I need 4 separate responses to my classmates posts and each post needs to be 150 words min with references. Please keep in order.
1. Mike C- Hello class,
Back in 1999, I worked for a bank that used acquisition to grow and increase is market share. It also used acquisitions to increase its products in each of it's markets. In 1999 the bank had over 200 branches in four states. Our tex states, “A primary reason for acquisitions is to achieve greater market power. Market power (defined in Chapter 8) exists when a firm is able to sell its goods or services above competitive levels or when the costs of its primary or support activities are below those of its competitors, (Hoskisson, p. 260, 2014), Citizens Banking Corporation (based in Flint, MI), was using horizontal strategic acquisition strategy to increase it’s market power and gain market share, in addition to continue grow in size. My understanding of acquisitions at that time was that financial institutions typically use acquisition to start competitive in the market. Not usually using Wikipedia as a information source, this link shows Citizens Bank’s changes over the past several years. This also show how Citizens Bank was acquired by another bank a few years ago. As I reflect back on the acquisition the bank made, I remember the problems with top managers agreeing on how to proceed during the xxx phase. Many of the mangers left the company as a new CEO moved in to direct the activities of the bank. I also recall stock prices falling tremendously during this time. As our text states, “If the potential for synergy exists between an acquired and a target firm, the potential is released primarily during the integration stage”, (Hoskisson, p. 266, 2014), in this particular case, synergy was not easily achieved because some of the managers from the acquired bank felt it was a hostile takeover and not a equitable acquisition. Ultimately the bank was successful in its transition during that time. But as the link below proves, Citizens Bank was acquired by another bank in 2013.
Reading through chapter 10 and answering the question of, “are the concepts relevant to companies with only domestic products”? In my opinion the answer is yes. Even if a company is only operating within the borders of the U.S., it still has the potential to serve individuals form different cultures. If a company want to attract more customers, a company will have to understand the demographics and wants of potential customers, otherwise, competitors will take more market share.
2.Tammy- Class,
I worked for a company that was in the process of being acquired as I was leaving. This was a horizontal merger. Our text defines this as “the acquisition of a company competing in the same industry in which the acquiring firm competes is referred to as horizontal acquisitions (Hoskisson, Hitt, Ireland, & Harrison , 2013, p. 260) . The acquisition was successful and I attribute the approach for that success. The founders of the original company desired to sell but wanted to ensure the future success of the organization. The acquiring company was also a restaurant management company and had one of their top executive’s work at the parent company as CEO for 4 years. During that time the parent company was adapted to be more profitable, struggling restaurants were closed and a tighter control over operations began. After the acquisition the parent company looked very closed to what it had for the past four years as the grooming process prepared for this for four years.
The transnational strategy could be used in domestic operations as well as abroad. Our text defines this as “international strategy through which the firm seeks to achieve both global efficiency and local responsiveness” (Hoskisson, Hitt, Ireland, & Harrison , 2013, p. 295) . Similar to the concept in the video even domestically products are accepted regionally. Coca-Cola modifies their product line and packaging to accommodate international markets (Meiuing, Scott, Guanhua, & Neil, 2013) . For example, Fanta is only in certain parts of the United States, primarily the southern states, similar to the Coca-Cola international strategy they have modified product distribution for the preference of customers in that region (Meiuing, Scott, Guanhua, & Neil, 2013) . The journal article speaks of “public sector’s contribution to society” and further states “public interest, common good social cohesion, dignity, regime stability … add to this value constellation” (Jorgensen & Sornsen, 2012-2013) . An organization must be mindful of the public interest and keep stability and dignity in focus. An organization must ensure they are not offending a region or nation with packaging or product design.
References
Hoskisson, R. E., Hitt, M. A., Ireland, R. D., & Harrison , J. S. (2013). Competing for Advantage (3 ed.). Mason: South-Western.
Jorgensen, T. B., & Sornsen, D.-L. (2012-2013). Codes of Good Governance National or Golbal Public Values. Public integrity, 71-95.
3.-Karen- Chapter 9 – Acquisition and Restructuring Strategies
In January 2007 eBay acquired StubHub for $310,000,000, engaging them in another acquisition, which they have also used many times before and since this business transaction (Gara, 2016). This particular transaction would be categorized as a strategy of horizontal acquisition when considering eBay’s highest level goals for the organization (Hoskisson, Hitt, Ireland, & Harrison, 2013, p. 260). In an interview in 2015, eBay’s CEO John Donahoe stated “We’re a consumer company. Our core mission is to connect buyers and sellers. And eBay’s a way to connect buyers and sellers. StubHub’s a way to connect a buyer and seller. Our classified sites around the world are a way to connect a buyer and seller…” (Ignatius, 2015). eBay’s strategy is to continue to acquire companies that sell things to consumers. This strategy has been successful for eBay and continues to be successful for StubHub. As of early last year, StubHub was eBay’s fastest-growing business, “generating 34% quarterly year-over-year sales growth and annual revenues of $725 million, roughly 9% of total sales” (Gara, 2016). In the fourth quarter of 2015, “StubHub generated over $1 billion in gross merchandising volumes, a 30% year-over-year rise” after being acquired by eBay almost a decade ago (Gara, 2016). It appears as though StubHub’s assets were a complement to eBay’s assets and the business structure established after the acquisition has allowed them to continue to grow and be successful (Hoskisson, Hitt, Ireland, & Harrison, 2013, p. 271).
Chapter 10 – International Strategy
Yes, the concepts learned in Chapter 10 of our text are relevant to an organization with only domestic operations. The chapter is an explanation of ways to enter into international business competition (Hoskisson, Hitt, Ireland, & Harrison, 2013). Once an organization understands which strategy would benefit them most, they are only limited to those choices that they are willing to make, based on risks associated with each type of strategy. For example, if an organization chooses to remain with only domestic operations, then the option for exporting is the logical choice for entering into an international business strategy (Hoskisson, Hitt, Ireland, & Harrison, 2013, p. 285).
The Codes of Good Governance article by Jorgensen and Sorensen this week was about the interesting and challenging topic of good governance for international business (2012-13). This subject matter is difficult to reach consensus on because human morals, values, and ethics are at the heart of the discussion (Jorgensen & Sorensen, 2012-13, p. 72). The concept of a code of good governance is value-added in the world of business to set guidelines for how organizations could and should operate across the world. However, due to the vast coverage required for common ground, getting enough people to agree on what those guidelines should be, does seem like an impossible task.
Reference:
Gara, A. (January 29, 2016). After PayPal Split, eBay Owes All of Its Growth to StubHub. Retrieved April 17, 2017, from
https://www.forbes.com/sites/antoinegara/2016/01/29/after-paypal-split-ebay-owes-all-of-its-growth-to-stubhub/#1c9a5cf520de
Global1managing. (April 15, 2013). SOM 354: Coca-Cola International Business Strategy. Youtube. Retrieved April 16, 2017, from https://www.youtube.com/watch?v=QAyJVtEIAtM.
Hoskisson, R., Hitt, M., Ireland, R., & Harrison, J. (2013). Competing for Advantage (3rd ed.). Australia: South-Western Cengage Learning.
4.Thomas- In the 2008 pre-crash global business environment, many mergers, acquisitions and takeovers were taking place as organization were attempting defeat competitive threats, overcome barriers to open new markets, and become more powerful in existing markets (Hoskisson, 2013). As a result of the economic downturn acquisitions and takeover activity slowed considerably. During this time, companies began to implement strategies such as restructuring and downsizing to reduce costs by eliminating employees and business units. General Motors, Chrysler, and Ford are companies that came to my mind immediately. During this unprecedented time, the Big 3, as they are referred to in our industry, laid off thousands of employees, encouraged early retirements of thousands more, and closed numerous business units in an effort to improve their balance sheet.
Specifically, GM, offered buy-out package to many of their employees and reduced the number of brands they would produce. During this process, GM eliminated their Saturn, Pontiac, and Oldsmobile brands and sold off controlling interest in other brands such as Hummer and Saab. In the years previous to 2008 automotive manufacturers were growing at a rapid pace through mergers and acquisitions. However, as a result of the restructuring and downsizing, The Big 3 were successful at reducing costs, increasing speed to market, and reshaping their firms competitive scope by becoming more lean and concentrating on their core competencies (Hoskisson, 2013).
Coca-Cola has implemented an aggressive growth strategy that has enhanced their brand recognition around the globe. I am not completely familiar with their international strategy, outside our video, but I believe there are many ingredients within Coca-Cola’s strategy that will influence a domestic strategy, in a meaningful way, that are similar to an international strategy (global1managing, 2017). Coca-Cola Codes of Good Governance increases their chances of success by fostering an environment of goodwill. Through participation, transparency, accountability, rule of law, effectiveness, and equity, Coca Cola has implemented an international strategy that has contributed significantly, and identifies with both their domestic and international strategies. A code expresses a vision of excellence and is a collection of principles that govern an organization or a group of people. It appears to me that Coca-Cola has performed admirably by identifying the values that are important to their associates. Coca-Cola’s integrity has cemented their place in the market by creating an attitude of trust with their team members, customers, and strategic alliances (Jorgensen, 2013).
References
global1managing. (2017, April 17). Coca-Cola International Business Strategy. Retrieved from YouTube: https://www.youtube.com/watch?v=QAyJVtEIAtM
Hoskisson, R. E. (2013 ). Competing for Advantage. Mason: Cengage Learning.
Jorgensen, T. B. (2013). Codes of Good Governance; National or Global Public Values. Public Integrity, 71-95.