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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.

  • Bond House

  • 1927: Opened in New York

  • Recently: Grow and expand

Facts

Introductory Facts

Issues

Primary:

Integration

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

  • Management
  • promotions

  • 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

  • Poor initial integration

  • 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

Tripod

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

  • Difference of pay

  • 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

  • Management
  • Nomura
  • Lehman

  • Investors/Stockholders
  • 70% drop

  • Employees

  • Clients

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