Go Shopping
For companies with comfortable cash balances, the time could also be right for an acquisition, though not necessarily a splashy, headline-making deal. "Good growth companies," says the Darden School's Hess, "tend to make acquisitions that are small and very strategic, like the acquisition of a technology or product or customer segment or geographic segment." Cisco Systems is a veritable poster child for that strategy, and Hess says it is a model more companies should follow: deals that are relatively inexpensive and therefore lower risk "are wise now."

At HSNi, "we've built up a substantial cash position and we are looking at possible opportunities to take advantage of the weak environment to acquire some businesses that make sense for us," says Schmeling. Vetting those targets properly is one of her top concerns, however, and the process looks to be a lengthy one, as she and her business-development and strategy groups search for targets that will prove to be both an excellent fit and a very good value.

Richmond of Darden Restaurants says an acquisition isn't in the company's plans at the moment, although he is keeping an eye on potential targets. "There are lots of great valuations out there," he says, "but I don't know if that makes for great deals." He does acknowledge the possible need to make a purchase eventually to continue to grow over the long term, but says it will likely be another restaurant chain that Darden can bring under its umbrella — not a food supplier, restaurant technology provider, or other peripheral acquisition.

Whether by improving and adjusting existing products, bringing products into new markets, or buying new customer segments or technology, finance chiefs are testing a variety of growth strategies to determine what will work in an environment marked by caution. It's challenging, to be sure, but many say they welcome the chance to focus on expansion. In fact, with uncharacteristic optimism, many insist that their businesses will find a way to grow despite lingering macroeconomic malaise.

"The world has got more opportunities than issues right now. We need to make sure our organization looks at the opportunities and doesn't complain about the issues," says Siemens's Kaeser. "If global GDP is down by 2%, that means that 98% of GDP is intact. Unless you have 100% market share, why complain about GDP being down by 2% or 3%?"

Kate O'Sullivan is senior editor for strategy at CFO.

Good Questions

The business landscape has changed markedly over the past two years, so dusting off a previously concocted growth strategy may not be a viable way forward for many companies. Competitors, for example, may be in far different positions today — some may have disappeared, others may have retooled or refocused, and still others emerged from nowhere.

Janice DiPietro, national managing partner at executive services firm Tatum, urges finance executives and their fellow managers to survey the competition as a first step to identifying growth opportunities. She suggests some critical questions to consider:

• Which company is gaining market share?

• Which company has pricing power?

• Which is bundling products and services in new ways?

• Which is creating buzz?

• Which is the marginal player? Is it you?

• Are you increasing your R&D budget?

• What innovative new products and services have you brought to market?

Armed with that analysis, you can begin to chart your next moves. — K.O'S.

• « previous
• 1
• 2
• 3

LinkedIn Company Connections:

• Darden Restaurants |
• EMS Technologies |
• HSNi |
• Coach |
• Siemens |
• Tatum