...Mergers and Joint Ventures Alisa King, Antoinette Penny, Mia James ECO/365 January 20, 2015 Mr. Gregory Ficklin Mergers and Joint Ventures In this essay team A will discuss the differences between horizontal, vertical and conglomerate mergers and how those differ from a joint venture. Horizontal mergers occur when two competitors merge and become a large corporation. For example, both Comcast and Time Warner cable were competitors until they merged just last year. Usually the larger company, that is the more financially sound of the two buys out the smaller less financially sound company. In that case the smaller company would benefit the most because they won’t have to go out of business or initiate major cut backs in order to stay afloat. Vertical mergers ensue when two non-competing companies that feed off each other in the supply chain come together as one. For instance, if Dairy Queen vertically merged with an ice cream supplier they could receive better deals on wholesale ice cream. This would increase profits thus making Dairy Queen increase their order which would increase profits for the ice cream supplier. Most vertical mergers happen because both businesses involved will benefit from the vertical merger. A conglomerate merger happens when two businesses have nothing to do with one another, meaning they do not engage same kinds of business, merge. Furthermore, there are two kinds of conglomerate mergers, pure and mixed. Pure conglomerate mergers...
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...Horizontal Merger When a merger between companies in the same industry occurs it is called a horizontal merger. Horizontal mergers usually happen in industries with fewer companies, because competition tends to be higher and potential gains in these kinds of mergers often deliver better results. (MBDA, n.d.). Example A merger between Nike and the Rebook shoe companies, for example, would be an example of a horizontal merger. The purpose of a horizontal merger is to create a larger organization with more market control. Because the two companies' operations will be similar, there may be opportunities to join certain operations, like manufacturing, to reduce costs. Vertical Merger A merger between two companies producing different goods or services for one specific finished product. A vertical merger occurs when two or more firms, operating at different levels within an industry's supply chain, merge operations. Most often the logic behind the merger is to increase synergies created by merging firms that would be more efficient operating as one. (MBDA, n.d.). Example A vertical merger joins two companies that may not compete with each other, but exist in the same supply chain. Microsoft joining with Intel would be an example of a vertical merger. Such a deal would allow the Microsoft to obtain better pricing on parts and have better control over the manufacturing process. The parts division, in turn, would be guaranteed a steady stream of business. Conglomerate A...
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...When a company is first born the last thing on its owners mind is merging with another company. A merger is sometimes a voluntary and sometimes and involuntary transaction. If a company has found itself in a place of financial difficulty or is simply exhausted all its resources to remain open, a merger may be the only way its employees can retain their position. The alternative would be to close its doors and give up. Below we will discuss the differences between horizontal, vertical, and conglomerate mergers and how these differ from a joint venture. The first to discuss is a horizontal merger which by definition is a consolidation of two or more businesses that are in the same field and are more than likely competitors. The benefit of this for both businesses is that there is one less company to compete with in their particular field. The down side may be that the owners of each will not need to share all of their trade secrets and will need to answer to someone that previously was a competitor. This could lead to tension if there were to be any bad blood in the past that was caused from the competitive market. Unlike a horizontal merger, a vertical merger takes place when two or more companies that produce different goods or services for one specific product come together. An example of this type of merger is a lumber yard that typically supplies lumber to a finish carpentry company merge. The lumber yard sees that they can have a positive influence on this end...
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...Mergers and Joint Ventures Yvette Hairston, Rhonda Roberts, Ricardo Salinas, Elizabeth Urquidez, Deandre Wakefield ECO 365 March 09, 2015 Matthew Anger Mergers and Joint Ventures Introduction - DEANDRE The ability for a business to grow and remain competitive there are occasion where Joint Ventures and or Mergers may become necessary. It can be quite daunting to reach an agreement to work together in the right format of legal entity. Partnerships of this type can help to achieve specific goals. Economic variables lead way to many reasons of offsetting cost and losses. In this essay we will cover the different types of mergers and the effects of joint ventures. Research methods will results in recommendations of each type and how this effects the distribution of products and or services. Horizontal Mergers Vertical Mergers - RHONDA Conglomerate Mergers Differences Between Mergers and Joint Ventures - DEANDRE Starting a business is a big step to developing your brand. The market will argue that running a business is even harder. Economic challenges make it difficult for the entry to be more than a small business at first. Partnerships with other firms, organizations, and investors are a few options to make the transition a little more reassuring. There are two options after finding the right source are joint venture or merger. Options being provided include a varying degree of collaboration between the two businesses. (Small Business, 2015) Firms decide...
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...Mergers and Joint Ventures ECO365 October 22, 2014 Lola Jackson Mergers and Joint Ventures Discuss the differences between horizontal, vertical and conglomerate mergers and how those differ from a joint venture. Mergers are when two companies join their organizational structures and business operations together. This is done if both companies will receive more benefits from working together than they would have done by working separately. Some companies merge in order to stay in business while others retire from the industry in order not to go bankrupt. Horizontal mergers are usually between two companies from the same industry who provide the same service or sell the same product. The business’s that merge horizontally used to work as competitors and in order to eliminate the competition the stronger of the two will offer to buy out the other. This type of merger can occur when there is potential for growth in revenue. It will also provide advantage over the market, giving consumers fewer choices on where to obtain the goods or services. It can eliminate some duplicate costs for producing the good or service, and the decrease in cost can lead to an increase in profit. There have been a number of large companies that have had horizontal mergers in the recent years. The most common of these have been in the banking industry. Horizontal mergers are closely monitored by the Department of Justice ("Amosweb Encyclonomic Web Pedia", 2014). They monitor this insure efficient...
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...Joint Ventures occur when two businesses arrange a short term contract in which they use each other’s resources or talents to accomplish a business goal. The contract consists of the responsibility of each company, and how they are going to divide profits or losses. Joint ventures are a lot like partnerships, but differ because partnerships are long term, whereas, joint ventures are usually single transaction contracts (Legal-dictionary, 2015). One of the main purpose of a joint venture is to share company strategies to make any risk minimal and to boast the popularity on the companies in the market. Consider a drilling and mining company. Their business might not have the proper funds to perform a huge mining operation because the price to do so is expensive. A joint venture with another company would be beneficial at this point in order to share risk and profit. Horizontal, vertical, or conglomerate mergers differ from joint ventures in many ways. The legal structure of Joint ventures differs from any of the mergers because even though two companies are working together, both companies still function as separate businesses. A firm is formed for the association of the two businesses, but the original businesses operate separately on their own (smallbusiness, 2015). If companies merge both businesses stop existing, and new business is created from the combination of two. Mergers tend to be more of permit contract because difficulty of detaching the merge. Joint ventures are...
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...Joint Ventures and Mergers Jason Walker ECO/365 June 15, 2015 Robert Watson Joint Ventures and Mergers When a company is first born the last thing on its owners mind is merging with another company. A merger is sometimes a voluntary and sometimes and involuntary transaction. If a company has found itself in a place of financial difficulty or is simply exhausted all its resources to remain open, a merger may be the only way its employees can retain their position. The alternative would be to close its doors and give up. Below we will discuss the differences between horizontal, vertical, and conglomerate mergers and how these differ from a joint venture. The first to discuss is a horizontal merger, which by definition is a consolidation of two or more businesses that are in the same field and are more than likely competitors. The benefit of this for both businesses is that there is one less company to compete with in their particular field. The down side may be that the owners of each will not need to share all of their trade secrets and will need to answer to someone that previously was a competitor. This could lead to tension if there were to be any bad blood in the past that was caused from the competitive market. Unlike a horizontal merger, a vertical merger takes place when two or more companies that produce different goods or services for one specific product come together. An example of this type of merger is a lumber yard that typically supplies...
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...Delta airline and Air France KLM established a joint venture that includes revenue sharing, cost sharing and intercontinental routes between two airlines. This joint venture was successful in early days and its sales were more than 12 billion Euros in 2011. As author said the purpose of this case is discussion in class room rather than examining its benefit and loss so this case examined the airline industry. Especially this case discussed the joint venture and Alliances that occurred in past between the different airlines. In this case Delta airlines and Air France KLM discussed about its joint venture, policies, procedures and operation. But Air France KLM and Delta airlines faced some issues and conflicts over the time. Detail of case is discussed as follows. This case was written by Pierre Dosage and Ulrich Washer of John Molson Schools of business in Concordia University. Airlines industry was tremendously change in last 24 years and especially during 1990 to 2010 many alliances in airline industry was occurred. A first airline alliance was established in 1930 between pan American Grace and Latin America. That alliance was simple and limited but with the passage of time alliances become complex and diversified and many airlines alliances occurred afterwards. Alliances occurred in different categorize according to the need and relation of airlines with each other's. First alliance category was code sharing agreements whereas airlines allowed each other's passengers on corresponding...
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...Executive Summary Feltex Carpets Ltd. is the largest Australian carpet manufacturer. The company has experiences in internationalization in countries such as USA, Japan, Southeast Asia and New Zealand. However, the company is interested in expanding their market power to new destinations, to improve their multinational strategy and to be well-known worldwide. The countries of potential choice are Mexico and Chile. The analysis has been done by comparing the overall information and in-details of each indicator. From evaluation of indicators of both countries, such as economic, social, legal and infrastructure, the analysis has shown that the economy of both countries are quite similar. However, the infrastructure, technological and legal environment seem to be better in Chile. As the Chilean government support the foreign investment in textile sector by promoting the education, technological development and the special policy especially for textile. For instance, tax reduction and promoting education in labour forces. Thus, Chilean labour forces would have the better off in comparison with Mexican labour forces. Another highlighted indicator in the country comparison - which the recommendation has inclined - is infrastructures. Both countries have the similar relative figures in number of infrastructure such as roadway, waterway and airports. But the infrastructure of electricity and internet/telephone networks seems to be at a higher level in Chile. The analysis of relevant...
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...Foreign Direct Investment Joining Forces Foreign direct investment methods · Investment in a joint venture in a foreign market · Mergers and acquisitions · Greenfield investment Reasons for foreign direct · Some governments prohibit or limit imports of goods produced in other countries · Producing goods in the target market avoids import duties and other taxes and the requirements for import permits · Companies can obtain the services of skilled employees in the target market or gain intelligence held by people in that market · Companies can take advantage of lower costs, such as cheaper labour · Companies can become more competitive Gain access to closed markets Issues to consider … · How important is the market? · How much investment, and what type of investment, must be made in the country in order to gain access to the market? · What are the ownership requirements for competing successfully? Investment for intelligence Issues to consider … · Where are the new areas of opportunity? · How is business done? · Who should the company get to know? What contacts are most valuable? · What is the competition doing? Taking advantage of lower costs · Factor costs are not enduring o currency devaluation o runaway inflation o improved standards of living o capital or profit repatriation o political risks · Factors to consider … o How important are factor costs? o How important are other considerations such as a well-educated...
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...and Barclays should proceed with a merger of their retail, corporate and offshore banking operations in the Caribbean because of : 1. The need for economies of scale and scope. 2. The need to be more competitive in the light-globalization in the overall industry. Rationale: If CIBC and Barclays decide to merge their operations the new merged entity would be able to serve a more diverse region in the Caribbean. For example some areas currently served by CIBC are not served by Barclays, and vice versa. The merger would give both the companies an opportunity to increase their scope and access to more countries, since currently CIBC only serves 8 Caribbean countries where as Barclay’s serves 14 countries but together they could cover most of the Caribbean. CIBC has the newest technology in the region but the full efficiencies cannot be realized at the current market size. The existing ICBS system could be fully used with lower marginal cost through the merger. On the other hand Barclay’ BRAINS system which is currently outdated could be replaced with CIBC’s modern banking system at much lower costs. Although some would argue that merger has some disadvantages such as potential reduced employee morale due to layoffs/restructuring, and reduced customer satisfaction as a result of the reduction in employee moral or that the merger is costly to integrate the operations, including management resources. We can’t ignore the fact the merger also creates great synergy as both...
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...NOKIA / PSION / MOTOROLA Only the English text is available and authentic. REGULATION (EEC) No 4064/89 MERGER PROCEDURE Article 6(1)(a) INAPPLICABILITY Date: 22/12/1998 Also available in the CELEX database Document No 398J012 Office for Official Publications of the European Communities L-2985 Luxembourg COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, 22.12.1998 In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EEC) No 4064/89 concerning non-disclosure of business secrets and other confidential information. The omissions are shown thus [… ]. Where possible the information omitted has been replaced by ranges of figures or a general description. PUBLIC VERSION MERGER PROCEDURE ARTICLE 6(1)(a) PROCEDURE To the notifying parties Dear Sirs, Subject: Case No IV/JV.12 – ERICSSON / NOKIA / PSION / MOTOROLA (SYMBIAN II) Notification of 20 November 1998 pursuant to Article 4 of Council Regulation No. 4064/89 1. On 20 November 1998, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EEC) No 4064/89 [ OJ L 395, 30.12.1989 p. 1; corrigendum OJ L 257 of 21.9.1990, p. 13; as last amended by Regulation (EC) No 1310/97, OJ L 180, 9. 7. 1997, p. 1, corrigendum in OJ L 40, 13.2.1998, p. 17 .] by which Motorola, Inc. (“Motorola”) would acquire joint control in Symbian Limited (“Symbian”). As a result of the operation, Motorola, Telefonaktiebolaget LM...
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...have been identified as the firm moves along the path to international status – from export department through to more complex department such as the matrix, transnational, heterarchy, networked. * Control and coordination mechanisms: Control and Coordination aspects. Formal and informal mechanisms were outlined, with emphasis on control through personal networks and relationships, and control through corporate culture, drawing out HRM implications. * Mode of operation used in various international markets: The various modes-such as wholly owned, franchising, management contracts and international joint ventures- used by multinational for foreign market entry and expansion. Again, we attempted to demonstrate the IHRM implications of the various modes, although noting that most of the literature focuses on wholly owned subsidiaries and international joint ventures. * Effect of responses on HRM approaches and activities: How international growth affects the firms approach to HRM. Firms vary from one another as they go through the stages of international development, and react in different ways to the circumstances they encounter in the various foreign markets. There is a wide variety of matches between IHRM...
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...Devry College of NY | Masters of the Universe | Accounting Project Case 11-3 | 12/7/2011 | | Introduction Mergers and Acquisitions are a normal part of the Corporate Finance world. Every week we hear news about large and small corporate mergers and buy-outs. They bring separate companies under the umbrella of a larger company that can be more efficient, created more profits and often offer more products, services and better quality. In this project we look at a joint venture type of merger that brings two companies together in order to form a third company and compete in new market segment. Saturn Inc. and Venus Inc. are two unrelated companies that have decided to form a Joint Venture to form a third company that will be called Jupiter Inc. The new company will be owned 51 percent by Saturn and 49 percent by Venus. At the forming of the Jupiter Inc., Saturn contributed $561 million and Venus contributed four manufacturing facilities and assembled the workforce. Venus’ contribution came with a fair value of $539 Million. Venus was already in the clothing manufacturing business and was looking for an exit strategy because it no longer seemed like a good fit for Venus Inc. Saturn Inc. wanted to expand its manufacturing of children’s clothing. The newly formed company, Jupiter Inc. would satisfy both of the needs by entering into a relatively new industry in making and selling organic clothing to be sold to unrelated retailers. Saturn and Venus...
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...advantage is when firms enters early in the foreign market commonly known as first-mover advantages First mover advantage;- 1. it’s the ability to prevent rivals and capture demand by establishing a strong brand name. 2. Ability to build sales volume in that country. so that they can drive them out of market. 3. Ability to create customer relationship. Disadvantage: 1.firm has to devote effort, time and expense to learning the rules of the country. 2.risk is high for business failure(probability increases if business enters a national market after several other firms they can learn from other early firms mistakes) Modes of entry:-- 1. Exporting 2. Licensing 3. Franchising 4. Turnkey Project 5. Mergers & Acquisitions: 6. Joint Venture 7. Acquisitions & Mergers 8. Wholly Owned Subsidiary 1.Exporting : It means the sale abroad of an item produced ,stored or processed in the supplying firm’s home country. It...
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