Organic growth:
Organic
growth strategy involves strengthening your company using its own energy and
resources. This approach to company growth is slower than others, but it has
relative low upfront cost. ( (Chron) . Which will make it
an attractive option for basically to small businesses and also helps in expand
their companies not having large amount of capital?
Merger and acquisition
A merger or
acquisition is a combination of two companies where one corporation is completely absorbed by another
corporation. The less important company loses its identity and
becomes part of the more important corporation,
which retains its identity.
In other
words methods by which corporations legally unify ownership
of assets formely subject to separate controls. A merger is not as same as consolidation in which two
corporations lose their separate identities and unites to form a complete new
corporation.
Strategic Alliance
An
arrangement between two companies that have decided to share resources to
undertake a specific, mutually beneficial project. A strategic alliance is less
involved and less permanent than a joint venture, in which two companies
typically pool resources to create a separate business entity. In a strategic
alliance each company maintains its autonomy while gaining new opportunities. A
strategic alliance could help a company develop a more effective process,
expand into a new market or develop an advantage over a competitor , among other possibilities. (investopedia)
Give an
example of a company that has grown through a)
Organic growth b) Merger and acquisition c)
strategic alliance.
ORGANIC GROWTH
The early history of Bibby Line Group is characterised by
organic growth. Starting with seven ships at the beginning of the nineteenth
century, the company expanded over the next 20 years to acquire another 18
vessels. Initially it focused on routes to Mediterranean ports, before
expanding to support trade with India, China and, later still, South America.
Its ships carried many different cargoes, including cotton, sugar, animal hides
and many other commodities.
STRATEGIC ALLIANCE
In 1996 Starbucks
partnered with PepsiCo to bottle distribute and sell the popular coffee based drink
Frappuccino.
Merger or Acquisition
It was a complete and total shock when bitter rivals Publicis (PUBGY) and Omnicom (OMC)
agreed to a so-called merger of equals to create the largest advertising agency
holding company in the world
CASE STUDY
Briefly
discuss the merger between Britiv and AG Baar. What advice would you you give to the new board?
The combined
entity of both merger of Britvic and AG Barr is called ‘’Barr Britvic Drinks plc’’. In which the Britvic
shareholders holds 63% of the total share and AG Barr shareholders hold
approximately 37% of the share capital. (The Telegraph)
The advice I
would like to give a new board is:
·
First
of all cut off all the unnecessary expenses
·
Focus
on research and development before direct investment
·
Good
hierarchy system with proper flow of information.
·
Proper
advertising.
What
are the positive benefits? What should work well?
·
Being
an individual brand before both the
drinks had its own customers preferring their drink, after the merger there is more chance of the drink selling with both
the loyal customers coming together.
·
If
you have a partner sharing risk you
spend more, and it might be beneficial
for the company.
·
New
company can bring new taste in the
market and can give competition to other flourishing soft drinks.
·
The
resources and the technology can be
shared
·
The
human resource can be used to the
fullest
What
are the negative and potential risks? What problems might occur?
·
The
other partner can be less enthusiastic because of less
profit sharing ratio.
·
Change
in the regular taste can decrease its
sales
·
Clash
in decision making, and getting more or less priority.
·
The
major issue is cutting off the jobs of the staffs working in both the company .
(n.d.). Retrieved from Chron:
http://smallbusiness.chron.com/organic-growth-strategy-57130.html
(n.d.). Retrieved from
investopedia: http://www.investopedia.com/terms/s/strategicalliance.asp
The Telegraph. Britvic
and AG Barr merger.
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