Ross & Weil - Chapter 8 (Exploit FFE for profitable growth)

Question 1

What are two general strategies for profitable growth?

Answer 1

1. Organic growth
   Apply existing capabilities for new business opportunities
2. Acquisition-driven growth
   Rip-and-replace or diversify

Question 2

What is done in rip-and-replace?

Answer 2

Leveraging best practices in the combined entity

Question 3

What is done in diversification(as acquisition)?

Answer 3

Allowing acquisitions to use their existing foundations, but allow synergy through standardized technology and shared services.

Question 4

How can you achieve profitable growth in a unification model?

Answer 4

• Standardized IT infrastructure, business processes and shared data.
• Growth when line managers use integrated data to better serve customers
• Growth when senior managers turn their attention to new markets, products or process innovation.
• Easy to innovate with new ways of serving existing customers, or new markets

Question 5

How can you achieve profitable growth in a replication model?

Answer 5

• Leveraging standardized IT-enabled business processes to: 1 grow into markets, 2 to increase products and services.
• Expansion of processes and systems in foundation supports new products/services
• Automation enables reduced start-up cost in new markets.

Question 6

How can you achieve profitable growth in a coordinaton model?

Answer 6

• Leveraging strong IT infrastructure to share data across unique business
• Increase customer service, better knowledge about customer buying patterns and greater ability to cross-sell.
• Better targeted new products

Question 7

How can you achieve profitable growth in a diversification model?

Answer 7

• Giving BU’s autonomy to pursue local growth
• Create or acquire new businesses
• Focus now is often on a portfolio with synergized businesses
• Many don’t move past maturity stage 2, sometimes into 3 when introducing shared services for functions and therefore reducing cost.

Question 8

In which operating model are acquisitions the easiest?

Answer 8

• Diversification (but low value)

- More difficult in other models

Question 9

Why are acquisitions more difficult in other operating models?

Answer 9

• You have to merge incompatible foundations.
• Companies might have not achieved the same stage
• Business will be disrupted when foundations is determined
• Combining best capabilities of companies will only work if both companies have reached modularity

Question 10

What are the two architectural approaches to acquisiton?

Answer 10

1. Rip-and-replace
   Ripping out existing processes and installing the digitized processes of the acquiring company (unification/replication) OR moving the acquisition on a standard portal and force data integration (coordination)
2. Move your whole enterprise towards diversification and don’t integrate or standardize new business.