International Business Strategies

Factors to Consider in a Cross-border Merger or Acquisition

Cross border mergers and acquisitions are playing an important role in the growth of international production. Not only they dominate FDI flows in developing countries, they have also begun to take hold as a mode of entry into developing countries and economies in transition.

Although the basic merger or acquisition is the same worldwide, undertaking a cross-border transaction is more complex than those conducted ‘‘in market’’ because of the multiple sets of laws, customs, cultures, currencies, and other factors that impact the process.

How should the Transaction be Financed?

The financial structure of the transaction might be impacted by which country the target is in.… Read the rest

Abey Francis

Types of Merger

An extensive appraisal of each merger scheme is done to patternise the causes of mergers. These hypothesized causes (motives) as defined in the mergers schemes and explanatory statement framed by the companies at the time of mergers can be conveniently categorized based on the type of merger. The possible causes of different type of merger schemes are as follows:

Horizontal merger: These involve mergers of two business companies operating and competing in the same kind of activity. They seek to consolidate operations of both companies. These are generally undertaken to:

  • Achieve optimum size
  • Improve profitability
  • Carve out greater market share
  • Reduce its administrative and overhead costs.
… 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

Levels of International Strategy

The globalization of the economy, internationalization of businesses and emergence of new markets are all key themes in contemporary business. Whereas international business may once have been the province of organisations with sufficient scale and reach, these types of companies — typically multi-national corporations – no longer have a monopoly on this kind of business. Increasing numbers of firms, of varying scale, are confronted with compelling reasons for expanding their activities across multiple national boundaries. In some cases, such motivation includes the knowledge that success in international markets is a pre-requisite for survival; if competitor organisations succeed in international markets, they may achieve the scale and liquidity which affords them sustainable competitive advantage.… Read the rest

Abey Francis

Steps in Conducting a Foreign Market Analysis

International businesses have the fundamental goals of expanding market share, revenues, and profits. They often achieve these goals by entering new markets or by introducing new products into markets in which they already have a presence. A firm’s ability to do this effectively hinges on its developing a through understanding of a given geographical or product market. To successfully increase market share, revenue, and profits, firms must normally follow three steps,

  1. Assess alternative markets
  2. Evaluate the respective costs, benefits, and risks of entering each, and
  3. Select those that hold the most potential for entry or expansion.
1. Assessing Alternative Foreign Markets

In assessing alternative foreign market a firm must consider a variety of factor including the current and potential sizes of the markets, the levels of competition the firm will face, their legal and political environment, and socio-cultural   factors that may affect the firm’s operations and performance.… Read the rest

Abey Francis

Modes of Entry into International Business with Advantages and Disadvantages

The different types of entry modes, to penetrate a foreign market, arise due to globalization. The latter has drastically changed the way business conduct at international level. Owing to advances in transportation, technology and communications, nowadays practically every business of any size can supply or distribute goods, services, or intellectual property. However, when companies deal with international markets, it is complicated as the companies must be prepared to surmount differences in currency issues, language problems, cultural norms, and legal and regulatory regimes. Only the largest companies have the capital and knowledge to overcome these complications on their own. Many other businesses simply do not have the means to efficiently and affordably deal with all those variables in foreign jurisdictions, without a partner in the host country.… Read the rest

Abey Francis