All right. Now, let's say a few words about what is a problem in strategy formulation and what can really undermine the great idea, even the great implementation. Now, I would make a small bridge to a second course, a course in corporate finance, when we said that in valuing a project, the important thing is to have good inputs, and it's even more important not to have good or great inputs but to treat them properly. So, if they're sort of poor, we have wide range that we do not pretend to come up with the really narrowed down valuation. We have the same problem here. So, the challenges to strategy. First of all, this is inputs. And why is that the challenge? Well, because there's, first of all, too many. You will see in our handouts that again they are a couple of dozens of them. Oftentimes, they are poor, and what is more important here, they are treated and evaluated differently by various stakeholders. So, some people believe that this is a good input but some others may not be willing to buy this idea. Well, to give you an idea, I'll provide some checklist, what should be taken into account. Again there is a long checklist in our handouts but for now, we can say, well, can we ignore the overall situation in the economy? Well, we cannot but as we know, we are unlikely to be able to narrow this down to a certain range and these may be more just overall ideas. Now, the next thing, we have to think about resources. We have to think about regulatory or social factors. We, as always, have to keep in mind technology, and then we also cannot avoid having a global view. Now, you can see that all this checklist offensively reminds you of what we did in the previous episode when we talked about frameworks. Now this is, on one hand, something that helps us in formulation and implementation strategy and on the other hand, by the same token, and that becomes the challenge for us. So, we have to keep this in mind but always compare that with the quality of inputs and with our ability to evaluate that. If we can do that, that's great, if we cannot, we better just keep this in mind but skip or the most important thing is not to pretend that we know that great. Now, so here on this last page of this small episode, I will put some significant issues that again they are close to what we had before in the following idea. So, certain things we cannot ignore even if we do not have full control, if we do not have the full understanding then we have to do something to improve our control, to improve our understanding, and that again always starts with government regulatory then social and maybe antitrust. So, all this. Why is that important for us? And again, here, I would put significant issues and we keep in mind that this is for M & As. Well, because if we ignore that or mistreat that, then we are unlikely to get an approval for a transaction and then all our work will be wasted. Now, the next thing is again technology, development, change. If we ignore that, then why would we engage in this transaction? Oftentimes, we engage in M & A with one big goal to really leap frog by acquiring someone's technology by having a faster, powerful development and by being more adequate to the changing environment. Now, the next thing that is key here, this is economies of scale or scope. Well, that seems to be a narrow view so we're talking about the competitive advantage namely cost leadership here, but it sometimes is quite important if our transaction contributes to that. That's one story. If we do not care about that, we care about something else, then we have to see how that is ignored and why because most often, companies, well, historically, they started the horizontal mergers, they would buy your competitor and become bigger and by doing so, they will be able to enjoy these economies. Now recently, we have some other things and that is let's say Big Data, communication channels, whatever it means maybe and then all other IT, internet, and all this stuff. Well, as late as 20 years ago, it was not the main focus, but now, it is. Because regardless of what you do, you cannot ignore this fast changing environment and unless you're adequate, unless you engage in certain actions that make you more adequate, remember we talked about banks, we said that a smartphone bank, it was in our first course on Capital Markets. We said that if a bank does not provide its clients with the technology of making very fast and easy payments, then the bank will lose the clients, these customers who just live in the internet and no bank can afford to do so. So, all this, this is overall global thing so we now can see that we can proceed. But the key story for us is always to look back for an M & A. So, in strategy course, people would go broader. They would study some areas in which all these contribute to organic growth. For us, the key emphasis is this M & A reflection, if you will. So, in what follows, we will specify that a little bit more and recall some of the major schools of strategy formulation and of identifying and supporting strategic advantages.
