Investigation of Corporations Merge and a Local Firm Order Instructions: Choose two (2)public corporation in an industry with which you are familiar.
One (1)that has mergers and acquisitions and operations solely within the U.S. Research each company on its own Website, the public flings on the Securities and Exchange Commission EDGAR database (http://www.sec.gov/edgar.shtml). in the University’s online databases, and any other sources you can find. The annual report willoften provide insights that can help address some of these questions.
Investigation of Corporations Merge and a Local Firm Essay Questions
Write a six page paper in which you:
1. For the corporation that has acquired another company, merged with another company, or been acquired by another company,evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.
2. For the corporation that has not been involved in any mergers or acquisitions, identify one company that would be a profitable candidate for the corporation to acquire or merge with and explain why this company would be a profitable target.
3. For the corporation that operates internationally, briefly evaluate its international business-level strategy and international corporate-level strategy and make recommendations for improvement.
4. For the corporation that does not operate internationally, propose one business-level srategy and one corporate-level strategy that you would suggest the corporation consider. Justify your proposals.
5. Use at least 3 quality references. Note Wikipedia and other Website do not qualify as academic resources.
Assignment must follow formatting requirements:
– be typed double spaced, using Times New Roman (size 12), with one inch margins on all sides, references must follow APA format.
– include a cover page containing the tittle of the assignment, the student’s name, the professor’s name, the course tittle, and the date. The cover page and reference page are not included in the required page length.
SAMPLE ANSWER
Merger, acquisition and international strategies are not a new phenomenon on the business world. They have been there and will continue as long as profits need to be increased. More mergers are bound to happen during the economic recession as corporations come together to support each other achieve profits and other organizational objectives.
Investigation of Corporations Merge and a Local Firm Background
According to Ray (2011), there are five strategies of merging described by companies. Conglomerate merging involves two or more companies coming together for unrelated business activities. They may be firms with nothing in common or companies looking to merge to extend their product or market line. Companies merge depending on their economic functions, purposes of business objectives and improving relationships between the corporations/companies asserts Ray (2011). Horizontal merger occurs between companies that operate in the same industry and a consolidation means improved services and reduced competition. Market extension mergers happen when two companies dealing with similar products but from different markets come together. It facilitates a larger client base. Product extension takes place between firms that deal with different products but operate in the same market while vertical mergers occur between two companies that produce different goods and services for a specific finished product. Having the background information on merging helps our study lay a strong basis on the impact of mergers.
Objectives
To investigate corporations merge and a local firm
Investigation of Corporations Merge and a Local Firm Literature review
When the two airlines announced their merge in 2013, wall street, financial blogs, Forbes and other lead newspapers totally flipped at the news reporting on every detail and what was expected in the future as a result of the merge. The horizontal merger between the two airlines was definitely a big thing happening between two airlines dealing with similar services (flights) and operating in the same space. The US group airlines expressed their interest to merge with the US parent company for the first time in January 2012. Two months later, Tom Horton AMR’s CEO stated that he was willing to merge the airlines. Letting the American airlines know about what the US airways merge was capable of doing, it was announced that the merger would yield to more than 1.5billion dollars per year in cost saving and added revenue figures.
The consolidation of the two corporations was welcome with jubilations as clients and customers counted the benefits that the merger will bring. For other airlines, it was a great idea bearing in mind that the merge meant one competitor down but still tricky to figure out how they would be competing against two great service airlines on the same skies. According to Ray (2011), more competition means that potential synergies lead to greater potential gains for the two merging airlines in the market share. Other airlines would however have to seek for creative ways to remain viable. The main goal of merging between American airline group and US airways was to create a larger corporation that will add value and increase their market share. True to their goals, the US airline merge has achieved that faster than it imagined.
Merging the two airlines was a wise choice that has paid off well. Because of the merge, the new airline is termed as the largest airline in the globe handling more than 6700 international and local flight to 56 countries with about 40billion dollars for operating revenue. The corporation is not only welcoming great profits but has also opened up numerous job opportunities locally and internationally with over 100,000 employees working in various stations. The merge has not slowed down and it has massive plans for the flight service industry. It plans to take it delivery of services to the next level through introducing 607 new aircrafts, which include narrow and wide body aircrafts. With 517 narrow body aircrafts and 90 aircrafts with a wide body, the flight service will have taken the flight industry to another level. The airlines operational single certificate should be complete by next year giving the integration more advantages to grow together.
While merging has numerous benefits and is viewed as a great way to grow corporations, some corporations remain closed to the idea of merging. Westjet unlike American airline and US airways has not spread its wings internationally and is relatively new. Impressive growth rates are notable, causing reasons to believe that it has potential to get bigger that what it actually is currently. Clive Biddoe founded west jet in 1996 with a team of likeminded partners. They believed that with so many airlines taking over they would be able to form an airline that would offer passengers less pay services and still deliver exceptional flights. Their philosophy of three aircrafts and fives destinations with 220 friendly attendants of west jet saw them start their journey. They would later grow to a company with 9700 west jetters flying to 88 destinations across the network with the youngest fleet of boeing aircrafts. Their committed efforts and passion to grow and impact lives has seen them rise slowly but surely.
A merge between west jet and air Canada would be profitable for the corporation largely. West jet airlines is a great competitor with Air Canada thus directly affecting the rivalry between the airplanes and their plans to join other US partners. Merging the two airlines would mean that their operations and goals will be aligned. Consequently, their profits and opportunities to reach more customers will increase. Working together as one company will save the airlines many hurdles that solo companies face daily. Through merging, there possibility of sharing risks and profits increase. This means that one company does not have to bear losses alone or share profits on their own. Since the profits are expected to increase with a merge, it is likely that more benefits will be enjoyed once the companies come together. The two airlines will also get bigger market access and client bases.
AMR corporation group unlike west jet operates internationally. As an international airline, its international business level differs from the corporate level strategy. Doing business at the international level is not the same as doing business at the corporate level. International business can be exciting and interesting yet complex at the same time. It demands more than the local/corporate business, calls for, and has more responsibilities. For its international business operations, AMR developed an elevating level to deal with the international business. Michael Porter’s national diamond strategy is an effective approach of explaining international business level strategy.
Factor conditions
Demand conditions related supporting industries
Strategy, structure and rivalry and Investigation of Corporations Merge and a Local Firm
Factor of production is whereby a corporate firm creates important factors such as skilled resources in this case the flight services. The demand for more flight services grows larger than at local level and the local airline devotes itself to foreign markets creating a competitive edge for the service. The more the flight services from the company, the more the national advantage. Demand conditions lead to the service dominance internationally and high performance while related and supporting flight become supportive.
International corporate level strategy is divided into multi-domestic, global and transactional strategy. Multi-domestic strategy has decisions decentralized in each country while the global strategy has its products or services standardized. Transactional strategy seeks to achieve local responsiveness and global efficiency. American airline utilizes strategic positioning through superior networking at the US airlines offering nonstop services that is used by many domestic and international clients. Its international operations include the Caribbean, Europe, Japan, Asia, Latin America, Canada and Mexico amongst other global states following its merge.
The international strategy differs from the local strategy in that operating only in US is different from operating globally for US airlines and American airlines. Globally the airline uses the three strategies to meet all client needs and increase profits.
The difference between corporate and international marketing strategy is the number of people that the company deals with. When a firm decides to go international, it increases its capacity to produce more services to other people from different cultures, backgrounds and interests argues Paul and Kapoor (2008). As a result, the firm may at times be forced to change its objectives to meet the varying populations of other clients. To grow internationally, it had to learn and acquire new skills to help it spread not forgetting the different laws and regulations governing different states. The culture, level of competition, market intelligence, politics, international law, technology and logistics are applied to the international marketing strategies (Paul and Kapoor, 2008). At the corporate level, the porter’s five theory was used to examine the flight industry and help it establish its strategy level. Through analyzing its supplier power, threats of new entrants, substitutes and buyer power they managed to deal with their rivals and become the best.
West jet airlines should consider a suitable business and corporate strategy that will help them gain a competitive advantage over other airlines. A business strategy involves making company decisions and creating ways to maintain them through competitive advantages. West jet can evaluate their company’s flight services target a larger market and identify the competitors to have a competitive advantage over the others. Though they are a small company and cannot enjoy the same privileges like US airlines group, they can enjoy economies of scale through keeping their costs affordable and getting more customers. The use of a differentiation strategy that emphasis on exceptional flight services are factors that customers will value highly and find worth to pay for. Using promotions and functions is a good business strategy for west jet.
At the corporate level, west jet can identify opportunities outside the flight industry services. Contemplating diversity is a great idea or even thinking of additional business strategies for the company (Ireland et al. 2008). The umbrella company will have to contribute to effective profitable advantages for the firm. West jet can for example incorporate a food service to their clients making the decision profitable for the flight customers and the company as well.
In conclusion, merging companies are likely to benefit more internationally and locally. They enjoy greater profits and have more opportunities for growth and reaching more clients. However, local firms also stand a chance of making it through improvising creating business and corporate strategies.
Investigation of Corporations Merge and a Local Firm References
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Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2008). Understanding business strategy: Concepts and cases. Mason, OH: South-Western Cengage Learning.
Paul, J., & Kapoor, R. (2008). International marketing: Text and cases. New Delhi: Tata McGraw-Hill.
Ray, K. G. (2011). Mergers and acquisitions: Strategy, valuation and integration. New Delhi: PHI Learning Private Limited.
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