Business Strategy Hanson ‘b’
During the early 90’s, Hanson acquired many companies each of which could be categorised into mostly waste disposal, chemicals, electrical installation equipment, coal mining, electricity distribution and electricity generation. So it seems that the strategic theme set for the remainder of the 90’s was one of concentrating on core business activities. Businesses were acquired in the aforementioned areas and businesses not able to be categorised as above were disposed of. The businesses that were disposed of included a vitamins manufacturer, household building activities, household and leisure products and office furniture and equipment.
So, it is apparent that very early on, plans to demerge could have been an option. Hanson regained its deal-making skills so far as managing to take over a selection of companies. However, what was more important was that the acquisitions were more strategically thought out than ever before. It would seem that Hanson had previously acquired businesses that made profits and had sound reputations. Now, their strategy was to acquire appropriate businesses. Each acquisition was linked to already set-up Hanson activities. For instance, a waste management company was acquired to partner the ARC quarrying business.
Quantum chemicals were bought to partner SMC chemicals. Carter Mining was bought to partner Peabody Coal and energy interests and activities were further developed by purchasing electrical companies and power stations. The case study also further corroborates the fact that Hanson had revived their deal-making skills when they purchased Quantum Chemicals. This was a strategic acquisition in the fact that Hanson was able to acquire it easily and presumably at a good price because a recession had just ended. Here, Hanson used it’s sheer size, power and capital to obtain a hard-hit business.
It is also apparent that that it’s deal-making skills were not only concerned with money, but with market-share-orientated strategy. Hanson chose to acquire businesses that already had a solid market share and good reputations such as Quantum with it’s 2 market leaderships, and when Hanson acquired Econwaste, they then became the 3rd largest land-sill operator in the UK. Hanson, however were not simply interested in growth, but protection of interests. This became apparent when, in 1994 Hanson bought Scholes not only to link with Crabtree but also to provide a stronger overall hold on the market in electrical installation equipment.
This showed more strategic thinking in light of the forthcoming trend in the growth of harsh European competition. This showed not only strategic thinking in growth terms, but in business-failure prevention and forward thinking. Hanson’s disposals completely began to reflect their desire to build on only core businesses. So, we are able to see that Hanson’s acquisitions and disposals were to be completely reflective of an overall change in business strategy from overall growth and profits to specialisation and the aim to be number one market leaders in four specific areas.