When a company decides to grow through a merger or acquisitions it faces not only the implicit challenges to choose the right deal, not over paying, appropriate culture fit, among other factors; but also the strategic choice of the company allowing additional consolidation of core competence3. According to the Harvard Business Review6, the failure rate in M&A deals is between 70% – 90% which make highly relevant the difficulty to implement a success integration process; Consequently, the mergers and acquisitions journey should be carefully designed to ensure a better strategic fit between two companies4. In this assignment, we will explore how to integrate the company strategy from a small to a large business after an acquisition in the Colombian enterprise Grupo Nutrias S.A.
Grupo Nutrias S.A1 is
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Strategy, Panero has three main risks to address that could affect dramatically the business and are related with the key partners.
1. Panero’s beverage partner is Coca-cola and Nutresa is Pepsi. As soon Coca-cola will know about the acquisition, there is going to be a legal conflict. So this transactional cost should be assumed by Nutresa and all the legal penalties regarding this change.
2. Outlet owners, Panero should negotiate the leases agreements before the acquisition for minimum three years more. There is a high chance that due to the new ownership the leases will increase drastically. (Reputational effect that Nutresa could pay more)
3. Panero, should not migrate yet to the Nutresa shared services. The overheads are too expensive for such a small business, and with that could avoid destroy value. Panero has to be aware to use all the Nutresa capabilities that will help to reduce costs and increment sales. (Nutresa has a heavy structure that has to support and Panero is not ready to be part of that so the integration should be a graduate
Brickley, J 1996, Incentive Conflicts and Contractual Restraints: Evidence from Franchising, Journal of Law & Economics, p. 173.
fail (Cheng, 2012). Mergers and acquisitions are much common in these days and only a few of them are end up in successes. Even though mergers and acquisitions are not result much successes rate, many organizations are still preferring it because, it is used as a cooperative strategy but nowadays it is used for cooperative development. The cultural differences and merger integration can be considered as an important factor for the failure rate but this study mainly focused
Pepsi needed a strong regional partner. Pepsi had been falling behind to Coke in Mexican market. However, changes in the regulatory environment had cut Coke’...
Gaughan, P. A., 2002. Mergers, Acquisitions, and Corporate restructuring. 3rd ed.New York: John Wiley & Sons, Inc.
Before granting merger forms The Bureau of Competition was committed to ensuring that involved companies do not create a monopoly in the market and hence reduce competition that may also affect the integrity of the services provided. In most cases the bureau controlling the start and the running of mergers uses the Hart-Scott-Rodino amendments to the Clayton Act (Clark, 2011). Before becoming a part of the merger it is important that FTC does an analysis of the merger to evaluate the effects the merger may have on the businesses. In addition, it is important that FTC gets to have a clear picture of the situation and how it is expected to affect the relations...
At the end of 1991, PepsiCo had EBITDA of $2.1 billion or operating profit margin of 10.8% - down from profit margins of 12.2% and 11.7% in 1990 and 1989, respectively. In addition, net sales only grew by 10.1% in 1991 – considerably low versus growth of 16.8% and 21.6% in 1990 and 1989, respectively. Recent acquisitions of Taco Bell franchises in 1988, bottling operations in 1989, Smiths Crisps Ltd. and Walkers Crisps Holding Ltd. in 1989, and Sabritas S.A. de C.V. in 1990 aided sales in growth in 1989 and 1990. Additionally, a joint venture with the Thomas J. Lipton Co. in 1991 to develop and market new tea-based beverages may lead to greater sales in the future. However, there is some need for an immediate return on its investments in order to sustain historical revenue growth and increase the current profit margins.
The Panera Bread Company began in 1981 as Au Bon Pain Co., Inc. Founded by Ron Shaich and Louis Kane, the company thrived along the east coast of the United States and internationally throughout the 1980’s and 1990’s and became the dominant operator within the bakery-café category. In the early 1990’s, Saint Louis Bread company, a chain of 20 bakery-cafes were acquired by the Au Bon Pain Co. Following this purchase, the company redesigned the newly acquired company and increased unit volumes by 75%. This new concept was named Panera Bread. Top management chose to sell their previous bakery-café known as Au Bon Pain Co. due to the financial and managerial needs of Panera. In order for Panera to become the success top management visualized all resources needed to become available for Panera. Panera Bread is now the most successful bakery-café in the category in which there are currently 1,777 bakery-cafes in 45 states and in Ontario Canada (Panera Bread).
The soft factors can make or break a successful change process, since new structures and strategies are difficult to build upon inappropriate cultures and values. These problems often come up in the dissatisfying results of spectacular mega-mergers. The lack of success and synergies in such mergers is often based in a clash of completely different cultures, values, and styles, which make it difficult to establish effective common systems and structuresBased on the case study, extensive research and annual reports of AT&T the writer has mapped AT&T in the different domains. AT&T should strive to attain a perfect circle as close to the centre as possible, which indicates total synergy, order and equilibrium. Where the circle is skewed drastic change is needed as it moves closer to the outer ring of chaos:
Azalea Seafood Gumbo Shoppe wishes to develop a strategic plan to maintain long-term growth and sustain a competitive advantage. For Azalea to accomplish this, they will need to consider the options presented here. Included is an analysis of Azalea's problems and issues to address, along with recommendations to grow the business. The recommendations are based on the status of the current market and forces that drive the industry.
Telepizza has an almost obsessive commitment to growth. At the moment, they have three possibilities, namely expansion within the domestic pizza market, international expansion or introducing new concepts as TeleGrill.
Marks, M. L., & Mirvis, P. H. (2011). A framework for the human resources role in managing culture in mergers and acquisitions. Human resource management, 50(6), 859-877. doi: 10.1002hrm.20445
Therefore I think that there are 3 alternatives which can be considered for the future. The first idea that came to my mind is to sell Panera or going join venture with one of the big players in the restaurant industry. Panera has an impressively high market value which is indicated by the goodwill estimation on the balance sheet. By getting together with a major franchising company like McDonalds or Burger King, Panera’s expansion could be supported with a much greater amount of money. The backside of this deal would be that Panera’s executives would lose their controlling power over the company’s operations and would allow the joined company to misuse Panera for own interests and goals. Considering these issues by getting together with another company opens up questions of the necessity of a joint venture which led me to the second alternative. The company should keep up with their strategy of a steady growth model and the production of high quality products. Panera was doing really good in the last couple of years and the fast casual market has a great undeveloped potential for the future. Nevertheless, Panera has to be aware of major franchisers competitors who have the power and willingness to compete with Panera for customers, market share and profits. This major threat may result in a recession of sales in the long run. Panera still does not have the financial strength of McDonalds or a similar major franchiser. My third idea was the opportunity of an international expansion which would allow Panera to become a forerunner in the fast-casual world market. There is nothing similar existing in the European market so far and it might be a great fit to the European culture.
Identify the potential risks which affect the company and manage these risks within its risk appetite;
The company recognizes that it is subject to both market and industry risks. We believe our risks are as follows, and we are addressing each as indicated.