Merging and International Strategies of Companies - Assignment Example

Business 499 Advanced Financial Management Assignment 4: Mergers, Acquisitions, and International Strategies August 24, 2014 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. In 2000, Bell Atlantic merged with GTE to form Verizon Communications, one of the leading global telecommunication firms. The merger between the two companies was the most appropriate move that helped reposition the companies by providing them with a new image thus enhancing the success they enjoy to date. Just as the name suggests, a merger is a business management strategy in which two independent businesses join operations. In doing this, the two companies relinquish their previous identities thus forming a new company. This was the case in the case when GTE and Bell Atlantic merged thus forming a new entity with the adequate resources to become the market leader. Prior to the merger, GTE and Bell Atlantic were two separate companies that operated in the same industry but as competitors. Bell Atlantic for example operated in the telecommunication industry will several products including mobile telephony, fixed line internet and internet protocol among many others. The telecommunication industry in the United States at the time consisted of several small-scale companies that competed for the market. Key among Bell Atlantic’s competitor was GTE, which also had numerous similar products targeting the same market. Bell Atlantic, which had existed since 1984 as one of the baby bells sought to expand its market into the New York and overseas. The company for example targeted the United Kingdom among other parts of Europe. This required effective consolidation of both its resources and experience in the industry two vital features that informed its merger with GTE. As discussed earlier, the merger was the best move for both companies since it minimized competition while consolidating resources for both companies (Blick, 2011). Verizon Communications currently operates internationally with varied products in the telecommunication industry. Besides a large market share in the United States, the company enjoys a large market share in Europe and Asia. Among the advantages of the merger was an increase in resources for the new company. Verizon Communication enjoys a large market owing to the dissolution of the two competing companies thus resulting in a large market. Additionally, the two companies mobilized their resources key among which are its qualified and experienced human resources who continue to steer the company’s profitability. 2. For the corporation that has not been involved in any mergers or acquisitions, identify one (1) 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. Walmart is arguably the largest supermarket in the United States. Headquartered in Bentonville, Arkansas, Walmart is a profitable business that enjoys an international presence especially with the fact that it currently expands its chain stores to other parts of the world such as South Africa. The chain store is a successful business that enjoyed revenue of more than four hundred billion dollars in 2014. The chain store has more than eleven thousand stores in strategic locations in some of the largest cities in the world. Founded in 1962, the company grew progressively thus becoming the leading convenience store in the United States. The company has numerous equally successful subsidiaries including Walmex and Sam’s club among others all of which increase the company’s market share thus profitability. Despite such success, the company has not exhausted even the American market. The existence of several other large chain stores in the country corroborates the claim that the American market is still viable and the company must intensify its operations in order to increase its market share thus enhancing its profitability. As such, Walmart should employ aggressive marketing strategies in order to increase its market share and profitability. Key among such strategies is to acquire other businesses operating in the same industry (Ansoff, 1965). The company has an established name and brand. Coupled with its large pool of capital, Walmart cannot therefore form a merger with any other company in the industry since a merge would result in the loss of its identity. Walmart would therefore acquire a smaller but strategic company in the industry, one that would enhance its profitability by earning it a larger market share. Key among such in the United States is Sainsbury. The company is equally successful but continues to struggle with its meager resources that continue to limit its expansion and operations in the market. Walmart should therefore acquire Sainsbury, such a move will increase Walmart’s market share thus increasing its profitability thus marshaling adequate resources for the company’s expansion plan. Acquiring Sainsbury would imply that Walmart inherits Sainsbury’s market share and resources. By eliminating Sainsbury rom the market, Walmart will increase the size of the domestic market a strategic marketing feature that will increase the company’s profitability thus accrue adequate resources to utilize in its expansion plan. Sainsbury success arises from its extensive marketing endeavors. With the acquisition, Walmart will enjoy increased visibility in the market a feature that will contribute to the success of the acquisition thus Walmart’s profitability. 3. For the corporation that operates internationally, briefly evaluate its international business-level strategy and international corporate-level strategy and make recommendations for improvement. Verizon communication continues to expand with the view to increasing its market share. The company operates internationally dispensing most of its oversea products in Europe and parts of Asia. Besides the merger that resulted in a larger market share, Verizon Communication continues to employ numerous intentional marketing strategies in order to enhance its profitability. The company maintains cordial business level strategies as it competes with several other multinational and national corporations in the numerous countries it operates globally. Despite the company’s local and international success, just as any other commercial organization it requires increased profitability and longevity a feature that implies that it requires aggressive business level strategies both internationally and nationally. Among such strategies, that Verizon Communication can employ especially in its international markets is to intensify advertisements. Intensifying advertisements in its oversea markets is an appropriate way of ensuring that the company raises the customer awareness in such markets thus increasing its profitability chances. Furthermore, the company enjoys an established market in the United States owing to its longevity. This implies that the company understands the market a feature that may lack in its international markets. As such, it requires extensive market researches and analyses in order to gain adequate understanding of the demographic factors that affect the viability of the international market. This will safeguard the company’s profitability and longevity two fundamental objectives of the company. Verizon communication is a merger; this implies that the company must employ other appropriate strategies that will meet the interests of all the parties involved. Another merger is not advisable but the company can easily marshal adequate resources to acquire smaller companies in the industry. The company must therefore carry out extensive market researches with the view to identifying appropriate small-scale companies to acquire in its international markets (Brassington & Pettitt, 2006). ThSis way, it remains aggressive but cordial. The company should maintain cordial relationship with the other companies operating in the industry both locally and internationally. However, it must act aggressively. Aggressive marketing includes employing appropriate marketing strategies that will enhance the company’s profitability. Among the intense initiatives that will increase the company’s market share while retaining a cordial relationship with its many competitors is to initiate numerous social responsive initiatives and increased media presence. The two initiatives will earn the company a substantial market share thus sustaining its profitability objective. Furthermore, such strategies will not aggrieve the other operators in the industry. 4. For the corporation that does not operate internationally, propose one business-level strategy and one corporate-level strategy that you would suggest the corporation consider. Justify your proposals. Walmart operates within the United States. However, the company has continued to diversify its products and services with the view to accessing the international market; such is an appropriate strategy, one that will safeguard its profitability and longevity. As a company that operates locally, the company requires effective marketing and corporate level strategies in order to exhaust the market. Key among such is to acquire other smaller businesses thus strive to develop a monopoly. While monopolies are not always desirable in any economy, they often typify the success of a corporation. Walmart should therefore acquire other chains stores in the country. Besides acquiring other business in the industry, the company must also diversify its products and services. Diversification of products is an appropriate way of increasing the company’s market share. Coupled with extensive marketing, Walmart will enjoy increased profitability in the market thus marshaling adequate resources to access the international market. References Ansoff, I. (1965). Corporate Strategy. New York: McGraw-Hill Blick, D. (2011). The Ultimate Small Business Marketing Book. Surrey: Filament Publishing, Brassington, F & Pettitt, S . (2006). Principles of Marketing. 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