Business Strategies

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
  1. 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.
… Read the rest
Abey Francis

External Expansion or Business Combination Strategies

External expansion refers to business combination where two or more concerns combines and expand their business activities. The ownership and control of the combined concerns may be undertaken by a single agency.

Business combination is a method of economic organization by which a common control, of greater or lesser completeness is exercised over a number of firms which either is operating in competition or independently. This control may either be temporary or permanent, for all or only for some purposes. This control over the combining firm can be exercised by a number of methods which in turn give rise to various forms of combinations.… Read the rest

Abey Francis

Business expansion and it’s forms

Expansion

Growth is always essential for the existence of a business concern. A concern is bound to die if it does not try to expand its activities. There may be a number of reasons which are responsible for the expansion of business concern. Predominant reasons for expansion are economic but there may be some other reasons too. Following are the reasons for expansion.

1.     Existence: The existence of the concern depends upon its ability to expand. In a competitive world only the fittest survives. The firm need to control its costs and improve its efficiency so that it may be achieved if the activities of the firm are expansion is essential for the existence of the firm otherwise it may result into failure and may be out of business.… Read the rest

Abey Francis

Case Study: Failure of Vodafone in Japan

Vodafone Group plc is a British multinational mobile network operator, its main headquarter is in Newbury, England. It is the world’s largest mobile telecommunication network company, based on revenue, its market value on the UK stock exchange is about £80.2 billion as of August 2010, making it Britain’s third largest company. It is currently operating in 31 countries and has partner networks in a further 40 countries.

In 2001 Vodafone announced to get into Japanese market with acquiring AT&T’s 10% economic interest in Japan Telecom Co., Ltd. (“Japan Telecom”) for a cash consideration of US$1.35 billion ( £0.93 billion). Japan Telecom was one of Japan’s leading telecommunications companies and parent of the fast growing mobile network, J-Phone Communications Co.,… Read the rest

Abey Francis

Risks of Generic Competitive Strategies

Fundamentally, the risks in pursuing the Porters generic competitive strategies are two: first, failing to attain or sustain the strategy; second, for the value of the strategic advantage provided by the strategy to erode with industry evolution. More narrowly, the three strategies are predicated on erecting differing kinds of defenses against the competitive forces, and not surprisingly they involve differing types of risks. It is important to make these risks explicit in order to improve the firm’s choice among the three alternatives.

Risks of Overall Cost Leadership Strategy

Cost leadership imposes severe burdens on the firm to keep up its position, which means reinvesting in modern equipment, ruthlessly scrapping obsolete assets, avoiding product line proliferation and being alert for technological improvements.… Read the rest

Abey Francis

Porter’s Generic Competitive Strategies

In 1985, in his book  Competitive Advantage: Creating and Sustaining Superior Performance,  Michael Porter, outlined a set of generic strategies that could be applied to all products or services.  In coping with the Porters model of   five competitive forces, there are three potentially successful generic strategic approaches (also known as Porter’s Generic Competitive Strategies)  to outperforming other firms in an industry:

  1. Overall cost leadership.
  2. Differentiation.
  3. Focus.

Sometimes the firm can successfully pursue more than one approach as its primary target, though this is rarely possible as will be discussed further. Effectively implementing any of these generic strategies usually requires total commitment and supporting organizational arrangements that are diluted if there is more than one primary target.… Read the rest

Abey Francis
Exit mobile version