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SZLN: Acquiring PEM - Case Study Example

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In this paper, you will find the analysis of the acquisition of the firm PEM by SZLN company. The first part of the paper will analyze companies strategic opportunities and business risks involved in the acquisition. The second part of the paper will focus on Australian and Chinese Regulatory factors that may influence this acquisition…
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SZLN: Acquiring PEM
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"SZLN: Acquiring PEM"

Download file to see previous pages In the current times of competitive business in recessive environment, strategic opportunities and risks are critical factors that need to be taken into consideration while forming business relationships. Forging alliances with other businesses greatly facilitates in meeting the challenges of time and improving productive outcome. Indeed, tactical business coalitions across the globe are important linkages that provide firms with competitive advantage and help maintain or improve their market position. The dynamics of acquisitions and takeover are complex business paradigms that need to be evaluated and analyzed thoroughly before making final bid. SZLN therefore needs to evaluate strategic opportunities and risks involved in its plans for acquiring PEM.
PEM or Periliya Limited is an Australian base metal mining and exploration company which has huge asset in terms of zinc, lead and silver ore mines. But in recent times, it has also been hit hard by recession and has accrued huge debt. Acquisition of PEM therefore offers significant strategic opportunities of improving business performance. The following business opportunities and risks in acquisition of PEM by SZLN are detailed as under:
Strategic opportunities
1. It would facilitate manipulation of strategic business information to improve its business prospects across the globe as PEM has business spread across geographical boundaries. It would therefore be able to acquire international resources vis-à-vis foreign direct investments....
It is the main body that examines proposals by foreign firms which is desirous of direct foreign investment in Australia. The foreign investment body must work within the defined criteria of Australian government and its investors’ operation must be independent of interference from relevant foreign government. Hence, firms undertaking FDI in Australia which are linked to foreign governments such that their commercial activities could be influenced by them, could find it difficult to get approval. SZLN’s largest shareholder is State Owned Assets Supervision and Administration Commission (SASAC) which is state owned and therefore would significantly impact its prospect of acquisition of PEM. 2. Cultural competencies and uncertainties are major obstacles in business negotiation across nations. The effective communication vis-a-vis language barrier and cross cultural understanding are complications which need to be understood for the wider ramifications of the success of alliance. 3. The future PEM’s financial needs must be taken into account as the firms seems to under huge debt. 4. SZLN must also pre-empt its sources of finance as the pre and post acquisition of PEM would require vast amount of financial liquidity to make the deal profitable. Answer 2 China and Australia are vastly different nations in terms of socio-cultural paradigms, economy and political and legal environment. Therefore, various regulatory factors of the two countries would considerably impact the acquisition process of PEM, an Australian country by Chinese firm, SZLN. It would need to be approved by Chinese and Australian regulatory agencies and shareholders of PEM. Thus, key regulatory factors that are likely to affect acquisition are as follows: 2a. ...Download file to see next pagesRead More
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