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Proposed Business Strategy for XYZ Consultant Company to Financial Improvement Through Acquisition Strategy

Novi Fitriani, Deddy Priatmodjo Koesrindartoto
European Journal of Business and Management Research , Volume 6, pp 1-7; doi:10.24018/ejbmr.2021.6.2.559

Abstract: XYZ is a university with the best reputation in Indonesia which has 12 companies engaged in consulting services (construction and non-construction)). The proportion of ownership in this business varies from 20% to 99.99%. This business has several companies that are inefficient and unhealthy because operating costs are greater than revenue. In addition, in 2019, this consulting company experienced a decrease in revenue by 7.11% while the cost of goods sold increased by 7.45%. This study aims to select which companies have good and healthy performance, create new and effective business strategies for the best performing companies, and develop sustainable business and new competitive advantages. This research methodology is qualitative using secondary data in the form of annual financial reports from 12 companies for 2015-2019, websites and other information media. External analysis in this study using macroeconomics, PEST, Porter's Five Forces, and Benchmark Analysis. While the internal analysis uses Financial Ratio Analysis and Altman-Z Score. The tools used to obtain business solutions and strategies from the XYZ consulting firm case are Business Level Formulations, Business Level Strategies, Functional Strategies, and Implementation Strategies. One of the strategies that the author applies in this case is by implementing an acquisition strategy After analyzing and calculating using the Financial Ratio and Altman-Z Score of 12 companies, the result shows that there are only 7 companies that have good and healthy performance so that they are included in the "safe zone" category with a discriminant zone Z> 2.99. The acquisition strategy was created by combining these companies. The first step is to evaluate each company, then calculate the acquisition to find out the synergy value of the acquisition to compare the value when the acquisition was made and what was not. The calculation results show that the company's FCFF accumulation after the next 10 years on 2030, In the event of an acquisition is IDR 124,131,871,981.11. Meanwhile, if there is no acquisition is IDR 117,285,044,723.00. So that we know there have added value of the synergy IDR 6,846,827,258.11.
Keywords: IDR / Functional / acquisition strategy / Business Strategy / XYZ Consultant / healthy performance / companies have good / good and healthy

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