Global Strategy - blog

When national governments and politicians make decisions about economic policies, they often shape the viability of businesses at the industry level.

Facing the "need" to bailout the country's Finance Industry as well as Auto Industry, politicians and industrymen in the US are puzzled over an important question: To which direction one should next take the industry corporations, as the bailout monies effectively give the government control over them ? This debate is -- for sure -- interesting also to other national governments which are struggling with their own finance and other industries (such as that of Finland with its pulp & paper industry).

In November last year, I criticized the logic with which some people calculated the valuation of Facebook corporation to be 15 billion dollars (see an original article as well as a further comment and a related article). I suggested that perhaps the fundamental value of this corporation could more realistically lie between 3-5 billion. Now, an interesting new piece of analysis arrived today: Valleywag news site calculated Facebook's current value to be 2-3 billion.

The academic world is often considered to be isolated from the real world. However, now that the world is struggling with an unprecedented financial crisis, one must (at last) pay attention to the role that academic theories may have in the real-world developments.

The dynamics between a firm's strategy and finance is one major research focus in GloStra (see e.g. http://www.glostra.fi/research/business-model-evolution, as well as http://www.glostra.fi/faculty/hse/120-jaakko-aspara). Therefore, it is interesting to ponder what implications the current financial crisis and looming recession have for the relationships between firms' strategies and finance options, such as venture capital.