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Online Music Rights Highlights The Research Proposal

Selling a major asset is a major strategic decision. A number of factors must be taken into account with such a sale, including the overall strategic direction of the parent company and the operating environment of both the parent and the subsidiary. In this case, it appears that two factors have come into play. The first is that the French firm is seeking to improve its balance sheet; the second is that there is regulatory pressure to divest the Chinese subsidiary. As the latter is more of a forced situation that has relatively less bearing on strategic management, this paper will analyze the decision to sell this major asset in the context of internal and external analysis. AXA management has recognized that their balance sheet is in a weak position, a consequence of the global economic slowdown. One of the more common solutions to this problem is the sale of non-core assets. Minority stakes in foreign companies are often the target of asset sales to generate cash that will improve a company's weak balance sheet. An internal analysis such as a SWOT can reveal such weaknesses in a company's finances and guide management towards opportunities for solutions in the marketplace.

Furthermore, if...

Porter's Five Forces model can reveal the potential sale asset with the least favorable operating conditions. Many Western firms have determined recently that the conditions in the Chinese insurance market are presently unfavorable.
With this move, AXA is exiting the Chinese market. Such a move is not to be taken lightly by AXA management. They would have undertaken an industry analysis to determine that the Chinese life insurance business was no longer attractive. They would have recognized their minority stake in an unattractive industry as an opportunity to shore up the weakness on their balance sheet with an asset sale.

Works Cited:

White, a. (2009). EU: breakthrough on online music rights. Business Week. Retrieved October 21, 2009 from http://www.businessweek.com/ap/financialnews/D9BFH5QG1.htm

McMahon, D. & Carew, R. (2009). AXA to sell Chinese Insurer Stake. Wall Street Journal. Retrieved October 21, 2009 from http://online.wsj.com/article/SB125612261129198667.html

Sources used in this document:
Works Cited:

White, a. (2009). EU: breakthrough on online music rights. Business Week. Retrieved October 21, 2009 from http://www.businessweek.com/ap/financialnews/D9BFH5QG1.htm

McMahon, D. & Carew, R. (2009). AXA to sell Chinese Insurer Stake. Wall Street Journal. Retrieved October 21, 2009 from http://online.wsj.com/article/SB125612261129198667.html
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