Merger, Acquisition and International Strategies - Case Study Example

Merger, Acquisition, and International Strategies Table of Contents Table of Contents 2 Merger & Acquisition 3 Apple Inc: A Brief Overview 3 Prismo Graphics: A Brief Overview 4 Merger and Acquisition Strategy of Apple 4 Merger and Acquisition Strategy of Prismo Graphics 5 International Business Level Strategy of Apple 6 Recommendations 6 International Corporate Level Strategy of Apple 6 Recommendations 7 International Business Level Strategy of Prismo Graphics 7 Recommendations 8 International corporate Level Strategy of Prismo Graphics 8 Recommendations 8 References 9 Merger & Acquisition The words “merger” and “acquisition” can be referred to as the aspect related to the management dealing, corporate finance and corporate strategy. The dealing occurs in the form of selling, buying and merging of two or more companies. This deal, in turn, helps the developing company to grow at a faster pace within the industry and even without establishing any separate entity. In general, merger and acquisition are the two simple forms of expanding the business (Sherman, 2010, p.2-3). Now in the context of the study, the two chosen companies are Apple Inc and Prismo Graphics. Before getting into deep, the report will present brief overviews of both the companies. After that, the report will offer merger and acquisition strategies of both Prismo Graphics and Apple. In this segment, recommendation will be also provided regarding the business level and corporate level strategies. Apple Inc: A Brief Overview The roots of Apple Inc. can be traced back to the early 1976 when the company was established by Steve Jobs, Ronald Wayne and Steve Wozniak. The company is presently headquartered at Apple Campus, 1 Infinite Loop, Cupertino, California, USA (Yahoo Finance, n.d.). Along with its subsidiaries, the company manufactures and sells desktop computers, laptops, mobile communication devices, portable music players, and various other digital gadgets. Some of the best sellers of the company are I-pad, I- Phone, Mac OS, and I-pod. From the time of its inception, the company has always focused on manufacturing innovative and unique products. The company also has the knack of producing those products, which the world has never seen. It has a worldwide presence and operates with 370 exclusive Apple stores. Apart from the hardware department, the company is also famous for its software division. Some of the noteworthy software embraced by Apple is Mac OS, I-tunes, Quick time player, I-work and logic studio among others (Apple Store, n.d.). In the context of merger and acquisition, Apple also has a long tradition. The first acquisition came in the year 1988, when Apple acquired Network Innovations. Apple’s has a simple philosophy in the merger and acquisition context, they believe in acquiring medium and small companies which can be integrated with the undergoing project. Prismo Graphics: A Brief Overview Prismo Graphics was founded in the year 1987. The company has its operation throughout USA. Prismo Graphics is presently headquartered in Oregon, the United States. The company is basically involved in the business of developing animated stuffs for the corporate and broadcast media arena. However, the primary goal of the company is to create prospects for the ‘Digital Content Creator’. In this context, the company improves the messages of the web, corporate video, print and broadcast media by adding graphics and animation. The company has employee strength of 50-100 and the total revenue us around $10 million - $25 million. In the year 2002, the company was acquired by Apple Inc (Wit & Meyer, 2010, p.688). Merger and Acquisition Strategy of Apple Apple is a company which always focuses on the development of unique and innovative products (Whetten & Cameron, 2008, p.208). However, having speciality in every field of business is complex and, therefore, Apple has the philosophy of acquiring small and medium firms and integrating it within the existing projects. Furthermore, the company also strives to increase their product line. This can be cited as one of the rationales behind the acquisition of Prismo Graphics by Apple. It has helped the company to start their operations in the field of animation. The purchase also continued Apple’s continuous run towards buying the post production equipments and animation companies. The purchase has made Apple to successfully add India Titler Pro to their current product line. The software India Titler Pro is basically a program offering video effects and helps in creating motion graphics and animated titles. Hence, considering all the aforementioned facts, it can be portrayed that the decision of Apple to acquire Prismo Graphics was wise, as well as intelligent. The following point will make it clear why the decision was wise. It has allowed Apple to take steps in the graphics and animation industry and addition of a new product has also taken place. According to a review of this software, it has the ability to animate in every possible way. Letters can spray, bounce, wiggle and slide. Thus, the decision was truly wise. Merger and Acquisition Strategy of Prismo Graphics Till date, Prismo Graphics is not involved in any kind of international merger or acquisition. The company can be categorized as a small public corporation. However, due to some of the limitations, the company is unable to carry out any activities pertaining to merger and acquisition. Some of limitations are less number of employees, limited area of operation, low sales volume and also inadequate target market. Hence, these factors act as the barriers towards the acquisition and merger of Prismo Graphics. However, in the context of the project, one company that can offer benefit to Prismo Graphics, if merger or acquisition takes place is Disney Toon studios, as it belongs to the animation sector. Disney Toon studios or Walt Disney can offer large benefits to the company as the software package Prismo Graphics can be extensively used in creating animated stuffs. The software also allows a number of benefits. For example, with the help of India Titler Pro, tracks can be created that will include an imported graphics, a text line and also a background texture, which can help in creating animation. Moreover, the benefits will be mutual. International Business Level Strategy of Apple Business level strategy for any company can be portrayed in terms of attaining low cost in differentiation in products, and focusing on a particular segment (Ireland, Hoskisson & Hitt, 2008, p.102-104). Among the available strategies Apple mainly practices differentiation strategy. The company mainly focuses on extending the product line, by launching new products in almost every two years. Also with the acquisition of new firms such as Prismo Graphics, the company is striving hard to enter the animation industry as well. Recommendations Although the company focuses on differentiation strategy, it is highly recommended that Apple at some point of time should consider focusing on cost leadership strategy. Moreover, the products of Apple are priced high and therefore the target segment remains limited. Therefore, cost leadership strategy will allow the company to cater to greater market segment. International Corporate Level Strategy of Apple There are three types of models that a company can follow while developing its corporate level strategy. It includes:- Portfolio Strategy – It is about analyzing the market in terms of strength, opportunities, weakness, and threats. Directional Strategy – It is about focusing on expansion of the business, and managing market share of the company Parenting Strategy – In this context, companies maintains workforce in the foreign country and transfer the resources. In this context, Apple is using directional strategy, as the company highly focuses on the expansion of business, with the help of new products and opening up on new Apple exclusive stores at several parts of the world. Recommendations It is recommended that the company should consider using corporate retrenchment strategy in order to increase the business efficiency. Apple is under-performing in few countries mainly due to inadequate production capacity, poor distribution network and local government norms. Hence, the company needs to refurbish the marketing strategy for those places. International Business Level Strategy of Prismo Graphics Prismo Graphics is not capable enough to expand their business internationally due to the lack of certain resources. The inadequate resources include weak financial condition, less human resources, and limited product range. Hence, in this context, Disney Toon studios through acquisition can certainly increase the business competencies in the field of animation of Prismo Graphics. In general, Disney Toon uses differentiation strategy and deals with a diverse media and entertainment enterprise to expand their business. Recommendations The study revealed that the present business level strategy of Disney allows them to target a broad market. Hence, they should stick to their present strategy and should not consider any changes. However, it is recommended that in the near future Disney can opt for a focus business strategy in order to increase the base of loyal customer. International corporate Level Strategy of Prismo Graphics Since Prismo Graphics does not cater to any international clients, they do not embrace any international corporate level strategy. However, if the company gets acquired or merged with Walt Disney or Disney Toon, they can develop a suitable corporate level strategy. Recommendations The recommended corporate level strategy for the company is presented. Prior to international expansion, the company should consider market auditing. The company can use portfolio strategy to analyze the market competition. Hence, the company needs to carry out SWOT analysis to understand existing market opportunities and threats. Based upon the findings, the company should design its corporate level strategies. References Apple Store. (No Date). Mac software. Retrieved from http://store.apple.com/us/browse/home/shop_mac/software. Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2008). Understanding Business Strategy: Concepts and Cases (2nd ed.). Connecticut: Cengage Learning. Sherman, A. J. (2010). Mergers and acquisitions from A to Z (3rd ed.). New York: AMACOM Div American Mgmt Assn. Whetten, D. A., & Cameron, K. S. (2008). Developing Management Skills. New Jersey: Pearson Education Inc. Wit, B. D., & Meyer, R. (2010). Strategy: Process, content, context: An international perspective (4th ed.). Connecticut: Cengage Learning EMEA. Yahoo Finance. (N. D.). Apple Inc. Retrieved from http://in.finance.yahoo.com/q/pr?s=AAPL. Read More