Merger, Acquisition, and International Strategies A corporation can grow internally by increasing its operations both domestically and globally, or it can grow externally through mergers, acquisitions or strategic alliances. Mergers and acquisitions have had an important impact on the business environment for over a decade, and they have often come in waves of activities that were motivated by different factors. Furthermore, the global marketplace provides many opportunities for companies to increase their revenue base and their profitability. In today’s intensive economy, there is the potential to create advantages by controlling firm knowledge when crossing boundaries to do business. This paper will analyze the strategy that directed to the merger or acquisition to a company to determine whether or not this was a wise choice, and to also detect the strategy one company that would be a profitable choice for the company to acquire or merge with, and to explain why this company would be a profitable target. This paper will also evaluate its international business-level strategy and international corporate-level strategy and make recommendations for improvement as well as for the corporation that does not operate internationally. This paper will propose one business-level strategy and one corporate-level strategy that would suggest the corporation consider. Merger and Acquisitions A merger is a transaction involving two or more corporations in which stock is exchanged but only one corporation survives; while acquisition is the purchase of a company that is completely absorbed as an operating subsidiary or division of the acquiring company (Strategic Management and Business Policy, pg 166) . In 2012, there were a total of $98... ... middle of paper ... ...ompatible with other computer hardware. It would a huge improvement if downloading different software’s were allowed into Apple computer hardware. Alliances Time and again a company that has a successful product or service may not have the basic marketing expertise as company use competitive strategies and tactics to gain a competitive advantages within an industry by competing against other businesses. These are not, however, the only business strategy option available to a company or business unit for competing successfully within an industry. A company can also use a cooperative strategies to gain competitive advantage within an industry by working with a firm. Such is the case for strategic alliances. A strategic alliance is a partnership of two or more corporation or business units to achieve strategically significant objectives that are mutually beneficial.
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
Gaughan, P. A., 2002. Mergers, Acquisitions, and Corporate restructuring. 3rd ed.New York: John Wiley & Sons, Inc.
Outsiders wondered how each company’s internal changes would affect their endless competitive battle in the industry. The case illustrates how global competitiveness depends on the organizational capability, the difficulty of overcoming deeply rooted administrative heritage, and the limitations of both classic multinational and global models.
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:
How can firms minimize or manage the bumps, hurdles, or conflicts that often occur when firms join together in an alliance or partnership?
The economy is always changing, and new ideas continue to be created, tested, and integrated into the financial world. Before World War II, wealthy families owned most companies and businesses. The families, or select wealthy individuals, dominated the economy and the rest of the population had little to no involvement in it. Takeovers, or buyouts of other companies were done in small scales, because the families lacked the funding to takeover larger companies. However, after the War the opportunities to participate in the economy slowly expanded. As the American communities began to recover, the economy slowly began to prosper once again. People began to invest more in companies, and buy shares in larger corporations, which allowed them to have some control over the management’s decisions. The old notion that companies were mostly family owned began to fade out; the owners were growing old and wanted to “avoid estate taxes and retain family control”. This left two options for them: either to make their family corporation in an initial public offering (IPO), or to have a larger company takeover. Neither of these options allowed the family to maintain complete control over their business. When Henry Kravis, Jerome Kohlberg, and George Roberts, began their careers in economics, they slowly began to utilize their own ideas and strategies, and eventually formed their own company. They reintroduced something called the leveraged buyout (LBO), a practice sparsely utilized by investors in the 1950’s, which later became the most popular form of takeover during the time. This buyout became the “third option” for the previously family owned companies to continue owning the business, but there were many other aspects included. These three...
Firms exist with the purpose of create and deliver economic value (Bensaco et al 2010, p. 365); therefore, business that create better economic value than its competitors will attain an advantage position in market place. Companies might try to improve its sales (profit) through domestic expansion, product diversification or by internationalisation; this report will focus on the reasons of espressamente Illy to expand internationally; additionally, its sources of competitive advantage and, the analysis of three markets in which company want to participate.
Companies merge and acquire other companies for a lot of strategic reasons with different degree of success. The success of a merger is measured by whether the value of the acquiring firm is enhanced by it. The impact of mergers and acquisitions on organization can be small and big in other cases.
Investing or venturing into the international market involves critical analysis of the internal and external environment in which the company operates. Usually, a company will decide to venture internationally due to a saturated market or fierce competition in the current country of operation. The demand for a company’s products may have diminished as a result of an economic crisis thus the company will target a foreign market to sustain its sales. In other words, the firms expand internationally to seek new customers for its products. For example, the current Euro zone crisis led to low demand in Europe and many companies extended their businesses to emerging markets where demand was high. A company may also venture in the international market to enhance the cost-effectiveness of its operations especially for manufacturing companies that will benefit from low costs of production in developing world. Global expansion is a long term project as it involves demanding logistics to be successful. Thorough research must be undertaken to ensure that the expansion will create value for share...
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. This paper will examine the sensible and dubious reasons for mergers and acquisitions and the benefits and costs of the cash and stock transactions.
First, companies identify interrelationships among already existing business units in order to seek for any opportunities to transfer skills or share activities. Second, companies select the core businesses that will be the foundation of the corporate strategy by determining the attractive industry and sustainable competitive advantages. Third, companies create horizontal organizational mechanisms to facilitate interrelationships among the core business units by strong corporate identity, mission statement emphasizes integration, and incentives for business-wide success. Fourth, companies pursue diversification opportunities that allow shared activities. Fifth, companies pursue diversification through the transfer of skills if opportunities for sharing activities are limited or exhausted. In other word, it is the stepping stone for sharing activities in the future. Sixth, companies pursue a strategy of restructuring if this fits the skills of management or no good opportunities exist for forging corporate interrelationships. At last, companies pay dividends so the shareholders can be the portfolio
Organisational change can arise due to a change in strategy and this begins with examining capabilities and the internal environment. This is portrayed in the Strategy diamond. Firstly through arenas the organisation can plan where they will be active in and which part to place most emphasis on for example technologies or value creation strategies. Only after determining this can they implement a positive change, leading to the next element, vehicles to get them where they need to be such as alliances. This can lead to change in management along with strategic partnerships, and the way managers transition to this change will determine if the strategy impacts on the overall organisation in a way that reinforces its purpose and goals. Partnerships indicate how an organisation can strengthen its capabilities by merging with businesses who possess the skills they lack. (Carpenter et al. 2010)
(i) Collaborative Advantage – This is the positive experience of collaborative alliances, which captures the synergy argument. The term has been defined as the beneficial factor or combination of factors one should achieve from collaboration. Partnership which handles social issues that would otherwise fall apart and help in development is defined as collaborative advantage. To understand the meaning of collaborative advantage we should know the common bases for collaborative advantage. These bases include –
When entrepreneurs plan their business future they will consider how they can increase their business size or profit in a short period. Entrepreneurs may consider growing their business or company by using a merger or an acquisition. These methods can be a speed up tool and a short cut to enlarge their business. (Burns, 2011) Also they can reduce competition, make it easier for entrepreneurs to think about the market and product development and risk reduction. Furthermore, some lesser – known companies can improve their firm’s image and market power by using merger and acquisition with larger firms. However, there may be risks associated with merger and acquisition related to lack of finance and time. (Burns, 2011) This essay will discuss more deeply the advantages and disadvantages of using mergers and acquisitions, showing how it can affect firms and market with the case study.
Corporate governance is the set of guidelines that determines the control and organization of a particular company. The company’s board of directors is in charge of approving and reviewing changes to this set of formally established guidelines. Companies have to keep in mind the interests of multiple stakeholders, parties who have an interest in the company. Some of these stakeholders include customers, shareholders, management, and suppliers. Corporate governance’s focus is concentrated on the rights and obligations of three stakeholder groups in particular: the board of directors, management, and shareholders. Corporate governance determines how power is split between these three stakeholders. A company’s board of directors is the main stakeholder that influences the corporate governance of a company (Corporate Governance).