Week 17

WEEK 17 – LEARNING JOURNAL

In your own words and using referenced quotes describe the difference between organic growth, merger & acquisition and strategic alliance.

Organizations have different growth strategy depending on their capability, strengths, time and situations. Hence, we cannot say that particular growth strategy is the best one. It depends on which type of growth strategy is best to particular organization. Here we are going to discuss some of the popular and widely used growth strategies.

ORGANIC GROWTH	MERGER & ACQUISITION	STRATEGIC ALLIANCE
Organic growth is the growth of the company obtained by enhancing sales and increasing output. It does not include the profits generated from takeover, acquisitions and mergers as they do not bring profits generated within the company. (Margaret Rouse, 2013).	Merger means merging of two or more firms and working efficiently and effectively by combining their strengths to overcome their weaknesses. Merger helps the company to share their resources, operations, decision making authority, etc. Acquisition means purchasing a firm or most of the shares of the firm to run a mutual benefit project in order to meet specific goal. The investment might be friendly or unfriendly in nature as well as national or international. (Robert Morello, Demand Media , 2013)	Strategic alliance means combining the resources of two or more resources to run a mutual benefit project. In this the organizations will have their own entity hence it is not a merger and acquisition. The two types of strategic analysis are: equity based alliance and non-equity based alliance.

Give an example of a company that has grown through a) organic growth, b) merger or acquisition and c) strategic alliance

An example of a company that has gone through organic growth, merger or acquisition and strategic alliance are as follows:

1.   Key factors like creativity, innovation, customer loyalty, employee-employer relationship, etc are the factors that have contributed to the organic growth of the Toyota motors. It has also helped to increase efficiency and work effectively. Along with it Toyota keeps on updating themselves with changing technologies which also helps them in process of growth.

2. Exxon and Mobil merged and formed Exxon Mobil in 1999 and is a leader in the international oil market. They explore, produce, transport, manufacture and sale crude oil and natural gas worldwide. 

3. Strategic Alliance has been famous with many mobile companies. One of the famous examples is the strategic alliance of Samsung and Google to created android operating system.

Briefly discuss the merger between Britvic and AG Barr. What advice would you give to the new Board?

Two beverages firm, Britvic and Barr went through the process of merger. This merger will be very profitable to both the companies as they can save 35million pound yearly and generates 23% of combined operating profit. Merger is an opportunity for both Britvic and Barr to increase the shareholder’s worth. They can grab new opportunities and use their strengths to overcome their weaknesses and threats. There are advantages as well as disadvantages of this merger.

Here are few of the advices to newly formed Board from this merger:

1.   They should form new strategies and mission

2.  They should come up with new product innovation as well as stick with their existing product and even should promote their product creatively

3. Each business unit should communicate properly to the board in order conduct production process smoothly.

4. They should focus on R&D

5.  Should maintain employee-employer relationship so that business operation is not hampered due to lack of communication.

                                    
    BRITVIC AND BAR CASE STUDY

Evaluate the case for the merger

1.     What are the positives and benefits? What should work well?

Britvic and Barr planned to work together as mergers in order to maintain top position in Europe as a beverage firm. The positive and benefits of this merger are as follows:

•       Cost saving of 35million pounds annually as well as operating profit of 23 percent. 
•     Their relationship with Pepsi can help them to compete with Coca Cola. Competing with a popular brand like Coca Cola is very tough so together they can compete with Coca Cola. 
•      They both can benefit from each other’s loyal customer. For instance, Britvic can attract Barr’s customers and Barr can attract Britvic’s customers.  
•      They can share their resources, knowledge and technology. 
•        Together they can combine their ideas and creativity and come up with good flavored unique product.

2.     What are the negatives and potential risks? What problems might occur?

Some of the potential risks and negatives are as follows:

  1.  Barr and Britvic have their own management styles and corporate culture that have been in practice for years. Merging these firms also means merging their cultures, values and way or working which may result to some sort of conflicts in the future. In addition to this, Britvic having the debt of £600 million may not be preferred by the executives and top management of Barr to take any kind of the strategic decision on their own without the evaluation and approval of Barr. This too may cause some sort of management problem and conflicts regarding the decision making authority.

  2. The shareholders of Barr who were earning high return on investments may not be earning the same amount after merging which may lead to their dissatisfaction. 

  3. The downsizing of the companies in terms of employees is another negative aspect of the merge of these companies because though having lesser number of employees may be beneficial to the company, settling down the issues related to the employees who will be fired can be very costly in terms of both monetary aspects and the company image.

3.      What advice would you give the newly formed Board?

Two beverages firm, Britvic and Barr went through the process of merger. This merger will be very profitable to both the companies as they can save 35million pound yearly and generates 23% of combined operating profit. Merger is an opportunity for both Britvic and Barr to increase the shareholder’s worth. They can grab new opportunities and use their strengths to overcome their weaknesses and threats. There are advantages as well as disadvantages of this merger.

Here are few of the advices to newly formed Board from this merger:

       They should form new strategies and mission

   They should come up with new product innovation as well as stick with their existing product and even should promote their product creatively

    Each business unit should communicate properly to the board in order conduct production process smoothly.

    They should focus on R&D

  Should maintain employee-employer relationship so that business operation is not hampered due to lack of communication.

References:
1. Margaret Rouse. (2013). mergers and acquisitions (M&A). Available: http://whatis.techtarget.com/definition/mergers-and-acquisitions-MA. Last accessed 15/11/2013.

2. Robert Morello, Demand Media . (2013). What Is Organic Growth in Business?. Available: http://smallbusiness.chron.com/organic-growth-business-56960.html. Last accessed 15/11/2013.

3. theguardian. (2013). Soft drinks merger of AG Barr and Britvic gets green light. Available: http://www.theguardian.com/business/2013/jun/11/ag-barr-britvic-drinks-merger. Last accessed 15/11/2013.

 4. agbarr. (2013). Possible merger of A.G. BARR p.l.c. and Britvic plc. Available: http://www.agbarr.co.uk/ces_general.nsf/wpg/investors-potential_merger_with_britvic.html. Last accessed 15/11/2013.