Question

Strategic Management

1. Explain at least two forms of synergy a corporation can take advantage of. Give one example of each.

2. Discuss why changes in corporate strategy should be followed by changes in organizational structure. Provide an example.

3. How does restructuring differ from re-engineering? Clarify your answer.

Answer 1

1)A synergy is the benefit that the combined firm may get which it could not get being an individual firm before. Synergy may in terms of cost savings of increased revenue. The two forms of synergy a corporation can take advantage of are explained as follows:

· Research and development-either of the two merged firms may have access to better R&D which when applied to the merged firm lead to better development which may help in cutting cost in production without compromising quality. For example one firm may have been developing a cheaper alloy that could be used in the production of an automobile the other firm produces.

· Patent-this is the most beneficial synergy in which the acquirer may pay a fee to access the patent of the target firm thus eliminating the expense. The merged firm now can produce more competitive products which further help in increasing revenue.

2) If a company changes its corporate strategy it must also change its organizational structure in order to improve efficiency, promote teamwork, create synergy, eliminate or create new department or reduce cost, including personnel.forstly the company must be clear that what it wants to achieve which comes in making strategy and then it will proceed to align its structure in such a manner to best achieve this. Changes in structure is needed to support the new strategy

3) Reengineering means designing again the processes of doing business. It improves economical and managerial performances. On the other hand restructuring means changing the structure of business in terms of people, hence staff reduction which ultimately result in cost efficient business making.