Half Life: Extending the Effective Lifespan of the Corporation through Strategic Management of Industry Diversification, Globalization, Mergers, and AcquisitionsWhat is the lifetime of a corporation? This is a critical question for it impacts not only how we make longer term investments in established corporations, it also impacts how often we need to restructure an investment portfolio.Large, established, and once successful corporations and their associated brands continually emerge and disappear in any healthy, competitive business environment. However an important trend is emerging in that the mean life time for large established corporations has more than halved in the last 50 years. This observation is of critical importance to business analysts, investors, executives and corporate directors, for it is a core parameter in determining the long term valuation of a business.In Half Life Forster documents a detailed study of corporate survival trends, and examines and extends the existing landscapes, tools, models and indexes used to monitor the corporate life cycle. Forster goes on to describe the creation of a new business fitness landscape model, introduces two new business risk parameters, creates a new business diversity fitness index, and completes a macro analysis of the extinction rates associated with the 100 largest corporations in the United States.With these new tools Forster establishes a new model for viewing the mean life and half life of large corporations and for studying the impact that related and unrelated diversification in industry participation has on a corporation's effective lifespan. Forster suggests that established corporations don't survive just by being the fittest, but that they survive rapid discontinuous change by finding a new optimum position in a new business fitness landscape. |
Contents
2 | 49 |
EXISTING BUSINESS LANDSCAPE MODELS | 89 |
DEVELOPMENT | 109 |
AN ANALYSIS OF CORPORATION DECAY | 127 |
6 | 159 |
7 | 221 |
APPLICATION TO SELECTED BUSINESSES | 251 |
CONTRIBUTIONS AND CONCLUSIONS | 289 |
REFERENCES | 317 |
LIST OF FIGURES | 333 |
LIST OF TABLES | 339 |
GLOSSARY OF MATHEMATICAL SYMBOLS | 353 |
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Common terms and phrases
4D business fitness adaptive landscape application associated attrition rate Austrian School benchmark business analyst business decay rates Business Diversification Fitness business environment business fitness index business fitness landscape business indexes business positioning concept corporate decay corporation’s create decay of corporations defined described digits dimensions discontinuous change Diversification Fitness Index economic Electric Enron Exxon Mobil Figure fitness landscape model Fortune 100 rankings four dimensional fractal Gaussian Hoover's Industrial Classification industry concentration industry growth industry NAICS industry peak kurtosis landscape metaphor large corporations leverage lifespan listed by NAICS major U.S. Manufacturing mean lifetime measure micro analysis Modern Portfolio Theory NAICS code normal distribution normalized Output Array participation in 2008 period rate of decay relative significant Sortino ratio species standard deviation statistical strategic management summarized survival Theta and Tau three dimensional U.S. business U.S. Census Bureau U.S. economy uniformitarianism unrelated diversification Xerox


