Acquisition and restructuring strategies - Yolanda Williams

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Key Business Concepts: Acquisition and restructuring strategies

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  • Bharti Enterprises, one of India's leading business groups with interests in telecom, agri-business, insurance and retail, and Walmart, renowned for its efficiency and expertise in logistics, supply chain management and sourcing.
  • Bharti Enterprises, one of India's leading business groups with interests in telecom, agri-business, insurance and retail, and Walmart, renowned for its efficiency and expertise in logistics, supply chain management and sourcing.
  • Acquisition and restructuring strategies - Yolanda Williams

    1. 1. Strategic ConceptsYolanda Williamsybowdrywilliams@gmail.com4/29/2013
    2. 2. • Acquisition• Merger• Restructuring2
    3. 3. An acquisition is a strategy through which onefirm buys a controlling or 100 percent interest inanother firm with the intent of making theacquired firm a subsidiary business within itsportfolio.3
    4. 4. It is used to achieve greater market power andobtain a competitive advantage.• Increased market power• Overcoming entry barriers• Increased speed to market• Increased diversification• Learning developing new competencies4
    5. 5. This strategy allows firms to generate increased assets andwealth to meet the needs of its owners.5
    6. 6. Reasons for AcquisitionsLearning anddevelopingnew capabilitiesReshaping firm’scompetitive scopeIncreaseddiversification Lower risk thandeveloping newproductsCost of newproductdevelopmentOvercomingentry barriersIncrease speedto marketIncreasedmarket powerMaking anAcquisition7–6
    7. 7. Acquisitions are a part of a companys growthstrategy whereby it is more beneficial to takeover an existing firms operations and nichecompared to expanding on its own.7
    8. 8. Walmart uses acquisitions to enter new markets as itcontinues to open stores in countries.8
    9. 9. A merger is a type of acquisition.9
    10. 10. 7–10
    11. 11. A merger occurs when two firms agree to go forward as a singlenew company rather than remain separately owned andoperated.• More precisely referred to as a "merger of equals“• Firms are often of about the same size.• Both companies stocks are surrendered• New company stock is issued in its place.Example: GlaxoSmithKline, merger of Glaxo Wellcome andSmithKline Beecham11
    12. 12. To understand the difference between a merger and anacquisition12
    13. 13. Major competitors:• dominate the market they compete• may trigger litigation regarding monopoly laws.Example: AT&T and T-Mobile mergerDifferent, but complementary, products:• Control an asset in supply chain.Example: PayPals merger with eBay allowed eBay toavoid fees they had been paying, while tying twocomplementary products together.13
    14. 14. Mergers are a part of a companys growth strategy• more beneficial for companies to combine itsefforts– increase its market power– leverage the combined supply chain oreconomies of scale14
    15. 15. Walmart doesn’t not participated in mergersBharti Walmart Private Limited (a joint venture)• Bharti and Walmart hold a 50:50 stake in Bharti WalmartPrivate Limited.• Wholesale cash-and-carry• Back-end supply chain management operations• Within Government of India guidelines.15
    16. 16. Restructuring is a strategy through which a firm changes itsbusiness and/or financial structure.16
    17. 17. To gain an understanding of the need for restructuring.17
    18. 18. It can help firms adapt to changes in internal and externalenvironments.• Restructuring strategies:– Downsizing– Downscoping– Leveraged buyouts18
    19. 19. 19
    20. 20. This strategy can help firms maintain stability in the event of afailed or difficult acquisition or to adapt to current marketconditions.20
    21. 21. Walmart uses this option to divest itself of intereststhat fail due to:• External culture• Losses• Market pressure.it sold its interests in Germany to due highcompetitive pressures (ALDI) and Germany’spatriotic culture.21
    22. 22. 22

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