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M&A - Vertical Acquisition of ADMECO AG

Management Strategy

Seminar Paper 2003 11 Pages

Business economics - Business Management, Corporate Governance

Excerpt

Contents

i. Abstract

ii. The company - ADMECO AG

iii. Investor - Nordic Medial Supply ApS

1.0 Situation & Issues Description

2.0 Actionable Advice to Senior Management

3.0 Justification of Key Points
3.1 Porter’s Five Force Framework
3.2 Strategic Clock
3.3 SWOT Analysis (of new vertical Situations)

4.0 Conclusion

5.0 References

i. Abstract

This paper discusses the potential benefit and strategic importance of an acquisition recommended for ADMECO AG, a small business operation, within the context of MSIE1. Since this is dealt with here briefly and concisely, the issues tackled do not cover the contrast between pre-acquisition motives and post-acquisition behaviour, or the subtle process of sound integration.

ii. The company - ADMECO AG

ADMECO AG2 is a small medical device company offering concepts and solutions for the hospital market, in particular, operating theatres and clean room environments. Its strategy is based on factors such as market penetration, the patent status of products , the regional location of their major customers, their financial strengths, and the resources the company can bring to bear on changing market opportunities.

iii. Investor - Nordic Medial Supply ApS

Nordic Medical Supply (NMS) is a Danish owned company and a subsidiary of Scandinavian Medical Group (SMG), a leading medical device company supplying products and services to the hospital market in Scandinavia (Denmark, Norway, Sweden, Finland), Russia, and Iceland. NMS was established in 1999 and, together with Zimmer Scandinavia, is a subsidiary of SMG.

1.0 Situation & Issues Description

At present, ADMECO AG cannot keep up with a rapidly increasing diversified global market and increased competition within the hospital OR market segment. Company growth has resulted in a horizontal organisation, but in the past there has been a marked inability to realise an overall aim moving beyond strategy, structure and systems to a framework built on purpose, process and people.

After it was founded in 1981, the company missed the point of effective diversification, failing to tailor new products (e.g., service-based products) to meet customer needs. The service line has not been widened to find ways to develop into new market areas offering, for instance, asset management based services for hospital providers, and neither has the product portfolio been broadened to incorporate sales tools such as risk sharing contracts in place of standard contracts.

Additionally, ADMECO has not proven itself able to effectively communicate and reinforce its plan to achieve strategic resonance. The company lacks the resonance between the speed of domestic and international market changes and the speed of management response. In the past, rapid market changes did not lead to the company radically repositioning itself internationally.

Given such a general situation, the present corporate outlook does not suggest long-term sustained "fast profitable growth" can be guaranteed for their business. ADMECO’s Pierre van den Wildenberg3 recognises that the increased struggle for competitive advantage nowadays makes it almost essential to join forces.

(Word count: 233)

2.0 Actionable Advice to Senior Management

ADMECO’s core competences are its branding, innovation and installed base. As a key competence partner NMS has a comprehensive web of sales/marketing channels The goal is to make the client profitable, address cost and maintenance issues, and minimise capital spending. In my view, vertical acquisition between ADMECO & NMS at the end of the coming fiscal year would be recommendable since, for such a new venture, a merger strategy will lead to increased new value creation, growth and globalisations.

The recommended steps consist of:

- Forming an acquisition strategy
- Defining the acquisition criteria
- Searching for a target
- Acquisition planning
- Valuing & evaluating
- Negotiating
- Due Diligence (including the cultural due diligence)
- Purchasing & sales contact
- Financing
- Implementation

Given the company’s present situation, the corporate side acknowledged it cannot response adequately to market changes and is therefore unable to positively benefit itself or its shareholders. When looking at markers of the overall health of an organisation, one major visible factor is its structure. The acquisition process flow is illustrated below:

Abbildung in dieser Leseprobe nicht enthalten

Fig: 1: Phases of Acquisitions

[...]


1 MSIE = Management Strategy and the International Environment

2 ADMECO AG (www.admeco.com) est. in 1981, headquarter in Hochdorf, Switzerland, employee count: 26

3 Mr. Pierre van den Wildenberg is CEO and owner of ADMECO AG

Details

Pages
11
Year
2003
ISBN (eBook)
9783656004462
ISBN (Book)
9783656005018
File size
403 KB
Language
English
Catalog Number
v178463
Institution / College
University of Strathclyde
Grade
1.7
Tags
vertical acquisition admeco management strategy

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Title: M&A - Vertical Acquisition of ADMECO AG