Mergers, Joint Ventures and Acquisitions - UnitedWorld School of Business
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Mergers, Joint Ventures and Acquisitions - UnitedWorld School of Business

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An overview of mergers, joint ventures and acquisitions will help all management students to understand its need in today's business.

An overview of mergers, joint ventures and acquisitions will help all management students to understand its need in today's business.

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Mergers, Joint Ventures and Acquisitions - UnitedWorld School of Business Mergers, Joint Ventures and Acquisitions - UnitedWorld School of Business Presentation Transcript

  • Designation: PGDM StudentBatch: 2012-2014.Specialization: Major – MarketingMinor – FinanceFacebook: http://on.fb.me/106D9UMBlog: http://bit.ly/13yMJAtLinkedIn: http://lnkd.in/jFgcBV
  • When one company takes over another and clearlyestablished itself as the new owner, the purchase iscalled 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 LandRover operations to Tata Motors. June 2008 – The acquisition is complete.
  •  Long term strategic commitment to automotive sector. Opportunity to participate in two fast growing autosegments. Increased business diversity across markets and product. Jaguar offers a range of “performance/luxury” vehicles tobroaden the brand portfolio.
  • Graph of Jaguar and Land Rover
  •  Group : Vodafone P/C HEADQUATERS: Berkshire, UK Industry : mobile telecommunication Presence : equity involvement in 25 countries andnetwork 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 $315 million
  •  Telecom business in Japan and Belgium werenot performing up to the world market. Market including the US market werematuring and were not growing in a big way. Stiff competition among almost all majorplayer in industry, global telecom giants likeBT, O2 of UK version from US, maxistelecommunication of MalaysiaAs a example:- reliance and bharti airtel fromindia
  •  Vodafone became no.1 for tele communicationin india (source: business standard, edition 16thapril, 2010). India is the world’s 2nd most populatedcountry, with over 1.1 billion people. India benefits from strong economicfundamentals with exceeded real GDP growthin high single digits. Increases Vodafone presence in higher growthemerging markets.
  • 1. Founder- J.N. Tata2. 102 yrs. In Steel Market3. World’s 56th largest4. Capacity of 30 million5. Presence in 26 nations
  • 1. World’s 6th largest2. 2nd in Europe & 1st in U.K.3. 3…1st rank in fortune list4. Presence in 50 nations5. 40000 people worldwide
  •  Tata- Chorus deal – US$ 12.2 billion Equity contribution from Tata Steel – US$ 3.88billion.
  •  Augmented its crude steel capacity to 27million tonnes per annum The combined entity forms the 6th largest steelcompany 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 work towardsa system based on trust and transparency. Need to have a clear long term goal and set theterms and conditions of the venture.
  •  In 2003, Hyundai has an investment of $250 millionin China in conjunction with Beijing Automotive toproduce 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 car-maker, 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 BeijingAutomobile Works 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 Beijing Automotive. Starting at 1,00,000 units in 2003, plans to expand to200,000 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 by 50,000till 2005, ultimately producing 2,00,000 units. From 2005 to 2011, production increased 60,000 units peryear.
  •  In order to be successful : Must form synergies on all levels with China and BeijingAutomotive. Hyundai must use their experience in investing in 4 otherplants in China. Take advantage of the first mover opportunity in China’sde-regulated auto market.
  •  Great opportunity for Hyundai’s businessdevelopment. Tremendous global growth potential.Bottom line : There is lots of money to be discoveredand made in the emerging markets of Korea andChina !!!
  •  Maruti Suzuki India Limited , commonly referred to as Maruti, is a subsidiarycompany of Japanese automaker Suzuki Motor Corporation. It has a market shareof 44.9% 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,to hatchback 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 Limitedwas renamed as Maruti Suzuki India Limited. The companys headquarters areon Nelson Mandella Rd, New Delhi.In February 2012, the company sold its 10thmillion vehicle in India. Maruti Suzuki is India and Nepals leading automobile manufacturer and themarket leader in the car segment, both in terms of volume of vehicles sold andrevenue earned. Until recently, 18.28% of the company was owned by the Indiangovernment, and 54.2% 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.
  •  Type:- Public company Founded:- 1975 Headquarters:- Delhi, India Services:- Electricity generation & distributionof natural gas exploration. Revenue:- Rs.620.53 billion (US$11.23 billion)(2011-2012) Net income:- Rs.92.23 billion (US$1.67 billion)(2011-12). Employees:- 26,000 (2012)
  •  Type:- Public Founded:- 1975 Headquarters :- Kolkata, West Bengal, India Product :- Coal, Bituminous Revenue:- Rs.624.15 billion (US$11.3billion)(2012) Profit :- Rs.147.88 billion (US$2.68 billion)(2012) Owner(s) :- Government of India Employees:- 383,347 (April 2011)
  •  Coal India feeds 82 out of 86 coal basedthermal power 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 &is expected to increase its market share fromabout 19% today to around 25% by 2017.During 11th plan your company has alreadycommissioned 3240 mega watt capacity.
  • INDEPENDENT ORGANIZATIONSHAVING A CRITICAL BUSINESSDEAL.
  • SA is a kind of partnership between two entities inwhich they take advantage of each other’s corestrengths like proprietary processes, intellectualcapital, research, market penetration, manufacturingand/or distribution capabilities etc. They share theircore strengths with each other. They will have anopen door relationship with another entity and willmostly retain control.
  • Boeing is the world’s leading aerospace companyand the largest manufacturer of commercial jetlinersand military. It was established by William Boeingin 1916 in Seattle, Washington. Its internationalheadquarters now has been located in Chicago,Illinois. The major products are commercialairliners, military aircrafts, munitions, space systemsand computer services. With respect to itscommercial airplanes, this company has launchedinto the world market models like 737, 747, 767,777, and the latest one is 787 Dream-liner(Commercial Airplanes).
  • The European Aeronautic Defense and Space CompanyEADS N.V. (EADS) is the largest European aerospacecorporation and was founded on July 10, 2000 from themerger among Aerospatiale-Marta of France, ConstruccionesAeronautic as SA (CASA) of Spain and DaimlerChryslerAerospace AG (DASA) of Germany. This company mainlyfocuses on developing 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 reduce excesscapability, Airbus and Boeing apply the “strategicalliance” including joint R&D efforts and jointproduction of a particular component. It means theydid not produce all the components of their planes.Instead, they share their jobs to their partners orconcentrate on the activities in low-cost or highskills countries to increase their productivity andreduce costs.
  • • Inadequate pre-planning for the strategicalliance.• The desired technology never developed.• Agreements could not be reached onalternative approaches to solve the basicobjectives of the strategic alliance.• People with expertise in one company refusedto share knowledge with their counter-parts inthe strategic alliance.55
  • To develop communications andinfrastructure solutions that combine Ciscosindustry-leading network solutions andproducts with Wipros infrastructure andmanaged services expertise.
  • WIPRO :-AzimPremji, chairman, hasled WIPRO since 1966.Today it is a US$5billion revenueIT, BPO and R&Dservices organizationwith a presence in over50 countries.CISCO :-Leonard Bosak andSandy Lerner foundedCISCO in 1984. Todayit has a revenue of US$46.06 billion on thenetworking equipment.
  •  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 engagement modelswhich 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 tocover international markets, Microsoft to takeequity stake in Facebook. Microsoft took a US$240 million equity stake in Facebook. At thelaunch of Facebook, it was not used worldwidebut in some places with the help of Microsofthe did the advertisement & as a result his usersincreased. Facebook’s users increased from 50million to750 million.
  •  July 2012, the countries with the mostFacebook users 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.
  • 907/A Uvarshad,GandhinagarHighway,Ahmedabad – 382422.Ahmedabad KolkataInfinity Benchmark,10th Floor, Plot G1,Block EP & GP,Sector V, Salt-Lake,Kolkata – 700091.MumbaiGoldline Business CentreLinkway Estate,Next to Chincholi FireBrigade, Malad (West),Mumbai – 400 064.