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. Globalization and increased competition have resulted in organizations expanding their operations to foreign markets (Antila & Kakkonen, 2008). While M&As are widely utilized, many are not successful. …show more content…
The Company was founded in 1906 in Monterrey, Mexico and has since become one of the top global cement companies in the world. The Company produces, distributes and sells cement, concrete and related building materials in more than 50 countries. In an effort to consolidate its position as one of the top three global players in the industry and expand its global presence, the Company successfully acquired Ready Mix Concrete in 2004 and Rinker group in 2006. This paper will discuss the factors that led to the success of Cemex with respect to mergers and acquisitions involving cross-border target …show more content…
This synergy will help enhance the Company’s performance and profitability. In addition Cemex hopes to share knowledge which will help the Company improve overall operating efficiency and profitability. Having a comprehensive integration process will help the Company quickly, efficiently and cost-effectively integrate the two companies, which will provide the company with a competitive advantage. Having standard operating procedures and providing constant and effective communication with employees throughout the organization will reduce anxiety which will help keep productivity high and reduce the possibility of the spread of rumors and
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
In the literature one finds a large number of explanations for the occurrence of mergers and acquisitions. Sometimes, these explana-tions are also applicable to related forms of interindustrial links such as joint ventures or strategic alliances. Therefore it is necessary to define the term merger and acquisition as it will be used throughout this paper.
Gaughan, P. A., 2002. Mergers, Acquisitions, and Corporate restructuring. 3rd ed.New York: John Wiley & Sons, Inc.
MDCM: Diversified and global organization, as we read we get the scale of operation as we see that MDCM has location in 35 cities, MDCM Corp., USA being oldest and largest. As the operation is purely manufacturing and operations driven, MDCM does not do any R&D and marketing, they are purely contract manufacturers. Major problem is with the margins, as they do not have any control, which will be managed by their Customer who will be selling to the Consumers. MDCM is sandwiched between and has no control or power to salvage their Margins. MDCM planned for diversification, and started a strategy of acquisition to have economy of scale as there is no other alternative to achieve the Cost benefit, when you are fighting on Cost differentiation. This lead to material mismanagement and dysfunctional operations, as sourcing has red...
During this process, negotiations with the government typically to place as well as meeting with local competitors and industry association were concerns about the acquisition were settled or hashed out. A report is than presented to the Executive Vice President of Planning and Finance. After the due diligence process is completed, CEMEX would than forma post-merger integration (PMI) team. Their purpose being to enhance the efficiency of their recently acquired operation and modify it to CEMEX’s standards and
Mergers is when two firms or entities, often of about the same size, agree to become one single new entity or organization rather than remain separately owned and/or operated. This kind of action is often referred to as a ‘merger of equals’. Financially, the stocks of both companies are migrated into a new stock with the new name of the company issued. (CIPD, 2009)
Carmex, I believe uses all four pricing approaches with their products. They use mark-up pricing to set prices that would be different at pharmacies and grocery stores, then they
CEMEX is a global cement company from Mexico that dates back to 1906. It was formally established in 1931 through a merger between Cementos Hildago and Cementos Portland Monterrey. Although initially it operated on a domestic level, various factors within its operating environment forced it to expand internationally. Before venturing into other markets, the company opted to capitalize on the ideal environment created the Mexican Government. Nevertheless, the Mexico 1982 economic crisis forced the Government to liberalize the Mexican market thus attracting foreign competitors. To counter the new competition, CEMEX opted to first divest its business, which was diversified across hotel management, engineering, petrochemicals, to focus on its core cement production business. It opted to avoid a hostile take over by foreign companies through consolidating its position in the domestic Market. Acquiring Cementos Anahuac and Cementos Tolteca was a strategic move that enabled it control 60% of Mexican market, becoming the world tenth biggest cement company. Probably motivated by the success of this strategy and the new acquired competitive scale, the company opted to internationalize. Acquisition was the preferred strategy of expansion. This strategy undoubtedly yielded unprecedented success over the years. By 2004, CEMEX had grown to be the 3rd largest building material company in the world, experienced an 18% annual growth rate in sales, and enjoyed a revenue of US$ 7.1 billion, just to mention a few.
Gaughan, P. A. (1996). Mergers, acquisitions, and corporate restructurings. New York: John Wiley & Sons.
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:
In the next decades the cement consumption is expected to grow by 4.4% per year for developing countries and 0.9 for developed countries. This way I believe that one of the best strategy for CEMEX to continue its growth as a leader in cement industry is to invest and open plants and distribution centers in some of developing markets in Eastern Europe and Africa, where the demand for cement is expected to increase dramatically by 85% to 2020. The pros about this alternative is that the company could expend their markets and will increase their profit but at the same time the investment will be bigger and the return could be in a long term.
Cemex has many qualities that are difficult to duplicate into other companies. Yet, these qualities could be hard to channel into other companies. The company should therefore invest directly into the foreign market. This way they can operate at the same success as they had in their domestic country. They would be able to control the customer service and quality that made the company so great initially.
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.
Having both complementary and compatible alliance partners was essential fundamental for MDT’s alliance strategy. In the second-degree perspective, interrelated-partner relationships are examined (Greve et al., 2014). Although each partner have their own alliances, not one interrelated partnership among MDT’s partners has been found. Therefore, MDT has a hub-and-spoke configuration and it is actually the same picture as Figure 1. Because MDT is at the centre of a hub-and-spoke portfolio, MDT has an easy access to new information, cooperation and power from each alliance partners that allow MDT to create new innovations (Greve et al., 2014). The medical device industry can be considered rather dynamic. As mentioned, the macro-environment of
The primary research and research done afterward was evident enough that the countries have different cultures and those cultures impact the standardization of way of work within the large organizations. The examples quoted by Hofstede demonstrate the difference of cultures among different countries. These areas were overlooked before by other researchers and practitioners but these were the main factors to consider. According to a KPMG study, "83% of all mergers and acquisitions (M&A 's) failed to produce any benefit for the shareholders, and over half actually destroyed value. Cultural preferences have been identified as an often overlooked barrier to the effective implementation of mergers and acquisitions. In the following the four factors are briefed in