Joint ventures and mergers


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Joint ventures and mergers - Unitedworld School of Business

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Joint ventures and mergers

  1. 1. When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition.
  2. 2.  Gain market share.  Economics of scale.  Enter new market.  Acquire technology.  Utilization of surplus funds.  Managerial effectiveness.  Strategic objectives.  Horizontal integration.
  3. 3. • 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.
  4. 4.  TATA GROUP – 150 YEAR OLD  Previously Tata Engineering and Locomotive Company, Telco  Tata Motors’s break-even point for capacity utilization is one of the best in the industry worldwide  listed on the New York Stock Exchange in 2004
  5. 5.  July 2007- Announcement from Ford that it plans to sell Land Rover and Jaguar.  August 2- India’s Tata Motors and M&M arrive as top bidders ($ 2.05b & $ 1.9b)  Jan 2008 – Ford announces Tata as the preferred bidders  March 2008 - Ford agreed to sell their Jaguar Land Rover operations to Tata Motors.  June 2008 – The acquisition is complete.
  6. 6.  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 to broaden the brand portfolio.
  7. 7. Graph of Jaguar and Land Rover
  8. 8.  Group : Vodafone P/C  HEADQUATERS: Berkshire, UK  Industry : mobile telecommunication  Presence : equity involvement in 25 countries and 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)
  9. 9.  Background : Hutchisson Essar ltd.  Founded in 1992  Circle :16+ license for 6 circles  Revenue : US $1282 million  EBITDA :US $415 million  Operating profit : US $315 million
  10. 10.  Telecom business in Japan and Belgium were not performing up to the world market.  Market including the US market were maturing and were not growing in a big way.  Stiff competition among almost all major player in industry, global telecom giants like BT, O2 of UK version from US, maxis telecommunication of Malaysia As a example:- reliance and bharti airtel from india
  11. 11.  Vodafone became no.1 for tele communication in india (source: business standard, edition 16th april, 2010).  India is the world’s 2nd most populated country, with over 1.1 billion people.  India benefits from strong economic fundamentals with exceeded real GDP growth in high single digits.  IncreasesVodafone presence in higher growth emerging markets.
  12. 12. 1. Founder- J.N.Tata 2. 102 yrs. In Steel Market 3. World’s 56th largest 4. Capacity of 30 million 5. Presence in 26 nations
  13. 13. 1. World’s 6th largest 2. 2nd in Europe & 1st in U.K. 3. 3…1st rank in fortune list 4. Presence in 50 nations 5. 40000 people worldwide
  14. 14.  Tata-Chorus deal – US$ 12.2 billion  Equity contribution fromTata Steel – US$ 3.88 billion.
  15. 15.  Augmented its crude steel capacity to 27 million tonnes per annum  The combined entity forms the 6th largest steel company  Capacity to produce 56 million tonnes per annum by 2015.
  16. 16.  A joint venture is an entity formed between two organizations to undertake economic activities together. Both of them contribute equity and then they agree to share the revenues, expenses and control of the newly formed enterprise.
  17. 17.  Both partners should appreciate the need for the joint venture.  The partners should clearly agree on the way the joint venture will be managed.  It is important that both partners work towards a system based on trust and transparency.  Need to have a clear long term goal and set the terms and conditions of the venture.
  18. 18.  In 2003, Hyundai has an investment of $250 million in China in conjunction with Beijing Automotive to produce 100,000 units per year .  Hyundai projects and plans production to be 200,000 units per year by 2005.
  19. 19.  Established in 1967, Hyundai is presently South Korea’s #1 carmaker, manufacturing dozens of models of cars, vans, and minivans.  Throughout the past two decades, Hyundai introduced various models: Pony, Excel, Sonata, andAccent.  In 1990, Hyundai introduced its own engine design, the Alpha. Two years later, it introduced its second-generation engine, the Beta.
  20. 20.  Beijing Automotive Group (officially Beijing Automotive Industry Ltd.) is a holding company of several Chinese automobile and machine manufacturers such as Beijing AutomobileWorks Co Ltd. etc. It is commonly known as Beiqi.  2011 production of 1,526,300 whole vehicles made Beiqi the fifth largest, in terms of units manufactured, vehicle-maker in China that year.
  21. 21.  Hyundai agreed to pay $250 million in a joint venture with BeijingAutomotive.  Starting at 1,00,000 units in 2003, plans to expand to 200,000 units by 2005.  If the production is a success, Hyundai will invest $1.1 billion to increase productivity to 5,00,000 by 2012.
  22. 22.  Production :  Starting at 1,00,000 units, production increased by 50,000 till 2005, ultimately producing 2,00,000 units.  From 2005 to 2011, production increased 60,000 units per year.
  23. 23.  In order to be successful :  Must form synergies on all levels with China and Beijing Automotive.  Hyundai must use their experience in investing in 4 other plants in China.  Take advantage of the first mover opportunity in China’s de-regulated auto market.
  24. 24.  Great opportunity for Hyundai’s business development.  Tremendous global growth potential. Bottom line : There is lots of money to be discovered and made in the emerging markets of Korea and China !!!
  25. 25.  Maruti Suzuki India Limited , commonly referred to as Maruti, is a subsidiary company of Japanese automaker Suzuki Motor Corporation. It has a market share of 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 'C' segment Maruti Eeco, multi purpose vehicle Ertiga and sports utility vehicle Grand Vitara.  It is the market leader in India, and on 17 September 2007, Maruti Udyog Limited was renamed as Maruti Suzuki India Limited. The company's headquarters are on Nelson Mandella Rd, New Delhi.In February 2012, the company sold its 10th million vehicle in India.  Maruti Suzuki is India and Nepal's leading automobile manufacturer and the market leader 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, and 54.2% by Suzuki of Japan.  Maruti Suzuki will be introducing new 800cc model by Diwali in 2012.The model is supposed to be fuel efficient, hence more expensive.
  26. 26. For Maruti :-  Suzuki Motor Corporation,the parent company,is a global leader 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 Suzuki and its partners.
  27. 27. For Suzuki:  Large Indian market.  Monopolistic Trade in the Indian automobile market.  Availability of resources.
  28. 28.  Type:- Public company  Founded:- 1975  Headquarters:- Delhi, India  Services:- Electricity generation & distribution of 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)
  29. 29.  Type:- Public  Founded:- 1975  Headquarters :- Kolkata, West Bengal, India  Product :- Coal, Bituminous  Revenue:- Rs.624.15 billion (US$11.3 billion)(2012)  Profit :- Rs.147.88 billion (US$2.68 billion)(2012)  Owner(s) :- Government of India  Employees:- 383,347 (April 2011)
  30. 30.  Coal India feeds 82 out of 86 coal based thermal power plants in India.  Joint venture has been signed between NTPC & Coal India Ltd. For development of Brahmini & Chichro coal mine with 50:50 equity participation.  NTPC is ramping up its generation capacity & is expected to increase its market share from about 19% today to around 25% by 2017. During 11th plan your company has already commissioned 3240 mega watt capacity.
  32. 32. SA is a kind of partnership between two entities in which they take advantage of each other’s core strengths like proprietary processes, intellectual capital, research, market penetration, manufacturing and/or distribution capabilities etc. They share their core strengths with each other. They will have an open door relationship with another entity and will mostly retain control.
  33. 33. Boeing is the world’s leading aerospace company and the largest manufacturer of commercial jetliners and military. It was established by William Boeing in 1916 in Seattle, Washington. Its international headquarters now has been located in Chicago, Illinois. The major products are commercial airliners, military aircrafts, munitions, space systems and computer services. With respect to its commercial airplanes, this company has launched into the world market models like 737, 747, 767, 777, and the latest one is 787 Dream-liner (Commercial Airplanes).
  34. 34. The European Aeronautic Defense and Space Company EADS N.V. (EADS) is the largest European aerospace corporation and was founded on July 10, 2000 from the merger among Aerospatiale-Marta of France, Construcciones Aeronautic as SA (CASA) of Spain and DaimlerChrysler Aerospace AG (DASA) of Germany. This company mainly focuses on developing and producing the civil and military aircrafts, missiles, space rockets, satellites and related systems. Airbus is one of its important divisions. This branch has penetrated into the global market the five big aircraft families including A320 family , A300/A310 family, A330/A340 family, A350 family and the newest one- A380 (Airbus).
  35. 35. In order to take advantage of the other nations’ comparative advantages in technology and to achieve the economies of scale and to reduce excess capability, Airbus and Boeing apply the “strategic alliance” including joint R&D efforts and joint production of a particular component. It means they did not produce all the components of their planes. Instead, they share their jobs to their partners or concentrate on the activities in low- cost or high skills countries to increase their productivity and reduce costs.
  36. 36. • Inadequate pre-planning for the strategic alliance. • The desired technology never developed. • Agreements could not be reached on alternative approaches to solve the basic objectives of the strategic alliance. • People with expertise in one company refused to share knowledge with their counter-parts in the strategic alliance. 54
  37. 37. To develop communications and infrastructure solutions that combine Cisco's industry-leading network solutions and products withWipro's infrastructure and managed services expertise.
  38. 38. WIPRO :- Azim Premji, chairman, has led WIPRO since 1966. Today it is a US$5 billion revenue IT, BPO and R&D services organization with a presence in over 50 countries. CISCO :- Leonard Bosak and Sandy Lerner founded CISCO in 1984. Today it has a revenue of US$ 46.06 billion on the networking equipment.
  39. 39.  To provide innovative solutions that deliver business value to customers.  To create industry specific solutions for sectors such as banking, finance, retail, energy & utilities and healthcare & life sciences.  To become the leading 360 degree strategic partner.
  40. 40.  To attain technological leadership.  To create differentiated joint offerings.  To adopt next generation engagement models which enable customer's business outcomes.
  41. 41.  Developing an integrated value proposition.  Board level governance to ensure strategic organizational alignment.  Market collaboration and GTM strategies.  Joint cloud strategy.  Scalable business architecture.
  42. 42.  Type of site:- Social networking service.  Users:- 955 million(active June 2012)  Owner:- Facebook, Inc.  Created by:- Mark Zuckerberg Eduardo Saverin Andrew McCollum Dustin Moskovitz Chris Hughes.  Launched:- February 4, 2004  Revenue :- $3.71 billion (2011)
  43. 43.  Industry:- Computer software Online services Video games  Founded:- Albuquerque, New Mexico, United States (April 4, 1975)  Founder(s):- Bill Gates, Paul Allen  Headquarters:- Microsoft Redmond Campus, Redmond, Washington, U.S.  Area served:- Worldwide  Revenue:- US$ 73.72 billion (2012)  Employees:- 94,000 (2012)
  44. 44.  Two companies expand advertising deal to cover international markets, Microsoft to take equity stake in Facebook. Microsoft took a US$ 240 million equity stake in Facebook. At the launch of Facebook, it was not used worldwide but in some places with the help of Microsoft he did the advertisement & as a result his users increased.  Facebook’s users increased from 50million to 750 million.
  45. 45.  July 2012, the countries with the most Facebook 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 or about 38.6 percent of Facebook's 900 million worldwide members.
  46. 46. 907/A Uvarshad,Gandhinagar Highway,Ahmedabad – 382422. Ahmedabad Kolkata Infinity Benchmark, 10th Floor, Plot G1, Block EP & GP, SectorV, Salt-Lake, Kolkata – 700091. Mumbai Goldline Business Centre Linkway Estate, Next to Chincholi Fire Brigade, Malad (West), Mumbai – 400 064.