MERGERS
Mergers are business combination transactions involving the combination of two or more companies into a single entity.
Source: SEC.gov
What makes a merger successful? Can success be measured immediately or in the long run? Many factors should be considered before merging. Reviewing what each company offers, determining whether the goods are compliments, and deciding whether the expanded customer base will open upnew markets can help decide whether a merger is a good idea. Other factors, such as the two company cultures and the ability to unite, should also be considered. Sometimes mergers lead to products/services which cannibalize each other and cause direct competition with very little differentiation.
According to the CNBC slide shows in the link below, one of the best mergers was that of Disney and Pixar. With competitors of the big and small screen all using digital cartoons instead of the traditional methods of cartooning the merging of Disney storytelling with Pixar's expertise in digital cartoons allowed Disney to stay a leader in animation combining forces with another leader in digital graphics.
Alternatively, mergers could turn into disasters. For instance, the merger of TimeWarner with AOL was thought to bring the synergies of print and online world together. Unfortunately, this deal did not consider future technologies and how rapidly AOL's core, dial-up internet, would become obsolete.
Top 10 Best (and Worst) Mergers of All Time - CNBC
Tuesday, October 26, 2010
Monday, October 18, 2010
Chapter 7
CAPITAL RATIONING
The allocation of a finite quantity of resources over different possible uses.
“Developing innovative new products and services is a expensive and time consuming. It is also extremely risky – most studies have indicated that the vast majority of development projects fail.” This is when capital rationing is put into place. Rationalizing which projects are worth investing in and which aren’t. But what if you can almost have guaranteed results in R&D, what if an organization could hire someone who constantly provides results. What would be the return on investment in such a scenario?
Warner Babcock Institute is an “academic style laboratory but [financed] like a contract R&D business.” Within this organization every project contributes to another organization’s research and development with a high yield of results, patents and new technologies. The institute whole heartedly implements green technologies and behaviors as part of its organizational culture. Most of their work revolves around biology and chemistry, but they have inventions including a less energy intensive method of developing solar panels.
http://pubs.acs.org/cen/science/88/8840sci1.html
Tuesday, October 5, 2010
Chapter 5
INCUMBENT INERTIA
The tendency for incumbents to be slow to respond to changes in the industry environment due to their large size, established routines, or prior strategic commitments to existing suppliers and customers.
Even though Microsoft was not first to develop the smart phone, it seems to have suffered from some of the general disadvantages of first movers. One of the missteps, the Kin, only lasted in the market for two months before being discontinued. The new software Microsoft is developing, Windows Phone 7, is intended to compete more with the iPhone and Google’s Android; a slow but steady step toward responding to the industry environment.
While the iPhone OS is completely integrated with the hardware, Microsoft still only plans to develop a phone OS and license it out. This really seems like the old tendencies of the giant. License the software and let others worry about the hardware, reminds me of Windows and Dell. This strategy assumes the hardware developers will maximize the software capability. Unlike with computers, where the keyboard, mouse, monitor and other peripherals are fairly standard, cell phones still come in an array of styles. Placing all bets on the hardware developer knowing what’s best to meet market demands is risky, especially when the new OS intends to deliver a new user interface. Will there be synergy between software, hardware and user?
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