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The Capabilities Premium in M&A

It is a perennial question in every major industry: What distinguishes the companies with a track record of M&A success? We think we’ve found the answer — and a few companies have figured it out, too. It’s a business strategy that uses capabilities as the basis for inorganic growth. Successful acquirers make M&A deals that either enhance their distinctive capabilities systems, leverage those capabilities systems, or do both.

The findings from our latest study on M&A further confirm our core beliefs about what lies at the heart of a company’s profitability, value creation, and competitive advantage: its capabilities system. A company that connects what it does better than anyone else to how it creates value for customers and what it sells will systematically outperform its competition.

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Capabilities-Driven Strategy

The power of coherence: A company's right to win in any market depends not just on external market positioning, and not just on internal capabilities — but on a coherent strategy that aligns them at every level.

The Essential Advantage

In The Essential Advantage: How to Win with a Capabilities-Driven Strategy, Booz & Company partners Paul Leinwand and Cesare Mainardi argue that many companies need to reset the way they develop strategy and show how adopting a capabilities-driven strategy that starts inside the company, with what it already does best, can lead to a measurable performance premium in terms of higher EBIT, ROI, and shareholder return.

Is Your Strategy Coherent?	The Strategy Gap
Ever wonder why some companies have a right to win in all the markets in which they compete? Why their growth initiatives almost always lead to success and their cost-cutting exercises leave them stronger? Take this short test and diagnose how well your organization is positioned for success. read more >	A survey of more than 1,800 respondents, compiled through the Booz & Company Coherence Profiler, shows that executives are pulled in too many directions and that there is a disconnect between companies' strategies and their capabilities. read more >

China for the World

China strategy today doesn't just mean implementing a set of plans for doing business in China — most big companies are already selling to China’s markets and competing against Chinese companies. A true China strategy is different, as Booz & Company's Edward Tse outlines in his new book, The China Strategy. What's needed is a one world strategy: a long-range plan for doing business as a global enterprise in which China is a central and integrated component.

The China Challenge

For global companies, ignoring China is not an option, writes Edward Tse in this article, adapted from The China Strategy, from the Spring 2010 issue of strategy+business. These firms must adapt their strategies to the country’s changing markets, increased competition, and shifting government priorities.

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China Consumer Market Strategies 2011

China Consumer Market Strategies 2011 is based on a survey of 135 companies competing in China and reveals six key trends impacting the Chinese consumer market. This is the first report to provide a clear picture of how companies, both Chinese and multinational companies (MNCs), private and state-owned, are responding to the explosion of consumer activity in China.

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New Channels of Penetration in China’s Home Appliances Industry	Competing for the Global Middle Class
The Chinese government’s “Home Appliances for the Countryside Scheme” and “Old-for-New Home Appliance Subsidy Program” have greatly promoted the sales of home appliances in China in the last three years. Already well-established in tier 1 and 2 cities, home appliance manufacturers are now starting to penetrate vigorously into tier 3 and 4 cities and rural areas companies call this phenomenon Qu Dao Xia Chen or simply “Going Down”. Differences in customer structure and consumption patterns in these lower-tier markets highlight the importance of sales channel reform. read this article >	In the 1920s, when Alfred P. Sloan Jr. reorganized General Motors Company, he promised shareholders “a car for every purse and purpose.” Sloan tapped into a teeming middle-class market of Americans who couldn’t afford luxury cars, but nonetheless wanted product options far beyond the “any color so long as it’s black” Model T Ford. This immense U.S. middle-class cohort propelled GM past Ford into a leadership position among carmakers that lasted for the rest of the century. read this article >
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"Mixed Bag"	"China Curbing Overcapacity Might Help GM and VW"
The Jan 21st, 2012 issue of The Economist quoted Dr. Edward Tse, Chairman of Greater China, for his views on state capitalism. Dr. Tse argued that the system was much more flexible than it looked at first sight.	The February 21, 2012 issue of Bloomberg quoted Bill Russo, Senior Advisor, for his views. Mr. Russo believed that the end of preferential treatment for foreign automakers on their Chinese plants by January 30 meant carmakers may lose out on cost savings of about RMB 200 million to build a factory and wait longer than the average one to two years needed to receive approvals and business licenses.
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