Why I’m not a fan of business strategy

Business strategy theories, that is.

This comes from my assigned reading:

According to Porter (1987) entering into another business (by acquisition or internal growth) can only result in increased shareholder value if three essential tests are passed:

 

The attractiveness test. The business must be structurally attractive, or capable of being made attractive. In other words, firms should only enter businesses where there is a possibility to build up a profitable competitive position.

 

The cost-of entry test. The cost of entry must not capitalize all the future profits. In other words, firms should only enter new businesses if it is possible to recoup the investments made.

 

The better-off test. Either the new unit must gain competitive advantage from its link with the corporation or vice versa. In other words, firms should only enter new businesses if it is possible to create significant synergies.

 

My point of contention: it’s hard to think of a business you would want to enter if it (1) isn’t attractive, (2) isn’t profitable, and (3) doesn’t offer any potential synergies. In other words, it’s obvious.

 

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Thanks everyone

Thanks everyone for the well wishes! It’s especially heartening to receive them when I’m always missing others’ birthdays – partly because of my intermittent presence on Facebook, though that really shouldn’t be an excuse at all.

Nevertheless thanks again! Truly appreciate it.:)

tim

Taking a break

I’m officially taking a break from blogging (not that I’ve been blogging regularly anyway). Given that school has started, I think my time will be better spent studying. Another reason is that few, if any, read this blog. Since my blog is more of a place for sharing than anything else, there is little point in writing to myself! I might blog from time to time if time permits; meanwhile, feel free to make use of the links on my blogroll if they interest you.

I’d also like to advertise for companions: I’m looking at joining NUS Toastmasters to improve my horrendous public speaking skills, so do let me know if you’re interested in joining me.

Lastly, my bookshelf is almost overloaded, so I’d like to give away some books to those who might be interested: (1) This Sentence is False by Peter Cave, (2) The Back of the Napkin by Dan Roam, (3) The Trachtenberg Speed System of Mathematics. Let me know if you’re interested.:)

Thanks

A million thanks for all the well wishes. Truly appreciate your messages:)

Research in psychology has shown a steady increase in self-reported well-being from 18 years of age through 26 years of age (Schulenberg & Zarrett, 2006).

I’m glad to report that at 22, I’m happier too.