Changes in the Business Environment - British America Tobacco - Annotated Bibliography Example

Changes in the business environment Name of the Class Professor Name of the School City and state Where it is Located Date Contents Contents 2 Summary 3 Article 1: Bray, 2017, ‘British American Tobacco to Take over Reynolds American in $49 Billion deal’ The New York Times, 17 January, viewed 3March 2017, https://www.nytimes.com/2017/01/17/business/dealbook/british-american-tobacco-reynolds-cigarettes-merger.html?_r=1 3 Article 2: Creswell, J 2017, ‘Fewer Niceties, Similar Price: Airlines Turn to ‘Basic Economy’ Fares’, 23 February, viewed 3March 2017, https://www.nytimes.com/2017/02/23/business/airlines-basic-economy-fares.html 5 Article 3: Allen, K 2016, ‘Brexit economy: inflation surge shows impact of vote finally beginning to bite’, The Guardian, 21 December, viewed 3March 2017, 6 https://www.theguardian.com/business/2016/dec/21/brexit-economy-referendum-inflation-uk-2017 6 Allen, K 2016, ‘Brexit economy: inflation surge shows impact of vote finally beginning to bite’, The Guardian, 21 December, viewed 3March 2017, https://www.theguardian.com/business/2016/dec/21/brexit-economy-referendum-inflation-uk-2017 9 Bray, 2017, ‘British American Tobacco to Take over Reynolds American in $49 Billion deal’ The New York Times, 17 January, viewed 3March 2017, https://www.nytimes.com/2017/01/17/business/dealbook/british-american-tobacco-reynolds-cigarettes-merger.html?_r=1 9 Creswell, J 2017, ‘Fewer Niceties, Similar Price: Airlines Turn to ‘Basic Economy’ Fares’, 23 February, viewed 3March 2017, https://www.nytimes.com/2017/02/23/business/airlines-basic-economy-fares.html 9 Mankiw, G 2014, Principles of Economics, South-Western College Publishers, United Kingdom. 9 Summary The British America Tobacco have sweetened the offer and bought stake in Reynolds American at an amount of $49 billion and this would result in the creation of a tobacco giant which would have a significant and noteworthy presence in the globe. The agreements have been reached three months after the first offer. The purchase result in the globe largest publically traded tobacco company when evaluated in terms of the net sales. The merger has also occurred when the industry is experiencing a shift as there is development of next-generation products. The second article deals with the airlines and competition seems to be stiff in this industry and thus every airline is responding and changing so as to compete favorably with the other competitors in the industry and for them to gain a competitive advantage. Companies such as the American airlines and the United Airlines have joined Delta Airlines in announcing plans for the basic economy option and this option is mainly targeting the bargain travelers. The third article deals with the Brexit economy. Britain finally voted that they need to leave the EU and this seems to be finally be feeding on the economy of the UK and this is as a result of the rising inflation which is offsetting the brisk trade for a great number of the businesses. Brexit has had a number of positive and negatives impacts on Britain with some of them being the inflation, low hiring rates and rise in house prices just to mention a few of them. Article 1: Bray, 2017, ‘British American Tobacco to Take over Reynolds American in $49 Billion deal’ The New York Times, 17 January, viewed 3March 2017, https://www.nytimes.com/2017/01/17/business/dealbook/british-american-tobacco-reynolds-cigarettes-merger.html?_r=1 In evaluating the merger between British America Tobacco and Reynolds American the merger can be termed as a horizontal merger. This is based on the fact that the two companies operate in the same space and they acted as competitors to each other since they offered similar goods to the consumers. A major factor which can be said to have contributed to the merger is that competitors seem to be higher and as a result the synergies as well as the potential gains in the market can be greater when merges takes place between the companies involved (Mankiw 2014). Based on the article the purchase is likely to lead to the globes largest publicly traded tobacco business and this is based on the sales since the companies will sell all brands that the initial companies had initially. The merger takes place as a shift occurs in the industry since there have been emergence of the next generations products such as the vaping products as well as the e-cigarettes. The merger will be of great benefit since it will create a stronger, worldwide tobacco and N.G.O business which will have direct access to the products of the companies in a great number of the most attractive markets in the globe. As a result the chief executive of British American Tobacco states that they believe that the merger will lead to the growth in profits as well as returns for the shareholders and more so in the long term basis. Through the merger, the new company is likely to have a stronger market share in markets such as the United States and they will also have a wide presence in other continents such as in Asia, Africa, South America and the Middle East (Bray 2017). The merger has also been facilitated by the need to bring together two companies which have complementary cultures and who have a shred commitment to transformation and innovation in the tobacco industry. Based on these, British American Tobacco seems to be the best partners for Reynolds and more so in their next growth phase and when working together the two can come up with a leading portfolio of tobacco and also develop new products for the adult consumers in the various markets. The deal is likely to bring about shakeup in the industry which have stayed for sometime without such shake up since the biggest in occurred with the Reynolds American-Lorillard deal in 2014 (Bray 2017). Article 2: Creswell, J 2017, ‘Fewer Niceties, Similar Price: Airlines Turn to ‘Basic Economy’ Fares’, 23 February, viewed 3March 2017, https://www.nytimes.com/2017/02/23/business/airlines-basic-economy-fares.html The new budget offering that have been adopted by a great number of companies in reality is a hidden increase in the overall cost (Mankiw 2014). Companies such as the American airlines and the United Airlines have joined Delta Airlines in announcing plans for the basic economy option and this option is mainly targeting the bargain travelers. For the major industry players the basic economy class means that airlines will take the travelers wherever they want to go to they will forgo some of the remaining necessities that are offered by their large commercial carriers. All this is response to the stiff competition being experienced in the industry. The new class has a number of limitations in that people will no longer have the ability to choose the seat and they will not get a refund or upgrade while in some airlines the situation seems to be more severe in that passengers will not put a suitcase in an overhead bin and when he or she does they will have to pay for it (Creswell 2017). Though a great number of airlines are reluctant when it comes to discussing pricing the basic economy class seats will be the same price as the standard economy fare and thus means that the travelers will actually get less for a similar price. Based on the above discussion costs those the standard economy ticket may be the one expected to rise in terms of price it may be viewed as being a better deal in some instances as compared to the new basic economy ticket. It is crucial to note that those customers who will accept the basic economy restrictions are likely to have lower overall travel costs. This is according to a spokesman of Delta Airlines which introduced the basic economy fares back in 2013. Based on her, the basic economy traveler faced a number of restrictions in that families may not have been able to sit together despite their wish to and they were also not permitted to choose their seats. As a matter of fact, they were allocated the nest empty seat despite its location but the good side with Delta is that they have never included a fee for any carry-on baggage and this fact stands up to date (Creswell 2017). Article 3: Allen, K 2016, ‘Brexit economy: inflation surge shows impact of vote finally beginning to bite’, The Guardian, 21 December, viewed 3March 2017, https://www.theguardian.com/business/2016/dec/21/brexit-economy-referendum-inflation-uk-2017 There are a number of factors in play and which depicts and defies the earlier forecast that have been made from the Bank of England and by others that the economy would in a way grind to a standstill after the move. Britain is experiencing a buoyant consumer spending, rising home prices, low level of unemployment as well as a continued growth in the dominant services of the country (Allen 2016). In addition to there are a number of worries to the prospects in the year 2017 and this is as a result of a number of signs that have emerged that the Brexit vote blow to the pound seems to be fueling inflation and at the same time limiting the spending power of the people (Mankiw 2014). The Guardian has made use of a number of aspects so as to tract the impact if the Brexit vote. Based on the dashboard of December four of the eight categories depicted better performance than expected, two performed as expected while one was worse and lastly inflation was very high than it can been forecasted by the economist. Six months later after the vote to leave the EU the wage growth remains solid, while the business activities continues pot expand, unemployment also remains low while the house prices seems to be on the rise. It is also crucial to note that the pace at which hiring is being done has also slowed down the retails sales growth can also be said to have eased off and inflation seems to be high and this is due to the weak pound and this leads to a rise in the cost of imports made to the UK (Allen 2016). Despite these, economists have also pointed out that a number of negative effects of the Brexit will be felt in the year 2017. Available business investment figures and surveys also suggest that a great number of the British based firms tend to be spending reluctantly. While the consumers have become cautious and that with that pace inflation is bound to quicken over the years. Another effect of the Brexit that is notable is that business confidence also tends to be low and optimism also seems to be falling among the consumers and the businesses. So far the consumers can be said to have held up well but the fall in the pound as well as the steady rise in inflation due to the increase in the prices of imports will in one way or another have an impact of them now and in the near future (Mankiw 2014). Experts have also argues that the potential Brexit blow together with the push by the government to bring down the sending will lead to many families struggling with lower incomes in the coming year (Allen 2016). Conclusion Based on the above discussion, the merger between the two companies will result in the globe largest publically traded tobacco company when evaluated in terms of the net sales. The merger has also occurred when the industry is experiencing a shift as there is development of next-generation products. Competition seems to be stiff in the airline industry and thus every airline is responding and changing so as to compete favorably with the other competitors in the industry and for them to gain a competitive advantage. Companies such as the American airlines and the United Airlines have joined Delta Airlines in announcing plans for the basic economy option and this option is mainly targeting the bargain travelers. Britain finally voted that they need to leave the EU and this seems to be finally be feeding on the economy of the UK and this is as a result of the rising inflation which is offsetting the brisk trade for a great number of the businesses. Brexit has had a number of positive and negatives impacts on Britain with some of them being the inflation, low hiring rates and rise in house prices just to mention a few of them. References Allen, K 2016, ‘Brexit economy: inflation surge shows impact of vote finally beginning to bite’, The Guardian, 21 December, viewed 3March 2017, https://www.theguardian.com/business/2016/dec/21/brexit-economy-referendum-inflation-uk-2017 Bray, 2017, ‘British American Tobacco to Take over Reynolds American in $49 Billion deal’ The New York Times, 17 January, viewed 3March 2017, https://www.nytimes.com/2017/01/17/business/dealbook/british-american-tobacco-reynolds-cigarettes-merger.html?_r=1 Creswell, J 2017, ‘Fewer Niceties, Similar Price: Airlines Turn to ‘Basic Economy’ Fares’, 23 February, viewed 3March 2017, https://www.nytimes.com/2017/02/23/business/airlines-basic-economy-fares.html Mankiw, G 2014, Principles of Economics, South-Western College Publishers, United Kingdom. Read More