1.In your own words and using referenced quotes describe the difference between organic growth, merger & acquisition and strategic alliance.
> Organic Growth:
When a company expands it's operations with the help of the resources that they have generated internally without borrowing from other firms. This could be the day to day business of the firm or a division of the firm starting a new business from scratch.( financial-dictionary.thefreedictionary.com,2013). It is essentially a 'do it yourself' method. It is much time consuming but it has relatively low up-front costs. this kind of strategy or method is more attractive to small business owners who wants to expand their company but do not have high capital.
Merger and Acquisition:
When two companies come together and one of the corporation fully acquires the other corporation, it is called merger and acquisition. This kind of strategy is usually applied when one company is in the verge of losing its identity, they then merge with another more important company retaining it's identity eventually. Acquisition refers to the process in which a company acquires and takes a full control over another company.
Strategic Alliance:
Agreement for corporation among two or more independent firms to work together towards common objectives. (businessdictionary.com,2013). When two companies decide to work together having a same predetermined goals and using same resources for a project that is temporary, it refers to strategic alliance.
2.Give an example of a company that has grown through a) organic growth, b) merger or acquisition and c) strategic alliance
> a) Organic growth: Lego Toy Brand
b) Merger and acquisition: Sony and Ericsson(Merger) SPSS acquisition by IBM (Acquisition)
c) Strategic alliance: Nokia and Microsoft
Case Study:
3.Briefly discuss the merger between Britvic and AG Barr. What advice would you give to the new Board?
>Britvic and AG Barr, the two u.k based company merge together to form a one company. Britvic holds 63% of the share whereas AG Barr holds only 37% of the share.
1) Evaluate the case for the merger
What are the positives and benefits? What should work well?
> The positives and benefits from the merger are:
- Both AG Barr and Britvic have its own loyal customers from before when they were an individual company, now that they are combined, the customers base is also combined resulting in huge number of customer following at market place.
- The debts are distributed and the risks are diversified.
- As both belongs from the same kind of industry (soft drink), resources and technology can be shared.
- The new company will have a benefit of economy of scales.
- Both companies combined together can give strong competition to coke.
What are the negatives and potential risks? What problems might occur?
> The negatives and potential risks are:
- Britvic’s debt of £600 will be shared with AG Barr, due to which Barr may get less profit.
- When companies merge, Authority issues for top management always occurs.
- When two companies become one they need less man power resulting in loss of jobs.
- Any negative experience faced by customers from one company may hamper in the new merged company's customer because the customers might wanna shift their choice.
- If in case a company is bankrupted, another company will also be affected.
2) What advice would you give the newly formed Board?
>My advice to the newly formed board:
- Both the companies once merged should have same mission and vision plans.
- They should cut off on unnecessary expenses.
- They should have good communication flow among the staffs and work coordinating with each other.
- They should invest more to gain a good market share.
- Emphasizing on advertisements of the products may help.
References:
http://www.businessdictionary.com/definition/organic-growth.html, accessed on November, 2013
Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 10
· Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 6
No comments:
Post a Comment