the distribution of most of its products, it has been able to reduce its storage and distribution costs enough to offer product discounts of up to 40 percent off the list price.
Outsourcing analysis
In manufacturing companies, a common decision facing managers is whether to make or buy some or all of the parts used in product assembly. The goal is to select the more profitable choice by identifying the costs of each alternative and their effects on revenues and existing costs. Managers need the following information for this analysis:
Information About Making
• Variable costs of making the item
• Need for additional machinery
• Incremental fixed costs
Information About Buying
• Purchase price of item
• Rent or cash flow to be generated from vacated space in the factory