1. In your own words and using referenced quotes describe the
difference between organic growth, merger & acquisition and strategic
alliance.
Organic growth
Organic growth is a
growth strategy where it supports and assists in making a firm strong by using
its own energy sources and the resources needed. As compared to any other
approach, this is very slow yet contains lower up-front costs. For small
businesses lacking huge amount of capital but willing to enhance themselves, it
is a very much appropriate approach. This is more like a “Do It Yourself” type
of strategy where most of the firms fabricate their capabilities.
Merger and Acquisition
Merger and Acquisition
is a growth strategy that makes an involvement of two different firms in order
to create a new firm where they acquire corporations. Here, acquisition means
the process of controlling a firm completely by any means.
Strategic Alliance
Strategic Alliance is an
approach where a set of predetermined goals is pursued by more than two companies
conjointly sharing resources for the same project for a temporary cause.
2. Give an example of a company that has grown through a) organic
growth, b) merger or acquisition and c) strategic alliance
The examples of
companies that have grown through the following are listed below:
Organic growth: Lego Toy
Brand made from its creative and innovative ides developed to become
successful.
Merger or Acquisition: Sony Ericsson is
the best example for merger and acquisition as Sony Corporation merged along
Ericsson in 2001 which then emerged to an acquisition of shares of Ericsson by
Sony Corporations hence developed as a Sony Mobile Communications in 2012.
Strategic Alliance: Nokia and Microsoft would
be the best example of a recent alliance.
3. Briefly discuss the merger between Britvic and AG Barr. What advice
would you give to the new Board?
Case Study answers
Positives:
·
A newly formed company after merger experienced 37% and 63% shares of AG
Barr and Britvic respectively with a loyal customer base for each product.
Since they are combined, the loyal customer base is also combined to have a
larger market.
·
The risk is expanded and the large amount of cash flows is very helpful
to cover the debts.
·
They are able to compete in a very intense market since they are
combined.
·
Both companies can benefit from the scale production.
Negatives:
·
It might result in unemployment of people because of redundancy occurred
by merger.
·
Top management might face problems related to authorization.
·
Barr individually will experience less profitability as it has to share
the £600 debt of Britvic.
·
Both might face the loss of customer due to any negative experience of a
customer of either brand before merger.
·
One firm will directly be affected by the bankruptcy in another firm.
·
In some cases it might be very tricky to shift from one product to
another.
The suggestions to the new board are as
follows:
·
They should minimize the unwanted
expenses.
·
In order to gain market share, there must be more cash inflows.
·
In order to increase comfort level and trust, there must more
participative goal set.
·
Good/ meaningful communication should be encouraged more within the
combined firm as well with customers.
·
Respond positively towards the customer’s feedback on product to
improvise work.
·
To show an actual emotional bond between the companies, appropriate
advertising should be encouraged so that they will be able to lure loyal
customers.
References:
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
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