...Cooper Industries Inc. Based on the given information in the case study regarding the acquisition of Nicholson File Company by Cooper Industries, there is no question that Cooper should try to gain control of Nicholson. This decision is based on an analysis of the bargaining positions of each group of Nicholson stockholders which have disparate goals and needs that need to be met. In addition, an appropriate payment method and specific dollar value based on a competitor's offer and Cooper financial data was decided. The remainder of this paper will provide the analysis and rationale for this determination. Should Cooper Industries Acquire Nicholson File Company? Cooper Industries has been expanding through diversification since 1996. Cooper's requirements to acquire a company has three major components. The target company must be: 1. In an industry in which Cooper could become a major player 2. In an industry that is fairly stable, with a broad market for the products and a product line of small ticket' items; and 3. A leader in its market segment. When looking at the criteria that Cizik's company (Cooper Industries), set forth relative to acquisitions, the acquisition of Nicholson meets all three objectives plus has significant potential short and long-term potential. Cooper management feels that by eliminating redundancy and streamlining Nicholson's operations this potential can be realized. Currently, Nicholson's financial history boasts a 2% increase in profit annually...
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...For the exclusive use of C. SULLIVAN Harvard Business School 9-391-095 Rev. April 18, 1995 Cooper Industries’ Corporate Strategy (A) The business of Cooper is value-added manufacturing. – Cooper Industries’ management philosophy Manufacturing may not be glamorous, but we know a lot about it. – Robert Cizik, Chairman, President and CEO Cooper Industries, a company more than 150 years old, spent most of its history as a small but reputable maker of engines and compressors to propel natural gas through pipelines. In the 1960s, the firm’s leaders decided to expand the company to lessen its dependence on the capital expenditures of the cyclical natural gas business. During the next 30 years, the company acquired more than 60 manufacturing companies that dramatically increased the size and scope of Cooper Industries (Exhibits 1 and 2). Through a process that both insiders and outsiders called “Cooperization,” the company welded a group of “independent, over-the-hill companies into a highly efficient, profitable, competitive business.”1 By 1988, the diversified industrial products company derived $4.3 billion in annual revenues from manufacturing 2 million items. Cooper’s products ranged from 10¢ fuses to $3 million turbine compressor sets marketed under an array of brand names, the most famous of which was Crescent wrenches. “We decided a long time ago,” said Robert Cizik, chairman, president, and CEO, “that if we could do an outstanding job at the unglamorous part by making necessary...
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...M&A, BARUCH COLLEGE, FALL 2012 Prof Harvey Poniachek Questions for Cooper Industries Harvard Case Study THE CASE SHOULD BE DONE BY TEAMS OF UP TO FOUR STUDENTS. The CASE WOULD BE PRESENTED AND DEFENDED IN CLASS BY TWO TEAMS. I EXPECT MANY OF YOU TO MAKE CLASS PRESENTATIONS BY UTILIZING POWERPOINT AND/OR OTHER MEANS. THE QUESTIONS BELOW WERE SUGGESETD BY THE AUTHORS OF THE CASE AND ADDRESS THE MAIN THE ISSUES, BUT YOU MAY EDIT / CONSOLIDATE THEM IF YOU FIND IT NECESSARY / CONVENIENT IN WRITING UP YOUR CASE. Cooper industries 1. If you were Mr. Cizik of Cooper Industries, would you try to gain control of Nicholson File Co in May 1972? ➢ yes o potential profit o COG from 69% to 65% o Saling expense from 22% to 19% o Leveraging European distributed system o Take benefits of the conflicts between VLN and Porter 2. What is the maximum price that Cooper can afford to pay for Nicholson and still keep the acquisition attractive from the standpoint of Cooper? As given in the case, Cooper Industries will get several synergies after the merger. 1) Cost of Goods sold of Nicholson could be reduced from 69% to 65%. 2) Elimination of the sales and advertising duplications would lower selling, general and administrative expense from 22% to 19% 3) Cooper will gain access to Nicholson’s strong European distribution system to sell its other hand tool lines. Based on the above factors, we prepared the pro forma statement...
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...Cooper Industries Corporate Strategy * Reputable maker of engines and compressors to propel natural gas. * More than 150 years of Business duration. * Cooper Industries acquired more than 60 manufacturing companies in 30 yrs. Q1. What is Cooper’s corporate strategy * Cooper Industries’ main corporate strategy is broad diversification through M&A. * Cooper Industries acquired firms in order to lessen its dependence on cyclical natural gas industry and to exhibit stable earnings. * Cooper Industries acquired firms that had stable earning, a broad customer base and proven manufacturing operations using well-known technologies. * Cooper Industries had a good corporate level strategy of diversification. * Copper Industries acquired both related and non-related businesses. * As a result, Cooper Industries could exhibit stable earnings. * Reasons for Cooper’s diversification * Threats of its original industry : * Low growth level * Unstable market(cyclic) * Technology Issues * Expensive labor and high costs. * Cooper’s strengths : * Skilled labor and high technology that could be used in other businesses * Financially abundant. * In order to refrain from possible threats and maximize its strengths, Cooper chose to diversify its business both in size and scope. * By diversification, Cooper could achieve, * Update of processes and equipment ...
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...Cooper Industries’ Corporate Strategy I. Situation of the company Cooper Industries was the manufacturing company have the three group of business. The three group business are Electrical & Electronic, commercial & industrial, and compression & drilling. All this group had created growth in term of revenue by doing acquisition. Initially, Cooper was the recognized leader in pipeline compression equipment. However, the company had developed production expertise and had built a reputation for customer service in the natural gas industry as well as extracted gas from underground wells. Electrical and Electronic. The E & E segment was Cooper’s largest in 1988, generating one-half of corporate sales and 57% of operating profits. Cooper had entered this segment with the 1981 purchase of Crouse-hinds. By 1988, E&E had four sub-segments, each representing quite diverse business, but all focused on the mature North American market that accounted for over 90 percent of segment sales. Commercial and industrial. In the commercial and industrial segmen Cooper participated in the non-powered handtool and window treatment business, and in the automotive aftermarket. In the Tool group, consolidation of acquisitions was completed and new manufacturing of acquisitions was completed and new manufacturing facilities constructed by 1988, and the company held the preeminent market position in most of its tool lines. Compression, drilling and energy equipment Compression and drilling...
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...Re: Cooper Industries’ Corporate Strategy (A) Diagnosis: Cooper Industries’ growth depends on its widely diversification. From 1960 to the following 30 years, the company purchased about 60 manufacturing companies that increased the size and scope of Cooper Industries. With its experience and strength in “Cooperization”, it has been able to digest the companies it purchased and welded the company into a highly efficient, profitable, competitive business. But they acquired too much debt due to it diversified its business too quickly. It leads whether or not acquires Champion and Cameron Iron Works became to the biggest problem when the case was written, which would raise the debt-to-capital ratio to 55% to 60%. If they leave the problem unaddressed, they might risk bankruptcy in the future. Analysis: Both of Champion and Cameron Iron Works were in related industries, automotive and petroleum equipment, which were profitable businesses. Cooper Industries was already doing those two businesses. For the opportunities identified in the case have to do with the purchase of Champion and Cameron Iron Works, both of them have a strategic fit with Cooper Industries’ long-term plans. For example, Champion has a poor management, old technology, and failures at diversification. But Cooper Industries is good at this field. Cameron Iron Works had a biggest Compression and Energy Business Segment until 1981. But it was the smallest segment of Cooper Industries. Moreover, Cameron Iron Works...
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...COOPER INDUSTRIES, INC Nicholson File Early in 1972 Nicholson File had to stave off a take over attempt by H.K. Porter Company Inc. which controlled 30.5% of the company's stock. Porter made a cash tender offer to stockholders. However, Porter did not get enough stock to take over Nicholson. In trying to fight the takeover Nicholson File made several merge overtures to other companies like VLN Corp. A few years back, it had rejected an offer from Cooper Industries. Cooper Industries interest in Nicholson Cooper was interested in Nicholson because of its competitive strength in the hand tools industry. Nicholson had a 50% share for files and wraps with a very strong brand name and high quality line. It also had a 9% share of the 200 million hand saws and saw blades market with excellent brand & quality. It had a very effective and large distribution system across US, Canada and overseas. Cooper industries believed that Nicholson can achieve 6% annual sales growth as also bring down the cost of goods sold from 69% to 65% and selling and administrative expenses from 22% to 19% , thereby increasing its profitability. Cooper would be able to use Nicholson’s distribution system to cross sell Cooper’s hand tool lines in the industrial and consumer markets. Cooper anticipated that the Nicholson acquisition would lessen its earnings volatility and currently Nicholson is in the merger market to stave off the raid by H K Porter Company. 1/5 Valuation of Nicholson File (without...
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...company in 1916 and 10 years later in 1926, The Goodyear Tire & Rubber Company became the largest rubber company in the world. (Goodyear Tire & Rubber Company official website, 2013) Goodyear Tire & Rubber Company took a long 53 years to reach the milestone of billion-dollar-year. At present, sales of Goodyear Tire & Rubber Company has a figure in $20 billion. (Goodyear Tire & Rubber Company official website, 2013) *Official Logo copied from (Cooper Tire & Rubber Company official website, 2013) Corporate Name Cooper Tire & Rubber Co Exchange Traded In New York Stock Exchange (NYSE) Ticker Symbol CTB Description The history of Cooper Tire Company actually dates back to 1914, when two brother-in-laws John F. Schaefer and Claude E. Hart jointly purchased an Akron based tire parts making M and M Manufacturing Company. After a subsequent growth in 1946 company took the name, Cooper Tire and by 1960 the company became a publically held corporation listing on NYSE. (Cooper Tire & Rubber Company official website, 2013) As of today Cooper Tire Company...
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...Product Innovation Best Practices Series Best Practices in the Idea-to-Launch Process and Its Governance Reference Paper #45 Robert G. Cooper and Scott J. Edgett Compliments of: Stage-Gate International and Product Development Institute Inc. This article appeared in Research Technology Management March-April, pp 43-54 For information call +1-905-304-8797 www.stage-gate.com © Product Development Institute Inc. 2000-2014 Product Development Institute Inc. and Stage-Gate are registered trademarks. Logo for Product Development Institute Inc. used under license by Stage-Gate International Logo for Stage-Gate used under license where appropriate. Best Practices in the Idea-to-Launch Process and Its Governance A study of new-product development practices at 211 businesses provides insights into best practices in both the idea-to-launch process and its governance. Robert G. Cooper and Scott J. Edgett OVERVIEW: Most firms now use some form of idea-to-launch process such as a Stage-Gate® system. The question is: Do these processes really work? And what are the elements of a best-in-class idea-to-launch system that really make a difference? A second and related question concerns the governance of the idea-to-launch model. Sadly there is a lack of hard evidence as to what governance structure works best and just what its impact is, if any. This article reports the results of an American Productivity & Quality Center (APQC) and Product Development Institute (PDI)...
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...Sample Answer For Cooper Industries Case Study Cooper Industries Inc. is the manufacturer and leading producer of engines and big compressors for oil and gas extraction industry. The firm had been heavily dependent on oil and gas sector for its sales and major earning; fluctuations due to cyclic nature of industry concerned its management. Although long-term sales and earnings growth for Cooper had been above average, its stock was less attractive to investors due to higher risk and earnings volatility. Cooper’s earlier acquisitions resulted in diversity of markets but did not result in reduction of earnings volatility.To reduce the risk, management initiated an acquisition strategy to diversify its product portfolio. An acquisition criteria was established that called for acquisition of leading companies of their respective market segments. Cooper acquired three different companies under its acquisition strategy but failed to tempt management of Nicholson File Company for a merger three years ago. However now with Nicholson in play, there was an opportunity for Cooper to acquire a controlling interest in the company. In May 1972, Robert Cizik, executive vice president of Cooper needed some answers before proceeding with appropriate course of action for this opportunity. QUESTIONS 1. Should Mr. Cizik of Cooper Industries try to gain control of Nicholson File Company in May 1972? 2. What is the maximum price that Cooper can afford to pay for Nicholson and still keep the acquisition...
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...Business Research Project: Riordan Manufacturing QNT/561 Abstract Riordan Manufacturing is subsidiary of Riordan Industries, Inc., which is a leading global manufacturer of plastic containers, parts, and electrical fans (Apollo Group Inc., 2013). The company attempts to maintain adequate quantities of completed electrical fan units in their stock in order to meet the customer demand, however, its on-time deliveries average only 93% due to an insufficient number of completed fan units. Riordan stocks all the necessary raw materials needed to assemble the electrical fans readily available in their manufacturing plant except for the fan motors, which are fulfilled by an outside supplier. Therefore, Riordan Management is asking why meeting the demand is inconsistent with the current fan motor supplier as manifested by their 93% on-time delivery and claim the company's on-time delivery to increase with new a supplier. In this business research project, Team C will investigate and examine the validity of Riordan Management's claim. Formulation of the Research Problem Managerial decision-making is very crucial in the long-term success and failure of organizations, which ultimately influences a great deal of individuals in both microeconomic and macroeconomic senses. The successes of industry leaders such as Apple, Google, and Amazon and failures of Enron, AIG, as well as the financial meltdown of the 2008 can all be attributed to managerial decision-making that affected many...
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...The combined company will be uniquely positioned to address large, established markets, such as the United States and the European Union, as well as the fast-growing markets of India, China, Africa, and Latin America where there is significant potential for further growth. Our combined portfolio of brands and products will be amongst the most comprehensive in the industry. Funding the Cooper Deal In a deal that will make Apollo Tyres the world's seventh-largest tyre maker by revenue, the Onkar S Kanwar-promoted company will acquire a 100% stake in US-based tyre manufacturer Cooper Tire & Rubber Company for $2.5 billion, or around R14,500 crore. Apollo would fund the acquisition fully by raising fresh debt. The deal would be largest acquisition by an Indian company from the automotive sector, beating Tata Motors' acquisition of Jaguar Land Rover in 2008 for $2.3 billion. The deal will be an all-cash transaction where in Cooper's shareholders will receive $35 per share, a 40% premium to the 30-day volume-weighted average price. Cooper Tires is listed on the NYSE. The deal is valued at 4.4 times the Ebitda of Cooper. After the conclusion of the deal,...
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...project such as to estimate the sales potential in the domestic market, first points to the issue of defining the purpose of the research, the area sales manager or researcher must distinguish between symptoms of organizations problem regarding the manufacturing and marketing of the outboard engines, the manager’s perception of the problem, and the research problem (Cooper, & Schindler, 2011, p. 13). Conner (1997) also posited the importance of building market research plan by starting the process with a clear statement of the decisions one have to make.(Conner, 1997, p. H15) The purpose of the research should be clearly stated followed by the research process detail. 2. Figuring out the research process detail, the researcher or the manager should provide complete research proposal (Cooper, & Schindler, 2011, p. 13). 3. Research design thoroughly planned would require the manager to ensure exploratory procedures outlined with constructs defined. Sample unit clearly described along with sampling methodology. And also data collection procedures selected and designed. (Cooper, & Schindler, 2011, p. 13) 4. For the manager to ensure high ethical standards applied, there should be safeguards put in place to protect the study participants, organizations clients and researchers. Recommendations should not exceed the scope of the study. And the study’s methodology and limitation section...
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...Bibliography 20 EXECUTIVE SUMMARY The purpose of this report is to evaluate the current situation of Krispy Kreme Doughnuts, Inc. and to discuss the reasons for such status. We will also look at current strategies the company is taking to better the situation, and finally, submit some of our own recommendations for ways to maximize potential at Krispy Kreme. Currently, Krispy Kreme faces many obstacles in operations and capital structure. Recent SEC filing discrepancies have added to the existing lack of optimism among stockholders. In addition, it appears that the money from loans made by the company to franchises has not been repaid at any type of acceptable rate. One major reason for the decline in franchise sales is that Krispy Kreme has oversaturated the market. This is made evident by nearly a 20% decrease in same store sales for the last quarter of fiscal 2004. Also, the company has doubled its number of stores to nearly 150 from the 70 of three years ago. They have also made large investments in off premise sales in convenient stores, supermarkets, etc. Krispy Kreme has begun to take positive action in recovering from recent hardships. Starting at the top, the company hired Stephen F. Cooper to take over as CEO in hopes of energizing recovery efforts. Specifically, Krispy...
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...Marcel Nzeukou In this paper I will discuss the business research process regarding the company I work for Aetna Inc., a health insurance company. I’ve been working in the health insurance field for some time now, and I find it rewarding being able to assist my clients with their health insurance claims. I will summarize the research process within Aetna and how that process applies to its daily functions. The business research process usually beings by looking at the market and/or industry. The reason this is done is to determine if whether or not there is an opportunity for business to be establish within a target market. Aetna was established in 1850 as “an Annuity Fund to sell life insurance” (Aetna, Inc.), established out of Hartford, Connecticut they were one the first insurance companies in the area. In those times there was an obvious need for insurance companies, and there were relatively few established health insurance companies. Since that time Aetna has committed itself to providing access to cost-effective health care of the highest standards. They strive to protect their clients against health-related risks and help them achieve both good health and financial security. Business research as defined by Cooper & Schindler,” is a systematic inquiry that provides information to guide managerial decisions”. This definition can be applied to Aetna Inc., as business decisions must be made on a day by day basis when it comes to dealing with each individual client....
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