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Accounting Allah shmoop strategic planning Okay back to Blade Runner

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your quickly blossoming drone company You dominate sales of drones

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in the U S but you want to be a

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power in Europe as well and you want it toe

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play offense But you also want euro sales Because while

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you fear a European compay editor rising from the socialist

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ashes over there and then coming in competing with you

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in the very non protectionist us meaning that the American

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government treats everyone in Mohr less equally badly when they're

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doing business American companies don't get much if any favoritism

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over other countries And it's the polar opposite of how

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most countries treat and favour their own over for and

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would be competitors By putting big import taxes on those

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foreign players any way you want slash need a partner

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in Europe and you're noodling how to go about getting

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the right one Well what if the partner who wasn't

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acting very partner re in offering you what you think

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is one tenth the value of your company for the

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European partnership then suddenly offers you a you know a

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fair price Well what if that Euro partner offers to

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give you five hundred million dollars for half of your

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company in Europe Well that I'd value your company at

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five hundred million dollars before their injection of five hundred

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million bucks in cash Good idea Bad idea Well here's

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where strategically really comes in You build a nice business

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in Europe and things are great And one day Google

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knocks at your door in says Hi We have bank

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We want to buy you and you get all excited

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at first But then you realize that if you sell

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half of your entire European business while you don't really

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own you anymore that is the U S Part of

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your business is easy to get in line You know

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the managers You know the partners You know the distributors

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who I'll sell your product You know how they'd react

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to a sale to Google and likely wouldn't care who

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owns your drones as long as they're selling off the

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shelves But the Europeans and not so much The Europeans

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hate Google It's independent It's risk taking its high octane

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its successful It represents everything Europeans hate about America and

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the European partners will make life miserable for you If

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you try to sell ownership of your drone company to

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Google They might even make drones illegal in Europe Yeah

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Can you hear the people drone Yeah it's a thing

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Regardless the ten billion dollars sale of the entire company

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all its worldwide assets to Google now can't happen Why

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Well because Google doesn't want just the US entity The

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Web is global Google wants all or nothing so you

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can't sell or a rather Google walks after reading your

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deal covenants with your partner and the hidden liability of

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partnering with euro partner There was massive It made you

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virtually unsellable How were you able to factor those factors

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in your financial model Well you likely weren't Just remember

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that factoring at your next job And don't forget your

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little desk plant as the HR lady manages your exit

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interview after you've been fired Okay so this is where

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management accountants earn their real keep They advised the CEO

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and the bankers basically what their options are Does the

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math of the merge company work not work it good

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bad ugly The management accounting in this room provide strategic

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advice but knows the details much more granular early than

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do the outside players you know like the banks the

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lawyers and the others who likely just got to know

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the company three weeks ago So assuming for a second

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that you're the management accountant the questions run something like

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this What do you do about China The other end

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of the strategically rainbow China has a different view of

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intellectual property him in America's patents and so on And

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they compete against us and they usually win Yeah go

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China But what about retailers Well they hate you now

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because you website around them meaning that instead of just

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committing to the physical brick and mortar stores to sell

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your drones you spent big bucks building in marketing your

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website to get around them You know lots of grumbling

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in the room and everyone nervous Then you say so

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here's a thought Why don't we just get all the

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physical retailers together and have them collectively by twenty percent

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of the company Well wouldn't they then have a different

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view of the deal Economics in working with you now

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that they're part owners Well there is a legal issue

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here by the way in round tripping that put a

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few people in jail in the late nineteen nineties You

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can't invest money in someone only to have them simultaneously

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cut a beyond market favorable distribution deal with you the

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next minute Yeah big disclosure issues and other issues as

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you can imagine But the gist is that you can

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think strategically about retailers as partners rather than adversary You'll

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deal cutters when they invest in you So you're the

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one in the hot seat here You have all the

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tools at your disposal Count your beans better than everyone

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else can count them and advise So what do you 00:05:03.584 --> [endTime] advise Mr Mr Counter There

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