Week: 16
In your own words and using referenced quotes describe the
difference between organic growth, merger & acquisition and strategic
alliance.
Organic growth
It
represents the true growth of the organization and increase profit by managing
the internal resources of an organization. It is also the result of effective
management team and the manager. Here, the organization’s capabilities and
competencies are used to enhance sale and increase profit as a result its very
easier for organization to expand. The decision making authority are within the
organization so no external forces hamper it.
Organic
growth is the process of business expansion due to increasing overall customer
base, increased output per customer or representative, new sales, or any
combination of the above, as opposed to mergers and acquisitions, which are
examples of inorganic growth. (Wikipedia, 2013)
Merger
and acquisition
When
two organizations of similar sizes come together and form a single new company
then it is known as merger. After merger the company will have new stocks.
When
companies takes over and have entire control of other weak company is known as
acquisition. It’s a corporate action where a company buys most of the target
company’s ownership stakes to have control over the target firm. It is most
happen to expand business by taking advantage of an existing firm’s operation
instead of expanding on its own.(M Silly,2008)
Strategic Alliance
When
two organizations decides to share resources temporary when working on a
mutually beneficiary project by maintain their own autonomy is known as
strategic alliance. It helps company to gain competitive advantage and enter in
new market.(International Trade, 2013)
Give an example of
a company that has grown through a) organic growth b)merger and
acquisition c) strategic alliance.
a.
Organic growth
Example
would be General Electric
b.
Merger and
Acquisition
Merger
– example, HP and Compaq, Sony and Ericsson, Global Bank and IME.
Acquisition
– example, SPSS acquire by IBM, News Corp.’s acquire Dow Jones.
c.
Strategic Alliance
Example
would be Motorola and In-Focus Motorola
and In-Focus Systems, Nokia and Microsoft.
(Case
Study)
Briefly discuss the
merger between Britvic and AG Barr. What advice would you give to the new
Board?
The two company (Britvic and Barr) merging together to form a
single new company i.e. AG Barr and Britvic. The deal between Britvic and Barr
is structured as acquisition with Barr owing 37% of share. Now there'll be only
one company in competition with them i.e. Coke.
Positive
a.
After merger, the combined operating of companies was success to
save 23% of annual cost.
b.
It’s easy to compete in market with Coke.
c.
The expertise management of Barr will improve the Britvic’s
management system.
d.
Risk minimization and huge cash flow helps in covering the debt
of Britvic’s £600m.
e.
Both lies on same industry so technology and resources can be
share.
f.
Taking benefit of scale production can compete in much intense
market.
Negative
a.
Debt of Britvic’s £600m will be share so its disadvantage for
Barr.
b.
People may loss their bobs after merger.
c.
Negative experience in single brand may result loose customer
for both brand.
d.
Product shift from existing to new one is highly risky
.Suggestion
a.
Set participative goal
b.
Proper authority and decision making
c.
Good communication
d.
Unnecessary expenses should be reduce
e.
Lots of promotional activities
f.
Proper feedback about product and continue improvement should be
done.
g.
Advertising of product
Reference
1.
M Silly (2008) Difference between Mergers and
Joint Ventures (online) http://smallbusiness.chron.com/difference-between-mergers-joint-ventures-18578.html
(Accessed on November 15, 2013)
2.
International Trade (2013) strategic alliance (online) http://www.investopedia.com/terms/s/strategicalliance.asp (Accessed on
November 12,2013)
3.
Wikipedia (2013) organic Growth (online) http://en.wikipedia.org/wiki/Organic_growth
(Accessed on November 11, 2013)
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