Evaluation of both companies
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Evaluation of both companies Evaluation of both companies Document Transcript

  • APPLE ACQUIRING 3D SYSTEMSMergers & AcquisitionsKiki AmadiMeksduru, Anthony Terzian, IsalineCharpentier&Racha Ismail13thJune, 2013Group Assignment
  • Apple and 3D Systems CorporationCompanies overview:AppleApple is a corporation founded in January 1977. It designs, manufactures and markets mobilecommunication and media devices. In addition, the company commercializes different services,software, networking solutions and third party digital content and applications. Apple sells its productworldwide through its retail stores as well as online store, direct sales force and third party resellers.The company recently acquired WiFiSlam, a Silicon Valley startup that does mapping applications forSmartphones.3D System3D Systems Corporation is a holding company incorporated in Delaware and operates through severalsubsidiaries around the world. They are the leading global providers of 3D content-2-print solutionsincluding 3D printers, print materials, on demand custom services, and 3D authoring solutions forprofessionals and consumers. They also provide scanners for a variety of medical and mechanical X-rayfilm digital archiving. Their 3D printers can print almost anything from personalized medical devices tofunctional airplane and car parts from individualized accessing to customized jewelry and toys.Organizational StructureApple"At apple they really are after you", was the perception of an employee as to the working culture of theorganization. The boss is noted for pushing his employees harder than anywhere else, and once he firedan employee in the elevator for not giving a good enough answer to his question ‘so what have youdone for Apple lately?” The company is one that thrives on secrecy,gives obsessive attention to detail,and this approach is not conducive for friendliness. Their culture is also referred to as tough as nails. Inaddition, their culture is one of change, with the drive to outperform and succeed as their majorobjective. The corporate headquarters makes policies and oversaw all activities, but the local employeesmake the day-to-day decisions on ground in countries all over. Their top down philosophy allows forquick responsiveness and resolution to situations without involving the corporate headquarters.Moreover, the following points can summarize their organizational culture:
  • 1: design is everything2: design reports to the CEO3: a very small team designs their products4: designers make the design decisions5: they do pixel perfect mockups6: they have paired design meetings7: they do no market research8: if its not perfect, it doesnt go out.3D Systems Corporation3D systems culture is customer oriented. They attract and develop experts who are passionate abouthelping their customers succeed. They identify and act on opportunities to create faster, simpleprocesses that enhance their ability to serve customers and maintain competitive posture. They arehighly motivated in committing and doing their jobs. They are guided by set of principles and values thatcultivates teamwork, entrepreneurial spirit, cross-functionality, interaction, and responsibility. From themanager of customer communications in service, he quotes: "My goal is to increase and promote cross-functional communications, not only between our customers, and the Global Customer Success Team,but among all departments within 3D systems. I am certain that my background in 14 years ofexperience in sales will provide the team with an increased in the standing of the market place,customers needs and efficient processes to support our companys number one priority-improving ourcustomers bottom-line."Market overview:The world printing machinery and supplies industry is expected to exceed 21 Billion dollars by 2015according to global industry analysts. The market is driven by demand for digital color presses, specialtyprinters, and inkjet printers. The printing market has grown alongside expansion in the PC market, withmany computer owners also owning printers. The demand for inkjet printers and PC free printers, whichtake flash memory cards used in digital camera, continues to rise. The printing industry has seen thepace of progress pick up due to digital technology. Moreover, the demand for 3D prototypes andanother printing material is increasing;as Amazon.com is interested to add a segment in their portfoliodedicated to the 3D printing since it is an asset for designers.
  • From the information obtained, we believe that Apple acquiring 3D Systems Corporation will creategood opportunities for future business development. As we familiarize with both companies, itappeared to us that our first insight on the deal was the right one. We will now see in more details howboth companies could work together.SWOT analysis of 3D Systems:Strengths:1) 3D systems’ biggest strength is their recurring sales output from print materials and services revenuesegments.2) They have a proven research and development department and are able to produce new productstoimprove their addictive manufacturing portfolio.3) They help cut customers cost by reducing their production lines while increasing their output role byenabling them produce single items quickly and cheaper rather than export abroad for rare parts.Weaknesses:1) 3D systems’ printers are very expensive to make which results in a high price for the machines andtheir end use products2) Objects will become a lot easy to copy, distribute, and pirate, thus making it easier to breachintellectual property laws.Opportunities:1) The increasing demand from growing markets such as China and Indiapaired with 3D systems abilityto speed up design process will have a big impact on the printing industry and may replace massmanufacturing.2) Once the printers cost decreases and their speed increases there will be a surge in demand andmanufacturers will look to adapt the technology since 3D allows for the creation of parts in shapes thatconventional technique cannot achieve.Threats:1) The major threat is expanding too fast and becoming too diversified within the industry.2) Staying on top of the industry and being able to compete with startup firms and other businesses thatcould affect their revenue or gross profit margin might be difficult on the long term.
  • 3) There is always a threat that the established technique of mass manufacturing will not go away andthat they cannot interrelate with 3D printers.4) If the technology does not improve then the cost of 3D printing machine will not lower to a respectfulprice.Costs of proceeding with the merger:Each company calculates its expenses in different terms. Apple’s expenses are covered through net saleswhile 3D systems’ expenses are covered through their total revenue. In order to evaluate the potentialbenefit of acquiring 3D Systems, Apple should either compare their results in terms of sales expenses orrevenues.In terms of R&D, Apple spends 2% of its net sales revenues while 3D Systems spends 6.6% of theirrevenue so we can conclude that both companies have a healthy attitude in terms of expenseexpenditure.In addition, if we take into consideration the fact that sales expenditures represent 34,1 % of 3Dsystems‘revenues then we can say that getting together with Apple would be a positive deal because it wouldlead to economies of scales thanks to the fact that Apple has already well-established selling platforms.Apple platform strategy would lead to reducing cost in R&D for since 3D Systems since their design isincremental.Strategy and terms of process:As mentioned in the description section of 3D systems, the company is aiming at broadening their targetaudience by not only reaching experts, but also individual users. This strategy fits well with Apple’spositioning. Furthermore, according to Apple Press Info, Apple announced changes to increasecollaboration across hardware, software and services, which supports us to think that this deal could bea good one.If Apple and 3D Systems merge, we would suggest that the printers produced would go under Apple’sbranding system when targeted to individual users. However, we would advise that the 3D Systemsbrand name remains when dealing with professionals. This is because changing to Apple would meanlosing the professional image that 3D Systems has developed until now to the fashionable side ofApple. Furthermore, in order to retain 3D Systems’ actual customers, current printers should remainunder the same design, however, Apple’s logo would be printed on them.
  • In terms of board of directors, 3D Systems, as of now, is authorized to issue 5 million shares of preferredstock and in addition to other rights, in order to keep the board of directors interested in the acquisitionand not lose present stockholders, it is preferred to increase each share value by 5%. Furthermore, 3DSystems directors will have seats in Apple’s board of directors so that they can provide their input andbe part of the decision process in terms of the company objective.References(2013, June). Retrieved from Reuters:http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=AAPL.OApple. (2013). Retrieved from http://www.apple.com/pr/library/2012/10/29Apple-Announces-Changes-to-Increase-Collaboration-Across-Hardware-Software-Services.htmlFaulk, T. (2013, June 10). Retrieved from smartplanet:http://www.smartplanet.com/blog/bulletin/amazon-launches-3d-printer-section/21522reportlinker. (2013). Retrieved from http://www.reportlinker.com/ci02068/Printer-and-Copier.htmlSystems, 3. (n.d.). Retrieved from http://www.3dsystems.com/company/investor/CorProf_13.pdf