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 the rate at which the company can accomplish its goals and targets by
increasing its outputs and enhancing sales. Gains or profit acquired from
mergers, acquisitions and takeovers are not included in Organic growth. The gains
should be acquired from within the competencies the company itself (investopedia.com,
2013).
Merger
and Acquisition:
Merger is the process of combining two
companies in order to form a new one where as acquisition is done when one
company is bought by another company and no new company is formed (investopedia.com,
2013).
Strategic Alliance:
Strategic
alliance is said to be done when two companies come together to share resources
in order to carry out a specific, mutually beneficial project. Strategic alliance
requires less involvement from the two parties and is generally less permanent than
a joint venture. Here, each
company maintains its autonomy while gaining a new opportunity. Companies
carry out strategic alliance in order to gain advantage over their competitors,
expand into new market etc (investopedia.com,
2013).
2. Give an example of a company that has grown through a)
organic growth, b) merger or acquisition and c) strategic alliance
Organic Growth:
The
growth of BSkyB in the UK is a classic example of how to build a business using
internal (or organic) growth methods rather than relying on acquisitions. It
makes for excellent research-based evidence for students who need to provide
examiners with relevant examples of growth strategy.
Several
years ago, the firm set itself what, at the time, seemed to be quite an
ambitious corporate objective. The target was to achieve 10 million
household subscribers in the UK. BSkyB achieved that objective earlier
than expected, and that is one key reason why they have been able to enjoy
consistent growth in revenues and profits, despite the recent economic
downturn.
However,
the organic growth story at BSkyB is about more than simply adding many new
subscribers. The business has been able to increase the average amount
spent by each subscribing household on its services. Pay-Tv subscribers
have been persuaded to buy their Internet broadband from BSkyB; customers have
upgraded to access HD and 3D; customer loyalty has been improved resulting in a
lower percentage of subscribers leaving each year (known as “customer churn”).
In
terms of the Ansoff matrix, BSkyB’s strategy has been firmly focused on
two of the four boxes; market penetration (increasing its share of subscription
television) and product development (innovation leading to the highly
successful Sky HD services).
The result of
this organic growth strategy seems to be a business that has maintained
impressive momentum despite a difficult external environment (e.g. pressure on
household spending & advertising) (tutor2u.net, 2013).
Merger and
Acquisition:
The merger between “Disney
and Pixar” is one of the most successful mergers. ‘Wall-E’, ‘UP’ and ‘Bolt’ are
some of the animated movies created through this merger.
Strategic Alliance:
Microsoft and Nokia
is one of the most successful strategic alliance done on February 11, 2011.
3. Briefly discuss the merger between Britvic and AG Barr.
What advice would you give to the new Board?
Both Britvic and AG
Barr are soft drink manufacturing companies based on Scotland and Britain
respectively. The merger of these two companies hopes to maximize their current
sales and profit margin. Barr Britvic Soft Drinks, the new name of the merged company
hope to take their products to the new markets and compete with their rival
Coke.
Through this
merger, AG Barr hopes to develop relationship with Pepsi (For which Britvic is
a bottler) and Britvic hopes to improve their annual turnover.
The merger could
lead these two companies to better portfolio management, cost reduction on
management and production, better decision making, market growth and expansion,
but can also have down side effects as disputes between the new management, stakeholder’s
dissatisfaction, etc are also possible.
Over all, the merger
of these two companies has greatly helped each other to complement one another
and to create one of the biggest soft drink manufactures in Europe.
Advices I would
like to give to the new board are as follows:
·
Start new
campaign and advertisement on the newly formed company.
·
Develop
a new management system to avoide clashes between the two old structures.
·
Research
and development of new products through their combined knowledge.
·
Cost effective
steps should be done.
c References:
Online available at :http://www.rasmussen.edu/degrees/business/blog/best-and-worst-corporate-mergers [Accessed on 11th Nov, 2013]
No comments:
Post a Comment