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Mergers, Acquisitions, And Downsizing
Difference between a merger, acquisition and a downsizing
All the three are management strategies dealing with the competitiveness of the companies in subject (Cassiman, 2006). The choice for either of the three depends on the interest of the subject company in their relationship with the other companies in the industry. The differences arise from the various components such as their concepts, size, application and the condition for their occurrence.
Merger is a cooperate strategy involving the combination of many companies whereby the subject companies intend to expand their business operations. Acquisition involves the combination of the companies with only one company having most interest in the newly established company. Downsizing always applies to both the acquisition and merger whereby the newly established company realizes that the new operating structure is costly: consequently triggering the need to downscale the cost (Shook & oth, 2011). Downsizing…
Cash, Jr., J., Earl, M., & Morison, R. (Nov 2008). Teaming Up to Crack Innovation & Enterprise
Integration. Harvard Business Review, 86 (11), 90 -- 100.
Cassiman, B. (2006). Mergers & acquisitions: The innovation impact. Cheltenham [u.a.: Elgar.
Shook, L. & Roth, G. (2011). Downsizings, mergers and acquisitions: Perspectives of human resource development practitioners. Journal of European Industrial Training, 35 (2), 135-
In 1998, Citicorp acquired Traveler's Group in a merger of financial services giants. The combination created the world's largest financial services company at the time, combining banking, investments and insurance (Martin, 1998). Under terms of the deal, it was a stock swap, with Traveler's paying $70 billion for Citicorp's shares, though the deal was sold as a $140 billion deal (Ibid). The deal paved the way for expectations that future similar deals would be allowed (Carow, 2001). This paper will analyze the deal in retrospect, to see if the deal delivered value for the shareholders of the two firms. Since it was described as a merger, the shareholders of both firms were expected to benefit.
In the late 1990s, there was tremendous excitement in the markets about the possibility that major mergers in the financial services industry would be allowed by Congress. Carow (2001) noted that market expectations…
Carow, K. (2001). Citicorp-Travlers Group merger: Challenging barriers between banking and insurance. Journal of Banking and Finance. Vol. 25 (8) 1553-1571.
Elkind, P. (2010). Ex-Citigroup chief says bankers behaving wildly. CNN Money. Retrieved April 9, 2013 from http://money.cnn.com/2010/10/27/news/companies/john_reed_citigroup.fortune/index.htm
Martin, M. (1998). Citicorp and Travelers Plan to merge in record $70 billion deal: A new no. 1: Financial giants unite. New York Times. Retrieved April 9, 2013 from http://www.nytimes.com/1998/04/07/news/07iht-citi.t.html
The constituent company's presence in China is geographically complementary, so that their respective distribution networks can be used to build each other's brands in their respective strongholds. Further, cost synergies of $1.5 billion annually are expected to accrue (Anheuser-Busch, 2008).
These claims are reasonable. There is little geographical overlap between the different brands. In particular in China, A-B is strong in the northeast, while InBev is strong in the southeast. The two companies are also complementary, with A-B strong in North America and InBev strong in Europe and South America. The experience of InBev in its previous major move in North America (the acquisition of Labatt's in Canada) was that it was able to build market share for InBev global brands by using the existing Canadian distribution system. Therefore, their expectation of replicating this success in the U.S. is reasonable. The claim of cost synergies is, however, questionable. hile InBev…
No author. (2009). InBev completes Budweiser merger. BBC. Retrieved November 27, 2009 from http://news.bbc.co.uk/2/hi/7735953.stm
No author. (2007). 2007 NAICS definition. NAICS. Retrieved November 27, 2009 from http://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=312120&search=2007%20NAICS%20Search
Press Release. (2008). InBev and Anheuser Busch agree to combine. Anheuser-Busch. Retrieved November 27, 2009 from http://www.anheuser-busch.com/Press/PressImages/FINAL%20PRESS%20RELEASE.pdf
No author. (2009). Mergers and acquisitions: Definition. Investopedia. Retrieved November 27, 2009 from http://www.investopedia.com/university/mergers/mergers1.asp
ergers and Acquisition
As a CEO, you are trying to acquire a foreign firm. The size of your firm will double and it will become the largest in your industry. What does your firm do and what does the foreign firm you are trying to acquire do? Where are the firms based?
look company is a major company in Ohio Columbus in the U.S. And specializes is the sale of all types of spectacles both for the visually impaired or those with visual problems and sun glasses of all designs. This company has been in operation from 1998 and seeks to expand its operations into the African market by acquiring Yengo enterprises which operates in the major East African cities; that is, Nairobi, Kampala and Kinshasa. As the CEO of I-Look enterprises, I need to take into account the following issues discussed below.
There are many reasons why…
Most sellers are prone to number of mistakes and it is wise that they are enlightened in order to avoid making the same mistakes. These mistakes include being indecisive and impatient. If a seller appears to be too anxious, buyers tend to make use of this to push for a lower price whereas if the seller takes too long, the opportunity to sale may pass them by, therefore timing is very paramount. Moreover, the seller must be very careful to ensure that the details of the sale are made public at the opportune time. If the seller informs the employees of the sale too soon, some of the top management may decide to leave for fear of losing out. Creditors and suppliers may also be doubtful of the credibility of the business and put more pressure for outstanding debts or be reluctant to continue supplying (Sherman, 2010).
You are very enthusiastic about the opportunity to be a leading captain of industry and the associated power, prestige, and income. (You expect your salary, bonus, and stock option to double next year). However, you are troubled by the fact that 70% of mergers and acquisitions (M&As) reportedly fail. How would you proceed?
There are a number of reasons why acquisitions fail. In most cases, lack of the acquirer to fully analyze the commercial, financial or strategic implications may be the main reasons for the acquisition to collapse. It is important for the acquirer to find out if the management is running the business smoothly enough before adding more responsibilities. If the management team is experiencing hurdles in the business before acquisition, it becomes obvious that an acquisition will not fare well. Compaq's
The leadership personnel of the companies were far more affected by this merger, and there is no evidence that this merger was viewed as anything but a positive move for both companies by these individuals (Coffee 2006; Taft & Musich 2006; Knorr 2006). The cash premium that was paid to Mercury Interactive shareholders and the ongoing increase in price for Hewlett Packard stock following the merger makes it likely that shareholder response to the merger was equally positive (Google Finance 2010; Hewlett Packard 2006a).
Many mergers, especially in the past decade of increased scrutiny of accounting methods and financial reports, are quite complex and time consuming. The merger between Hewlett Packard and Mercury Interactive, however, was accomplished with a great deal of simplicity and efficiency. Though the primary benefits to both companies were found in the boosted assets, market share, and operational scope of the merged entity, the efficiency…
Boardman, B. (2006). "Merging for muscle." Network Computing, 17(6), pp. 16.
Coffee, P. (2006). "HP-Mercury: Modules to monoliths." eWeek 23(3), pp. 18.
Google Finance. (2010). "HPQ." Accessed 27 October 2010. http://www.google.com/finance?client=ob&q=NYSE:HPQ
Harkiolakis, N. & Mourad, L. (2009). "Preserved Valuation Measurements in Mergers and Acquisitions of Similar Size Corporations." In Recent Advances in Management, Marketing, Finance. Penang, Malaysia: WSEAS Press. Accessed 27 October 2010. http://184.108.40.206/scholar?q=cache:kSabfbC1VpcJ:scholar.google.com/+hp+mercury+interactive+merger&hl=en&as_sdt=1
If the failure is sufficiently severe, the future of the company could be called into question, leading to customer and supplier flight, creating a death spiral.
These impacts can spread far and wide. For example, a company with a failed merger could ultimately lose market share as its weaknesses and its distracted management are exploited by competitors. Sometimes firms merge to acquire market share, but then fail to perform as well as the two individual entities did, resulting in market share declines. This can cause the firm's industry position to deteriorate in addition to its market share. The loss of prestige can actually impact the market share as well.
Goodwill is created on the balance sheet during a merger as the result of the difference between the cost paid for the acquired company and its book value. The goodwill is reflective of the expected synergies and gains that are expected…
Merger, Acquisition and International Strategies
Mergers, Acquisitions and International Strategies
A merger is a combination of two or more business entities with the aim of consolidating the resources that they have and creating a single entity with that. The process of merging is done through acquisition or direct pooling together of the resources available. Acquisition occurs when a firm buys a stake in another firm and assumes control of it. Acquisitions are part of growth strategies paid for in cash, payment through stock of the acquiring company or both. Mergers and Acquisitions commonly denoted by M & A work hand in hand and are in recent times seen as one. M & A is a strategy of finance and management dealing with the selling, buying, combination of, firms and entities to help grow a firm rapidly. M & A occur to help a firm create a new strategy, joint venture…
GM:New York Stock Quote - General Motors Co - Bloomberg. (n.d.). Bloomberg - Business, Financial & Economic News, Stock Quotes. Retrieved December 1, 2012, from http://www.bloomberg.com/quote/GM:U.S .
General Motors | GM.com. (n.d.). General Motors | GM.com. Retrieved December 1, 2012, from http://www.gm.com/
Tesla Motors | Premium Electric Vehicles. (n.d.). Tesla Motors | Premium Electric Vehicles. Retrieved December 1, 2012, from http://www.teslamotors.com/
Mergers & Acquisitions
Should a firm attempt to have fewer or more suppliers?
It depends on the situation the client is in terms of availability of materials and such as well as the number of vendors out there. A firm should balance between not putting all the proverbial eggs in one basket by using only one or two vendors and using too many and thus making administration and logistics more complicated (eSmallOffice, 2013)(Entrepreneur, 2013).
The "sweet spot" is probably 3 or 4 vendors although it can be more if more are required to reliably get all the materials but less may be needed can provide what is needed on time and in a reliable fashion and at a good cost. In short, there shouldn't be more vendors than needed while at the same time, there shouldn't be too few to protect against problems with vendors (eSmallOffice, 2013)(Entrepreneur, 2013)..
Entrepreneur. "How to Find and Work With Suppliers | Entrepreneur.com." Business
News & Strategy For Entrepreneurs | Entrepreneur.com. N.p., 4 Oct. 2013. Web.
4 Oct. 2013. .
eSmallOffice. (2013, October 4). Don't Let Suppliers Control Your Business. Small Business Owner Resource Center|Business Guide - eSmallOffice. Retrieved October 4, 2013, from http://www.esmalloffice.com/SBR_template.cfm?
One of the greatest mergers in the history of computers was recently organized between Hewlett Packard and Compaq Computers. This was a great victory organized by the chief executive of Hewlett Packard, Carleton S. Fiorina. The direct proof has come within one year of the purchase of Compaq computers at a cost of $19 billion. There was a savings of $3.5 billion and this was achieved in one year, when the promise was to save a billion dollars less and that too, by the end of two years. The company has had the classical result of mergers with a decrease of 17,000 jobs but there was a gain of market share, over 3,000 new patents and launching of 367 new products. It was also very successful in gaining new contracts and got $3 billion contract from Proctor and Gamble that is spread out over ten years. The success has…
Hardy, Quentin. We Did It, 11 August, 2003. Retrieved at http://www.forbes.com/forbes/2003/0811/076_print.html . Accessed on 29 June, 2004
Rupley, Sebastian. HP and Compaq Get Down to Brass Tacks, May 10, 2002 Retrieved at http://www.pcmag.com/article2/0,1759,50028,00.asp . Accessed on 29 June, 2004
Popovich, Ken. HP Releases First Earnings Reflecting Merger; August 27, 2002 Retrieved at http://www.eweek.com/article2/0,3959,489290,00.asp . Accessed on 29 June, 2004
Popovich, Ken. Fiorina: Compaq Acquisition Paying Dividends; October 23, 2002 Retrieved at http://www.eweek.com/article2/0,3959,645785,00.asp . Accessed on 29 June, 2004
Global Implications of the TAP/IAG Merger
In order for any merger to be successful achieved and the two venture to remain profitable in the future, careful consideration of environmental and industry factors as well as certain internal features of both companies involved in the merger must be undertaken. This type of comprehensive internal and external analysis, such as a standard SWOT analysis, would provide a general overview of any of the different risks and potential channels for rewards that such a merger would face (Campbell et al., 2011). A more detailed examination of certain features can also be beneficial, however, not only in helping to forecast certain challenges and outcomes, but also in illuminating the importance of key decisions and the methods by which they are made. An overview of the internal components of organizational structure, culture, and leadership in regards to the merger between Air Portugal (TAP) and…
Campbell, D, Stonehouse, G & Houston, B (2011) Business Strategy, An introduction, 3rd Ed. Burlington, MA: Butterworth-Heinemann.
Johnson, G, Scholes, K, and Whittington, R. (2010). Exploring Strategy, 9th Ed. New York: Ed Pearson Education.
Parker, A. (2011). IAG Looks at Three Potential Mergers. Financial times. Accessed 7 December 2011.
Merger and AcquisitionThese two terms, merger and acquisition, often refer to the act of the companies joining; when two separate business firms combine to create a new venture, it means that they have merged. Alternatively, an acquisition refers to a takeover of one entity by another. The two can be completed so that there can be an expansion of the companys reach or in an attempt to gain the market share to create the value of the shareholder. Typically, the reason why we have merged is to reduce the operational costs, to boost profits and revenues, and to expand into new markets. In an acquisition, the smaller company ceases to exist, and the bigger company operates the management. In the blog below, the topics covering a current contemporary issue are; creating value, financial investment, and financial value. These will be discussed about the merging and acquisition concept.The contemporary issue in…
Akan, Mustafa, and Arman Teksin Tevfik. \\\\\\"Fundamentals of finance.\\\\\\" Fundamentals of Finance. De Gruyter, 2020. https://www.degruyter.com/document/doi/10.1515/9783110705355/html
It is important that we be allowed to pursue our business interests with a minimum of government interference. Given that the FTC and DoJ already enforce antitrust legislation, it seems unethical that the FCC also enforce such codes, specifically focused on our particular business.
I believe DI should support the proposed changes. The company would benefit from the opportunity to expand our media properties both horizontally and vertically. It would also give us greater opportunity to exit the business should we so desire in future. Ethical concerns about media consolidation are largely unfounded, especially in light of the way that the Internet provides a low-cost voice for alternative media outlets. The Telecommunications Act of 1996 has significantly reduced barriers to entry in the television business, so the free market can dictate which outlets will have an audience and which will not. Moreover, the FCC's Fairness Doctrine, upheld by the Supreme…
Klinenberg, Eric. (2006). Mega-Merger Mania. The Nation. Retrieved December 16, 2008 at http://www.thenation.com/doc/20060703/klinenberg
No author. (2008). Hart-Scott-Rodino. Federal Trade Commission. Retrieved December 16, 2008 at http://www.ftc.gov/bc/hsr/
McChesney, Robert W. & Nichols, John. (2008). Who'll Unplug Big Media? Stay Tuned. The Nation. Retrieved December 16, 2008 at http://www.thenation.com/doc/20080616/mcchesney
No author. (2008). Telecommunications Act of 1996. Federal Communications Commission. Retrieved December 16, 2008 at http://www.fcc.gov/telecom.html
The hypothesis is that "if managers are rational, mergers should always lead to an increase in shareholder value." In principle, this statement should hold, but there are a couple of pragmatic considerations that must be taken into account. Before examining the nuts and bolts of mergers, the statement needs to be corrected a little bit -- if managers are rational mergers should always lead to an expected increase in shareholder value. ationality does not imply omniscience, so managers can only make decisions based on what they expect will happen, not with perfect knowledge of the future. In other words, if a merger fails to increase shareholder value, that does not imply that the manager failed to act rationally. Now that we understand that, we can investigate the core principles behind the statement.
The first underlying concept at work in this statement is agency theory. Agency theory lies…
Agrawal, A. & Jaffe, J. (1999). The post-merger performance puzzle. Advances in Mergers and Acquisitions. JAI Press, Stamford, CT.
Agrawal, A., Jaffe, J. & Mandelker, G. (1992). The post-merger performance of acquiring firms: A re-examination of an anomaly. The Journal of Finance. Vol. XLVIII (4) 1605-1621.
Arthur, W. (1994). Inductive reasoning and bounded rationality. The American Economic Review. Vol. 84 (2) 406-411.
Eisenhardt, K. (1989). Agency theory: An assessment and review. The Academy of Management Review. Vol. 14 (1) 57-74.
The smaller firms therefore may be able to gain entry into the market but are generally unable to compete on quality with the top firms, and this is allowing the market leaders to grow as a result.
Another factor that is taken into consideration is the regulatory entry and exit conditions. In the mobile industry, there is a significant barrier in spectrum. Given that there is a finite amount of broadband wireless spectra available, and potential limits on where wireless towers can be sited, there are limits to the number of players in the market (FCC, 2010) This means that consolidation at the top of the industry could create limitations on the amount of competitors that can enter a given market. The DoJ will take this into account as well.
There are pros and cons associated with this merger. The pros are that the industry will take a more natural…
FCC. (2010). FCC 10-81, Fourteenth Report. Federal Communications Commission. In possession of the author.
Investopedia. (2011). Herfindahl-Hirschman Index. Investopedia. Retrieved May 18, 2011 from http://www.investopedia.com/terms/h/hhi.asp
Merger, Acquisition, And International Strategies
Ford Corporation: The Volvo takeover
It's imperative for the automotive companies to attain benefits of scale whilst developing latest products which is costing exceedingly high in the present business environment. Compared to the 90's the chances of attaining benefits of scale while saving costs has altered quite a bit. Model volumes have declined which creates difficulties for companies to attain economies of scale, while saving costs. Hence, as a last resort, companies merge with each other, acquire and form alliances with each other to save rising costs while developing new technology and products (Lundback, 2002).
Ford Motor Company
The Ford Motor Company is the second leading profitable automaker in the world. Ford has recently acquired the Swedish-based Volvo for $6.45 billion. Fords profits last year were a bit more than that with $6.57 billion. It's yet another quick acquisition among many others. Ford at present…
AECOM. (2014, July 13). Retrieved October 13, 2014, from http://www.aecom.com/News/Press+Releases/_carousel/AECOM+to+acquire+URS+Corporation+for+U.S.$56.31+per+share+in+cash+and+stock
AECOM Capital. (n.d.). Retrieved October 13, 2014, from http://www.aecom.com/About/AECOM+Capital
Asongu, J. (2007). Innovation as an Argument for Corporate Social Responsibility. Journal of Business and Public Policy.
Fairholm, M. (2009). Leadership and Organizational Strategy. The Innovation Journal: The Public Sector Innovation Journal, 2-15.
You a middle manager a healthcare organization merged a previous competitor. Up, employee's competition enemy provided a poor quality care. The corporation, place inpatient outpatient services organization.
Surviving a merger at a large healthcare entity: Managerial concerns
Surviving a merger at a large healthcare entity: Managerial concerns
Mergers are extremely difficult and delicate periods within any organization's history. More mergers fail than succeed. Uniting an organization with two very disparate cultures makes the endeavor even more challenging, and much is at stake, given that a failure of a healthcare merger can result in serious harm to patients as well as to both organizations' reputations. "Merger failures usually revolve around people issues -- loss of key staff, culture clash, FUD: fear-uncertainty-doubt, and last but not least, poor communication and interaction between employees of the merging organizations. Many of these issues are also faced by companies participating in joint ventures and…
Krebs, Valdis (2008). Post-merger integration. Orgnet. Retrieved October 16, 2010 at http://www.orgnet.com/merger.html
Matrix organization and product management. (2010). Visit Ask. Retrieved October 16, 2010 at http://www.visitask.com/matrix-organization.asp
Mergers, Acquisitions, and International Strategies
A well crafted strategy is crucial for business success in the both the local and the international market. Firms achieve this success by using business-level strategies or corporate-level strategies, or both. Business level strategies (such as cost leadership and differentiation) influence a firm's competitive advantage in its products and markets, while corporate-level strategies (such as mergers and acquisitions) affect the firm as a whole (Hill & Jones, 2012). Firms operating in the global market must also choose effective international business-level strategies and international corporate-level strategies. This paper compares an international company, Samsung, with a history of mergers and/or acquisitions, and a US-based company, Hibbert Sports, Inc., which is based solely in the US and does not have a history of any mergers or acquisitions. The paper specifically evaluates Samsung's acquisition strategy as well as its international business-level strategies and international corporate-level strategies. Also, the paper…
Frainshmidt, S., Smith, A., & Judge, W. (2016). National competitiveness and Porter's diamond model: the role of MNE penetration and governance quality. Global Strategy Journal, 6(2), 81-104.
Hibbett Sports Inc. (2017). Investor relations. Retrieved from http://phx.corporate- ir.net/phoenix.zhtml?c=78137&p=irol-irhome
Hill, C., & Jones, G. (2012). Essentials of strategic management. 3rd edition. Boston: Cengage Learning.
Johnson, G., Scholes, K., & Whittington, R. (2010). Exploring corporate strategy. London: Prentice Hall.
Finance-dominated proponents also maintain that boom economic periods generate a more varied divergence of valuations that fuel merger activity (Medlen 2007). In this regard, Medlen concludes that, "Taken collectively, these understandings may explain some of the merger activity in booms, but they involve certain asymmetries that undercut their explanatory power. High stock valuations allow stock to be utilized as currency and collateral for takeovers; yet stock booms also make targets expensive" (p. 202). Moreover, despite the commonly held perception that mergers are a "quick and dirty" way to grow a business and achieve organizational goals, there remains a lack of convincing empirical evidence in support of this perception (Medlen 2007). As Medlen points out, an "anomalous fact about mergers concerns the lack of evidence that mergers are profitable. This fact begs the question: why then are mergers carried out with such frequency and with such large levels of capitalization?" (p.…
Ahern, K.A. & Weston, J.F. (2007). 'M&as: the Good, the Bad, and the Ugly.' Journal
of Applied Finance, vol. 17, no. 1, pp. 5-7.
Babbie, E. (1990). Survey Research Methods (2nd ed.). Belmont, CA: Wadsworth
Merger a continuation. Please adhere directions required information needed, ensure a good grade. Title: Expansion Merger This paper a continuation Assignment 1.
ISP industry: Expansion and merger
Because of the rapid expansion of the ISP (internet service provider) industry and the rapid expansion in general of telecommunications technology, there is a tendency towards under-regulation of these entities which exert such an influence over Internet consumer's lives. ecently, there was a firestorm of controversy to stop SOPA (the Stop Online Piracy Act), which would have taken down websites without a court order for the piratical content the sites unwittingly hosted. However, it was less controversial in 2006 when the FCC "let effective Net Neutrality protections expire in August 2006 as the result of a technical change in the way they address Internet governance" (Net neutrality, 2012, Common Cause). Free speech advocates should have been alarmed given that "today there…
ISP group criticizes Verizon-MCI merger. (2005). Phone Watch. Retrieved:
Net neutrality. (2012). Common Cause. Retrieved:
merger of Time with warner is economically very attractive this is contributed by high value enhancement opportunities. This value enhancement opportunity reveals clearly the existence of a merger between Time with Warner. Motives present included:
How attractive is the merger of Time with Warner? What are the value enhancement opportunities?
Existence of horizontal merger. This existence leads to economies of scale.it represents combination of two firms in the same line of business (Allen, 2008, p.68).Time and warner are in the same line of business hence this can be considered as horizontal. The prime advantage of this is that there is sharing of central services such as office management and accounting, financial control, executive development and top level management consolidating operations hence elimination of redundant costs.
Vertical merger .this involves companies at different stages of production. Vertical mergers seek economies of scale in vertical integration this is gained by spreading fixed…
Allen, (2008) corporate finance, p.68.
Dingman Michael, (2011) paramount vs. Time, p.360.
From the perspective of the firm, Pfizer and Wyeth can combine their diverse strengths and capabilities, and merge their talents and skills thus enabling them to become more profitable and lucrative. Doing so, they will be able to reach more clients, solidify their already existent client base, and, possibly, expand into other areas whilst establishing themselves in other states and/or in other parts of the globe.
More specifically, advantages to the firm include the fact that:
Quality staff, or additional skills, non-existent in one's own firm, can be acquired
That additional knowledge of the industry or sector can be gained;
That the business intelligence of other firm (or each particular company) can add to current experiences and knowledge;
That there is enhanced access to asses for new products and business development;
That the larger company can now gain a wider customer base, therefore increasing market share;
That there is…
Allocative efficiency. Economics. Help www.economicshelp.org/dictionary/a/allocative-efficiency.html
Merging with or acquiring another business Just Start Ups.com http://www.juststartups.com/
NY Times Pfizer agrees to pay $68 billion for rival drug maker Wyeth www.nytimes.com/2009/01/26/business/26drug.html
The Director at His Best: The Right Question at the Right Time
Mergers are often advocated as a way of generating powerful organizational synergies for both newly-united organizations. But merging together two dissimilar corporate cultures can often result in profound challenges. The Vanguard Group of Investment companies is a result of a merger of several organizations and the organization initially faltered in its attempts to gain a clear sense of direction. The board of directors was divided between those loyal to Philadelphia-based Jack Bogle versus those still loyal to the Boston investment firm that made up the conglomerate. According to Jim Hill, there was constant friction between the two sides and meetings often were focused more upon one faction’s attempt to dominate the other rather than advancing the true interest of the firm.
Vanguard thus showed all the signs of not being a truly merged entity but was more like…
This would leave the company with the option to choose the supplier with the best-priced, best-quality products.
The threat of substitute products and services is high, particularly from major competitors such as Wal-Mart. Wal-Mart is a major player in the industry, and the merged companies will need to be significantly creative to maintain their competitive advantage in terms of products. Furthermore, the rivalry among competitors in the industry is quite high, particularly among the major rivals. Indeed, the reason for the merger was precisely to increase the collective size of the company to make it more competitive within the market.
The strategy in terms of the merger was for two relatively insignificant companies to join forces to enable a global-scale retail entity in order to better compete with market leaders such as Wal-Mart (ahman and Eisner, 2007). Part of the strategy is to improve the reputation of Kmart…
Schuman, E. (2004, Nov. 17). Sears, Kmart Merger to Create Huge Retail IT Operation. eWeek. Retrieved from http://www.eweek.com/c/a/Enterprise-Applications/Sears-Kmart-Merger-to-Create-Huge-Retail-IT-Operation/
Sears Holdings Corporation. (2010). About Kmart. Retrieved from
The conclusion whereat these researchers have arrived is that there is a negative mathematical relation between the probability of success of an M&a and the target company's leverage. An increasing leverage shows that equity is slowly substituted with debt, which reduces the fraction of voting right controlled by management and therefore affects the bidder's gain. Stultz finds that the probability of success of a takeover bid is decreasing as the debt-to-equity ratio increases.
Harris and aviv (1988) have studied the same phenomenon from a different point-of-view. They have examined the effects of capital structure change, when it is used and an anti-takeover defense. Substituting debt for equity increases the bargaining power of the target companies. These conclusions were also obtained by way of empirical research (aad and yan (1995), Assem and Titman (1999), and Schwert (2000)): the negative relation between the probability of takeover success and the target's leverage is…
Angwin, D. (2001), "Mergers and acquisitions across European borders: national perspectives on pre-acquisition due diligence and the use of professional advisers," Journal of World Business, Vol. 36 No. 1, pp. 2-57.
Assem, S., and S. Titman, "Leverage and Corporate Performance: Evidence from Unsuccessful Takeovers," Journal of Finance, 54 (1999), pp. 547-580.
Branch, B., Yang, T."Predicting Successful Takeovers and Risk Arbitrage" Quarterly Journal of Business and Economics. Lincoln: Winter 2003.Vol.42, Iss. 1/2; pg. 3, ProQuest
Buono, a.F. And Bowditch, J.L. (1989), the Human Side of Mergers and Acquisitions, Jossey-Bass, San Francisco, CA.
Vedanta believed that the company overall was undervalued; Hewitt was trying to avoid the loss of a major segment of business.
Overall, merger and acquisition activity has been relatively slow in recent years. However, firms are still trying to find ways to defend their position (GM, Hewitt) and other firms are attempting to creatively extract new value through their transactions (Exxon, a-B/InBev, Vedanta). As long as there are shifting environmental considerations and new opportunities to exploit, firms will continue to seek out merger and acquisition activities.
McClure, B. (2010). Mergers and acquisitions. Investopedia. Retrieved March 14, 2010 from http://www.investopedia.com/university/mergers/default.asp
Espinoza, J. (2009). Merger pays off for AB InBev. Forbes. Retrieved March 14, 2010 from http://www.forbes.com/2009/03/05/inbev-quarter-profits-markets-equity_drinks.html
Daily, M. & Driver, a. (2009). Exxon Mobil to buy XTO Energy in big U.S. gas bet. Reuters. Retrieved March 14, 2010 from http://www.reuters.com/article/idUSTRE5BD28G20091214
Reuters. (2010). Vedanta eyes aluminum unit spinoff. The Economic…
McClure, B. (2010). Mergers and acquisitions. Investopedia. Retrieved March 14, 2010 from http://www.investopedia.com/university/mergers/default.asp
Espinoza, J. (2009). Merger pays off for AB InBev. Forbes. Retrieved March 14, 2010 from http://www.forbes.com/2009/03/05/inbev-quarter-profits-markets-equity_drinks.html
Daily, M. & Driver, a. (2009). Exxon Mobil to buy XTO Energy in big U.S. gas bet. Reuters. Retrieved March 14, 2010 from http://www.reuters.com/article/idUSTRE5BD28G20091214
Reuters. (2010). Vedanta eyes aluminum unit spinoff. The Economic Times. Retrieved March 14, 2010 from http://economictimes.indiatimes.com/news/international-business/Vedanta-eyes-aluminium-unit-spin-off-Report/articleshow/5683287.cms
There are many factors that contribute to today's economic global status. Economic evolution did not happen over night and one can look to history to analyze trends and practices as proof. It is unfair of historians to try to pinpoint one deciding moment in history that influences today's business world. One should see today's market as a reflection of past trends and business practices, a build up of many moments of time full of mistakes and successes. It is fair to say that much of where we are today has much to do with what has been learned already but also what has yet to be learned. It is the notion of possibility that makes the present economy rich and multifaceted. It is the ability to think outside what is already known and break down barriers that makes the future of business very exciting. This type of attitude…
O'Brien, Patrick Anthony. "Factory Size, Economies of Scale, and the Great Merger Wave of
1898-1902." The Journal of Economic History Vol. 48, No. 3 (1988): 639-649.
Whole Foods Market (WFM) is a grocery store chain that has operations in the U.S., Canada and the UK. Competitor The Fresh Market (TFM) is based only in the United States at this point. While Whole Foods is substantially bigger, these two companies are close competitors of one another based on the similarity of their product lines and their target markets. This paper will analyze the strategic tactics of each of these companies, based on their respective growth strategies.
The Merger & Evaluation
By 2007, Whole Foods was becoming the dominant player in the natural foods grocery business. It sought to grow further, and decided to purchase struggling competitor Wild Oats (Fineman, 2007). At the time, Whole Foods paid $18.50 in cash for each share of Wild Oats. There was concern from the Federal Trade Commission about the deal, because it put Whole Foods in a dominant position…
Bartz, D. (2009). Whole Foods, FTC settle on Wild Oats merger. Reuters. Retrieved November 30, 2013 from http://www.reuters.com/article/2009/03/06/us-wholefoods-ftc-idUSTRE5253AL20090306
Fineman, J. (2007). Whole Foods agrees to buy Wild Oats; profit declines. Bloomberg. Retrieved November 30, 2013 from http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZtDQutxeDsU
MSN Moneycentral. (2013). Whole Foods. Retrieved November 30, 2013 from http://investing.money.msn.com/investments/stock-price?symbol=WFM&ocid=qbes
MSN Moneycentral. (2013). The Fresh Market. Retrieved November 30, 2013 from http://investing.money.msn.com/investments/stock-price?symbol=TFM&ocid=qbes
Nike Converse Merger 2003
One of the biggest mergers witnessed in the 21st century is the one that happened between two popular footwear companies, Nike and Converse, in the year 2003. It was a historic deal for two important reasons, the price involved and the pedigree of the two giants in the industry. Affirming Nike’s confidence about the deal, Nike’s president, Tom Clarke said Tom Clarke said, ''Converse is one of the strongest footwear brands in the world, with a great heritage and a long history of success”, (Wayne, 2003). Looking back 16 years, the same brand, Converse, under Nike’s management, has astronomically boomed in acceptance, recording a very high sales in many regions across the world and that has in no small measure added to Nike’s revenue. For instance, in the year 2015, Nike recorded a remarkable growth of 28% increase worth of $538 from the first and the…
Merger, Acquisition, And International Strategies
From a humble beginning in 1998 of responding to about 10,000 queries by offering search engine services, Google, Inc. has grown to a gigantic multinational corporation providing immense and widely used, actually over 30, services with a search engine capacity that responds to more than 200 million queries daily.
Using a combination of personal logging information and other information gathered from its spectrum of services and Google cookies, it is capable of building large dossiers of pertinent information of its individual users. In this essay I wish to examine Google's three most popular and innovative services namely: Ad Sense, Gmail and Google Search in order to show how the huge amount of data gathered from these three services are used to create incredibly big profiles of all its individual users. I will not, however, underestimate the important role its other services like Google…
Bhatia, A., Deep, G., & Sachdeva, A. (2012). Strategic analysis of search engine giant: A case study of googleinc. International Journal of Computing and Business Research. Retrieved from http://www.researchmanuscripts.com/isociety2012/55.pdf
Delichatsios, S.A., & Sonuyi, T. (2005). Get to know Google, because they know you. Retrieved from http://groups.csail.mit.edu/mac/classes/6.805/student-papers/fall05-papers/google.pdf
Dess, L.E.(2012). Corporate level strategy. Retrieved from International Strategic Management: http://brianhenderschiedtbsad428.blogspot.ca/2012/03/walmart-corporate-level-strategy.html
Digication.(2014). Google's corporate level strategy. Retrieved from https://stonybrook.digication.com/calvins_google/Corporate_level_strategy
announcement merger companies Vela Bahri. *Size companies *easons merger * process merger ( time ) * happened stock prices shareholders reaction *After completed merger results merger? status change? *oles top manager merger.
Vela Bahri Merger
Information from the announcement of the merger
The announcement of this important merger was made on June 27, 2012 by Saudi Aramco and the National Shipping Company of Saudi Arabia. The announcement revealed the fact that the two companies signed a non-binding memorandum of understanding, in order to pursue the merger of the fleet and operations of Bahri and Vela International Marine Limited, which is a wholly owned subsidiary of Saudi Aramco.
The objective of the merger is represented by developing a larger and more diversified national shipping company. By joining their forces, the two companies expect to become a force in the shipping activity. Their intention is to successfully address the shipping activity by…
1. Vela Bahri Merger Creates One of the World's Largest Shipping Firms (2012). Hellenic Shipping News. Retrieved April 4, 2013 from http://www.hellenicshippingnews.com/News.aspx?ElementId=28f180f6-7b3c-4e67-b05e-bd3b3bede16f .
2. Bahri, Vela Sign Merger Agreements (2012). Mubasher Info. Retrieved April 4, 2013 from http://english.mubasher.info/portal/TDWL/getDetailsStory.html?goToHomePageParam=true&storyId=2188139 .
Mergers, Acquisitions and Downsizing
How does the role of a company's motivation determine the selection of a business initiative of a merger, acquisition or a downsizing? Your answer should summarize the role of the economies of scale and be adapted to include a corporate example (current or past employer should be utilized).
The current employer that will be examined is how various services are delivered to the public from local government officials. During this process, there was a focus on downsizing various departments and merging others together. This is illustrating how administrators are concentrating on reducing costs and increasing the quality of services being provided. In most cases, this means that many programs are reorganized and the role of government (as a part of process) is brought into question. As the traditions of providing various services and expanding the number of programs, has not effectively addressed the underlying challenges impacting…
Aaker, D. (2001). Developing Business Strategies. New York, NY: John Wiley & Sons.
DiNapolli, D. (2009). Shared Services in Local Government. New York State Comptroller.
Peed, J. (2007). North Carolina LEA Services. Department of Public Instruction.
Stanley, S. (1992). Bigger is Not Better. Policy Analysis.
Failures of Merger
Failure of Mergers
The objective of this study is to examine why it is that most mergers fail and will provide real-life examples of the failure of mergers. Toward this end, this work will examine relevant literature in this area of study and specifically academic and professional literature and publications that are peer-reviewed in nature. The work of Weber and Camerer (2003 ) entitled "Cultural Conflict and Merger Failure: An Experimental Approach" reports that most mergers fail and that failure occur "on average in every sense: acquiring firm stock prices tend to slightly fail when mergers are announced; many acquired companies are later sold off; and profitability of the acquired firm is lower after the merger." (Weber and Camerer, 2003) There is a great deal of conflict reported during the process of a merger that results in a high rate of turnover." Disappointment was expressed by participants…
Chiriac, Irina Sandu case (2011) Mergers -- Success or Failure? CES Working Papers, III  2001. Retrieved from: http://www.cse.uaic.ro/WorkingPapers/articles/CESWP2011_III1_SAN.pdf
Cross-Border Mergers & Acquisitions: Reducing the Risk of Failure (nd) Communicaid,. Retrieved from: http://www.communicaid.com/access/pdf/library/culture/Cross-Border%20Mergers%20&%20Acquisitions_Reducing%20the%20Risk%20of%20Failure.pdf
Dumon, Marv (2008) Biggest Merger and Acquisition Disasters. Investopedia. Retrieved from: http://www.investopedia.com/articles/financial-theory/08/merger-acquisition-disasters.asp
Elwin, Toby (2010) Mergers and Acquisitions Failures are Project Management Failures. 30 November, 2010. Retrieved from: http://www.amajorc.com/blog/mergers-and-acquisitions-failures-are-project-management-failures
The transaction was all-cash and was estimated at approximately $4.3 billion, including the assumption of approximately $900 million of net debt. Before acquiring Alamosa, Sprint Nextel Corporation was involved in some litigation issue with one of Alamosa Holdings' subsidiaries, AirGate PCS Inc. Therefore, completing the Alamosa acquisition brought final resolution in this matter. Alamosa was one of Sprint's most important affiliates before the merger with Nextel and the acquisition of this wireless affiliate. Texas based Alamosa Holdings provides Sprint PCS services in 19 states across the United States, and it has about 1.5 million direct wireless subscribers. The affiliate has approximately 1,300 employees. In 2005, Alamosa Holdings' revenues reached $1.32 billion. The most important outcome of acquiring Alamosa Holdings was the fact that the acquisition extended Sprint Nextel Corporation's direct service territory to an additional 20 million people in 19 states.
Another wireless affiliate that was acquired by Sprint Nextel…
The Sprint Tradition (2007). Sprint Nextel. Retrieved June 12, 2007 at http://www.sprint.com/companyinfo/history/ .
Sprint Corporation 1899-2005 (2007). Wikipedia, the free encyclopedia. Retrieved June 12, 2007 at http://en.wikipedia.org/wiki/Sprint_Corporation_%%29 .
Nextel Communications (2007). Wikipedia, the free encyclopedia. Retrieved June 12, 2007 at http://en.wikipedia.org/wiki/NEXTEL_Communications_%%29 .
Sprint Nextel (2007). Wikipedia, the free encyclopedia. Retrieved June 13, 2007 at http://en.wikipedia.org/wiki/Sprint_Nextel#Merger_of_Sprint_and_NEXTEL .
Mobile / Sprint Merger
Within the more and more dynamic and challenging economic, social and technological context, the economic agents devise a wide array of coping mechanisms. One common means in which they strive to consolidate their competitive positions is through mergers and acquisitions. These imply the unification of two traditional competitors in a means in which mutual benefits are created, such as wider access to the market, know how, expertise, resources and so on.
Today, a piece of news which torments the American business community is related to the potential merger between mobile telephone monoliths T-Mobile and Sprint. It is the opinion of this study that the merger would be of a positive impact for the two firms. The following lines reveal the rationale for this conclusion.
The financial state of the companies
Data is not available for the entire 2010 fiscal year, but the information which is available…
2010, Sprint Nextel (NYSE:S) and T-Mobile merger rumors return after comments from Sprint CEO, American Banking & Marketing News, http://www.americanbankingnews.com/2010/07/15/sprint-nextel-nyse-s-and-t-mobile-merger-rumors-return-after-comments-from-sprint-ceo / last accessed on February 24, 2011
2011, Sprint Nextel Corp, Bloomberg Businessweek, http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=S:U.S . last accessed on February 24, 2011
2011, T-Mobile USA reports third quarter 2010 results, T-Mobile website, http://www.t-mobile.com/Cms/Files/Published/0000BDF20016F5DD010312E2BDE4AE9B/5657114502E70FF3012B59F6EC3E60E2/file/TMUSQ32010PressReleaseFinal%5B1%5D.pdf last accessed on February 24, 2011
2011, T-Mobile closing its doors in 2011? Not so fast! Tmo News, http://www.tmonews.com/2010/07/t-mobile-closing-its-doors-in-2011-not-so-fast / last accessed on February 24, 2011
Corporate Mergers and the Public Good
The United States of America, during the last years of the Nineteenth Century, witnessed a rash of corporate mergers. The Industrial Revolution had taken firm hold, and the nation was changing rapidly. Millions of Americans who had once been independent farmers or tradesmen now found themselves in the position of what some termed "wage slaves." At the mercy of their corporate employers, they worked long hours at low pay, and often under appalling conditions. The reasons for the merger mania of this period are many and complex, as are its effects upon the population as a whole. In breaking down the traditional vocational environment, the gigantic new conglomerates also transformed the entire social landscape. ork was no longer a family business shared by all generations. Communities no longer clung together for mutual protection and aid. Suddenly, the citizen of this new world was out…
Applebaum, Herbert. The American Work Ethic and the Changing WorkForce: An Historical Perspective. Westport, CT: Greenwood Press, 1998.
Aronowitz, Stanley. False Promises: The Shaping of American Working Class Consciousness. New York: McGraw-Hill, 1992.
Atack, Jeremy. (1985). "Industrial Structure and the Emergence of the Modern Industrial Corporation" Explorations in Economic History 22, 48.
Champlin, Dell P., and Janet T. Knoedler. "Corporations, Workers and the Public Interest." Journal of Economic Issues 37.2 (2003): 305+.
Investigating the Possibility of a Sprint and T-Mobile Merger
Sprint and T-Mobile Merger (?)
AT&T Acquisition of T-Mobile (?)
Advantages to AT&T
Effects to the Consumer
The purpose of this paper is to analyze the feasibility of a Sprint and T-Mobile merger. The two companies utilize similar technology and it was thought that a merger of the two telecommunications giants would offer a certain synergy that would add value not only to the combined organization but also to consumers. ith the increased competitiveness that would be gained with this merger the new conglomerate would be in a better market position to compete with industry leaders such as AT&T and Verizon. However, the business world moves very quickly and the possibility of a Sprint and T-Mobile merger no longer seems to be a remote possibility.
Instead, the giant telecommunication leader AT&T has recently made a move to purchase T-Mobile…
Dignan, L. (2011, March 8). Sprint, T-Mobile merger talks spurred by network sharing needs. Retrieved August 2011, 2011, from ZDNet: http://www.zdnet.com/blog/btl/sprint-t-mobile-merger-talks-spurred-by-network-sharing-needs/45797
Herman, B. (2011, March 22). AT&T T-Mobile Merger: Less Competition, Higher Prices. Retrieved August 22, 2011, from Shouting Loudly: http://www.shoutingloudly.com/2011/03/22/attt-mobile-merger-less-competition-higher-prices/
Neate, R., & Russell, J. (2009, September 12). T-Mobile owner eyes multi-billion dollar bid for Sprint. Retrieved August 22, 2011, from The Telegraph: http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/6180195/T-Mobile-owner-eyes-multi-billion-dollar-bid-for-Sprint.html
Sorkin, A., De La Merced, M., & Wortham, J. (2011, March 20). AT&T to Buy T-Mobile USA for $39 Billion. Retrieved August 22, 2011, from DealB%k: http://dealbook.nytimes.com/2011/03/20/att-to-buy-t-mobile-usa-for-39-billion/?hp
Company Mergers on Employees
The end of the twentieth century saw a wave of domestic and cross-border corporate mergers and acquisitions. Worldwide M&As grew at an average of 42% per annum between 1980 and 1999, reaching U.S.$2.3 trillion in 1999, according to the United Nations World Investment eport 2000. The report also suggested that the merger trend was evidence of an emerging globalized market (Cheng). While the globalization of markets is one important driving factor behind cross-border mergers since this allows for easier access to new markets through acquisition of strong local players, there are several other reasons why companies may choose to merge. Objectives range from the need to reduce competition, lower cost of production, eliminate excess capacity, increase market share through the acquisition of strong, established brands to the desire to acquire new technology and realize economies of scale in production, distribution, and purchase. Further, weak financial positions…
Cheng, E. What's driving the wave of corporate mergers. Green Left Online Edition.
Retrieved from the World Wide Web: http://www.greenleft.org.au/back/2001/438/438p16.htm
Gharib, S. (Feb. 24, 2004). Commentary: The Merger Mania Failure Factor. Quote.com.
Retrieved Mar. 2, 2004 from the World Wide Web: http://finance.lycos.com/qc/news/story.aspx?story=200402250300_NBR_NBR-20040224-STORY4&symbols=NBR:100
The Birdie Golf – Hybrid Golf Merger
Hybrid Golf and Birdie Golf are two companies that have been engaging in talks of merging their company in the past 6 months or so. It is imperative to note that both of these companies are in good position on their own and have niche markets. Moreover, the contemplations of proceeding with the merger is encouraged owing to the fact that it is deemed a beneficial transaction for both of them if the merger actually takes place. In addition, both Birdie and Hybrid will enjoy economies of scale that come along with the transaction. At the present moment, the price at the table is $68.75 for every share of Hybrid’s stock. The purpose of this paper is to conduct a comprehensive analysis regarding the expected value of Hybrid so as to determine whether the price given ought to be accepted by Birdie or…
When a merger the size of the AOL ime Warner merger takes place and then disintegrates, it is time to look for what went wrong. Both companies were regarded as important in their fields; both had been successful, one for many years (ime Warner), the other for only a short while (AOL), but that success was extreme.
What did go wrong? he simple answer is that is was probably a classic clash of old paradigm vs. new paradigm.
In fact, the simple answer is the whole answer, and it appears in graphic detail on the 91st page of Alec Klein's book, Stealing ime: Steve Case, Jerry Levin, and the Collapse of AOL ime Warner. On that page, Klein describes the scrambling of the lawyers for both firms -- AOL and ime Warner -- when operation Alpha ango is revealed to them. (Both Case and Levin chose to keep…
The shareholders need to be stinking mad. Time Warner executives, even after the truth was coming out, didn't want to challenge the belatedly charismatic Steve Case. Case had also belatedly reassumed his former pretty persona, perhaps to meld, at last, with the 'suits' at Time Warner. Too little too late. On Sunday, January 12, 2003, Case finally stepped down as chairman of AOL Time Warner. Too late for Jerry Levin. And Ted Turner, who had turned his initial 'nay' reaction to a yea, eased on out the door to become a philanthropist. He didn't lose enough loot to matter. Levin is sitting pretty, despite not cashing in on his AOL Time Warner stock. Case cashed out for millions. The AOL Time Warner Center, costing $1.8 billion, killed at least one worker in the building, and sits as a tony home to those who can afford $2 to $40mliion for a condo.
Very likely, few stockholders can afford that. And some stockholders actually invest with two aims: to make a good return for themselves, and to be part of the growth of American business.
In the case of AOL Time Warner, investors lost on both those fronts, and suffered the embarrassment of hatching the world's biggest merger turkey, whether they had actually cast a proxy ballot or had merely sat back and watched, as well.
On April 15, 2008, Delta Air Lines and Northwest Airlines formally announced a merger agreement forming the largest commercial airline in the world; a fleet of almost 800 aircraft. This combined airline, still known as Delta, would have a value of $17.7 billion. In addition, due to the merger and the proposed benefits and synergisms, the company stated that it had come to an agreement with its pilot union to extend the collective bargaining agreement through the end of 2012; providing Delta pilots a 3.5% equity stake in the newly created organization (Rhoades 2008).
On September 26, 2008 the shareholders of both companies approved the merger, with only a Federal antitrust review board's approval. As expected from most analysts, the merger was approved by all requisite Federal agencies, largely due to the minimal overlap between the two carriers' routes and very little threat to competitive industry pressures. A…
American Bar Association 2008, Annual Review of Antitrust Law Developments 2008, ABA Publications, Chicago.
Center for Management Research 2009, The Delta and Northwest Airlines Merger, viewed March 2011, <
Havel, B 2009, Beyond Open Skies: A New Regime for International Aviation, Kluwer Law Publications, Frederick, MD.
Regulation of Mergers and Implications of Government Intervention - the Case of a Potential Merger for Blockbuster
When a large firm in a mature industry wants to grow a common strategy will be the seeking of an acquisition or merger. However, large firms in an industry will often be faced with government regulation which may seek to control and limit the way merger activity takes place. For example, if Blockbuster, a major film rental company, wishes to merge with another firm they may face barriers, while these barriers may be seen as good for competitive environment, they may be perceived by Blockbuster as limiting their commercial actions.
It may be argued that government regulation of needed in the markets for a number of reasons. The first may be the role of the government in protecting the market system to ensure that competition remains in a market. Where one firm…
GM and Peugeot Merger
With the current economic trends that many multinationals are caught up in especially after the global recession, many opt for alternative ways to survive in the market as well as alternative markets. This drive to venture into other markets has seen many of the multinationals and big businesses venture into alliances and mergers that would see them have a footing in varied economic settings hence supporting their entire business framework.
The article is mainly based on the alliance that the General Motors intend to forge with the French auto maker Peugeot Citroen. The General Motors (GM ) intends to take buy 7% of the Peugeot Citroen in a move that is widely seen to be a step towards salvaging the Peugeot from total collapse and also to solidify the footing of GM within the European market.
The alliance between the two companies is based on a…
Kevin Voigt, (2009). Mergers fail more often than marriages. Retrieved April 1, 2012 from http://edition.cnn.com/2009/Business/05/21/merger.marriage/index.html
Mediacorp Interactive media, (2012). GM to take 7% of French Peugeot in strategic alliance.
Retrieved April 1, 2012 from http://www.channelnewsasia.com/stories/afp_world_business/view/1186172/1/.html
If you were to pick one company for Wal-Mart to merge with, what would it be? Explain your choice with respect to possible benefits of this merger and why you would choose this company over any other choice for a potential.
The primary candidate for Wal-Mart to acquire would be United Parcel Service (UPS). UPS is known for having the best IT systems and logistics processes of any of the global third party logistics providers (Alghalith, 2005). It is also very well-known for being a company culture that relies heavily on standard metrics of performance including performance dashboards to provide real-time visibility of each shipment, no matter how large or small (agu, 2009). UPS would complement the extensive supply chain expertise of Wal-Mart and would also add significant depth of global operations that the company has struggled to get in place over the last decade (Sodhi, Son, 2009).…
Nabil Alghalith (2005). Competing with IT: The UPS Case. Journal of American Academy of Business, Cambridge, 7(2), 7-15.
Cohan, P.. (2008). Riding the value cycle. Business Strategy Review, 19(2), 36-41.
Gereffi, G., & Christian, M.. (2009). The Impacts of Wal-Mart: The Rise and Consequences of the World's Dominant Retailer. Annual Review of Sociology, 35, 573.
Jared M. Hansen. (2009). The evolution of buyer-supplier relationships: an historical industry approach. The Journal of Business & Industrial Marketing, 24(3/4), 227-236.
Code of Conduct Policy Recommendations
It has been a pleasure working with Tom Tramlin, the CEO of UWEAR and our new colleagues at PALEDENIM. During the merger process, we have had the opportunity to get to know each other better. This has allowed us to create a new Code of Conduct for all employees after the merger.
A Code of Conduct is designed to create and maintain an ethical organizational culture. Standardizing organizational behavior in a Code of Conduct helps to create social norms that govern business operations, which will tremendously help smooth out the kinks of the merger process. The merger is occurring between one larger and one smaller company, and a Code of Conduct will help to establish some ground rules for the new company culture. The following situations are covered in the Code of Conduct, based on my observations.
Situation 1: Conducting Business on Neutral Ground
In fact, Lampert is cited as still frequently drawing his top picks from consulting the shareholder letters of Buffet, and drawing from Buffet's advice to guide him in his own investment decisions.
arren Buffet is famed as the billionaire chairman of Berkshire Hathaway Inc. Like Buffett, Lampert is said to seek investments in "stable businesses with predictable income streams that have very strong brands," that are currently suffering troubled fortunes but are not fundamentally misguided in their core brand concepts (eiss, & DiStefa 2007). For example, in his own investment strategies, Buffet resisted the dot.com boom and bust, by and large, and so did Lampert. Buffet prefers companies that are traditional blue chips that produce products you can see, touch, and can count upon to build a customer base steadily, over time.
Likewise, Lampert has staked his reputation upon companies such as Kmart and Citigroup, amongst others, which were experiencing…
Irwin, Neil. (24 Mar 2005). "Merger approved, Sears-Kmart can focus on reshaping stores." The Washington Post. Retrieved 9 Apr 2008 at http://www.washingtonpost.com/wp-dyn/articles/A64648-2005Mar24.html
Weiss, Miles & Joseph N. DiStefa. (16 May 2007). "Lampert's ESL Fund holds $800 million Citigroup stake." Bloomberg.com. Retrieved 9 Apr 2008 http://www.bloomberg.com/apps/news?pid=20601103&refer=us&sid=ai5qQcW6SJTI
The status quo, which is predicted to (or already does), produced an undesirable future state.
The actual path of change initiated by timely directors of the manager is the course of achieving the current state.
In change management initiatives that failed the following were cited as reasons for lack of success in the organizational change process:
1. Managers who were unwilling to assign the needed resources to the project or would not allow their representative adequate time to participate
2. Managers who filtered out important messages or started negative conversations about the change
3. Employees who became distracted and lost interest in their current work responsibilities thereby impacting overall productivity and customers
4. Valued employees who left the organization
5. More people taking sick leave or not showing up for work
6. Unforeseen obstacles to the change that seemingly appeared from nowhere
7. A lack of funding for the change…
Supporting Employees Through Organizational Change (1999) How to Guide. Queensland Health.
Bastien, et al. (1991) Executive Leadership during Organizational Change: A Bi-Cycle Model - Human Resource Planning, Vol. 14, 1991.
Changing Models of Care Framework (2000) Queensland Health Change Management - Queensland Government.
Hiatt, Jeff and Creasey, Tim
value differences between merging with other companies inside of Western Europe vs. investing in merging with companies in BRC nations. Thus, mergers and acquisitions from within Western Europe were gathered. These were then compared to mergers of Western European companies with BRC nations, including Brazil, Russia, ndia, and China. The data set chosen was to include a span of ten years, from 1999 to 2009. First and foremost, there were more mergers within this time frame than past 2009 based on the fact that the economic crisis in Europe had worsened to a degree that made mergers and acquisitions decline overall in the region. Moreover, after 2009, there were actually increasing trends of BRC nations investing in acquiring Western European nations, and not the other way around because of declining financial conditions that were weakening the acquisition and leveraging power of many European companies. The period of 1999 to 2009…
Institute of Mergers, Acquisitions, and Alliances. (2015). Statistics. Mergers and Acquisitions. Web. http://www.imaa-institute.org/statistics-mergers-acquisitions.html
Thomson Reuters. (2013). Mergers & Acquisitions Review: Financial Advisors. Web. http://www.pwc.es/es/servicios/transacciones/assets/thomson-reuters-mergers-and-acquisitions-review-2013.pdf
Wang, D. & Moini, H. (2012). Performance assessment of mergers and acquisitions: Evidence from Denmark. E-Leader Berlin. Web. http://www.g-casa.com/conferences/berlin/papers/Wang.pdf
Thus, the company did not manage to the fullest extent to capitalize on achieved competitive advantages and did not manage to cover all the risks
Before the merger, the HP managers expected their market growth rate between the years of 2002 to 2004 to annual increase by 12%, for the PCs business segment to grow by 8% annually, for services segment by 12% and to increase imaging and printing segment by 10% annually. The company projected the highest profit margin growth in the servicing sector as this was Compaq competitive advantage before the merger. After 3 years of the merger, the actual earned revenues were not equal to the predicted ones in any sector: the enterprise revenues fell by 20% in 2002 compared with their 2001 rates, and by 5% from 2003 to 2002; the same happened with PCs segment, while services segment also decreased considerably by 11% in revenues…
Nguyen, H., Kleiner, B. The Effective Management of Mergers, Leadership & Organization Development Journal, Volume 24 (8), 2003, pp. 447-454.
Jackson, J. HP-Compaq Merger Could Aid Resellers, available at http://www.washingtontechnology.com/news/16_13/business/17177-1.html
CQUAY Technologies Corp
corporate merger between Delta and Northwest airlines in order to find out the possible reasons why it was necessary. We evaluate the merits associated with corporate mergers and the challenges that might be faced in the process. A recommendation on how mergers should be carried out is also provided
Mergers and acquisitions form a very integral part of the contemporary corporate landscape. Kolker (2010) points out that initial six months of the year 2010 witnessed the total value of global acquisitions increase to 2.7% to a monetary value of $915 billion. This was an increase for the initial six months of 2009. 2010 however was off to a rather slow start as compared to 2006 which recorded an excess of $3.8 trillion in transactions related to acquisitions (Yeary, 2007). It is worth noting that it is never the volume of the deals that matter but their size. Averagely, there were…
Appelbaum, S., Lefrancois, F., Tonna, R. And Shapiro, B. (2007). Mergers 101 (part one):
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99-120.
Bijlsma-Frankema, K. (2001). On managing cultural integration and cultural processes in mergers and acquisitions, Journal of European Industrial Training, 25/2/3/4, 192-207
Brigham, EF & Houston, JF (2009).Fundamentals of Financial Management
Managing All Stakeholders in the Context of a Merger Process
Review of the Relevant Literature
Types of Mergers
Identifying All Stakeholders in a Given usiness
Strategic Market Factors Driving Merger Activity
Selection Process for Merger Candidates
Summary, Conclusion, and Recommendations
The Challenge of Managing All Stakeholders in the Context of a Merger Process
Mergers and acquisitions became central features of organizational life in the last part of the 20th century, particularly as organizations seek to establish and maintain competitiveness in an increasingly globalized economy (Nevaer & Deck, 1996). Mergers are generally described as being the formal joining or combining of two corporations or business (Prichett, 1987), although both the framework and the method of merger vary greatly. The reasons for mergers are different based on what a company is trying to accomplish. The acquiring firm may seek to eliminate a competitor; to increase its efficiency; to diversify its products, services,…
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Part 1) One proposed merger is Omnicare's bid to purchase Pharmerica (FTC, 2012). The FTC has defined the industry as "long-term care pharmacy" and these are the two largest firms in that industry. The FTC has sued to block this proposed takeover. Pharmerica is the only national competitor for Omnicare. Firms in this industry work with institutions to provide pharmacy services. The industry has some fragmentation, but there are only two national players in Omnicare and Pharmerica. The FTC feels that the combined entity would have such strong bargaining power that consumers would not have adequate choice, prices would rise and suppliers would also suffer from this extreme leverage.
From Omnicare's point-of-view, the merger would give it a dominant position in its industry. Pharmerica is resisting the takeover, as this is a hostile takeover. Pharmerica would likely be absorbed into Omnicare to the detriment of its own operations. Suppliers…
FTC.gov. (2012). FTC sues to block Omnicare's bid to buy rival pharmacy provider Pharmerica. Federal Trade Commission. Retrieved February 3, 2012 from http://www.ftc.gov/opa/2012/01/omnicare.shtm
Investopedia. (2011). Herfindahl-Hirschman Index. Investopedia. Retrieved February 3, 2012 from
In early 2013, the merger between US Airways and American Airlines became official, and by April 2015, the final regulatory hurdle – FAA approval - had been cleared (Maynard, 2013; Holmes, 2015). The merged airline had significant strategic implications, including US Airways leaving the Star Alliance (Maynard, 2013). The implementation at the time the deal was announced was expected to take between 18 and 24 months, and that time frame remains valid – FAA approval is a precursor to the final operating merger between the two airlines.
The deal was announced in early 2013 was yet another in an ongoing round of consolidations within the US airline industry. The deal was worth $11 billion, and was structure shortly after American emerged from bankruptcy proceedings (Isidore, 2013). American was losing market share prior to the deal, and US Airways was vulnerable as one of the smaller domestic carriers, so there…
VACATIONSPOT.COM AND RENT-A-HOLIDAY: NEGOTIATING a TRANS-ATLANTIC MERGER OF START-UPS IN THE NEW ECONOMY
Whenever two companies merge, there are a multitude of issues involved. First, there are financial issues, i.e., will the deal be all cash, cash and loans, or cash and stock, etc. Next, there are personnel issues, i.e., who will be in charge of the new company, will all employees be retained after the merger, etc. Lastly, there are intangible issues, i.e., synergies involved with the merger, future prospects for success, etc.
This paper analyzes and examines the various issues related to the merger of Vacationspot.com and Rent-A-Holiday. Part II outlines the merger discussions between Vacationspot.com and Rent-A-Holiday. In Part III, the next course of action is reviewed. Lastly, this paper concludes with recommendations for the successful formulation and execution of the proposed merger.
MERGER DISCUSSIONS BETWEEN VACATIONSPOT.COM AND RENT-A-HOLIDAY
Vacationspot and Rent-A-Holiday focused on the independent leisure…
Thus, a broad market index is the best available comparison for the time period studies.
The capital asset pricing model is appropriate for this particular event study. The event is an acquisition by Freeport McMoran of an asset, Phelps Dodge. Many mergers are made for operating synergies, but in this case the move was made for different strategic reasons. Phelps Dodge knew Atticus was going to sell their stake and wanted to make a pre-emptive strike against that. For Freeport, the move was made to more than double their size. They went from being a medium-sized mining firm to being a major world player. In the process, they removed themselves from the position of being a takeover target (the BHP rumors never amounted to anything). The merger was therefore done for long-term reasons more than anything else. Thus, its effectiveness cannot truly be measured until long-term returns have been…
Press Release: Freeport-McMoran Copper & Gold to Acquire Phelps Dodge. Retrieved April 7, 2009 from http://www.fcx.com/news/2006/111906.pdf
Historical stock prices from Big Charts (WSJ). Retrieved April 7, 2009 from http://bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=fcx&close_date=11%2F17%2F06&x=43&y=24
Trounson, Andrew. (2006). Rumour Rockets Oxiana. The Australian. Retrieved April 7, 2009 from http://www.theaustralian.news.com.au/story/0,20867,20571418-643,00.html
Schneiderman, R.M. (2006). Atticus Capital Shopping Phelps Dodge. Forbes. Retrieved April 7, 2009 from http://www.forbes.com/2006/10/11/phelps-dodge-atticus-markets-equity-cx_rs_1011markets14.html
Operating synergies are commonplace in mergers, because there can be substantial synergies resulting from them. Administrative divisions that duplicate each other's work can be reduced in order to produce a more efficient organization. Another example would be when a company is able to utilize an existing asset (like a salesforce) to improve the new company's business. An example of this can be found with the mega-merger between Anheuser-Busch and InBev. The two companies were able to combine production operations, but also use each other's sales forces around the world to enhance the ability of the combined firm to sell the company's core brands more effectively in all markets.
Financing synergies such a lowering transaction costs can occur when a combined entity has improved bargaining power, allowing it to acquire key inputs for cheaper, or can otherwise find ways to lower transaction costs, perhaps with a reduced sales force that…
Negotiation Conflict Resolution Mergers Acquisitions You required obtain Gung Ho film, locate case articles mergers acquisitions literature, prepare a paper analyze typical leadership dilemmas conflicts occur organizations merge.
Gung Ho!: Communication complications in the wake of corporate mergers
It is an often-cited truism that if you want to seem to have great fortune-telling abilities, it is wise to predict that a corporate merger is bound to fail. The reasons for the failure of mergers to create promised added value for shareholders or employees are numerous, but one of the most common sources of conflict is a conflict of organizational cultures. As illustrated in the film Gung Ho!, cultural conflicts become even more acute when they involve a clash of national as well as corporate work cultures. According to the authors of the study "Assimilation of quality culture and its effect: An empirical study of a cross-border M&A" (Ito,…
Organizational culture is defined as "a pattern of basic assumptions -- invented, discovered, or developed by a given group as it learns to cope with its problems of external adaptation and internal integration" (Ito, Toshihiko, & Fujimura 2009: 1). In the film, a powerful Japanese automotive company acquires a failing American facility. This acquisition is willing, given that representatives from the American plant go over to Japan to convince the company to come over to the U.S. However, the Americans have no idea how to relate to the Japanese executives. When Hunt Stevenson, played by Michael Keaton, travels over to Japan to speak to the board of directors, he makes loud and boisterous small talk and inappropriate sexual jokes, clumsily tries to create a connection between himself and the executives in a personal fashion, and asks if they speak English. All of this suggests a lack of 'homework' on the part of Hunt which the Japanese clearly expected him to do. Furthermore, his familiar attitude is not in keeping with the high-context culture of Japan, in which hierarchies and duties based upon status are expected to be obeyed. However, the Japanese executives are equally tone-deaf to the corporate culture of America. They try to force American workers to do calisthenics and place no value upon individualism and insight after the merger takes place.
Although Gung Ho! is a parody, the fanatical Japanese attention to symmetry and quality, in contrast to the more lackadaisical attitude of American workers is reflected in many real-life scenarios. "When two companies with different corporate cultures are merged into a new company, cultural friction inevitably arises, creating internal inconsistency in quality culture until the completion of assimilation. This cultural inconsistency may affect quality ratings and organizational decision-making" (Ito, Toshihiko, & Fujimura 2009: 2). For the Japanese, attention to product detail is a point of collective pride in the film. Workers are supposed to put aside their personal needs in deference to the needs of the organization. This creates friction between Japanese managers and American workers.
A clash of corporate cultures regarding quality standards does not merely make
Though Olsten is seeking a minimum price of sixteen dollars per share for the acquisition of its staffing services by Adecco -- a price nearly double the current market value of the company's shares -- the amount of debt that the company is carrying and the restructuring that will need to be involved to effectively and efficiently incorporate the company into Adecco's operations does not warrant such a high price. With the stock currently trading at around $8.75 per share and given the other constraints and realities of the situation, Adecco should make an offer of $12 per share for the firm. This provides an extra incentive to Olsten shareholders to sell, as it presents a substantial premium over the market value of each share of Olsten stock, while at the same time minimizes costs to Adecco such that more capital can be used to pay…
The proposed merger between Riordan Manufacturing and JJJ Company is detailed in four company memorandum written from the perspective of the accounting department, and addressed to a select group of individuals as well as the committee responsible for the decision on moving forward with the acquisition. Each memo contains a review of material which ultimately leads to a recommendation on the feasibility of the venture. Yet, a review of these messages reveals writings which are poorly organized, composed, and incomplete.
How well did the communication convey the intended message?
The four memorandums convey the accounting department's viewpoint that the proposed merger between the two organizations would not be in the best interest of Riordan given the financial stability of the JJJ Company. The two memos which state this point most forcefully are the Ad Hoc Committee memo and the Mark, Sales Manager memo. The main concern however, is…
Midwestern Medical Group's Integration Journey
The communication plan is one of the critical success factors when implementing any project plan. It is common for projects to fail because of poor communication either amongst the project team or with communication with internal or external stakeholders. In the succession planning project, the communication plan will have to include continual communication with the project team, the two merged organizational members, as well as communication with the other stakeholders. MMG apparently has many obstacles to overcome, however it is still deemed to have significant value to the overall organization as well as potential to increase its financial position in the future. New leadership could definitely work to increase the level of collaboration between the two organizations. With Olsen stepping down as interim president, she must work diligently to prepare the organization for the transition.
The succession project and communication plan needs to…
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Globalization and Technological Influences
On International Mergers: DaimlerChrysler as a Case Study
One of the most interesting international manufacturing mergers of the 20th century was the 1998 negotiation between the Daimler auto company headquartered in Germany and the struggling Chrysler corporation, headquartered in the U.S. Daimler's buyout of Chrysler resulted in a merger that ultimately failed to benefit either party, and may have seriously damaged both organizations' capacity for future growth. Below, I will discuss how the merger proceeded -- as it was covered in U.S. And international business media -- and how the negotiations for the merger and the 2007 spinoff of Chrysler were facilitated by technological developments and global business practices. I will also discuss motivations for international mergers in general and how they applied specifically in the case of the DaimlerChrysler merger.
As a horizontal merger, DaimlerChrysler followed a popular movement towards consolidation in the international auto…
Qiu, L., & Zhou, W. (2003). International Mergers: Incentive and Welfare. Journal of International Economics, 68(1): 38-58.
Landler, M., & Maynard, M. (2007). "DaimlerChrysler stock gets a lift from talk of Chrysler spinoff." International Herald Tribune, Tuesday February 20, 2007.
Finkelstein, S. (2001). The DaimlerChrysler Merger. Tuck School of Business White Paper # 1-0071.
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