Transcript of "Joint ventures and mergers - Unitedworld School of Business"
When one company takes over another andclearly established itself as the new owner, thepurchase is called an acquisition.
Gain market share. Economics of scale. Enter new market. Acquire technology. Utilization of surplus funds. Managerial effectiveness. Strategic objectives. Horizontal integration.
• Location: Dearborn, Michigan• Founded: 1903 by Henry Ford• Competitors: General Motors, Toyota• Brand names: Lincoln, Mercury, Volvo,Mazda, Jaguar and Land Rover.• CEO: Alan Mulally.
TATA GROUP – 150 YEAR OLD Previously Tata Engineering and LocomotiveCompany, Telco Tata Motors’s break-even point for capacityutilization is one of the best in the industryworldwide listed on the New York Stock Exchange in 2004
July 2007- Announcement from Ford that it plans to sellLand Rover and Jaguar. August 2- India’s Tata Motors and M&M arrive as topbidders ($ 2.05b & $ 1.9b) Jan 2008 – Ford announces Tata as the preferred bidders March 2008 - Ford agreed to sell their Jaguar Land Roveroperations to Tata Motors. June 2008 – The acquisition is complete.
Long term strategic commitment to automotive sector. Opportunity to participate in two fast growing auto segments. Increased business diversity across markets and product. Jaguar offers a range of “performance/luxury” vehicles tobroaden the brand portfolio.
Group : Vodafone P/C HEADQUATERS: Berkshire, UK Industry : mobile telecommunication Presence : equity involvement in 25 countriesand network partner in 42 countries Strength : 2,30,000 employee Revenue : 35478 million pounds (14.1%growth) Net income : 10047 million pounds (10.1%growth)
Background : Hutchisson Essar ltd. Founded in 1992 Circle :16+ license for 6 circles Revenue : US $1282 million EBITDA :US $415 million Operating profit : US $315 million
Telecom business in Japan and Belgium werenot performing up to the world market. Market including the US market were maturingand were not growing in a big way. Stiff competition among almost all major playerin industry, global telecom giants like BT, O2 ofUK version from US, maxis telecommunicationof MalaysiaAs a example:- reliance and bharti airtel fromindia
Vodafone became no.1 for tele communicationin india (source: business standard, edition 16thapril, 2010). India is the world’s 2nd most populated country,with over 1.1 billion people. India benefits from strong economicfundamentals with exceeded real GDP growth inhigh single digits. IncreasesVodafone presence in higher growthemerging markets.
1. Founder- J.N.Tata2. 102 yrs. In Steel Market3. World’s 56th largest4. Capacity of 30 million5. Presence in 26 nations
1. World’s 6th largest2. 2nd in Europe & 1st in U.K.3. 3…1st rank in fortune list4. Presence in 50 nations5. 40000 people worldwide
Augmented its crude steel capacity to 27million tonnes per annum The combined entity forms the 6th largeststeel company Capacity to produce 56 million tonnes perannum by 2015.
A joint venture is an entity formed betweentwo organizations to undertake economicactivities together. Both of them contributeequity and then they agree to share therevenues, expenses and control of the newlyformed enterprise.
Both partners should appreciate the need forthe joint venture. The partners should clearly agree on the waythe joint venture will be managed. It is important that both partners worktowards a system based on trust andtransparency. Need to have a clear long term goal and setthe terms and conditions of the venture.
In 2003, Hyundai has an investment of $250million in China in conjunction with BeijingAutomotive to produce 100,000 units per year. Hyundai projects and plans production to be200,000 units per year by 2005.
Established in 1967, Hyundai is presentlySouth Korea’s #1 carmaker, manufacturingdozens of models of cars, vans, and minivans. Throughout the past two decades, Hyundaiintroduced various models: Pony, Excel,Sonata, and Accent. In 1990, Hyundai introduced its own enginedesign, the Alpha. Two years later, itintroduced its second-generation engine, theBeta.
Beijing Automotive Group (officially BeijingAutomotive Industry Ltd.) is a holdingcompany of several Chinese automobile andmachine manufacturers such as BeijingAutomobileWorks Co Ltd. etc. It is commonlyknown as Beiqi. 2011 production of 1,526,300 whole vehiclesmade Beiqi the fifth largest, in terms of unitsmanufactured, vehicle-maker in China thatyear.
Hyundai agreed to pay $250 million in a jointventure with BeijingAutomotive. Starting at 1,00,000 units in 2003, plans to expandto 200,000 units by 2005. If the production is a success, Hyundai will invest$1.1 billion to increase productivity to 5,00,000 by2012.
Production : Starting at 1,00,000 units, production increased by50,000 till 2005, ultimately producing 2,00,000units. From 2005 to 2011, production increased 60,000units per year.
In order to be successful : Must form synergies on all levels with China andBeijing Automotive. Hyundai must use their experience in investing in 4other plants in China. Take advantage of the first mover opportunity inChina’s de-regulated auto market.
Great opportunity for Hyundai’s businessdevelopment. Tremendous global growth potential.Bottom line : There is lots of money to bediscovered and made in the emergingmarkets of Korea and China !!!
Maruti Suzuki India Limited , commonly referred to as Maruti, is a subsidiarycompany of Japanese automaker Suzuki Motor Corporation. It has a market share of44.9% of the Indian passenger car market as of March 2011. Maruti Suzuki offers a complete range of cars from entry level Maruti 800 and Alto, tohatchback Ritz, A-Star, Swift, Wagon-R, Estillo and sedans DZire, SX4, in the Csegment Maruti Eeco, multi purpose vehicle Ertiga and sports utility vehicle GrandVitara. It is the market leader in India, and on 17 September 2007, Maruti Udyog Limited wasrenamed as Maruti Suzuki India Limited. The companys headquarters are on NelsonMandella Rd, New Delhi.In February 2012, the company sold its 10th million vehicle inIndia. Maruti Suzuki is India and Nepals leading automobile manufacturer and the marketleader in the car segment, both in terms of volume of vehicles sold and revenue earned.Until recently, 18.28% of the company was owned by the Indian government, and54.2% by Suzuki of Japan. Maruti Suzuki will be introducing new 800cc model by Diwali in 2012.The model issupposed to be fuel efficient, hence more expensive.
For Maruti :- Suzuki Motor Corporation,the parent company,is a globalleader in mini and compact cars for three decades. Suzuki’s technical superiority. Lightweight engine that is clean and fuel efficient. Near 75000 people are employed directly by Maruti Suzukiand its partners.
For Suzuki: Large Indian market. Monopolistic Trade in the Indian automobilemarket. Availability of resources.
Coal India feeds 82 out of 86 coal based thermalpower plants in India. Joint venture has been signed between NTPC &Coal India Ltd. For development of Brahmini &Chichro coal mine with 50:50 equityparticipation. NTPC is ramping up its generation capacity & isexpected to increase its market share fromabout 19% today to around 25% by 2017. During11th plan your company has alreadycommissioned 3240 mega watt capacity.
INDEPENDENT ORGANIZATIONS HAVINGA CRITICAL BUSINESS DEAL.
SA is a kind of partnership between twoentities in which they take advantage of eachother’s core strengths like proprietaryprocesses, intellectual capital, research,market penetration, manufacturing and/ordistribution capabilities etc. They share theircore strengths with each other. They will havean open door relationship with another entityand will mostly retain control.
Boeing is the world’s leading aerospace companyand the largest manufacturer of commercialjetliners and military. It was established byWilliam Boeing in 1916 in Seattle, Washington.Its international headquarters now has beenlocated in Chicago, Illinois. The major productsare commercial airliners, military aircrafts,munitions, space systems and computer services.With respect to its commercial airplanes, thiscompany has launched into the world marketmodels like 737, 747, 767, 777, and the latest oneis 787 Dream-liner (Commercial Airplanes).
The European Aeronautic Defense and Space Company EADSN.V. (EADS) is the largest European aerospace corporationand was founded on July 10, 2000 from the merger amongAerospatiale-Marta of France, Construcciones Aeronautic asSA (CASA) of Spain and DaimlerChrysler Aerospace AG(DASA) of Germany. This company mainly focuses ondeveloping and producing the civil and militaryaircrafts, missiles, space rockets, satellites and relatedsystems. Airbus is one of its important divisions. This branchhas penetrated into the global market the five big aircraftfamilies including A320 family , A300/A310family, A330/A340 family, A350 family and the newest one-A380 (Airbus).
In order to take advantage of the other nations’comparative advantages in technology and toachieve the economies of scale and to reduceexcess capability, Airbus and Boeing apply the“strategic alliance” including joint R&D effortsand joint production of a particular component. Itmeans they did not produce all the components oftheir planes. Instead, they share their jobs to theirpartners or concentrate on the activities in low-cost or high skills countries to increase theirproductivity and reduce costs.
• Inadequate pre-planning for the strategic alliance.• The desired technology never developed.• Agreements could not be reached on alternativeapproaches to solve the basic objectives of thestrategic alliance.• People with expertise in one company refused toshare knowledge with their counter-parts in thestrategic alliance.53
To develop communications andinfrastructure solutions that combine Ciscosindustry-leading network solutions andproducts withWipros infrastructure andmanaged services expertise.
WIPRO :-Azim Premji,chairman, has ledWIPRO since 1966.Today it is a US$5billion revenue IT,BPO and R&Dservices organizationwith a presence inover 50 countries.CISCO :-Leonard Bosak andSandy Lerner foundedCISCO in 1984. Todayit has a revenue ofUS$ 46.06 billion onthe networkingequipment.
To provide innovative solutions that deliverbusiness value to customers. To create industry specific solutions forsectors such as banking, finance, retail,energy & utilities and healthcare & lifesciences. To become the leading 360 degree strategicpartner.
To attain technological leadership. To create differentiated joint offerings. To adopt next generation engagementmodelswhich enable customers business outcomes.
Developing an integrated value proposition. Board level governance to ensure strategicorganizational alignment. Market collaboration and GTM strategies. Joint cloud strategy. Scalable business architecture.
Type of site:- Social networking service. Users:- 955 million(active June 2012) Owner:- Facebook, Inc. Created by:- Mark ZuckerbergEduardo SaverinAndrew McCollumDustin MoskovitzChris Hughes. Launched:- February 4, 2004 Revenue :- $3.71 billion (2011)
Industry:- Computer softwareOnline servicesVideo games Founded:- Albuquerque, New Mexico, UnitedStates (April 4, 1975) Founder(s):- Bill Gates, Paul Allen Headquarters:- Microsoft RedmondCampus, Redmond, Washington, U.S. Area served:- Worldwide Revenue:- US$ 73.72 billion (2012) Employees:- 94,000 (2012)
Two companies expand advertising deal to coverinternational markets, Microsoft to take equitystake in Facebook. Microsoft took a US$ 240million equity stake in Facebook. At the launchof Facebook, it was not used worldwide but insome places with the help of Microsoft he didthe advertisement & as a result his usersincreased. Facebook’s users increased from 50million to 750million.
July 2012, the countries with the most Facebookusers were: United States with 155.6 million members Brazil with 52.8 million members India with 51.0 million members Indonesia with 44.0 million members Mexico with 36.2 million members All of the above total 309 million members orabout 38.6 percent of Facebooks 900 millionworldwide members.