Benchmarking –Mergers & Acquisitions

Benchmarking –Mergers & Acquisitions

Length: 1878 words (5.4 double-spaced pages)

Rating: Excellent

Open Document

Essay Preview

More ↓
Benchmarking –Mergers & Acquisitions

Companies and organizations are challenged with daily decisions that can provide unlimited opportunities internally and externally. Finances and growth maximization also play a large role in these decisions. Executives and managers must make decisions on how resources will be appropriated, how to increase profits, sales, and the companies overall business portfolio. Companies are able to determine what is working and not working by analyzing the company's financial statements. At times the financial statements will tell a lot about an organization and their financial situation or background. When companies begin to lose out on profits or sales, they are at a point in time where they could be potentially bought out or go out of business. The current benchmarking paper Team C is focusing on is mergers and acquisitions that other organizations in diverse industries have faced. With LEI and Shang-wa potentially facing buyouts, we wanted to view organizations that have merged or partnered in order to keep the business flowing. Next, Team C will explore several companies that have dealt with mergers or acquisitions.
Airlines
The first mergers and acquisitions we will discuss include American Airlines, Comair, and Delta.
American Airlines was flown into existence in 1929 when the Aviation Corporation was formed to acquire younger companies, and in 1930 the Aviation Corporation's were incorporated into American Airways. In 1934 American Airways became American Airlines, Inc. (American, 2002). In 1937 American hit a milestone with carrying its one-millionth passenger. Through out the years American had its own milestones and changes with new routes being added, different planes, and even reorganization within the company. In 1982, stockholders approved a plan of reorganization and formed a new holding company AMR Corporation, which became the parent company of American Airlines, Inc. With American doing well in the industry and the consumer base was increasing, they decided to search out smaller airlines and see if they could boost their business. In 1998 American Airlines announced its acquisition of Reno Air, and American Eagles acquisition of Business Express. By August 1999 Reno Air was fully integrated. However, American was not done with increasing their business and clientele. On September 21, 1998, American and four other airlines joined alliances to start a customer driven global alliance called one world, which launched a multi-million dollar program that raised the standard of global travel.

How to Cite this Page

MLA Citation:
"Benchmarking –Mergers & Acquisitions." 123HelpMe.com. 28 Jan 2020
    <https://www.123helpme.com/view.asp?id=163804>.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Lester Scenario: Investment Alternatives Benchmarking Essay

- Investment Alternatives Benchmarking for Bernard Lester Whether it’s a strong competitive market or the effectiveness of shareholders maximizing shareholders wealth has become the norm for the global production market. Companies have found different operational strategies to convert less than profitable corporation into long-term profit maximizing corporation. Corporate CEO’s and financial manager must distinguish between growth or operational wealth, which will determine the possibilities of growth maximization, defining current and projected values to shareholder, examining growth opportunities, and increase market values....   [tags: Investment Alternatives Benchmarking Bernard Leste]

Free Essays
1979 words (5.7 pages)

Essay on InterClean Benchmarking

- In today's world of fast paced business, nothing less than 100 percent success is accepted. Companies and organizations thrive on consistency and profitability. A classic tool that has proven successful for most companies has been benchmarking. Basically, benchmarking is the modeling of similar successes in similar or different industries and applying them to a company's specific situation. Generic benchmarking is finding best practices or solutions to a company's own problems through outside industries or seemingly non-related companies....   [tags: Business Strategic Management]

Free Essays
1952 words (5.6 pages)

Essay on Inter Clean Benchmarking

- Inter-Clean Benchmarking Abstract InterClean, Inc. is a major player in the cleaning and sanitation industry. After a recent merger with a top competitor, EnvironTech, the company must undergo an intensive change management transition. Through research analysis of three other companies, the following is a summarization of solutions InterClean Human Resources may consider during this ordeal. InterClean Benchmarking In today's global and technological market environment, change is constant. As a result, businesses around the world are finding ways to sustain competitive advantage....   [tags: Business Analysis Strategy]

Free Essays
1800 words (5.1 pages)

Lester Electronics Benchmarking Essay

- Lester Electronics Benchmarking Lester Electronics, Inc. (LEI) faces a situation where the company must decide to whether partner with Shang-wa to establish a new capacitor manufacturing facility in a neighboring Asian country, acquire Shang-wa, or sell the firm to Aral Electronics, Inc., (University of Phoenix, 2004). The issue translates into an opportunity to increase revenues through sources of synergy – revenue enhancement, cost reduction, lower taxes, and lower cost of capital (Ross, Westerfield, & Jaffe, 2005)....   [tags: Business Analysis Strategy]

Free Essays
1258 words (3.6 pages)

Analysis of Benchmarking at TNT Express Essay

- 1. SUMMARY The article has the subject “Benchmarking at TNT Express” and it offers a clear explanation of the way in which TNT has demonstrated dedication in their services to the customers and their quench to achieve high echelons of excellence in their endeavors. It is clearly indicated in the article that the formula used in TNT to achieve success is keenly listening to the opinions of the customers in an attempt to capture a clear understanding of the logistic problems that they face and offer logistic solutions to the problems identified....   [tags: benchmarking and customer satisfaction]

Research Papers
1855 words (5.3 pages)

Mergers And Acquisitions : M & A Essay

- Mergers and acquisitions (“M&A”) refer to the consolidation of two companies and occur for a number of reasons, including growth, synergy, market power, sustainable competitive advantage, and diversification. M&As enable organizations to share resources, leverage competencies, gain flexibility and create opportunities that the organization may not otherwise have been able to create. An increase of international mergers and acquisitions seen over the last few years can be attributed to advances in technology, globalization and deregulation....   [tags: Management, Mergers and acquisitions]

Research Papers
1042 words (3 pages)

Mergers And Acquisitions Essays

- Introduction Mergers and acquisitions immediately impact organizations with changes in ownership, in ideology, and eventually, in practice. There are multiple reasons, motives, economic forces and institutional factors that can, taken together or in isolation, influence corporate decisions to engage in mergers or acquisitions. The financial risks of merging with or acquiring an organization in another country and how those risks can be mitigated are important issues for corporations to conduct research on....   [tags: Business Company Mergers Acquisitions]

Research Papers
1106 words (3.2 pages)

Bechmarking: Riordan Essay

- Abstract Benchmarking intends to discover the best practices of companies that have solved issues comparable to Riordan Manufacturing's concerns. It's the best way to find solutions involving companies in the same industry, and then finding solutions to similar issues faced by companies in other industries. General Motors and Verizon are companies that have faced decreased sales and employee concerns over employee reward issues. In Riordan Manufacturing case, they have developed a new business strategy and provide new strategies with their employee reward systems....   [tags: Business Benchmarking]

Research Papers
1123 words (3.2 pages)

Essay on Benchmarking: Gene One

- Benchmarking: Gene One Introduction Gene One made a name for itself in the biotech industry with its breakthrough gene technology that eradicated disease in tomatoes and potatoes. It was a benefit to farmers who no longer need the use of pesticides and consumers that like organic produce. This successful discovery helped Gene One grow to a $400 million company in a short span of eight years. Gene One hopes to capitalize on the growing interest in biotechnology as the stock prices on Wall Street continue to rise....   [tags: Business Market Analysis Strategy]

Free Essays
1919 words (5.5 pages)

Lawrence Sports Benchmarking Essay

- Lawrence Sports Generic Benchmarking The lifeblood of free enterprise opportunities over the span of centuries has for all tense and purposes been either currency or precious metals. The lack of free cash flow after all the liabilities are satisfied, generally spells disaster to the free enterprise effort, regardless of how the actuals have been formulated on balance sheets, income statements, or quarterly financial reports issued to appease federal regulators and sway governing boards. Lawrence Sports financial managers have come accustomed to finding themselves at the precipice of either boon or ruin, on a weekly basis for the last three quarters....   [tags: Business Performance]

Free Essays
1809 words (5.2 pages)

Acquisitions and mergers are also good for companies who are headed for bankruptcy yet still want to salvage some of the company's assets. In April 2001, TWA or Trans World Airlines assets were acquired by American Airlines. Another airline company that was actually acquired was Comair. Though the company initially did well, once they hit financial woes, they realized that being acquired could definitely keep them flying and in business.
Comair was initially founded in 1977 in Cincinnati, Ohio by a father and son team. It is considered a regional airline and introduced regional jets to the North America industry in 1993. Comair initially had a major impact on commercial aviation and its rapid growth helped lead to expanded air service for communities. Comair also became the first regional airline to operate an all-jet fleet (Comair, 1999). In 1981 Comair started its relationship and partnering with Delta Air Lines, when it became part of the Deltamatic computerized reservation system. In September of 1984 Comair became an official Delta Connection Carrier. In 1986, Delta purchased 20% of Comair's common stock, but later was acquired 100% by Delta in January of 2000 for approximately $1.8 billion (Comair, 2006), or $23.50 a share. At the time of purchase Comair was worth $2.3 billion.
Delta also purchased Atlantic Southeast Airlines the spring before for $650 million. This was paid as a tender offer to the shareholders. Delta began purchasing and acquiring the smaller carrier's strong balance sheets, improve their service and gain control of their growing fleets of new regional jets (Buying, 1999).
With the acquisition of regional jets fly faster and farther, which allow more routing flexibility for airline flights. This flexibility comes with 50 seat jets that can fly into smaller airports and terminals. The regional jets can be used on busy routes at off-peak times. By using the smaller jets, it also allows the larger planes to go on more profitable and efficient flights and destinations. In discussing Delta we will also view the Delta and Pan Am Merger in detail. As we can see many airlines tend to acquire and merge in order to gain a higher standing in the industry and over international markets.
In Delta's quest to become a "world class carrier" (dl net, 2004) precipitated a major historical event. Delta, a U.S. carrier had been deemed the number two preferred airline for travel in 1990 (dl net, 2004), and was now looking to extend its popularity to a global market. Delta airlines decided to purchase the European routes of Pan America Airlines. The acquisition of Pan America's routes would provide Delta their entire European operation with the exception of a Paris-Miami route. This was thought to be an acquisition that would allow Delta to capitalize on the European markets and expand its customer base. Though Pan America's financials in the 80's were plagued with forced sales and other acquisitions, Delta experts saw this acquisition as a profitable measure to ensure border growth and increase shareholder wealth. They decided to use the resources gathered from their profitable domestic markets, to acquire international routes from Pan America. On August 12, 1991 Delta Airlines purchased the assets of Pan America for $416 million dollars. They also assumed $389 million in liabilities. Delta rendered payments of $80 million cash upfront, then a second installment of $35 million to Pan America. Part of this agreement was that Delta would pay Pan America $4 million dollars to help its reorganization and emergence from bankruptcy.
Pan America eventually sued Delta for this part of the agreement when Delta attempted to write off this amount due to Pan America's failing financial state. Pan America lost the suit and 3 months later was officially out of business. Many experts state that the plan was always to force Pan America out of business (Harvard business, 2006). Either way, Delta did see an immediate 30 percent increase in profit for 1991-1993 (centennialoffflight, 2006). Delta also became one of 3 major carriers in the world, controlling one-third of all the commercial aviation market.
Conclusion
From Team C's benchmarking research shared in this writing, you can see many companies and organizations are challenged daily with decisions which can provide unlimited opportunities internally and externally. These companies face finances and growth maximization challenges, which influence their decisions. Constantly under pressures, executives and managers make decisions concerning how resources are to be appropriated, in an effort to understand how to increase profits, sales, and the overall portfolio of the business. In our research, we have discovered when companies begin to lose out on profits or sales, they are vulnerable to be potentially bought out, merged, or to go out of business. The intent of this writing was to correlate the scenario, of LEI and Shang-wa, as both are potentially faced with buyouts, with other like companies who have faced the same challenges of being merged or partnered in order to keep their business going. This decision will have to be completed after a full review of the financials and comparison of the ratios. Once this is completed the CEO's can sit down and focus on what the risks could involve.
The pros to takeovers or acquisitions differ from case to case but generally
fall into one of these categories; increase in sales/revenue, venture into new business
or markets, profitability of target company and to increase market share.
These pros can be seen as company benefits or measures of success, but
unless shareholders feel their impact from takeovers can be seen as a bad thing,
takeovers will continue to happen and investors will continue to prosper. However, the risks or cons to acquisitions are that if it is considered a hostile takeover, many companies are forced out. If there was a family heritage to the company, once purchased typically this image and name is gone forever. The hard work that was initially placed into building up the company, can be destroyed in minutes with a multi million or billion deal.

References
Airchive data. (2006). Retrieved on November 26, 2006, from http://www.airchive.com.
.
American Airlines, Inc. (2006). Retrieved November 28, 2006, from
http://www.aa.com.
American airlines to reduce its number of buildings. (2002). New York Times,
CLI 52(219):C3. Retrieved from RDS Suite on November 27, 2006
Buying Comair, Delta carves a huge regional network. (1999). Aviation Week
& Space Technology, 151(17):30+. Retrieved from RDS Suite on November 27,
2006.
Cingular lays out $300M to lock in No. 1 spot; After the merger, it's spending big to keep
Verizon at arm's length.(News). (2004). Advertising
Age, 75:4. Retrieved November 24, 2006, from Academic OneFile via Thomson

Gale: http://find.galegroup.com/ips/infomark.do?&contentSet=IAC-Documents&type=retrieve&tabID=T003&prodId=IPS&docId=A126169960&source=gale&userGroupName=uphoenix&version=1.0

Comair, Inc. (2006). Retrieved November 28, 2006, from http://www.comair.com.

Delta Air Lines Finishes Deal for Cincinnati-Based Regional Carrier. (2000, January).
Atlanta Journal & Constitution. Retrieved from RDS Suite on November 27, 2006.
Delta and Pan Am Merger. (2003). Harvard Business News, 98:47-48.

Dlnet- Delta Intracompany employee web-site (2004). Retrieved on November 27, 2006,

from http://www.dlnet.com/asa
Drier M, Choi A, Prior M. Procter & Gamble Earnings Rise on Gillette Acquisition. WWD: Women's Wear Daily [serial online]. 2006;192(22):5-5. Available from: Business Source Complete, Ipswich, MA. Accessed November 28, 2006.
Duke Energy Merger. (2006). Retrieved November 26, 2006, from http://www.duke-energy.com/news/releases/2006/ar/206040301.asp.
Malester, J., & Wolf, A. (2005). Triton Pressures Maytag After Haier Offer. (Cover story). TWICE: This Week in Consumer Electronics, 20(14): 1-54. Retrieved
Thursday, November 23, 2006, from the Academic Search Premier database.
McGuinness, D. (2006). Henkel Acquires Gillette Deodorants. WWD: Women's Wear Daily, 191(39), 18-18. Retrieved Tuesday, November 28, 2006 from the Business Source Complete database.
Prior, M. (2005). P&G ACQUIRES GILLETTE. WWD: Women's Wear Daily,
190(119), 16-16. Retrieved Tuesday, November 28, 2006 from the Business
Source Complete database.
Skokna, Christopher. (August 6, 1999)U.S. Foodservice builds nonsexy
empire. Baltimore Business Journal, 17, p1(2). Retrieved November 24,
2006, from InfoTrac OneFile via Thomson Gale:
http://find.galegroup.com/ips/infomark.do?&contentSet=IAC-Documents&type=retrieve&tabID=T003&prodId=IPS&docId=A55541384&source=gale&userGroupName=uphoenix&version=1.0

The Bottom Line. (2002). Des Moines Business Record, Retrieved Thursday,
November 23, 2006, from the MasterFILE Premier database.
Union News. (2006). Retrieved November 27, 2006, from http://www.iunion.com/new_pape_51.htm.
U.S. Foodservice to Buy Alliant Exchange in $2.2B Deal. (2001).
Nation's Resturant News, v35 i38, p96(6). Retrieved November 24, 2006, ProQuest database.
Williamson, Richard. (2006) Cingular Brand Set to Vanish.(AT&T Inc.)
(BellSouth Corp.)(Cingular Wireless L.L.C.). ADWEEK Online,

Retrieved November 26, 2006, from Academic OneFile via Thomson Gale:

http://find.galegroup.com/ips/infomark.do?&contentSet=IAC-Documents&type=retrieve&tabID=T003&prodId=IPS&docId=A145288098&source=gale&userGroupName=uphoenix&version=1.0

Wolf, A. (2005). Whirlpool-Maytag Merger Moves Closer. TWICE: This Week in
Consumer Electronics, 20(21):52. Retrieved Thursday, November 23, 2006, from the Academic Search Premier database.
Woodside, Daniel. (1997). Groups: key for adapting to change. (change brought
about by a consolidating industry). In ID: The Voice of Foodservice
Distribution, 33, p17(1). Retrieved November 25, 2006, from InfoTrac

OneFile via Thomson Gale:

http://find.galegroup.com/ips/infomark.do?&contentSet=IAC-Documents&type=retrieve&tabID=T003&prodId=IPS&docId=A19735562&source=gale&userGroupName=uphoenix&version=1.0
Return to 123HelpMe.com