Case Analysis of: Nomura's Integration of Lehman Brother's Assets in Asia and Europe
Strategy Tripod:
- Application of facts: Institutional
- This leg focuses on differences in firm strategies and influences. They can be formal: laws, regulations, and rules. They can also be informal: norms, cultures, and ethics.
Global Strategic Management
Fall 2013
Professor Roxanne Jansen
Erika Gagne
November 19, 2013
The End
Questions?
Overview
Introduction
Lehman Brothers
Financial Crisis
- 1844: Montgomery, Alabama
- Dry Goods store
- 1860: moved to New York
- Started to transition to a financial institution
- 2000’s: Profits grow and business expands
- 2000’s
- Businesses: growth and expansion
- Consumers: spending and investing in real estate
- Bubble economy
- Housing
- Stock
- Spending
- Bubble Burst
- Companies tanking
- Employees facing unemployment
- Introduction
- Facts
- Analysis
- Discussion Questions
- Strategy Tripod
- Recommendations
- Conclusion
Nomura Holdings
- 1925: Securities Department
of Osaka Nomura Bank Co. Ltd.
- Recently: Grow and expand
Facts
Introductory Facts
Issues
Secondary:
Culture
Promotion
Management
Recognition of differences
- Lehman Brothers - Bankruptcy
- Nomura - Expansion
- "Opportunity of a Lifetime!"
- CEO, Kenichi Watanabe
- 24 hour decision
- Europe and Asian assets
- $200 million
- Added 8,000 jobs
Conclusion
In review:
- Financial crisis many disadvantages and advantages
- Acquisition led to organizational issues
- Step back and examine implications
- Nomura still in financial industry today
Recommendations
Three stages
1) Before – More time
2) During - Compromise
3) After – Focus on internal organization
Reuters Overview
Case Discussions Questions
Case Discussion: Strategic Fit
Case Discussion: Stakeholders
Strategy Tripod
- Employees
- guaranteed
- wage imbalances
- reverse takeover
Strategic Fit:
- “The complementarity of partner firms’ ‘hard’ skills and resources, such as technology, capital, and distribution channels
- Strategic Fit between the two, even though size discrepancy
Case Discussion: Organizational Fit
Case Discussion: Effectiveness
- Near perfect strategic fit
- Lagging organizational fit
- Struggle at first and then hopefully address issues and compromise
Organizational Fit:
- “The complementarity of partner firms’ ‘soft’ organizational traits, such as goals, experiences, and behaviors, which facilitate cooperation”
Bad Organizational Fit
- Synergy lacking
- No forethought
Bridge Gaps
- Look at compensation, management styles, and compromise
Case Analysis: Location
Case Analysis: Positives
Issues: Employment, Promotions, Management
- Expansion options:
- Exports, Contractual Agreements, Joint-Ventures, Wholly Owned Subsidiaries, Acquisition
- Costs:
- Great Deal!
- $200 million
- Itemized fashion: France 1 Euro. = $1.38
- Barclay Capital paid $3.75 billion
Case Analysis
Case Analysis: Negatives
Case Analysis: Ethics
- Biggest Issue: Employment
- Uncertain times, but guaranteed employment
- Proves commitment to following through
- Take care of their employees
- Time Limit
- Acquiring bankrupt company
- Employees
- Lehman guaranteed job and compensation levels
- $1 billion pool for Lehman
- Major difference in levels of pay among employees
- After upset: Nomura addressed issue through raises
Case Analysis: Negatives
Case Analysis: Management Actions
- Nomura:
- CEO, Kenichi Watanabe
- Decision Time
- Lehman:
- Deputy President of Nomura Group and
CEO of Banking Group, Jesse Bhattal
- Growing Frustration
- Left the company
- Management Styles
- Lehman: Fast paced, past performances, specialize
- Nomura: Slower, long-haul, rotation, no specialists
- Attitudes
- Lehman: Reverse takeover
- Nomura: Defensive
- The “L” word
Stakeholders
- Investors/Stockholders
- 70% drop