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(Solution) Strategic Management : PDF

   

Added on  2021-04-21

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2 Historical backgroundRepsol was the biggest oil company in 1999 in Spain and had a capacity of refining 60% of the country’s oil. It had 50% of serving station in the entire country and had over 23,762 employees worldwide. With this in mind, Repsol had the capacity of bidding a takeover from any company it deemed strategically worthy to its requirements. It had maintained a dominant stake in the countries petro-chemical industry and was the main wholesaler of gas and natural gas in the country. Strategic management has the fundamental objective of supporting the administrator in the continuous search for methods through the development of a set of tools and conceptual maps that allow the discovery of systemic relations that exist between the decisions made by the administrator and the performance achieved by the organization (DePamphilis, 2018). b. strategy formulationthe formulation of the strategy consists of the identification and evaluation of the different strategic options that are presented, and culminates with the selection of one of them state that to an organization, formulating a strategy involves developing a coherent plan to achieve the

3objectives through the most appropriate adjustment of the organization with its environment, after a thorough strategic analysis should be chosen a strategy that allows the organization, In addition to staying in the environment, improving their competitive position and increasing their market share, (Müller-Stewens, Kunisch and Binder, n.d.) agree on that the formulation of strategies must be a rational, explicit and simple process.Traditional competitive strategies are subject to erosion. The additional features of today will be standard tomorrow and, therefore, will no longer be exclusive. "What companies are currently looking for through strategic direction is to create advantages with added value (hardly equal) that place the organization in a privileged position in front of the other organizations of its same nature,that locate it as a really competitive company.An analysis of the strategic position of the two companies before the acquisition, their alternative strategic options and the rationale for the acquisition (Weber, 2013).For Repsol, it was a dominant force in the petrochemical industry and by that had all the financial muscle and strategic organization advantage to take over YPF Company and many others. The decision to take over YPF was necessitated by the fact that negotiations for a merger had come under considerable difficulties that may have necessitated the 100% company takeover. The fact of the matter is, Repsol had tried to acquire the whole company as a whole butthe Argentinian company was not willing. An obstacle to takeover of YPF was brought about bythe company’s article of association. At a public auction in 1999, Repsol had bought 14.99% of the company’s share at $38 per share which was equivalent to $ 2 billion (Meitner, 2006). This transaction triggered a clause that gave the company the option to buy the rest of the company within 3 years. Repsol was not given the chance to buy the remaining part of the company and was unable to get genuine control of the company at the auction. To obtain necessary synergies,

4the company had to make a public offer of buying the remaining 85% of ypf at the stock market. According to YPF s articles of association, it meant that Repsol required ready cash for this type of transaction. A significant increase in the company’s debt would lead to financial risk on Repsols side which could shake the petro chemical industry (Schmidlin, 2014). Repsol strategy in investing in the Latin –American company was to increase its investment and the geographical axis that was necessitated by the company. The gulf crisis of 1990, had slowed growth of the brand that is Repsol but its investment strategy was not in any way blurred. Its end sight game was to increase profits due to the company. YPF Company on the other hand had significant stakes in the production and exploration business in the south America in countries like chile, Argentina, Bolivia, brazil, peru, Venezuela and the united states of America,. It made a lot of sense doing this. Its turnover in 1997 was 1500million dollars which is respectable and a sizable company like this would bring effective synergy and control (Thomas and Gup, 2010). Corporate laws establish that corporate or corporate-level strategy is one that "solves the fundamental questions: in what business or business should we be to maximize the long-term profitability of the organization? Should we join and increase our presence in these businesses to achieve a competitive advantage? “state corporate strategies as "the way in which the company creates value through the configuration and coordination of multi-market activities". These strategies should allow to identify and delimit which is the business to which it is dedicated and wants to dedicate the company now and in the future.

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