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Final Fantasy captures Lara Croft:aquisitions and alliances

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Wilson Tsang

on 6 December 2013

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Transcript of Final Fantasy captures Lara Croft:aquisitions and alliances

Final Fantasy captures Lara Croft:acquisitions and alliances in electronic games
Members
Leung Chu Pui
Lui Chin Wai
Tsang Chi Shing
Wong Siu To
Yeong Yik Tat
Q3 What are the strengths and weaknesses of the alliance strategy, and what problems might Square Enix anticipate over time?
Different between Buy and ally
Why acquisitions with
Eidos
?
Value Creation Activities

Envisioning
Coaching & Facilitating
Providing central services and resources
Intervening
Increase Square Exin’s capabilities
Sharing technology
across the businesses
Bring Square Enix its first studios
outside Japan
UK, Denmark, Hungary, US, Canada and China
work best
when the desired capabilities are "hard"
e.g physical investments
(studios)
Envisioning
Square Enix can provide a clear
overall vision or strategic intent
for Eidos.

Maximise performance
through commitment to a common purpose.

Envisioning
'Our aim is to implement a hybird management structure which avoids the extremes of being too global or too local'
by Wada
Can give Square Enix
ability to deliver the punch
of a large company
Increase
referrals and extend
market reach
.
North American and European market
Provide a
wider range of choices

not only RPG game
also with strategy and action adventure
Wada in order to serve these significant markets better by change customer tastes
Background
Sqaure founded in 1983
Enix founded in 1975
Merged in 2003 by Square & Enix

Diversification gaming-
Consoles, PCs, mobile phones or online and spin-offs, films , comics and novels.

Masterpiece: Final Fantasy & Dragon Quest
Japanese market is
shrinking
, the urgency is
high

Speedy way of extending international reach in term of geography
Eidos is disappointing sales
Share-price down from
£5 to 30pence
Eidos
willing to sell
to Square Enix
Can usually be
resold if failure
Coaching & Facilitating
Coaching & Facilitating
Providing central services and resources
Intervening
Q & A
Team C
What is/are the reason(s) lead(s) to the termination of the strategic alliance? What is/are the impact(s) of the termination?
Team B
Expect those obvious reasons like the key motivator, sharing resources, what might be the possible rationale which foster square enix for alliances?
Strength of the alliance strategy
Become larger company by establish alliance
- Extend the
company range
and
market share
- Also extend the
company’s geographical reach

Increase in Capability
- Company
famous
in UK and US
- There is capability for provide
better products and services
in tune with customer taste.

Decision making quickly and flexibly
- All the company which is the
consistency objective
- Make the better game in the western market



The work motivation is not full
- E.g. Gas Powered Games asked how the alliance develop the game
with their philosophy
- It may not the fully contribution of the alliance.

High risk affect the operation when company leave
- There is chance and a
big problem
to affect the
whole operation
by any company leave of the alliance

Easy to have argument
- There are
different idea
and strategy used on the company mind
- The argument will be appear when the alliance develop the game
using the wrong strategy of their minds

Weakness of the alliance strategy
Intervening
The problems might Square Enix anticipate over time
Absence of full ownership
Cannot simply be reconciled by managerial authority
Negotiated between independent partners.

Lack of control by one side or the other
The managerial processes in alliances are particularly demanding.
The management will change over time.

Develop strategic capabilities by
coaching them to improve their skills and confidence
.

Can improving the syneries
both Square Enix and Eidos
Providing central services and resources
Square Enix can
provide central services
in order to
build up relevant expertise
.

Facilitate cooperation and
sharing across
the business units.
The corporate parent can also
intervene
within its business units in order to
ensure appropriate performance
.

Closely monitor
Replacing weak managers
Assisting them in turning around their business
Challenge and develop the strategic ambitions
Co- evolution
Partners, strategies, capabilities and environment are constantly changing.

Need realignment so that they can evolve in harmony.
An alliance is unlikely to be the same as envisaged at the start.


Trust
cannot be specified in the initial alliance contract.
Each partner will have made investments that are vulnerable to the selfish behavior of the other.
profit motive is suspect on one side
sudden shifts in political agendas are feared on the other.

Acquisition integration matrix
'We want to cherish the Eidos studio culture but change it where it is necessary.'
Preservation
“Wada chose to keep Eidos’s chief executive with his management team.”

Each be
stand-alone
divisions
Little Independent
High need for autonomy
Allow the
old cultures to continue
much as before
Reach the customer wants,
increase
the
sales
revenue
M&A Strategy change over time
Consolidate the competitors
Reduce the
number of competition
by acquisition
Increase the
market share

Which alliance cannot do that
1. Serial acquirer

Continue to acquire other games developers
expand in the world market such as
US
&
Europe
learn the
technologies and distinctive capabilities
from firm by acquired game development
provide an opportunity
for acquiring companies
to accumulate experience
about how to do M&A better
develop specialist teams
for managing acquiustion process
Serial acquirer
develop specialist
teams for managing acquisition process
target selection
through price negotiation & integration
Specialist teams can
build up expertise
&
procedures
for dealing effectively with selection, negotiation & integration
M&A Strategy change over time
2. Divestment

The acquired units are liable to lose their fit with evolving strategy
Square Enix may sell the acquired company that no longer fits the corporate strategy
key determinant: parenting advantage
corporate parent can add more value to the business unit than other potential owners of business
Divestment
Obtaining a
good price
for the divested units can recoup any losses it may have originally made
reason for divestment is the
pressure from competition authorities
may force the sale of businesses to
reduce
companies'
market power
Why Square Enix alliances with
Wargaming.net
,
Gas powered Games
and
Double Helix
?
All of these three partners were relatively
small and privately-owned
it may easier to concern alliance than big company
May
not willing to sell
their company to Square Enix
Coaching & Facilitating
The importance of two themes in the various stages of the alliance process:


Co- evolution

Trust
Providing central services and resources
Q1:Explain why Square Enix chose alliances in some cases and acquisitions in others.
Wada
Q2 What should Square Enix do in order to maximise value creation for Eidos acquisition ?

And how might that management approach change over time?


Weakness of the alliance strategy

The work motivation is not full
- E.g. Gas Powered Games asked how the alliance develop the game
with their philosophy
- It may not the fully contribution of the alliance

High risk affect the operation when company leave
- There is chance and a
big problem
to affect the
whole operation
by any company leave of the alliance

Easy to have argument
- There are
different idea
and strategy used on the company mind
- The argument will be appear when the alliance develop the game
using the wrong strategy of their minds

Human Resource
Technology
Experience
Conflicts
Common goals
Profits
Alliance--> acquisition
Reduce competitors
Less market share
Gain experience from alliance
Retalitation
Full transcript