A number of mergers, take-overs and consolidation have take place in the recent times. The major reason for mergers and amalgamations, is the liberalization of economy. Liberalization is forcing companies to enter new business, exit from others, and consolidate in some simultaneously. The following are the other important reasons for mergers or amalgamations: Economies of scale: An amalgamation company will have more reasons at its command that the individual companies. This will help in increasing the scale of operations and the economies of large scale will be available. These economies will occur because of more intensive utilization of production facilities, distribution network, research and development facilities, etc. these economies will be available in horizontal mergers were scope of more intensive use of resources is greater. Operating economies: A number of operating economies will be availed with the merger of two or more companies. Duplicating facilities in accounting, purchasing, marketing, etc. Continue reading
Business Strategies
Case Study: Business Strategy of Sony Corporation
Founded on May 7, 1946 in Tokyo, Japan, one of the most successful technological corporations in the world: Sony was created under the two legendary men: the physicist Masaru Ibuka and the physicist Akio Morita (Sony, 2013). They made the decision to set up a company repairing and producing electrical equipment and established Sony under the name under the name Tokyo Tsushin Kogyo K.K. which is Tokyo Telecommunications Engineering Corporation, known as Totsuko. At that time, Totsuko was just a small company with capital of 190,000¥ (~ 2000 $) and around 20 employees compare to giant corporations in Japan such as Toshiba, Hitachi, Sharp, Matsushita with tremendous capital, facilities and labour capacity. Although in 1946 Japan was just recovered from the wartime, while the other giants still possessed enough resource and experience to control the Japan market, Totsuko had no machinery and little scientific equipment and using only their own Continue reading
Legal and Procedural Aspects of Mergers
Merger is a financial tool that is used for enhancing long-term profitability by expanding their operations. Mergers occur when the merging companies have their mutual consent. The income tax Act, 1961 of India uses the term ‘amalgamation’ for merger. The procedure of amalgamation or merger is long drawn and involves some important legal dimensions. Following Steps are Taken in this Procedure Analysis of proposal by the companies: whenever a proposal for merger or amalgamation comes up then managements of concerned companies look into the pros and cons of the scheme. The likely benefits such as economies of scale, operational economies, improvement in efficiency, reduction in cost, benefits of diversification, etc. are clearly evaluated. The likely reaction of shareholders, creditors and others are also assessed. The taxation implications are also studied. After going through the whole analyses work, it is seen whether the scheme will be beneficial or not. After going Continue reading
The Concept of Strategy
The top management of an organization is concerned with the selection of a course of action from among different alternatives to meet the organizational objectives. The process by which objectives are formulated and achieved is known as strategic management and strategy acts as the means to achieve the objective. Strategy is the grand design or an overall ‘plan’ which an organization chooses in order to move or react towards the set of objectives by using its resources. Strategies most often devote a general programme of action and an implied deployed of emphasis and resources to attain comprehensive objectives. An organization is considered efficient and operationally effective if it is characterized by coordination between objectives and strategies. There has to be integration of the parts into a complete structure. Strategy helps the organization to meet its uncertain situations with due diligence. Without a strategy, the organization is like a ship without Continue reading
Case Study: Competitive Advantage of Boeing
As an airplane manufacturer Boeing started its business in 1916. It was William Boeing and George Westervelt who bring this company in to existence. It was 1952 when Boeing launched its first short range jet plane with the name of Boeing 707. After that Boeing continued its journey and makes a number of joint ventures, mergers, acquisitions and many contracts with many Governments and suppliers and became one of the largest Aircraft Jetliner manufacturers in the world. As one of the largest exporter in USA Boeing has a wide range of products. Boeing manufactures and design commercial jetliners and military aircraft combined, rotor-craft, electronic and defense systems, missiles, satellites, launch vehicles and advanced information and communication systems and also is one of the major service providers to NASA in operating Space Shuttle and International Space Station. Boeing is divided its operations into two business units (1) Boeing Commercial Airplanes (2) Continue reading
Components of a Strategic Plan
Strategic plan of any enterprise is a picture of the desired position of the organization. Strategic plan gives a root path that how the organization will achieve the desired place or position in the given industry. Three major components of strategic plan include formulation, implementation and evaluation of strategy carries that information and plan which provides a direction towards the organizational objectives. 1. Strategy Formulation Strategy formulation process starts with the situation analysis of the organization. Situation analysis is an important part of strategic plan as it gives an overview of the existing position of the organization. Situation analysis includes the analysis of internal and external environment of the organization. Different strategic tools can be used to evaluate this situation i.e. SWOT analysis, PEST Analysis etc. This also includes the evaluation of current mission and vision of the organization. Vision statement clarifies that what an organization want to become and Continue reading