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MANAGING PROJECTS

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Projects represent nonroutine business activities that often have long-term strategic ramifications for a firm. In this chapter, we examined how projects differ from routine business activities and discussed the major phases of projects. We noted how environmental changes have resulted in increased attention being paid to projects and project management over the past decade. In the second half of the chapter, we introduced some basic tools that businesses can use when planning for and controlling projects. Both Gantt charts and network diagrams give managers a visual picture of how a project is going. Network diagrams have the added advantage of showing the precedence between activities, as well as the critical path(s). We wrapped up the chapter by showing how these concepts are embedded in inexpensive yet powerful software packages such as Microsoft Project. If you want to learn more about project management, we encourage you to take a look at the Web site for the Proj...
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Corporate Strategy: Mergers and Acquisitions, Strategic Alliances

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This chapter discussed two mechanisms of corporatelevel strategy (acquisitions and alliances).
Mergers and acquisitions, and why firms would use either as a vehicle for corporate strategy.
A merger describes the joining of two independent companies to form a combined entity.
An acquisition describes the purchase or takeover of one company by another. It can be friendly or hostile.
Although there is a distinction between mergers and acquisitions, many observers simply use the umbrella term “mergers and acquisitions,” or M&A.
Firms can use M&A activity for competitive advantage when they possess a superior relational capability, which is often built on superior alliance management capability.
Horizontal integration and evaluate the advantages and disadvantages of this corporate-level strategy.
Horizontal integration is the process of merging with competitors, leading to industry consolidation.
As a corporate strategy, firms use horizontal integration to (1) reduce competitive intensity, (2) lower costs, and (3) increase differentiation.
Why firms engage in acquisitions.
Firms engage in acquisitions to (1) access new markets and distributions channels, (2) gain access to a new capability or competency, and (3) preempt rivals.
Evaluate whether mergers and acquisitions lead to competitive advantage.
Most mergers and acquisitions destroy shareholder value because anticipated synergies never materialize.
If there is any value creation in M&A, it generally accrues to the shareholders of the firm that is taken over (the acquiree), because acquirers often pay a premium when buying the target company.
Mergers and acquisitions are a popular vehicle for corporate-level strategy implementation for three reasons: (1) because of principal–agent problems, (2) the desire to overcome competitive disadvantage, and (3) the quest for superior acquisition and integration capability.
Strategic alliances, and why they are important corporate strategy vehicles and why firms enter into them.
Strategic alliances have the goal of sharing knowledge, resources, and capabilities in order to develop processes, products, or services.
An alliance qualifies as strategic if it has the potential to affect a firm’s competitive advantage by increasing value and/or lowering costs.
The most common reasons why firms enter alliances are to (1) strengthen competitive position, (2) enter new markets, (3) hedge against uncertainty, (4) access critical complementary resources, and (5) learn new capabilities.
Three alliance governance mechanisms and evaluate their pros and cons.
Alliances can be governed by the following mechanisms: contractual agreements for non-equity alliances, equity alliances, and joint ventures.
Exhibit 9.2 presents the pros and cons of each alliance governance mechanism.
The three phases of alliance management and how an alliance management capability can lead to a competitive advantage.
An alliance management capability can be a source of competitive advantage.
An alliance management capability consists of a firm’s ability to effectively manage three alliancerelated tasks concurrently: (1) partner selection and alliance formation, (2) alliance design and governance, and (3) post-formation alliance management.
Firms build a superior alliance management capability through “learning-by-doing” and by establishing a dedicated alliance function.
The build-borrow-or-buy framework to guide corporate strategy.
The build-borrow-or-buy framework provides a conceptual model that aids strategists in deciding whether to pursue internal development (build), enter a contract arrangement or strategic alliance (borrow), or acquire new resources, capabilities, and competencies (buy).
Firms that are able to learn how to select the right pathways to obtain new resources are more likely to gain and sustain a competitive advantage.

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