1. In your own words and using referenced
quotes describe the difference between organic growth, merger and acquisition
and strategic alliance.
Organic
Growth:
It
is more like a "do it yourself" method where a firm can enhance its capabilities
internally. Opposed to mergers and acquisitions, organic growth can be created
within a business, for example:
·
by creating new products and sales,
·
increasing in market shares,
·
proper
resource allocation,
·
new location for the business,
·
internal investment in research and development.
(qfinance.com)
Mergers
and Acquisitions:
Mergers refers to negotiation of two companies
to form a new business entity by sharing the capital and exchanging the shares
for the new formed firm.
Acquisitions means where one company is
completely absorbed by another company by buying most of the stakes.
Strategic
alliances:
It is a contract between
two or more companies to pursue a set of unanimous objectives while staying as an
independent organization.
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: Apple is committed to organic growth by reinvesting its
profit. It has become one of the top and richest brand around the world.
b)
Merger and Acquisition: Disney and
Pixar is one of the best example for mergers and acquisition. The merger of
legendary Walt Disney and "Everything we create kids adore" Pixar was
a match in cartoon heaven. (rasmussen.edu)
c)
Strategic Alliance: In 2008, PepsiCo Foundation and Water.org began working
together to bring access to clean water and sanitary toilets to people in
need. (water.org)
1. Briefly discuss the merger between Britvic
and A.G. Barr. What advice would you give to new Board?
Britvic plc is one of Europe's leading soft drinks companies, with an
enviable portfolio of market leading brands, such as Robinsons, J2O,
Tango, etc in GB, Ireland and France. (britvic.com)
A.G. Barr plc, also known as
Barr's is a soft drink manufacturer in Scotland. Its famous products is Irn-Bru.
Merging between these two companies founded Barr Britvic Soft Drink plc
where Britvic owns 63% and AG Barr 37% of shareholders with the annual sales of
£ 1.5 billion employing around
4,300 staffs.
Barr Britvic: Benefits
· Barr Britvic soft drink is likely to get
consumer loyalty and market share from the mergers.
· Both the companies gets to have a new product in
their portfolio.
· Being in the same industry, their resources and
technology can be shared and utilized more effectively.
· Capital is shared and risk is minimized.
Barr Britvic: Disadvantages
·
Chances of job cut offs due to redundancy.
·
Loss, risk and debts faced by one company might
be a heavy burden to another.
· Company must be careful about consumer
sensitivity. Consumer may not like any one of the company and thus, the company
loses its customer.
· There might be clash between the managers. The
two mergers are facing some problems of their own. They are not being able to
agree upon same terms. Likewise, Shares in Britvic, which have risen almost 74%
over the past years, were down 2.3 percent while Barr shares were up 1.6 % at
1432 GMT. (British time)
Suggestion to the new board
·
They can control their cost by reducing
unnecessary expenses.
·
There must be a good coordination and
communication between the management teams and gain comfort and mutual trust.
· They must keep an effective communication with
their customers mainly through advertisement.
Britvic Company Profile [Online] Available at: http://www.britvic.com/company-profile.aspx [ Accessed on 14th Nov 2013]
Britvic, A.G. Barr merger deal collapses [Online] Available at:
http://uk.reuters.com/article/2013/07/11/uk-britvic-agbarr-idUKBRE96A0MM20130711 [Accessed on 14th Nov 2013]
Qfinance Newsletter. Organic Growth. [Online] Available at http://www.qfinance.com/dictionary/organic-growth [Accessed on 14th Nov, 2013]
Strategic Alliances [Online] Available at: http://water.org/about/strategic-alliances/ [Accessed on 14th Nov 2013]
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