Establish Networks & Develop Teams and Individuals
Unit Code
BSBREL401A & BSBLED401A
Semester &Year
Semester 1, 2015
Time Allowed/Due Date
Week 7
Assessment Type
Assignment One
Value of Assessment
35%
Assessment Conditions
None
Special Requirements
Individual assignment (with team discussion input)
DECLARATION
I am aware that penalties exist for cheating, plagiarism (copying) and unauthorised collusion with other students, or external consultants.
I am aware of the requirements covering style and layout standards as designated by my teacher/tutor.
For assessments other than those conducted in-class, I have retained a copy. I understand that uncollected assessments will be destroyed.
This assessment was prepared using the Unit of Competency from training.gov.au with particular attention to; Required Skills, Required Knowledge, Evidence Guide/Critical Aspects.
Student’s signature: Jerry Date:24/3/2015
Questions
Teachers
Comments
Possible
Marks
Actual
Marks
1 Identify and discuss four (4) opportunities
Via Moodle feedback
8
8
2 Discuss 2 (+) networking strategies
4
4
3 Self preparation discussion
2
NCY script/business card
4 Discuss ‘maintaining a record’ of networking
2
nyc
5 Attend/report on a networking function
15
nyc
6 Discuss problems/difficulties (based on group feedback) and supply solutions
4
nyc
Total
35
Identify and discuss four ‘opportunities’ (e.g. events, activities, online (virtual) or real, Holmesglen or external) relevant to your future career as a marketer that will enable you to participate in networking. * (see guide below)
(8 marks)
Determine and discuss two or more networking strategies you will use to make contact with the individual/organisation (who represent the opportunities in 1 above) and to initiate communication. Note: You are not to make actual contact unless it’s related to Holmesglen Student Services’ clubs.
(4 marks)
Determine and discuss what you will need to do to prepare yourself to undertake networking.
(2 marks)
Determine and discuss how you will maintain a record of your network
(2 marks)
Attend one of the networking opportunities/ function and report on your experiences. Before you attend, you will need to check with your teacher to ensure that the event is suitable.
(15 marks)
After the event, form into groups of around four students. Identify several problems/difficulties each of you may have experienced. Suggest ways of how you could overcome these problems/difficulties. Write a brief summary of your group’s discussions.
(4 marks)
1* Guidelines:
For example, Holmesglen Student Services will be helping students network through the following clubs: Coffee Club, Movie Club, City Seekers Club, a variety of sporting /interest clubs (you may like to consider setting up an indoor soccer club, courtesy Student Services, or some other interest/sporting club).
Alternatively, you may wish to research some marketing peak bodies and join as students, attending a networking function.
We will spend time in class researching various networking opportunities.
Q1) Tourism
Tourism is major business opportunity which has prevailed over many years. Tourism may be local or international. They both offer business opportunities as the tourist will require the service of the tour guides to help locate the sceneries and the wildlife. For any travel agency to offer its travelling service to the tourists then it should market its services through suitable media.to be successful in this business one ought to be aware of the current trends in the tourism sector.it will be the duty of the marketing manager to advertise the services of the company.
Fashion and beauty
Beauty and fashion industry is currently a booming business. Most people who design and make these beauty products have to be aware of the latest fashion and therefore they should consider networking as option towards getting the information they want about the latest fashion in the market.one can achieve this through attending fashion and beauty shows.
Information system management and manufacturing
Currently the world is using information technology to enhance communication within the organization. The company designing and manufacturing these systems should ensure maximum security for the users and also ensure their privacy.it is the duty of the marketing managers to ensure that the company products are well known and secure. They can achieve this by networking with members within the industry so that they can be aware of the latest development and the threats within the industry.
Hotel management
Hotels offer food products which are served to the customers. The customer needs to be aware of the kind of food offered by the hotel. The marketing manager should be aware of the latest preferences by different customers. Attending cooking competitions can help the managers to achieve maximum sales.
Q2)
Strategies: Using social media
The best networking method is the use of social media groups like Facebook, LinkedIn, twitter etc. In these social media, one joins like-minded individuals.by creating a social fan page where like-minded people join the group to get updated. Organizing social events
Organizing social events like football tournaments, cooking competition and tour for families.
Q3)
Before undertaking any networking function, should make some preparations which include; determining the reason for undertaking the networking, participating well in the networking event will help portray the a good picture of your company. Prepare a list of questions to ask the organizers of the function, this will ensure that you get all the answers to your question
Q4)
during the networking event, one should add in more people in his or her network so that the network can expand.one is supposed to take the address of each added member so that they can communicate at a later date. Add the new members into your social network. Some of the data management software which can be used to keep the information obtained from the network includes; spread sheet which includes the SPSS datasheet, the commercial database program which include the Access and Oracle and finally the Specialty data entry programs such as SPSS data entry builders. These speciality data entry programs are good for data storage and entry, thus they are useful.
Q5)
Having attended a networking function involving entrepreneurs, investors, tourism board directors and hotel managers which sought to identify the best ways to incorporate information technology to attract more tourists both local and international. During this networking event the facilitators were given ten minutes each to explain their products. The event was organized United States tourism board. From the look of events, it was clear that this networking event was the best place for the information technology experts and upcoming companies to introduce their latest projects in the industry. From the proceedings of this event it was clear that one can get an insight into and knowledge about what technology is expected in the industry and also the one in use currently.
The board director encouraged the locals to visit their national parks and other sceneries so that they can improve the economy of the country. Through the use of information technology, the tourism board was in a position to attract more tourists both local and international by creating more awareness to via the media.
Q6)
Some of the problems encountered this networking event include lack of enough time for the presenters to explain their products well. There were a lot of people willing to participate but very few were able to present and demonstrate their technology. The audiences were not allowed to participate due to lack of time. There was less interaction between the marketers
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SAMPLE ANSWER
Abstract
The paper explores quite a number of previous studies, more specifically studies that bring out the authenticity of incorporating partnership, alliances and outsourcing in creating the assessment process and building the capacity of organizations. The idea brought out by the paper is quite exclusive in sensitizing the fact that partnership takes the center stage in defining the objectives of the alliances to the concerned parties (Argote, 2012). In such situations, the parties are expected to fully understand all the requirements of the union to avoid controversy in matters pertaining to outcomes and profits made by the organization. The paper brings an exclusive aspect of the ideology that the intervention of the competent parties is highly needed in a bid to effectively address matters pertaining to capacity development and employment creation (Armstrong & Taylor, 2014). Besides, developing a clear perspective when the engagement and involvement of all the parties is necessary is quite significant in oversight. The content of this study explores the essentiality of the involvement of negotiations and considering the requisite potentiality and competency of the concerned parties in developing an ideal alternative for determination and delivery oversight. The paper also explores numerous academic journals to present a comprehensive and appropriate decision making process, particularly through the consideration of the flowchart. This idea expresses the sole purpose of outlining and defining the essentiality of building agility and capacity development in large non-profit making organizations.
The idea of partnering and forming alliances to help solve the challenges incurred by large nonprofit organizations is an excellent idea that needs to be accorded requisite attention. On the same note, to give an extensive attention to the issues and concerns of the organization, leaders and human resource managers of the organization need to become well informed and acquainted with the culture and structure of the organization (Burgelman, 2012). In addition, when both the parties develop an idealistic perspective on the progress of capacity building and development of the organization, controversies that may come as a result of the concerned parties developing unclear perceptions and feeling the expectation of the comapany may not be promising. Hence, when the personnel of the organization fully understand the culture of the organization they would be very resourceful when consulted, particularly on matters concerning the improvement of the economic performance of the organization in the competitive environment (Malen et al., 2015).
Involving the competency of the organizational leaders in the decision making process has been very significant in championing for the success of the assessment process for quite a number of large nonprofit organizations. The underlying concern of coming up with the idea of partnership and alliances is to help solve organizational issues and drawbacks for purposes of realizing success (Grant et al., 2004). Realistically, the ideological construct of conceptualizing team work and shared leadership potential help instill the perception of hope and certainty in the personnel of most non-profit making organizations. In addition, once the concern of promoting the organization’s performance is successfully achieved, most notably with the help of assessment process, the organization in question will be in a good position to pinpoint the considerable framework for creating modalities (Gold & Arvind, 2001). As a result, the sole purpose of determining the essentiality of collaborative leadership will be realized.
The idea of considering the concern and perspective of leaders in the assessment survey is very developmental in addressing issues concerning implementation and the establishment of strategic planning for several nonprofit organization. A comprehensive report from the assessment survey will create an opportunity for most companies to determine the overhead costs that may jeopardize their outcome evaluation processes (Jamalli et al., 2015). The fact that the assessment survey offers an idealistic platform for access to larger samples offers the concern parties and organizational leaders the audacity to determine the ability and performance of the organization. On the same note, this idea could also help establish a situation where the limiting factors such as resource constraints and time are extensively brought under consideration with an intention of economy actualization and resource mobilization (Grant & Baden-Fuller, 2004).
In view of the credibility and validity of the assessment survey, most organizational leaders are expected to take an active participation in the survey to develop courage with an exclusive intention of convincing the partners and alliances on the description of the type of study and the outcome evaluation. When the issue of considering the application of data management systems and the conceptualization of the logic tenet is categorically brought under consideration, most alliances will adequately understand what is required of them (Grant et al., 2004). Hence, the controversy that would be experienced as a result of the misunderstanding would definitely be averted, and this would call for the alternative solutions to address matters pertaining to the satisfaction of the clients (Malen et al., 2015). Quite a number of nonprofit organization across the globe tend to encounter a shortcoming of ensuring quality services and community development. This idea would sensitize the need for the organizational leaders to consider the aspect of public policy and innovation initiatives to categorically define the essentiality of incorporating the alliances and partnerships (Burgelman, 2012).
According to Grant et al. (2004), the pressure from the alliances needs to be exceptionally examined and be accountable, more specifically in helping the organization realize its position and status in the economically competitive environment. The concern of taking note of the credibility of the shared leadership potential and collaborative involvement of the alliances has been on the fore front in engaging most nonprofit organization to take part in the sustainability practices (Grant & Baden-Fuller, 2004). In view of the previous studies, quite a number of nonprofit companies tend to concur with the phenomenon of sensitizing the human capital development and capacity building. This concern would depend on the idealistic ideology and modality for establishing effective and efficient practices to address the sustainability concern (Gold & Arvind, 2001). This development could take the center stage in helping companies undertake effective evaluation of their outcomes and economic performance. In view of the concern of building the capacity and assessment creation of most organizations, it would be quite easier and developmental for the organization to enhance high quality of program development and champion for the authenticity of accountability (Argote, 2012).
The concern and trend of establishing an evaluation and capacity building, particularly through the consultation of a network of partners, is being influenced by the community development funders. When this idea is conceptually brought under consideration, most nonprofit organization would have the audacity to improve on their performance and exceptionally maximize on the use of their resources and investments. A fundamental challenge that could be incurred by several companies in their endeavors to maximizing on the resource mobilization and employment creation could encompass factors such inadequate clarity, particularly with regards to evaluation of capacity development (Jamali et al., 2015). The sensitization of the concern of governance and leadership has been very categorical in expressing the credibility of the organizational capacity and assessment creation. Governance and leadership will definitely help define the structure of the organization and show how the organization perceives the opportunity of involving alliances in the decision making process.
As noted by Cummings and Worley (2014), an extensive involvement of the ideas of partners and stake holders in an organization would help establish an objective opinion for ensuring success and help influence the power of decision making. As a result, the evaluation capacity of the organization would be positively affected since each and every department in the organization would tend to conceptualize the ideas of the alliances. Additionally, for a large nonprofit organization to realize success in the competitive environment, there is need for the partners and stake holders to determine the credibility of human capital in ensuring capacity development (Cummings & Worley, 2014). On the same note, the ideological construct of human capital development is normally considered in situations where the personnel of the organization in question are in good capacity to conduct thorough scrutiny of the staff competency and technical skills.
The idea of articulating human capital also plays an essential role in enacting the competency of the personnel and also offers an ideal platform for providing formal education and training in the capacity development mainstream. According to Argote (2012), the essentiality of human capital has been on the forefront in addressing the organization marketing strategies and participating in the strategic planning initiatives. The concern of involving the stakeholders of the organization in the marketing strategies and the promotion of financial development has not only helped address the concern of program implementation but has also enabled most organizations realize success in their efforts to attain a recommendable capacity development (Burgelman, 2012). Based on the wide range of responsibilities assigned to the partners in most organization, the conceptualization of the ideology of assessment creation and capacity development has not been so skeptical in providing and determining the type and validity of evaluation experience. The evaluation approaches based on the culture of the organization has been able to provide directives on the essentiality of collaborative modalities and the shared leadership potential (Gold &Arvind, 2001).
The idea of considering culture and structure of the organization in determining the performance has been able to present alternative solutions to issues involving and identifying the most effective programs to impact on evaluation and capacity building. Development of the adequate perception and comprehension in the culture of the organization has been perceived by quite a number of academics and profound scholars as very categorical in outlining and ascertaining the competence level within an organization (Burgelman, 2012). Establishing an adequate communicable information on the attitudes of the partners in most large nonprofit organization help assess their readiness and willingness to take part in ensuring success in an organization. In view of the culture of an organization, it may be quite unrealistic to present an objective opinion that assessment creation and capacity building is a complex exercise (Malen et al., 2015). When this concern is not debated upon, most partners will definitely feel worried about the success of the organization and will tend not be actively involved in the assessment process and capacity building exercise.
In addition, the organizational culture and structure has always been considered as a technique of testing the confidence and awareness of the organization stakeholders with regards to evaluation and capacity assessment. In view of the YMCA organization, as a large nonprofit company, the culture of evaluation in the context of assessment creation and capacity building varies considerably depending on the perceptions of alliances and stakeholders (Grant et al., 2004). In such situations, other partners may be aware of the need and the essentiality of the assessment process in driving organization improvement and performance. The consideration of the personality of the leaders in improving growth and development of most organizations has been able to clearly define the execution of the assessment process and capacity building modality. The institutionalization of the modern assessment evaluation has made tremendous development in encouraging the sustainability practices of both the established and upcoming organizations (Armstrong & Taylor, 2014).
Quite a number of companies today, more specifically YMCA has shown adequate improvement by involving organizational leaders in the evaluative thinking in both the local and international environment. This development has not only enabled YMCA to make exclusive adjustment in matters pertaining to profit maximization but has also created an idealistic platform for the organization to realize its fundamental goals and objectives (Burgelman, 2012). Incorporating the ideas of the leaders of an organization through a technique of negotiation has been very instrumental in the implementation and assessment of the capacity building exercises. In addition, it may be quite recommendable to engage partners and leaders of most nonprofit organizations to come to terms in ensuring the quality of building and evaluating the assessment process (Malen et al., 2015).
Designing a comprehensive decision making process is quite essential in evaluating factors concerning partnering with a sole purpose of determining the authenticity of capacity building in most organizations. Designing a business making process would consider issues such as how organizations carry out their daily operations, particularly with regards to assessment creation and capacity building techniques (Gold & Arvind, 2001). A better and most appropriate decision making process would ensure that the organization in question is able to compete adequately in the ever changing economic environment. This concern would not only help improve the quality of the organization’s services but will also enable the company to be very instrumental in selling the ideas of its decision making processes and its capability in the competitive environment (Jamalli et al., 2015).
There are quite a number of theories and models that could help address the concern of an organization assessment creation and capacity building. Most models need to conceptualize the essentiality of both the validity and reliability of the evaluation exercise. The model of requisite evaluative thinking is primarily preferred to incorporate the opinions of leaders in an organization. As observed by Cummings and Worley (2014), developing a clear understanding of this model may enable the organization address concerns such as customer relationships, strategic planning, alliances and shared leadership potential. The models and theories developed in understanding the organizational capacity of the YMCA Company serve as a guiding framework in defining the assessment process and sustainability practices (Burgelman, 2012). The figure below acts as a flowchart with a sole purpose of the decision processes that most organizational leaders would adopt to improve business performance and sustainability practices. The flowchart plays a significant role in outlining the essentiality of human resource managers to take part in the potential partnerships and collaboration practices. In addition, the figure also tends to clarify the authenticity of planning and monitoring that most human resource managers consider in the evaluation of the assessment process and capacity building.
In conclusion, idea of incorporating the fundamental facets of partnership and alliances in most developing and fully established organizations is an excellent idea that needs to be accorded requisite attention. In view of the previous studies, most researchers and academic professionals have always presented an objective opinion that nonprofit organization across the globe tend to encounter a shortcoming of ensuring quality services and community development. Hence there is need for future organizational leaders and human resource managers to consider the aspect of public policy and innovation initiatives. When such policies are adopted, most organizations would be in a good position to better understand the essentiallity of incorporating the alliances and partnerships in boosting their capacity development.
References
Argote, L. (2012). Organizational learning: Creating, retaining and transferring knowledge. Springer Science & Business Media.
Armstrong, M., & Taylor, S. (2014). Armstrong’s handbook of human resource management practice. Kogan Page Publishers.
Burgelman, R. A. (2012). Managing the internal corporate venturing process. Sloan Management Review (Winter 1984).
Cummings, T., & Worley, C. (2014). Organization development and change. Cengage learning.
Grant, R.M. and Baden-Fuller, C. (2004), “A knowledge-accessing theory of strategic alliances”, Journal of Management Studies, Vol. 41 No. 1, pp. 61-84.
Gold, A. H., & Arvind Malhotra, A. H. S. (2001). Knowledge management: An organizational capabilities perspective. Journal of management information systems, 18(1), 185-214.
Jamali, D. R., El Dirani, A. M., & Harwood, I. A. (2015). Exploring human resource management roles in corporate social responsibility: the CSR‐HRM co‐creation model. Business Ethics: A European Review.
Mills, A. M., & Smith, T. A. (2011). Knowledge management and organizational performance: a decomposed view. Journal of Knowledge Management, 15(1), 156-171
Malen, B., Rice, J. K., Matlach, L. K., Bowsher, A., Hoyer, K. M., & Hyde, L. H. (2015). Developing Organizational Capacity for Implementing Complex Education Reform Initiatives Insights From a Multiyear Study of a Teacher Incentive Fund Program. Educational Administration Quarterly, 51(1), 133-176. https://eric.ed.gov/?id=EJ1048792
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Many people fulfill lifelong goals when they become a member of a certain profession. Perhaps you had a dream of being a business professor or operating your own business from a young age. You may have admired a teacher or a business owner who kindled your ambition. Despite having an idea of what you wanted to accomplish early on, you likely had little knowledge of the steps you would take to achieve your goal. As you learned about what was required to reach your ultimate goal, you set short-term and medium-range goals that aligned with your long-term goals. Short-term goals may have included getting good grades each year while medium-range goals might have included getting into a good college or saving money for tuition. You likely adjusted short-term and medium-range goals to take advantage of new opportunities that may not have existed when you set your long-term goals, such as attending the DBA program at Walden. Organizations that operate with strategic intent employ a similar approach often with substantial benefit. However, adopting a strategic intent approach can also present challenges for organizations that have relied on more traditional strategies. As a scholar-practitioner in the modern global business environment, it is important that you understand the benefits and challenges of strategic intent and how the approach differs from traditional strategies.
To prepare, consider the similarities and differences between conventional strategic planning and strategic intent thinking.
Write 2–3 paragraph response (2 word document pages), that compares traditional strategic planning to strategic intent thinking.
Explain how the concepts are similar and how they are different.
Also explain the impact of strategic intent thinking on business strategy.
Finally, explain the implications of expanding business strategy to include different types of stakeholders and their viewpoints and relationships.
Extend the conversation by identifying implications for practice or research, as well as for your own research agenda, where appropriate. Be sure to integrate one or two new related, and engaging, questions that will extend the discussion about your paper in constructive ways. Try to think of a question(s) that will engage your peers in critical analysis and thinking about your organization,(Apple Inc.) which may provide insight for your use as you continue preparing your sections of the major Sustainable Solutions Paper (SSP) due in two weeks.
Resources
• Mintzberg, H., & Lampel, J. (1999). Reflecting on the strategy process. Sloan Management Review, 40(3), 21–30.
• Harvard Business School Press. (2005). Strategy: Create and implement the best strategy for your business. Boston, MA: Author.
SAMPLE ANSWER
The Advantages of Strategic Intent Thinking
Organizations adopt different strategies to ensure that they achieve their goals. Understanding the strategies strengths and weaknesses is important for the success of these entities. The paper compares conventional strategic planning to strategic intent thinking.
Traditional strategic planning also known as fit model of strategy making aims at finding the fit between the resources available and the capabilities and external threats and opportunities. Organizations that employ this model are limited in terms of their strategy as they limit their objectives and goals on the available resources and capabilities (Mintzberg & Lampel, 1999). Therefore, in case an entity faces challenges in resources, then it becomes difficult for such organization to achieve their goals. This strategy focuses on the means more than the end as opposed to strategic intent thinking. Furthermore, organizations that employ traditional strategic planning compare their level of performance to their competitors instead of focusing on what they want to achieve in the future (Harvard Business School Press, 2005). On the other hand, strategic intent strategy allows managers to focus on how they can create new capabilities in order to exploit future opportunities. Furthermore, strategic intent thinking aims at winning and is stable over time. The goals set under this strategy require personal effort and commitment to be achieved. This strategy is therefore a vision about what leadership position an entity admires and it provides a ground on assessing the success of an organization (Auburn, 2013). Employees share similar vision and focus on wining to emerge market leaders. Therefore, contrary to traditional strategy, strategic intent thinking is consistent over time; focus on short-term stability while allowing long-range flexibility to take advantage of future opportunities. Strategic internet thinking therefore focuses on the ends while means remains to be flexible hence there is room for open innovation and improvisation opportunities (Auburn, 2013). Similarities of the conventional strategic planning and strategic internet thinking are that they both require that organization have a vision that allows the entity to understand what it wants to achieve (Liedtka & Rosenblum 1996). Furthermore, allow the company to have a competitive edge over competitors.
Strategic internet thinking has an impact on business strategy. It allows an entity to achieve its objectives even if it encounters such challenges such as resource limitation. The company remains committed and focused until the objectives are met (Mintzberg & Lampel, 1999). It as well ensures teamwork and commitment by the members of the organization hence enhancing achievement of the business strategy. It as well fosters open innovation and a business strategy can be adjusted to ensure that the organization remain steadfast towards its objectives (Auburn, 2013). The future is more important and therefore any opportunities are taken seriously to enhance achievement of the business strategy.
Expansion of business strategy to include different types of stakeholders and viewpoints and relationships is healthy and essential. This approach allows the organization to have multiple options; hence, the likelihood of selecting the best option is high. It makes an entity to gain a competitive edge since it can access enough information from different perspective. Understanding market dynamics becomes easier hence giving an organization a competitive edge. Including different stakeholders as well shows that the organization trusts in them hence, they feel a sense of belonging which motivates them (Liedtka, 2011). The productivity or performance of an organization can improve due to this motivation. It is also important to note that involving these stakeholders and different viewpoints will delay the process of decision-making and this may affect business operations.
This discussion is essential on the practice as it provides valuable information on strategic planning and strategic intent thinking. Organization should adopt strategic internet thinking to ensure they remain competitive. The issues raised are also important for my own research since they provide a basis to understand the strategy that my organization has adopted and whether it is sustainable or not. This discussion can still be extended through questions to gain better understanding about business strategy. One question is, ‘Do you think that Apple Inc business strategy is sustainable?’ and the second question is, ‘What can Apple Inc do to ensure that it takes the market leadership in the future?
Stetson Company has so far had a lot of financial challenges in some of its wings of operation such as the Fly Airways, Technology, and the Banking sectors. The occurrences of the issues such as the currency exchange rates, bidding process, risk management and the hedging options (Clark and Buffett, 2014). In this case, they prompted the finance department through the Directorate the department to come up with a report that comprehensively evaluates on these sectors as presented below.
Stetson Air
Free Cash Flow Methodology in Stetson Group Fly-Up Airways (FA)
Free Cash Flow, FCF is the available cash to the stakeholders when all the expenses, interests, taxes, capital expenditures and the present portion of the long-term debt have gone through the deduction from the revenues. FCF will be of value to the organization since it enhances the provision of an accurate financial picture of the company than the net income. Net income, in this case, is the accounting adjustments that at some may not have an impact on the Stetson’s health. For instance, Fly-up Airways may have a negative Free Cash Flow. The company may find it hard to continue doing business operations without borrowing from other financial institutions to sustain it. In addition, when the company experiences a downward trend in the cash flows, then it signifies that there will be stagnation in its growth (Wilson and Adler, 2013).
On the hand, the other value of the free cash flow to the Stetson Company is in the evaluation of the company’s financial ability in realizing its stated goals and then objectives to the stakeholders. In this case, the company that has positive cash flow, as in the case of Fly-up Airways of the Stetson Company, will attain the full financial strength in meeting its financial obligations.
The Revenues of FA = $325m
EBIT = 85m
The total working capital= $20m
Corporation tax is 30%
Debt to equity ratio = 70%/30%
In this scenario
Free Cash flow will be given by:
FCF=Sales Revenue – Operating Costs and Taxes – Required Investments in Operating Capital
=325 – 20
$305
Since FA has good free working capital, Stetson should continue with their plans of acquiring the company.
Evaluation on the Possible Defence Tactics That Might Be Adopted By Fly-Up Airways
Fly-Up Airways in the case of its failure in bidding process may adopt the below options to sustain the situation; Fly-Up Airways may go for the option of selling itself to the bigger companies through trade sales. As a result, the company, in this case, will act as a subsidiary buyer. Failure in the bidding process may also prompt the management of the Stetson Company to sell its assets, rather than the shares, to save the situation. As a result, a potential buyer may have the choice to choose from the most useful assets so as to save the company from further troubles (Wilson and Adler, 2013).
In the case, the Fly-Up Airways fails to find an appropriate buyer then it will go for the auction method of selling itself. In such situation, the company will strive itself so as to get the potential buyer with the highest bidding amount. All these processes, however, will have to take place through the stock exchange, as it is only the best way or place that a company can perform or initiate its acquisition well. In addition, many potential buyers are also available in the stock exchange market that, in this case, should provide for the options for the Fly-Up Airways in auctioning itself within the shortest time available.
In some cases, the Fly-Up Airways bidding process may receive the rejection. The company will, in this case, withdraw their offer further to reduce the chances of the bid becoming more and more hostile to the public. Cases of hostile bids have the tendency of generating conflicts of interests between the directors and the shareholders. For instance, in such bidding process, the directors may lose their jobs while the shareholders end up selling more shares than the previously announced figure for sale from the company.
The other option that the Fly-up Airways has in the case of the hostile reception of their bidding process is to avoid the use of the poison pills. Poison pills entail the schemes and the strategies involved in the issuance of more stock to the present holders, resulting in the dilution of the bidders share in the company. Such circumstances that may lead to the frustration of the bidding process should be avoided at all costs by the Fly-up Airways to evade the hostility in the bidding process (Wilson and Adler, 2013). Another option that the Fly-up Airways may adopt in the case of hostile bidding process is to look for friendlier potential purchasing companies. In addition, Fly-up Airways may also look for the white knight that together with the friendlier company may provide the option for quotation of higher prices of shares than the hostile bidder in the stock market (Wilson and Adler, 2013).
Advantages of Cash Offer or Mixed Mode Financial
Cash offers have the advantages of providing the option minimal and closing costs that can take place within the period of implementing the contract. However, the contract should be acceptable to both involved parties in such situations. On the other hand, the seller enjoys the benefit of not waiting for the approval of the mortgage In this case, the agent will have no fear of the issue of the properly not earning its appraisal. The instance is that it is the banks that mostly do need the appraisals while not either the seller or the buyer. In addition, the agents from the Fly-up Airways will enjoy the benefit of the few contingencies that, in this case, enhance their closeness to earning their commissions (Beattie, Fearnley, and Hines, 2011).
Disadvantages of Cash Offer or Mixed Mode Financial Offer
Buyers need to be more cautious in their contracts the engage in so as to enable their protection from having the contingencies in the contract. In this situation work with their agents who will guide them on the suggestions relating to the appraisal issues and also how to carry out such appraisal issues effectively. For instance, the elements that the agent may address, in this case, are the; Termite Inspection, Well and Septic, Building Permits, School Districts, Wetlands and Lot size. The agent, in this case, has, to ensure further, that the buyer makes all the verifications on the contents of the contract. As a result, it enables him or her get familiarized with the requirements and the legalities of the contract at large (Beattie, Fearnley, and Hines, 2011). The seller, on the other hand, may find it also hard to do his or her verifications on the funds involved in the transaction process that entails the third parties. The agent may sometimes have too much pride in handling the transaction process. For instance, he or she (agent) may end up ignoring some contents of the contract, especially when handling his or her client during the transaction process (Lee, 2006).
Stetson Technology
The Significance of Exchange Controls for the Investment Decision
The decisions on the exchange control investments come with some laws or regulations that the government uses to regulate the foreign exchange of the country’s currency. For instance, the government may initiate the exchange controls on a single currency such as allowing for the convertibility of the currency into the country’s currency.
In addition, the control of the exchange rates helps the citizens of the country in making the right choices on the investment decisions or choices. For instance, the individual may be able to evaluate the inflation trends of different countries. As a result, he or she will choose the best nation with favorable inflation trends so as to avoid failure in his or her business (Lee, 2006).
Strategies of Dealing with Restricted Remittance
Remittances are the monies that migrants from home send to their mother countries. The funds are also of importance towards the growth and the development of these nations. Countries, however, have to come up with the strategies for ensuring that this money gets back home despite their citizens staying abroad (Beattie, Fearnley, and Hines, 2011). For instance, the two governments in place of the countries where these citizens stay should cooperate with each for the realization of its success. The governments may work together towards their tax and their foreign affairs departments in revealing the information details concerning the citizen’s earnings. Consequentially, the tax departments may use such information calculation the expected or the amount that these migrants should send back home. In this instance, it will also be possible to track the individuals who never subject themselves at all for taxation purposes.
Viability of Investment in Cambodia
Cash Flow Statements will assist the investment in Cambodia in expressing how the Stetson Company raised the cash or money and the expenses of the money during a given period. As a result, Cash Flow Statements, in this case, will measure the Stetson Company’s to manage its incoming expenses in the coming days or periods (Palepu, 2007). In most of the occasions, Stetson Company will be in a good shape when it will be able continuously to generate more cash than its expenditure. As a result, the Cash Flow Statements just as was identified before, will serve as a tool for evaluating the company’s financial health status. In addition, it will also determine the abilities of the company to meet the incoming bill and liabilities during its normal operations or transactions (Palepu, 2007). A business that has more cash runs their operations better. However, cases of low negative cash flow for a year may come from the poor financial strategies that the company may have towards its growth and development. As a result, the real issue here of positive development does not get its required attention. With regards the financial analysis, there is a need for the Stetson Company continues to evaluate on its cash flow tends to avoid meeting such bad omens in the financial sector of the company (Alexander, Britton and Jorissen, 2007).
Potential Risk Exposures to a Company In Future
Potential Future Exposure is the expected maximum credit exposure for a given period with the consideration of the calculation of the level of confidence. As a result, PFE determines the counter party risks or the credit risks. The calculation of the Potential Future Exposure (PFE) entails the evaluation of the trades carried out with the possible market prices in the future, especially at the times of lifetime transactions (Beattie, Fearnley, and Hines, 2011). As a result, PFE may also assume the name sensitivity analysis of the risk with respect to the market prices. However, the expected maximum exposure is not the same as the maximum credit h exposure possible. As such, the maximum credit exposure defines the upper bound on the confidence interval for the possible future exposures (Alexander, Britton and Jorissen, 2007).
In most of the occasions, the credit managers remain focused on the present exposure evaluations such as the current market exposures and the outstanding receivables that, in this case, form part of the collateral management. However, the incoming problem here is that it emphasizes on the current but does not create the opportunity for the indication of the credit risks in the coming future (Clark and Buffett, 2014). Due to the losses that accrue from the credit risk, the instance, in this case, takes a bit long time to prosper into a more viable method of evaluating the potential exposure. In addition, the potential exposure is not the same as the present exposure since its existence is in the future. As a result, it gives a wide choice of the outcomes instead of the single point estimation case (Palepu, 2007).
Management of Risks
As much as the term goes with risk management, the objective of the Stetson Company is to eliminate the risk entirely from the company rather than just its management. However, risks are uncertainties that an individual or a company cannot do away with completely. Risks continue to occur and in most of the occasions they may prove hard to predict their time of occurrence (Kwok, 2005). However, Stetson Company may use the below strategies to manage the potential risks that may occur in the company; ensure that good risks and opportunities are identified, assessed, managed and reported. A
Aligning risk appetite and strategy enhance the embedding of risk management in decision-making, allocating resources to effectively and efficiently manage risks and ensuring efficient management of risks with the use of the best practices.
Stetson Bank
Stetson on Banking
Stetson’s Increased Exposure to Credit Risk As A Result Of the Borrowing Requirement
Stetson Company stands at high risks of exposure to the below categories of risk exposures; corporate, sovereign, Bank, Retail and Equity exposures.
Corporate Exposures
Corporate exposure defines the type of exposure that the Stetson Company will find itself in, in relation to the partnerships or the proprietorships that it will be doing business operations within the market structure. For instance, there is a need for a special guidance on the small or medium entity for the purpose of the avoidance of occurrence of this type of exposure (Clark and Buffett, 2014). As a result, corporate exposure exists in other further sub-classifications as given below that facilitate in the lending of the assets during the normal business operational activities (Smith, 2010). Object Finance that involves the funding of the physical assets in relevance to the expected cash flows from the rentals or leases on some of the identified assets in the company. Commodity Finance is the funding of the reserves, receivables or the inventories of the exchange traded commodities instead of the borrowings from the independent sources of finances (Beattie, Fearnley, and Hines, 2011). The income producing real estate that entails the financing of the real estate that is either rented or leased out by the debtor for the purposes of generating cash flow used to repay the exposure. High volatility commercial real estate that involves the funding of the commercial real estate so that to how a higher level of volatility of loss rates in comparison to some other forms carrying out lending (Elliott and Elliott, 2008)
Sovereign Exposures and Bank Exposures
Sovereign exposures define the loan given to a given country. Elements of this forms of the exposure are the central banks from different countries, public sector enterprises, multilateral developments that meet the threshold for the 0% mark for the risk weight through the standard guidelines approach (Hussey, 2011). Bank Exposures are the loans to banks or security firms through the regulatory capital requirement. Some domestic PSEs or MDBs fail to meet the threshold for the 0% mark of the risk weight through the standardized approach is also in the class of Bank Exposure of risks (Kirk, 2009).
Retail Exposures
Retail exposures include the loans that the Stetson Company makes to the individuals. For instance, the credit cards, overdrafts or the residential mortgages from some of the products for lending in the retail exposure categories. With the consideration of the maximum one million Euros, the exposures to small businesses that are under the management of the retail exposures are also in this category as well (Gibson, 2013). The management of the risk exposures due to retail business may not as such take place due to the influence of banks or on the individual basis for the purposes of evaluation of the potential risks to the business. However, it takes care of the exposures due to groupings that share the same characteristics (Fridson and Alvarez, 2011). As a result, retail exposures may further fall in; Residential mortgage, qualifying revolving exposure, other retail and equity Exposures.
Equity exposures are the direct interests in the assets and the incomes of a financial institution such as the case of the Stetson Company. In addition, it also entails the indirect interests such as the derivatives. An exposure will fall under the category of the Equity Exposure types (Lee, 2006). The return funds invested in the equities may only be attained by the sale or the liquidation of the person or who is responsible for the issuance of the equity
The Hedging Options Available To Stetson
In relation to the financial issues and management, hedgehog is the investment that the company undertakes with the primary objective of reducing or eliminating the risks in another possible investment for the company (Kirk, 2009). Stetson Company may use the below available options of hedging in its operations;
Perfect Hedge
The position that the Stetson Company will take to eliminate the risks of anther available option is the perfect hedge. However, the position will require full 100% negative correlation to the investment for hedging purpose that also in some instances is not easily available. Consequentially, there are either the imperfect or the near perfect hedges that, in this case, do occur at their best to the company (Palepu, 2007).
Equity Hedging
In this case, Stetson may go for its individual hedging of the long stock positions through the option of buying the protective options as long as there is the availability of options for trading the stock available. On the same note, hedging of the entire portfolios against the systematic market risks through the use of the index options may also take place (Ittelson, 2009).
Future Hedging
In this option, the trader has the choice of hedging the positions against the synthetic futures position. Stetson, in this case, may hedge the long futures position with the synthetic short future positions. On the same note, hedging of the short future positions may also take place against the synthetic long futures positions (Palepu, 2007).
Hedging Commodity Price Risk
In the case where the Company may be involved in the production of consumable raw materials, the company may remove the commodity price risk through hedging in the commodity’s future market. However, cases of the short hedges do lock the selling price of a commodity in plan for sale in the future (Ittelson, 2009).
Solution from the Data Given
Sometimes, parties may subject themselves to an agreement of making periodic payments mostly at the maturity of the swap
In the case of the above problem;
Swapped value=$2, 000, 0000
Libor+3 basis points=Libor+0.03%
FTSE=(100-92.75)=7.25%
In this case payment=a floating interest rate=libor+0.03% on 2,000,000
With a libor value of 6%p.a and a swap tenor of 180 days, the floating leg payer/equity receiver would owe:
(6%+0.03)*$2,000,000*180/360=6,030,000
As a result, this is the equity payer/floating leg receiver
At the same date, that is after 180 days, following the appreciation of FTSE by 7.25% from its level at trade commencement, Stetson would owe Harry 7.25%*$2,000,000=$145, 000. However, the FTSE at six month mark fell at 7.25% from the level of trade commencement. In this case, Stetson would owe hurry an additional 7.25%*$2,000,000=$145,000 because there is a negativity in the flow.
Assessment and Evaluation of the Specific Points Raised By Simon In Relation To Developments in the World Financial Markets.
The primary centre of focus of Simon in relation to the development of finance in the world financial markets is the issue of financial capitalism. For instance, financialization usually enhances the talks that primarily dwells on the financial capitalism that occurred at some time ago. During such times, the financial leverage tended to outdo the capital or the equity while the financial markets strived to outwit the dominance of the industrial economy the economics related to agriculture (Previts, Walton and Wolnizer, 2012).
According Simon, financialization is the economic systems that seek to aid in the reduction of all the values exchanged. The values may either be tangible, intangible, future or present promises of a financial instrument. Simon further postulates that the origin of the intent of financialization is to foster the reduction of any activity related to work product or service into an exchangeable financial tool such as the currency. As result, it would make it affordable for individuals in trading with the financial instruments in place (Smith, 2010).
Simon further added that workers through the financial tools such as mortgage may find it possible trade theses premises for future work, wages or homes. As a result, financialization takes care of all the insurance demands from such occasions (Wilson and Adler, 2013).
In the case of the above problem;
Swapped value=$2, 000, 0000
Libor+3 basis points=Libor+0.03%
FTSE=(100-92.75)=7.25%
In this case payment=a floating interest rate=libor+0.03% on 2,000,000
With a libor value of 6%p.a and a swap tenor of 180 days, the floating leg payer/equity receiver would owe:
(6%+0.03)*$2,000,000*180/360=6,030,000
As a result, this is the equity payer/floating leg receiver
At the same date, that is after 180 days, following the appreciation of FTSE by 7.25% from its level at trade commencement, Stetson would owe Harry 7.25%*$2,000,000=$145, 000. However, the FTSE at six month mark fell at 7.25% from the level of trade commencement. In this case, Stetson would owe hurry an additional 7.25%*$2,000,000=$145,000 because there is a negativity in the flow.
Conclusion
The report covers the Stetson Company financial issues. As a result, it gives the true picture of what the company needs to implement in collaborating with the department of finance. Consequentially, the effect of the findings if implemented will become a success to the operation of the company. For instance, the evaluation of the issues touching the currency exchange gives the preview to the company on what place or country to make a choice on for investments purposes. In addition, the issue of risks exposures presents a clear picture of what the threats the company is at during its operation and how to detect them in their occurrences. In so doing, the report further presents the way the manager or the company may manage such risks in the event of their occurrences. Last but not least, the paper also gives the way the Stetson Company react on the issue of hostile bidding process or scenarios. The paper reports majorly on the financial condition of the Stetson Company. As a result, the report, in this case, will serve as a valuable material to both the finance department and the company at large in the assessment of financial issues they face.
Bibliographies
Alexander, D., Britton, A. and Jorissen, A. 2007. International Financial Reporting and Analysis. London: Thomson Learning.
Beattie, V., Fearnley, S. and Hines, T. 2011. Reaching Key Financial Reporting decisions. Chichester, U.K.: John Wiley & Sons.
Clark, D. and Buffett, M. 2014. Warren Buffett and The Interpretation Of Financial Statements. New York: Scribner.
Elliott, B. and Elliott, J. 2008. Financial Accounting and Reporting. Harlow: Financial Times Prentice Hall.
Fridson, M. and Alvarez, F. 2011. Financial Statement Analysis. Hoboken, N.J.: John Wiley & Sons.
Gibson, C. 2013. Financial Reporting & Analysis. Mason, Ohio: South-Western.
Hussey, R. 2011. Fundamentals of International Financial Accounting And Reporting. Singapore: World Scientific.
Deliverable: A Written Report, 25 pages, lines spacing 1.5, with 11 Times New Roman Format, excluding cover page, appendix, and references.
Questions
Part One: (1 attachment: PowerPoint-M&A Theories and Major Synergies Models)
1- One of the first M&A steps is to screen the market in order to identify potential targets. Suggest three potential targets and document your choice with qualitative and quantitative analysis.
The three targets companies, but we need to do qualitative and quantitative analysis
• www.engilitycorp.com
• www.olivegroup.com
• www.dji.com
2- Describe each of the potential targets using the relevant M&A theories and the relevant synergies valuation models, as listed below.
• Synergies: Operating Synergy & Financial Synergy
• Valuation: The Discounted Cash-Flow (DCF) Model, The Discounted Future Earnings (DFE) Model, The Multiple Model, The Comparable Transactions Model
3- What are the potential synergies that may come from merging with each of the identified targets? Suggest an economic assessment of these synergies.
4- Based on your assessment and analysis done in questions 1to 3, recommend the firm among the three selected ones that should be subject to be merged with Tawazun. Recommend an execution plan for this merger within a realistic timeline and illustrate how and when the synergies will be achieved.
A) Explain each of the below on the three Targets Selection Framework
• Profitable and financially healthy targets: Gross Profit Margin, Net Profit Margin, Current Ratio, Quick Ratio, Dept to equity, Return On Equity, Return on Asset, EPS, P/E (for each of the three companies)
• Stability of the revenues
• Publically listed or private?
• Maturity (age of the firm)
• Geographical consideration
• Business model similarities and/or complementarities
• Existence of a Competitive advantage or not
• Regulated industry/sector or not
• Size: too much small or too much large (implications on the M&A financing scheme)
• Dependence on one customer or not
• Long-term contractual arrangement with suppliers?
• Law suits?
B) Overview of the Selected Targets
• Industry
• Products
• Business model
• Governance structure
• Financial facts and performance
• etc.
C) Use one or more of the valuation models to assess the potential synergies
D) Be conservative (not too optimistic…)
E) Cover different dimensions as much as possible
• Operations
• HR
• Finance
• Strategic
• IT
F) Recommendation and first draft of M&A Planning
Part Two: (3 attachments: Reading 4-M&A Execution Imperatives, Reading 3-a- Performance Assessment in M&A, and Reading 3-b- Performance Assessment in M&A)
5- According to Wang and Moini (2012) and Zollo and Meier (2008), what are the different methods used to assess the performance of M&A? Describe them.
6- According to Arthur et al. (2003), what are the main executions problems for which M&A may fail? Describe them.
7- According to Arthur et al. (2003), what are the two M&A integration imperatives? Describe them.
8- In question 4 of the part one, you recommended and execution plan for a target integration. Enhance this plan using some of the relevant performance metrics.
9- Explain how your recommended execution plan prevents from M&A execution problems?
SAMPLE ANSWER
Introduction
According to Basmah and Rahatullah (2014), mergers happen when organizations verify that consolidating their business operations with an alternate venture is of profit. This is generally helpful as expanded quality for the shareholders. While a merger of equivalents can happen when two organizations consolidate, this is not regularly the situation. Rather, the two organizations will go to an assention in which one of the organizations buys the other association’s regular stock from its shareholders in return for the buying organization’s basic stock. Here and there, money or different sorts of installment are utilized as a part of request to encourage the value exchange. Nonetheless, the most well-known methodology for a merger is the stock-for-stock plan (Adomako, Gasor & Danso, 2013). At the point when a merger happens, it is uncommon that there is an exchange of stock on a coordinated premise. This is almost constantly finished with a proportion. This is on account of the organizations are seldom of precisely the same size. For instance, Company A may be obtaining the stocks from a littler Company B. In the event that Company A is three times the extent of Company B, then the degree would be 1:3. As such, for every three shares of Company B, Company A would pay with one of its own stocks.
Part One
Engility
This is a company formed a couple of years ago to offer various technological solutions. For the past three years, the company has been busy providing critical services and support to the American department of defense and Federal civilian agencies with technological solutions to these bodies. In the recent past, the company has expanded their operations in line with their capabilities and brand in order to take advantage of the market opportunities. Therefore, the company is determined to enhance value for their customers by providing business services that are benchmarked with other similar businesses in the industry. The company has a workforce composed of character, skills, and expertise that are necessary for undertaking the most challenging tasks that may arise in the course of their operations. Since the company operates in more than 40 countries, the company has a wide market for their products and this enhances their strategic position (Engilitycorp, 2015). The company boasts a global of excellence in command and control system software, engility services, global security and engineering solutions, linguistic operations, and technical support.
Olive group
This is a company that provides resilient safety, security, and technological systems that support the core business functions in the oil and gas sector (Olivegroup, 2015). The oil and gas industry continue to venture into remote and high risk areas due to increased demand for hydrocarbons and this requires technological solutions to minimize such risks. The Olive group takes advantage of the need to provide advanced security, safety, and technological solutions in the energy sector that is subjected to high risk operations. In addition, the Olive group is determined to take care of the criminally and the politically motivated threats in the oil and gas infrastructure that increases with increased global demand.
DJI
DJI is a company that provides creative tools used to capture images that were previously out of the reach of human beings. The company operates flying cameras with the ability to move in the air and capture images that are then transmitted to the central server for adequate analysis. The DJI products are able to capture professional and high quality images and videos in every corner of the world, thus enhancing surveillance systems. Through their commitment to R&D and innovation, the company has managed to produce easy-to-use devices combined with advanced technologies and modern designs that promote the ethos of “form follows function”. Due to its strategic headquarters in the Chinas Silicon Valley, Shenzhen, the company benefits from direct access to raw materials, creative talent pool, and other important supplies that improve their chances of success (DJI, 2015). Due to the nature of their products, DJI has successfully managed to redefine various industries by accomplishing safer, faster, and more efficiency that before.
Analysis of the marker screening
From the above analysis, the three companies can form a very successful merger due to the nature of their operations. Since the companies operate in related environments, their merger can create more efficiency leading to improvement in their overall productivity (Cefis, Marsili & Schenk, 2009). This is because the security operations provided by the two companies will provide solutions to the highly risky oil and gas operation of the other company. In addition, the ability of these companies to form a merger will enhance their market power due to increased quality of their products. Due to the quick growth anticipated with mergers, the companies will have enhanced market power due to their diversified product portfolio. Since these three merging companies operate in related industries, they are likely to share information related to the market of their products and this will have them in formulating an advanced business operation strategy.
Operating synergies
According to Weber and Shlomo (2012), operating synergy is a type of a synergy that results to companies increasing their income and growth by the use of the same level of assets. It is useful, and divided into the four parts. These four parts are inclusive of the economies of scale that makes the organization to be more efficient in its operation due to combined effort following the merger that has been done. There is more profit that is evident in the company when merging is done and this increase the profitability of the company (Vu, Shi & Hanby, 2009). This is only evident, where both the parties are involved in the same kind of business that is headed in the same kind of direction with the same aim of profit making as the main outputs. Operating synergies give yield to a more increased pricing seen to be experienced by the company at hand the company that has merged will have high increased profits and higher margins following the reduced competition that is now evident. When companies come to work together, there is combined strengths will provide diverse strengths that will propel the organization forward. On the side of technology, it will improve because, the strengths that were employed by the single companies will now be put together leading to high productivity. Operating synergies will lead to a combination of multiple strengths and higher growths in the market (Schraeder & Self, 2003).
Financial synergies
These are type of synergies that are related to payoffs and in some cases, they can related to low, high or even both pay offs. When projects are of low rate, there is a high cash flow in such an organization and the value of that firm is highly increased following the high returns in the same organization (Schief et al, 2013). When a big company acquires a large company, the value of that big company will automatically increase due to the acquisition that has been made. This will further define the debt capacity of the two companies that have merged together to be highly increased because, there is consolidation of cash flows and other accounts of the two companies (Rosi, Shlomo, & Raviv, 2013). There is what will be termed as a tax case resulting from the acquisition of the smaller company the larger one. The companies will tend to benefit themselves by ensuring that that they manipulate the taxes by ensuring that they write off loses of other companies to reduce their tax liability. This will of high benefit to such firms who will evade the huge taxes they are entailed to pay but will be a loss on the other side if the laws governing the country finds out the trick the company is using to evade responsibilities. Whenever there is diversification, the firms are liable to face huge problems and more in the case of the investor’s diversification.
Discounted cash-flow (DCF) model
This is the main valuation model that is highly considered by companies that are about to carry out the mergers and acquisition process (Pillania, 2011). When the cash flow of a given company is well analyzed, it is thus very easy to tell the value of that given company and the amount of money that ought to be paid for it to be acquired by a much bigger company. The value of the company will give its estimated cash flow in the future; hence the other company acquiring it will tell if it will be able to benefit from it. This is a very rare opportunity that is used to measure the attractiveness of the investment opportunity to the acquiring company in a more realistic way (Nogeste, 2010). The cash flows of the firms is done separately, then from the combined firms and this is done to get the actual analysis of each firm with the aim of getting the true value and the benefits that can be experienced by the firm. The calculation follows two models that are to be followed to ensure that the actual value of the company is well tabulated. The model involves the forecast period and the terminal period, which have to be analyzed to get the cash flow made during that time. After the computation of the company’s value, it is prudent to get the cash flow over the life of the company in comparison to its present value. This is useful in analysis the amount of money the company big company acquiring the smaller company will be required to pay (Merikas, Polemis, & Triatafyllou, 2011).
Discounted future Earnings (DFE) Model
This is another type of model used in the analysis whose main aim is to relate the present value earnings of the given firm with its synergy value in the same given company (Mehta & Hirschheim, 2007). The company’s present value of the future earnings in most cases, it recommended to be compared with its synergy value especially to the smaller company and that of the two companies combined to give the credit worth of all.
Multiple models
The product of the flow of synergy is well tabulated by the use of this model and it is also compared with the value of the synergy that is present in the company. Comparison of the two firms is as well done through the use of this model, thus, for the comparison to be more effective, the common variable present in both the companies is kept constant. In the case of multiple cases, the synergy of the individual company is highly recommended to be compared with the difference between the multiple values of the firms at the combined state to ensure that the multiple value is accurately tabulated (Malik et al, 2014). The multiple value of the combined firms will be excess as compared to the value of the individual firm implying that in the case of multiple tabulations, the multiple firm have to be involved in whole.
Comparable transactions model
The common variable, which is maintained constant to all firms, is compared with the synergy and the product of the synergy that flows in all the organizations under the comparable transactions model. This also implies that, the comparable transaction model is useful in the comparison of the comparable transactions with the company’s synergies.
Question three
Operation synergy
There are two types of potential synergies that come as a result of merging the three companies inclusive of the financial and the operating synergies. On the side of the operating synergies the economies of scale on the side of the company’s will be said to increase following the merged efforts of the three companies. The organization will now be more efficient in its operations due to, the combine efforts that come as a result of the merging of the companies. The cost incurred in the production of the company’s product will be reduced, leading to increased profit to the company (Huang & Kleiner, 2004). This is because all the parties are therefore, involved in the same type of business that entails all having the same goal of making profit and improving the performance of the company. Once the companies have merged together, the competition power will be reduced; thus, the power of pricing will be increased at a very high rate. This will increase the company’s sales and profit at the same time; hence increasing the value of the company. Merging of three companies leads to a high combination of the multiple strengths that may result to the way of success to the newly formed company. The strength of one company might compliment the strength of the other company to mean that, when all these strengths are combined together the capability of the company will be increases to a higher percentage (Fiarield, Ogivile, & DelVecchio, 2002). This will therefore result to higher growth in the market, which will mean all the customers of the old companies will now be customers of the new company. The potential of the market growth will highly be increased such that, no matter the pricing of the products, people will tend to buy the products of the company because they can only access them there. The potential of the market growth will highly be increased such that, no matter the pricing of the products, people will tend to buy the products of the company because they can only access them in that one company.
Financial Synergy
This is termed as good potential for growth for the newly formed company that will now have a guaranteed increased number of customers old and newly formed ones. On the side of financial synergies that are formed as a result of the merging of the three companies, the cost of capital may be high, low or even the two circumstances can as well be noted depending on various situations in the three companies. The organization will have a high cash flow that will result from the low rate of projects that is evident in the company. The debt of the newly formed will be rated higher than before due to the companies that have merged to form the new company; thus, combining their debts together (Dorota, 2012). This will be a disadvantage to the new company that will have to pay huge amount of debts, for it to pave its way through. The debt will increase as a result of consolidating the cash flow, accounts of all the companies and other accounts belonging to the individual companies as well. In some instances, the company will tend to manipulate the tax that it ought to pay just for the sake of its own interest gain. This can be done through the use of the profits of one organization to cancel the losses of the other organizations to mean that, the tax liability of the new organization is increased (Clayton, 2010). The three companies that have merged together were from diverse grounds with diverse leadership, management that might be a problem to the new company, which is at a high risk of encountering insurmountable challenges in the incorporation of the diverse operations from the three companies.
Assessment
Based on the above assessment, the best company to be merged with Tawazun is Engility since they are closely related in the sense that they both deal with military technologies. In this regard, it would be very easy to streamline the operations of the two companies since they have related clients. Since the companies come from very different markets, the merger between them is likely to cause an improved market for the merged companies. Engility alone operates in more than 40 countries and this makes them a strategic partner for the merger with Tawazun due to the large nature of their market. Englity also forms a strategic partner of Tawazun due to their global excellence in command and control software, global security, and engineering solutions.
Execution plan
The beginning of the execution plan will begin with creating a unified organizational culture for the merged companies since the two companies comes from diverse cultural environments. The next stage will involve merging the vision and mission of the companies. The next stage involves integrating the personnel of the two companies into one unit to build the team momentum required for the success of the organization. This will help to develop the human capital that ensures the planning and retention of the best talent needed for the proper implementation of the company’s mission and vision. Integrating the cultures, formulating mission and vision statement, and development of the human capital can be done within one year period.
After the actual merger, the synergies will automatically be obtained and this will help the companies to create some opportunities that were not available in case they were working independently (DivyaPriya, 2012). After the merger, the companies will form one big company and this will enable them to achieve economies of scale, resulting into more profits. Merger enables the company to reduce the competition among them and this increases their pricing power, leading to more profits from their sales. In addition, the merger will enable the companies to have a combined strengths that if they were operating independently. Since these companies come from diverse geographical locations, they would achieve higher growth due to the increased market presence. The merger between these two companies will also result in financial synergies, such that their debt capacity would increase as their cash flow and other accounts are consolidated, leading to increased debt capacity.
Part 4 A.
A vital part of the successful merger or acquisition is proper evaluation of the target company (Schef et al, 2013). Like nearly any sales transaction, this can result in differing opinions. The company selling stocks will want the price to be high. The purchaser will work to achieve the lowest price. Since there are often many millions of dollars involved, methods for determining the value of a company have been developed. One method for establishing the value for a company is to use comparative ratios. Many ratios exist, and the most common of them are the Price to earnings ratio (P/E ratio) and the Enterprise Value to Sales Ratio (EV sales). The P/E ratio includes the acquiring company make an offer which is some multiple of the target company’s earnings. Examining the P/E ratio can provide the purchasing company with guidance concerning the multiple which should be used in the purchase. A higher P/E ratio will generally lead to the use of a higher multiple. The EV sales ratio allows the acquiring company to base their purchase multiple on the revenues of the company (Rossi, Shlomo, & Raviv, 2013). If the company has a relatively high EV sales ratio, then the multiple paid for the purchase stocks will be higher.
Another important factor to consider when determining the value for a company is its replacement cost. If the value for the company were the sum of its staffing and equipment costs, the company doing the acquisition could purchase the staff and equipment in order to evoke the acquisition. This type of evaluation is used primarily when the assets for a company are tangible such as vehicles, mines, and products. Companies which are in the service industry may have assets such as ideas and people, which do not lend themselves to this type of valuation.
Gross profit margin is the type of profit in a given company that is calculated with the selling price multiplied by 100 and it can best be defined as the selling price that is turned to profit of a company. Return on assets is well used in showing of how a company’s given assets are in the fore front of giving high returns and profits to the same company (Nogeste, 2010). The best way of tabulating the return on assets is by dividing the net income of the same company with its average total assets that will give the actual tabulations. This will give the actual figure gained by the company after it has employed the usage of its assets in profit making.
The current ration of the company is its financial ratio hat is used in the measure of resources of the firm that it will use in the paying of acquired debts either through the bank or any other loner channel (Pillania, 2011). The company’s market liquidity ratio can be compared to the company’s current ratio; hence, tabulated by diving the current assets with the current liabilities. This is the best way of a company that is interested in comparing of its current assets with its current liabilities that it will be entailed to surrender on failure of paying the acquired loan.
Quick ratio is the measure of the how fast a company will be in a position of using its available cash that will be needed to clear its liabilities within then given time as earlier agreed. The faster the company uses its money to clear its debts the higher the position it will attain of acquiring bigger loan from the same loner. The quick ration is obtained through the addition of the accounts receivable, the cash and cash equivalent with the marketable securities whereby, the total sum is divided by the current liabilities.
Debt to equity ratio indicates the relative equity that belongs to the company’s shareholders equity in combination of the debt a company has been in a position of acquiring to finance its assets to work accordingly (Mehta & Hirschheim, 2007). This type of a ratio is mostly termed as the risk leverage a company has to incur in its operations of expanding the business to higher heights. To obtain debt to equity ratio, the total debt that a company has acquired is divided by its equity. This will therefore, give the financial leverage of the company as a whole and corrections will be done on the right places.
Return on equity will best give the required return to the company’s interest by measuring all its efficiency of a company on how profit is given to the shareholders on each unit. It can best be tabulated by dividing the net income with the shareholder equity of the given company to ensure the returns are equal to the fiscal year net income. This is a ratio that is given in percentage terms; thus, also referred to as the return on investment. It can be given by tabulation of the Net Income that is divided with the Total Assets.
Stability of the revenues will have an impact on the success of the merging companies such that the more stable their revenues, the more profitable the merging venture is due improved profitability. Since both the three companies have stable revenues, they are likely to take advantage of the synergies created by the merger to increase their profitability.
The nature of the companies, whether public or private, affects the success of the merging process. For public companies, the process of merging usually becomes complicated since it involves government bureaucracies and processes which often take long time to reach conclusions. In addition, some government entities are usually guided by some laws and regulation that requires the parliamentary not to continue with the merging process. For the private companies, the merging process becomes relatively easier since the ownership of the companies is in private hands with main focus driven by profits. This is quite different for public listed companies since the government is also highly concerned on other factors such as the loss of employment and environmental impact of such mergers. Since all the three targets are privately owned, the process of merger is simple and faster due to less bureaucracy involved.
Maturity age of the firms also determines the success of the firm, such that the firms at their maturity level are likely to carry out successful mergers than firms at their advanced stages. Firms are maturity level are have reached their final stage of their growth and have nothing left apart from forming mergers and acquisitions to form multinational corporations. Since all the three firms are at their maturity levels, it becomes simple and profitable for them to form mergers that they will use to benefit from opportunities that come from globalization.
The geographical location should always be considered for firms intending to form mergers since it determines the level of market penetration of the proposed merger. Companies that are located in different places have more capability to increase their market presence that those companies located in the same geographical location. The fact that these companies are located in different locations enables them to form strategic partners for merger that would result into increased market presence.
The nature of the business model also affects the success of the merger, such that firms with similar business model integrate their business activities easily than those firms with different business models. All the above companies strive to achieve innovation in their businesses, they form potential targets for the merger due to similar business model.
The existence of competitive advantage also has an important role to play in the merger process since such combination of attributes supports the synergies developed (Nogeste, 2010). Since all these merging companies have highly qualified staff, this gives them a competitive advantage necessary for the merger process. In addition, the location of these companies makes it possible for them to attain natural resources that enable them to make their products with lots of ease. All these merging companies also focus on innovation from new technologies such as robotics and information technologies. According to Pillania (2011), the competitive advantage gained from these individual attributes will enable the merging companies to outdo their rivals in the industry and realize more profits needed for the success of the organization.
The nature of the industry, whether regulated or not, determines the success of the overall merger of the organization. According to Nogeste (2010), the technological sector is not much regulated and thus companies have enough freedoms to explore their innovative strategies as long as they are observing the patent and copyright laws. These merging companies have rare patent litigation incidences and this means that they are well prepared in observing their patent and copyright laws. Therefore, the regulation in the technology industry is less likely to interfere with their operations.
According to Basmah and Rahatullah (2014), the size of the merging companies has implications on the financing scheme. All these companies are medium sized companies and this implies that they have moderate influence of the financing scheme. Since the size of the companies is somehow similar, this will highly positively impact the merging process due to similar perspectives.
Both Engility and DJI are highly dependent on one customer, which is the government, for their supplies. On the other hand, the Olive group has a diversified market for their products. In this regard, the three companies are not dependent on one customer since others serve the government while the other serves the general publics. This diversified customer base enable the merging companies to have a diversified market for their products and this reduces the nature of risk due to global market risks.
The nature of contractual relationships with the clients also determines the success of the merging companies. If one of the merging companies have long-term contractual relationships with their suppliers and the other is not, the process of negotiating the contract agreements may become complicated (Cefis, Marsili, & Schenk, 2009). On the other hand, if both companies have short-term contractual relationships with their suppliers, the process of merging the companies becomes very easy and simple. In addition, the lawsuits arising from any company should be determined before the merging process. This is because companies with lawsuits are risky to merge with since the legal battles can result into huge financial and reputational losses for the companies. In turn, this would impact the level of profits realized by the organization. In this regard, it is safe and secure to merger companies which are free form law suits in order to reduce the risks that may result from the legal proceedings.
Part B
Overview of the selected Targets
The above mentioned firms operate in the high-tech industry that is characterized by accelerated innovation cycles, margin pressures, and intensive global competition. In addition, this industry is characterized by complex supply chains. In order to competitive in the high-tech industry, a company has to respond rapidly to the highly changing market conditions and demands and incorporate into their strategies. Therefore, such companies needs to have a an efficient and reliable landscape to support their complex business processes at all time of their operations (Clayton, 2010). Due to the capital intensive nature of the company, it barriers to entry are so high that only few players exist in the market.
The products for these three companies are related to robotic cameras with the potential of providing surveillance to areas that are beyond the reach of human beings. These cameras have the capability of capturing images and video from all the corners of the earth with the aim of improving security and reducing the risks in various types of businesses. These products can also be used in high risks operation such as military operations to provide surveillance and support where necessary.
The business model for the three companies is somehow the same since both of them apply the concept of innovation to create hi-tech products. Both the three companies invest a lot of money in R&D to create cutting edge products that can perform highly sophisticated security surveillance. The In addition, the governance structure of the three companies is also related since they are both headed by the CEO who is supported by various level managers. In the past few years, these three companies have had a strong financial performance with strong asset based and high sale. Therefore, these companies shows strong financial performance and their financial projections are also bright.
Part C
The merger between these companies can also be viewed under various valuation models. The discounted future earnings model can effectively be used to analyze the performance of these three companies in case of merger. The discounted future earning analysis helps to determine the current value of each of the merging companies in accordance to their estimated cash flows. The present value of the future earnings for both the organizations is then calculated for both the companies and the combined firms separately.
Part E
The operations of the company are somehow similar since they both operate in the high-tech industry. The operations of the company are geared towards achieving technological solutions that are capable of providing enough security in the most effective manner. The human resources available for these companies are also similar from the fact that they both employ highly skilled and talented pool of professionals to drive innovation from the companies. In addition, the human resources should develop and maintain a highly skilled manpower to support R&D initiatives. Since these companies have readily available market, their sales provide them with huge financial strength. In addition, these companies are credit worthy and can easily access loans for financial to finance various projects. Security is one of the main concerns for most organizations since breach of it can result into series of losses. In this regard, these three companies operate a strategic business since they have a wide market for their products across the industry. These companies take advantage of the development in information technology to develop their products, leading to improve efficiency in their operations.
Part F
I recommend that merging of these companies will result into positive synergies that would result into increased market presence and improved sales. In addition, the merger between these companies would result into increased talent pool, leading to improved chances for innovation and subsequent development of the company.
Part two
Methods used to assess performance
There are Different methods of assessing the performance of Mergers and acquisition of a given company. They are inclusive of the level of analysis, time dimension that is classified into long-term measurers and short to medium measures (Wang & Moini, 2012). The other method is the complete model that is basically used in the analysis of the logical progression that entails the consideration of the firm performance with its short term acquisition. The integration of the companies will enable the new company to reach its desired target level by ensuring that the desired level is attained for the success of the company. The task level of the new company will be highly increased following the merging of the two companies as the control systems of the company will be well aligned for smooth operations. When the degree of target level is attained by the three organizations in a satisfying manner will be the task level obtained by the merged organizations (Zollo & Meier, 2008). The transaction level will be well improved to ensure that, the company is well encompassed to ensure that the revenue growth is high together with the efficiency of the cost that is incurred in production. This will mean that, the acquired and merged companies are now having a good transaction level that can be measured by the amount of value that is generated by the new company. The value creation is very important as its realization by the new company will aid boost its transaction level that will be a measure of its new value after merging has taken place.
The performance that will be now be evident after the acquiring and merging of companies has taken place; thus, being in a reputable position of clearly the performance of the firm that is newly formed. In a firm there is a variation that mostly occurred during the time of relevance when the business plan was to be executed is also used in the definition of the company’s level of performance and its credit worth. When the performance is at a high level, the rating of the company’s level will be higher compared to other type of business.
When dealing with the matters of time horizon there are different classification that are followed inclusive of the long term measures together with the short to medium measures that are followed to ensure time is not wasted anyhow rather should be used for the well-being of the company. The period of implementation will be covered by the completion of transaction that is needed to be covered by the firm in combination of the consequent creation (Wang & Moini, 2012). The quality of the conversion of the information technology and t effectiveness of the knowledge e that ought to be well transferred defines the short to medium measures that ought to be employed for the job to be well done in the given company. The retention of the employees in the new company will a long term measure that the company will have to use in ensuring that when workforce is maintained things will be all right (Weber & Shlomo, 2012). Customers, suppliers and the business partners is a task that has to well-coordinated by the entire formed company only if it deems them necessary to it. If need be, the relationship of the partners with the new company ought to be well improved to ensure that, the company’s performance will be at the fore front.
Complete model considers the company’s short term and its performance over a long and the short period of time with the aim of acquiring the returns and stock over a short given period of time. When the transaction period has been announced, the company is required to give its stock analysis over that given time to ensure the model of acquisition is completed. When dealing with the completion of the long term windows, knowledge of what happened during the integration period has to be incorporated following that it is of great use to the acquisition and the merging program of the company. The success of the strategic move evident in the merging program is also analyzed by the market because the market will have a direct effect after the merging of the companies has been done (Vu, Shi & Hanby, 2009).
Execution problems
The main execution problems that may fail the process of merger and acquisition are inclusive of; under communication, missing momentum, information issues that are addresses too late, unclear financial expectations, unclear strategic concept and the master plan that might be missing (Wang & Moini, 2012). The new organization structure might have high compromises that might interfere with the functioning of the company; thus becoming a problem that might result from the merging and acquisition a company. When a company has done the acquisition and merging the integration of the companies ought to be the shortest possible because of delayed loss may be highly incurred as a result. When problems are evident, the potential that is used in the building of the synergies is therefore not maximized and this also leads to the destruction of the share-holders value on the same company (Zollo & Meier, 2008). Momentum that is obtained early will tend to produce acquisitions that are successful; whereas, those which do not obtain early momentum will tend to suffer loss. The deal of acquiring the mergers depend on the execution that is put forth to ensure that the acquisition process is smoothened (Schief et al, 2013). Different cultures accompanied by different management styles will be prone to bring out.
Integration imperatives
The integration imperatives explained by the Arthur are the urgency imperative and the execution imperative. The mergers that will prove to have a high progress will be the one that the market will easily trust to operate with for its growth and prosperity. The management with highly recognized actions will be at a high consideration by the company that is out to acquire the acquisition process (Arthur et al, 2003). The highest prioritized projects have to be won quickly to create a good impression to the investors that value is being created in the company that they want to acquire. There ought to be a very high urgency inclosing of underused facilities that may be the source of los to the company’s. Investors will be highly in need of knowing the value they will attain after attain the best out of the management.
Execution plan with metrics
The extent of the execution plan has an important role to play in the success of the merger and acquisitions. For proper integration to take place, it is necessary to set expectations regarding the merger in order to determine whether the merger is a success or a failure. The management can decide to set a particular financial target, say 30% profits, to be realized after the merger of these companies has taken place. creating such a blue print for the organization enable the teams involved to work hard with the aim of ensuring that such a dream is realized. The execution plan should be developed such that it can easily show results as quickly as possible to demonstrate confidence in maintaining business momentum and continuity (Schraeder & Self, 2003). The execution plan should also focus on gaining and retaining more customers than the individual companies had. In this regard, a proper target of the customers can be set, which is above the individual companies, so that assessment can be made later concerning the number of new customers acquired.
Execution plan to prevent M&A problems
Execution plan can adequately be used to prevent the problems identified in the post-merger integration. During the execution, proper communication should be enhances using the right channels and media in order to ensure that all issues are ironed out in good time (Wang & Moini, 2012). In addition, the execution plan needs to entail realistic and clear financial expectations to avoid failures due to unrealistic financial projections. The new organizational structure should also be arranged that it incorporate the managerial aspects of the merging companies and allow for proper communication flow within the organization. The organization should also create a master plan to help establish the momentum needed for the success of the organization. According to Zollo and Meier (2008), all the people involved in the execution plan should be fully committed and should be ready to follow the clear strategic concept set by the organization. All the execution plans should have set timelines in order to ensure that all the issues are addressed within good time.
Reference
Adomako, S., Gasor, G. K., & Danso, A. (2013). Examining human resource managers’ involvement in mergers and acquisitions (M&As) process in Ghana. Journal of Management Policy and Practice, 14(6), 25-36. Retrieved from http://search.proquest.com/docview/1503084748?accountid=45049
Arthur, B., McDonald, T., & Herd, T. (2003). Two merger integration imperatives: Urgency and execution. Strategy & Leadership; 31, 3; ProQuest Central
Antila, E. M., & Kakkonen, A. (2008). Factors affecting the role of HR managers in international mergers and acquisitions. Personnel Review, 37(3), 280-299.
Cefis, E., Marsili, O., & Schenk, H. (2009). The effects of mergers and acquisitions on the firm size distribution. Journal of Evolutionary Economics, 19(1), 1-20.
Clayton, B. C. (2010). Understanding the unpredictable: Beyond traditional research on mergers and acquisitions. Emergence : Complexity and Organization, 12(3), 1-19. Retrieved from http://search.proquest.com/docview/847014363?accountid=45049
DivyaPriya, B. (2012). A study on impact of mergers and acquisitions in the growth of total assets and profits of selected merged banks. Sumedha Journal of Management, 1(2), 90-96. Retrieved from http://search.proquest.com/docview/1339409324?accountid=45049
Dorata, N. T. (2012). Determinants of the strengths and weaknesses of acquiring firms in mergers and acquisitions: A stakeholder perspective. International Journal of Management, 29(2), 578-590. Retrieved from http://search.proquest.com/docview/1020619654?accountid=45049
Fairfield-Sonn, J., Ogilvie, J. R., & DelVecchio, G. A. (2002). Mergers, acquisitions and long-term employee attitudes. The Journal of Business and Economic Studies, 8(2), 1-16. Retrieved from http://search.proquest.com/docview/235797496?accountid=45049
Malik, M. F., Anuar, M. A., Khan, S., & Khan, F. (2014). Mergers and acquisitions: A conceptual review. International Journal of Accounting and Financial Reporting, 4(2), 520-
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Nogeste, K. (2010). Understanding mergers and acquisitions (M&As) from a program management perspective. International Journal of Managing Projects in Business, 3(1),
Rossi, M., Shlomo, Y. T., & Raviv, A. (2013). Mergers and acquisitions in the hightech industry: A literature review. International Journal of Organizational Analysis, 21(1), 66-82.
Schief, M., Buxmann, P.,Prof Dr, & Schiereck, D.,Prof Dr. (2013). Mergers and acquisitions in the software industry. Business & Information Systems Engineering, 5(6), 421-431.
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Weber, Y., & Shlomo, Y. T. (2012). Mergers and acquisitions process: The use of corporate culture analysis. Cross Cultural Management, 19(3), 288-303.
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Evidence from Denmark. E-Leader Berlin.
Zollo, M & Meier, D. (2008). What Is M&A Performance? Academy of ManagementPerspectives, pp55-77
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1.Why was this case so important?
2.Why did the U.S. Supreme Court develop the “effects on interstate commerce” test?
3.Is most commerce considered “interstate commerce”? Why or why not?
SAMPLE ANSWER
Interstate Commerce
The Commerce Clause of the United States Constitution states that the Congress shall have the power to regulate interstate and foreign trade. The case was so important since commerce clause had never been construed in its narrow sense. The clause states plainly that, there is limited power to control trade between people in one country and people outside that country (Brown, and company, 1907,6).
The clause and the economy of the US has progressed and turned out to be very sophisticated. In addition, as soon as the congress engaged in addressing the social challenges in the country, the commercial law was used as the referencing point for any law that was passed. Consequently, the commerce law has developed into a very significant law for the congress for the last 50 years. The clause therefore is now one of the main referencing points for the congress authority (The Baldwin law book co, 1917,3).
Moreover, the commercial clause is very important in the US. This is simply because, a keen look at the US code clearly shows that approximately 700 provisions of the state which affect various issues revolve around interstate commerce. For instance, Supreme Court in United States v. Lopez and United States v. Morrison concluded that a gun possession law and a law concerning sexual violence were not the mandate of the congress to control. In another case Gonzales v. Raich, later confirmed the powers of the congress to control medical marijuana. The court decided that the consequences of the previous cases would be limited. The case of National Federation of Business v. Sebelius, which was challenging the role of a person to purchase health insurance, the court declared that commerce clause did not have a room for such provision. In Sebelius, the Court provided regulations in the instances where people had already chosen to involve themselves in commercial engagements (Washington : U.S. Govt,1910,7).
References
Washington : U.S. Govt. (1910). Hearings before the Committee on Interstate and Foreign , by HathiTrust)Commerce of the House of Representatives on bills affecting Interstate commerce. United States House Committee on Interstate and Foreign Commerce
1. What is the long term business strategy for HuStream? In which areas should the business model be directed? You may use any appropriate business model to analyze their business.
2. How should HuStream’s co-founders seek the funding needed to support their company’s growth? Discuss the revenue model.
3. What partnership model should the co-founders pursue to promote the use of digital ecosystems to enhance their customers experiences and value propositions
4. Describe the IT platform HuStream has developed to date. Is this platform aligned to HuStream’s business strategy? If so, how has the user experience helped or hindered?
5. What principles of strategic execution should HuStream use?
SAMPLE ANSWER
HuStream Case Study
What is the long term business strategy for HuStream? In which areas should the business model be directed? You may use any appropriate business model to analyze their business.
HuStream seeks to reach a larger customer base through the Do it yourself (DIY) business model. This involves productizing its interactive video technology, such that it allows customers to easily access and generate their own videos using its SDK interface without the need for professional support. This is to be achieved through the Pay as You Go model in the form of per-video-profit-model, where HuStream will charge a per-episode fee and negotiate prices downwards with increasing volumes (Denne, 2007). In order to enhance efficiency, this business model should be directed to the developers, creative teams and the client services team. While the development and improvement of the online platform is highly relevant to the business strategy through ensuring innovation and uniqueness, knowing the clients’ needs and their views on the quality and pricing are also of importance in defining the business strategy outcome.
How should HuStream’s co-founders seek the funding needed to support their company’s growth? Discuss the revenue model.
HuStream’s co-founders should follow the fee-for service revenue model to support the growth of the company. This is a model in which customers pay for the services they use at any particular time (Mayer, 2012). HuStream aims at providing customers with a platform in which they can access DIY videos and it would be most appropriate to charge customers as they use the services. The revenue generated can then be used to support the company’s growth.
What partnership model should the co-founders pursue to promote the use of digital ecosystems to enhance their customers experiences and value propositions
HuStream co-founders should utilize a sub-contracting partnership model that brings together the co-founders, channel partners and external software developers (Lawton and Michaels, 2001). HuStream must establish partnerships with related companies to bring desirable skills and resources in a bid to promote the use of digital ecosystems. The partnership model should encompass a relationship where the co-founders control a majority stake while the others take a supportive role in terms of subcontracts, where each will be compensated by the level of effort put in or through a contract agreement. The external software developers will play the role of bringing in modern technology, innovative applications and software development skills while channel partners will market and sell the products. Channel partners should include entertainment industry and website owners.
Describe the IT platform HuStream has developed to date. Is this platform aligned to HuStream’s business strategy? If so, how has the user experience helped or hindered?
HuStream began with the use of a cloud-based platform on the internet from which clients can conveniently access and use to build interactive material according to their needs. This is aimed at providing users with unique experiences through features and functionalities that help customers create their own stamps. HuStream has also developed a video production hub which initially helped customers produce high quality video content using the software development kit (SDK). With advancement in technology and changing customer needs, HuStream seeks to pursue a product-based model, where the user-friendly SDK interface will help customers generate their own videos. This is in line with the organization’s strategy and through the SDK interface; HuStream will achieve its objective of productizing its business and hence reduce focus on service-based model. The user experience has enhanced this strategy because it has worked by reducing the need to rely on professionals to develop videos and manage accounts.
What principles of strategic execution should HuStream use?
In enhancing strategic execution, HuStream should ensure that the principles of focus, leverage and accountability. Focus demands that the company stays committed to its goals. This includes providing the best solutions for customers through innovation, following the business strategy and maintaining fruitful partnerships (Parise, 2006). Given the limited resources that are available to companies against the growing demand from customers, leveraging these resources of great importance as it will ensure that the company can achieve greater milestones for less. Consequently, profitability and company growth will be assured. Lastly, accountability is of essence and following consistent actions in line with the company’s objectives will ensure that HuStream achieves the desired results. Accountability is about ensuring that HuStream can deliver what it promised to customers in terms of performance and quality (Parise, 2006).
Lawton, T. C., & Michaels, K. P. (2001). Advancing to the virtual value chain: Learning from the dell model.Irish Journal of Management, 22(1), 91-112. Retrieved from http://search.proquest.com/docview/207641214?accountid=45049
1. What is the long term business strategy for HuStream? In which areas should the business model be directed? You may use any appropriate business model to analyze their business.
2. How should HuStream’s co-founders seek the funding needed to support their company’s growth? Discuss the revenue model.
3. What partnership model should the co-founders pursue to promote the use of digital ecosystems to enhance their customers experiences and value propositions
4. Describe the IT platform HuStream has developed to date. Is this platform aligned to HuStream’s business strategy? If so, how has the user experience helped or hindered?
5. What principles of strategic execution should HuStream use?
SAMPLE ANSWER
Hustream Technologies Interactive Video
Question 1: What is the long term business strategy for HuStream? In which areas should the business model be directed? You may use any appropriate business model to analyze their business.
Every business is expected to have a short and long-term strategy to remain steadfast in its operation. The long-term business strategy for HuStream is to render quality services that meet customers’ expectation. The company has a number of areas that they can direct their business model. One of the areas is entertainment. Others includes education, hospitality and tourism, automotive, advertising, athletics, landscaping, oil and gas, employee training, computer software, weddings, online dating, casinos, real estates, athletic and sports, online tutorial, and vlogging also known as video blogging among many others (Ivey, 2014). An appropriate business model that can make the company accrue profits will guide the selection of a lucrative area. Per episode fee model is appropriate to help the firm generate revenues through entertainment option while in per video profit model will be appropriate in the education area. Therefore, the company stands a higher chance to accrue more revenue by adoption the revenue model.
Question 2: How should HuStream’s co-founders seek the funding needed to support their company’s growth? Discuss the revenue model.
Funding is required to spearhead the growth of the company. The co-founder therefore seeks this funding through revenue model approach. The co-founder should provide a detailed account of how the company plans to accrue its income and strategies that it will use to generate profits. The pricing details of its services and the modalities it will use to attract customers should be provided to provide an insight of the capability of the company to make profits and generate revenue in future (Dasgupta, 2013). The co founder should as well come up with sales projections over a certain period. The revenue of the company may be recurring from the repeat or loyal clients. Providing services to various customers, as schools and entertainment industry will enable the firm to have stable streams of revenue hence will enable the company to carry on with its projects. Other source of revenue for the company could be transactional which includes services the company will be selling on a continuous basis to its clients.
Question 3: What partnership model should the co-founders pursue to promote the use of digital ecosystems to enhance their customers experiences and value propositions
Various partnership models exist that cofounder can pursue to promote the use of digital ecosystems to enhance customer experience and value propositions. In this scenario, the suitable model is concurrent model. Partnership should incorporate different individuals that will be able to offer different programs or services to different groups of people to enhance and expand service delivery (Ivey, 2014). Currently, the demand of the customers is huge and this requires hiring of specialized individual to come and help with service rendering. The company is also expected to liaise with other stakeholders as well as financial institutions, to request for financial assistance. This model is therefore suitable in this scenario as it goes an extra mile to save costs.
Question 4: Describe the IT platform HuStream has developed to date. Is this platform aligned to HuStream’s business strategy? If so, how has the user experience helped or hindered?
HuStream IT platform under operation has the capacity to operate globally through internet with the aid of cloud computing. Through this cloud computing, customers can access and use and even build own interactive materials the way they see fit. Clients are required to login the cloud and create their own content that meets their needs. This cloud is protected by Secure Sockets Layer (SSL) security (Ivey, 2014). Therefore, there is a guaranteed protection from the intruders. The functionality and new features provide users and customers with unique experience. Users such as students and teachers have the ability to customize some of the buttons on the websites to ensure that they achieve user experience (Ivey, 2014). The company therefore focused on production of videos at a small fee. The service based model business focused on video production and in ensuring that customers het high quality video production services.
Question 5: What principles of strategic execution should HuStream use?
For HuStream to achieve its objectives it needs to apply various principles of strategic execution (Pal & Pantaleo, 2008). This is important in setting the pace of what the company will achieve. One of the principles is to dialogue with the client partners to help in definition of objectives and criteria of success. It is important to begin by thinking about the brand and the client partners to define success criteria. The partners should collaborate and agree on what will constitute as a successful campaign. The company should also consider the program performance indicators to ensure that the performance of the company is assessed at the conclusion of the project to help measure success. Since objectives of the business do vary, program performance indicators as well tend to vary from one company to another. Another principle is to gain in-depth understanding of both internal and external landscape that the services or the brand competes, understanding the company position and status as well as the environment enlightens the business person on the various aspects that affect smooth operation of the business.
Furthermore, before execution is prudent to think about consumer insights (Radomska, 2014). Consumer should provide their views and express their emotions and rational engagement about them and these insights will inform how the company will implement or develop the campaign. The next principle requires that that the service provided exemplifies creativity and innovation. The services should resonate and meet the expectations of the company. The services should also engage the customers through different platforms such as digital touch among other to create positive consumer experience.
HLTH 8465 Week 2 Discussion
The Strategic Planning Process
The strategic planning process is essential for any non-profit or government organization, as it helps organizations achieve their missions and goals. This process includes various elements such as stakeholders, sustainable outcomes, resources, and community connections, with each element fulfilling a particular role in the planning process. For this Discussion, you examine strategic planning and consider the most important element of the process.
Answer the following Questions:
1. An explanation of the most important element of the strategic planning process (e.g., stakeholders, sustainable outcomes, resources, community connections, etc.).
2. Include how this element of planning helps public and non-profit organizations achieve optimal results.
3. Then, explain how this element of planning relates to your own professional experiences.
Article:
1. Karel, S., Adam, P., & Radomír, P. (2013). Strategic planning and business performance of micro, small and medium-sized enterprises. Journal of Competitiveness, 5(4), 57–72.
2. Kash, B. A., Spaulding, A., Johnson, C. E., & Gamm, L. (2014). Success factors for strategic change Initiatives: A qualitative study of healthcare administrators’ perspectives. Journal of Healthcare Management, 59(1), 65–81.
3. Zollo, M., Reuer, J. J., & Singh, H. (2002). Interorganizational routines and performance in strategic alliances. Organization Science, 13(6), 701–713.
4. National Council of Nonprofits. (n.d.). Strategic and business planning for nonprofits. Retrieved June 14, 2014, from http://www.councilofnonprofits.org/strategic-business-planning-for-nonprofits
Please apply the Application Assignment Rubric when writing the Paper.
I. Paper should demonstrate an excellent understanding of all of the concepts and key points presented in the texts.
II. Paper provides significant detail including multiple relevant examples, evidence from the readings and other sources, and discerning ideas.
III. Paper should be well organized, uses scholarly tone, follows APA style, uses original writing and proper paraphrasing, contains very few or no writing and/or spelling errors, and is fully consistent with doctoral level writing style.
IV. Paper should be mostly consistent with doctoral level writing style.
SAMPLE ANSWER
Strategic Planning
Despite the fact that the main goal of strategic planning process is to come up with a plan, the importance of the whole process squarely lies within the process itself. The process therefore grants the stakeholders the opportunity to familiarize themselves with every activity that happens within the organization. The stakeholders are given an opportunity to give their opinion about what they feel concerning the organization in terms of the strength and weakness (National Council of Nonprofits, 2014). The stakeholders also share their perceptions of its strengths and weaknesses, and to discuss critical issues affecting, or likely to discuss the most serious things affecting the organization. During this process, the finals decision to be incorporated in the strategic plan ought to have been agreed upon by every stakeholder. This is simply because, despite the fact that though one person is very efficient, eliminates the opportunity to distribute the ownership of the organization hence interferes with the future of the organization (Karel, Adam & Radomír, 2013.57-72).
Sustainable outcomes, resources, community connections are very essential in the description of the organization. This therefore entails analysis of the detailed description of the organization’s Strengths, Weaknesses, Opportunities, and Threats. The process is usually conducted step by step in order to ensure all issues are tackled. In addition, analysis of the Political, Environmental, Social, and Technical factors which are currently affecting the organization are also considered. Both approaches are embraced especially when the organization wants to adopt a new program in the shortest time possible (Kash et al., 2014.65-81).
Strategic planning is therefore very essential to both nonprofit and public organizations. Strategic plan provides the guideline which guides decision-making process and a basis for a comprehensive planning. The plan also explains the strategy of the organization to the outsiders so as to involve them and also acts as a stimulator for growth of the organization.
The element of planning is very relevant to my professional. The process describes clearly the specific route to follow in order to achieve laid down objectives in an organization (Zollo, Reuer & Singh, 2002.701-713).
References
Karel, S., Adam, P., & Radomír, P. (2013). Strategic planning and business performance of micro, small and medium-sized enterprises. Journal of Competitiveness, 5(4),57–72.
Kash, B. A., Spaulding, A., Johnson, C. E., & Gamm, L. (2014). Success
factors for strategic change Initiatives: A qualitative study of healthcare
administrators’ perspectives. Journal of Healthcare Management, 59(1), 65–81.
Zollo, M., Reuer, J. J., & Singh, H. (2002). Interorganizational routines and performance in strategic alliances. Organization Science,13(6), 701–713.
For this paper, the writer will have to chose a company base on the instructions provided. It is critical that the writer pay special attention to all the details of this paper, because the writer will have to use the same information for another paper that’s due subsequently as noted in the assignment details. I will upload the template mentioned in the paper for the writer to have an idea of what the subsequent paper will look like so as to guide her in choosing the company for this paper. I will also upload additional instructions to help the writer in choosing the company for this paper as it will be a continues assignment and every detail will count from day one. Hear below the writer will follow the detail instructions to respond to the questions raise after the scenario , and will end by asking a question as also mentioned in the instructions as one other pear will have to in turn respond to that in class. The paper will have a 4 paragraphs in two pages as mentioned in the instructions. It is critical that the writer follow all the detail instructions as any missteps will jeopardize the entire paper .
Value Chains Analysis
Consider the following scenario:
Miguel owns a Mexican restaurant. He has well-established relationships with local suppliers and has fresh produce delivered daily. Carefully trained cooks craft authentic Mexican food in state-of-the-art kitchen using a well-refined and systematic process. They interact seamlessly with fast, friendly wait staff who typically deliver food in fifteen minutes or less to hungry customers. Customers come in large numbers for good food at a good price. Miguel carefully tracks customer preferences to alter menus and offer specials.
Despite being a small business, Miguel has successfully coordinated various internal activities and established external relationships in ways that create value for his customers.
A well-functioning work team carefully assesses the strengths and weaknesses of each team member, assigning activities to leverage their individual strengths. However, team members also carefully coordinate tasks to ensure they combine their individual efforts in effective ways. Effective organizations do the same by carefully selecting a strategy that maximizes the strengths in performing various activities. They exploit relationships between internal activities to create a chain of activities that maximizes the value of their product or service for customers. Companies large and small can derive additional benefit from combining a strong internal value chain with those of external partners to establish a value system.
To prepare, select a company with which you are very familiar or for which you can easily obtain information.
You may wish to use the organization you are thinking of proposing for the Sustainable Solutions Paper (SSP), which you will complete throughout the course. This would allow you to re-purpose information from this paper for a portion of your SSP. If you wish to take advantage of this opportunity, please review the SSP template located in this week’s Learning Resources to ensure the organization you choose for this paper also satisfies the SSP requirements. Review this week’s Learning Resources, particularly Exhibit 1 in Porter and Millar’s article “How Information Gives You Competitive Advantage.” You can use this chart to guide your value chain analysis for this paper.
Write a minimum of, 3–4 paragraph response (2 pages). Briefly describe the organization you selected and the industry in which it is located.
Explain the concept of value chain and its impact on business strategy.
Next, explain how technology impacts a value chain.
Apply Value Chain Analysis to identify strengths and weaknesses in areas of the value chain for the organization you selected.
Describe the linkages (relationships) between the areas, and explain the strategic significance of the organization’s value chain in terms of the larger value system.
Extend the conversation by identifying implications for practice or research, as well as for your own research agenda, where appropriate. Be sure to integrate one or two new related and engaging questions that will extend the discussion about your paper in constructive ways.
Try to think of a question(s) that will engage your peers in critical analysis and thinking about your organization, which may provide insight for your use as you continue preparing your sections of the major Week 4 Sustainable Solutions Paper (SSP) due in this course.
Resources
Readings
• Harvard Business School Press. (2005). Strategy: Create and implement the best strategy for your business. Boston, MA: Author.
o “Introduction” (pp. xi–xxi)
The Introduction to the text presents the ideas of strategy creation and implementation. The book defines strategy and illustrates and contrasts it against the term “business model.” It outlines business strategy as a process, moving from the establishment of goals to the implementation of those goals. The Introduction ends with an overview of the remainder of the text from Chapter 1 through Chapter 9.
• Senge, P., Smith, B., Kruschwitz, N., Laur, J., & Schley, S. (2008). The necessary revolution: Working together to create a sustainable world. New York, NY: Broadway Books.
o Chapter 1, “A Future Awaiting Our Choices” (pp. 3–13)
In this chapter, the authors introduce readers to the idea that the Industrial Revolution is coming to a close. The authors assert that ways of thinking, being, and consuming that many have grown accustomed to are now being called into question. They begin to suggest that new ideas are emerging to solve the new challenges surfacing in our world. This resource is useful for completing your SSP Proposal and your SSP in the coming weeks.
o Chapter 9, “Positioning for the Future and the Present” (pp. 119–139)
The authors present several approaches in this chapter. They suggest breaking sustainable value into four quadrants—providing a framework within which today’s companies can evaluate their strategies and project the payoff of making changes. Throughout the chapter, the authors provide examples of companies who are succeeding in the present while positioning their businesses to meet the needs of the future in this quickly changing environment. This resource is useful for completing your SSP Proposal and your SSP in the coming weeks.
o Chapter 11, “Building Your Case for Change” (pp. 157–164)
In this chapter, Senge et al. (2008) provides strategies for communicating change and soliciting “buy-in” from decision makers. They revisit the sustainable value matrix from Chapter 9 and outline specific steps for building consensus. This resource is useful for completing your SSP Proposal and your SSP in the coming weeks.
• Millar, V.E. & Porter, M. E. (1985, July–August). How information gives you competitive advantage. Harvard Business Review, 63, 149–160..
In this seminal work, Porter and Miller (1985) articulate the strategic significance of the information revolution on competitive advantage. While the aspects of this article related to information technology may now seem dated, the core management principles are still very much in use today. Focus on the Exhibits as they relate to your understanding of the analysis of value chains for use in this week’s paper
The site briefly introduces the value chain concepts and the value chain’s relationship to cost and differentiation strategies. The site also identifies technologies that can be employed in many value chain activities. The site stresses the importance of linkages between value chain activities and analyzing these interrelationships. It explains the outsourcing of activities and the development of value systems.
SAMPLE ANSWER
Value Chains Analysis
Sustainability is one of the concepts that is gaining more approval in most of businesses across the world. Companies deal in different areas of production and they are required to remain sensitive to the environment even as they carry out their activities to be sustainable even in the future. The paper focuses on the Apple Inc.,. This company is in the industry of communication technology. The pioneer of the company was Steve Jobs and Steve Wozniak. They developed their first computer in 1976 (Apple Case Study, 2012). The company continued to expand and grow and currently it is one of the most popular brands. The company is renowned for its creative and innovation products such as iPods, iPhone, Smartphone’s and many others. The company CEO Steve Job worked hard and remained visionary enabling the Apple Inc., to be one of the world influential and successful companies.
Value chain is a concept that most firms employ to create value. Is the set of activities that an entity carries out in order to create value for its customers hence, instrumental in creating competitive advantage (Millar & Porter, 1985). The value chain consists of various activities categorized as support activities and primary activities. The supporting activities includes human resource management, procurement and technology development while primary activity includes inbound logistics, operations , outbound logistics , marketing and sales and services (Millar & Porter, 1985). These activities are important as they contribute to firms’ creation of value. Value chain impacts on a business strategy as they provide impetus for the business to achieve its goals (Millar & Porter, 1985). For instance, a firm is expected to carry out sales and marketing of its products to ensure that it succeeds. Therefore, value chain acts as a catalyst in achieving these objectives and goals. Technology has become important in the functioning and operations of business. Technology impacts on value chain in various ways. One of the ways is that it ensures good management and processing of information in an entity. Information is critical as it provides avenues for an entity to improve in its operations (Buciuni & Mola, 2014). Technology is important in protecting the knowledge base of the company as well. This is important as it plays a key role in creating value. Technology as is also important in reducing costs of information technology ensuring the firm stays current with advancements in technologies and maintains technical excellence.
The company has a number of strengths as well as weaknesses. The company understands the impact of employees. It has therefore put in place appropriate mechanisms that ensure hiring of the right employees. The HRM is up to the task as employees are treated well and motivated contributing to its success. Teamwork and unity have helped to enhance creativity and innovation. The company is also up to date in terms of technological advancement. Technology has played a key role in its success. It has reduced costs of doing business. The company has as well established infrastructure that facilitates its operations. The company as well as values its customers and this has contributed to its success. The loyalty of its customer has enabled it to climb to the tip (Sahoo, 2012). Some of the weaknesses are challenges in procurement. The company faces challenges when it comes to its suppliers who are not reliable. The source of raw materials is also higher affecting its operations.
Various areas in the organization value chain links. For instance, the shipped in raw materials are transformed to output. The finished products are then delivered to customers. Marketing and sales are carried out to persuade and seduce customer to buy them (Cravens, Piercy & Baldauf, 2009). The company has put mechanisms in place to ensure that customer receive quality products and can return defective products if purchased. This value chain therefore is important to the organization as a whole. It has enabled the organization to expand and be in operations in various countries. The profit margins of the organization have as well increased tremendously over the years. The company has also managed to engage in corporate social responsibility impacting lives of many people. Therefore, this research is important as it enhances understanding of the significance of value chain. It as well provides insights to various activities of value chain and how it can impact business strategy. As I finish, the question that everyone should ponder about is, What can leadership of an organization do to ensure that an organization promotes sustainability initiatives as they create value.
References
Apple Case Study (2012). Apple Inc.: The Steve Jobs Effect. The Steve Jobs Effect, 1-16
