Merger, Acquisition, and International Strategies
Choose two (2) public corporations in an industry with which you are familiar – one (1) that has acquired another company and operates internationally and one (1) that does not have a history of mergers and acquisitions and operates solely within the U.S. Research each company on its own Website, the public filings on the Securities and Exchange Commission EDGAR database (http://www(dot)sec(dot)gov/edgar.shtml), in the University's online databases, and any other sources you can find. The annual report will often provide insights that can help address some of these questions.
1.For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.
2.For the corporation that has not been involved in any mergers or acquisitions, identify one (1) company that would be a profitable candidate for the corporation to acquire or merge with and explain why this company would be a profitable target.
3.For the corporation that operates internationally, briefly evaluate its international business-level strategy and international corporate-level strategy and make recommendations for improvement.
4.For the corporation that does not operate internationally, propose one business-level strategy and one corporate-level strategy that you would suggest the corporation consider. Justify your proposals.
Identify various levels and types of strategy in a firm.
•Use technology and information resources to research issues in business administration.
•Write clearly and concisely about business administration using proper writing mechanics.
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MERGER, ACQUISITION, AND INTERNATIONAL STRATEGIES
Mergers and acquisitions are critical in corporate restructuring. The idea behind mergers and acquisitions is that two businesses together are much more valuable than the same businesses when they are separate entities. Mergers occur when two companies join to form a single company with a new name, while in acquisitions one firm acquires another one and the latter ceases to exist (Alam, Khan and Zafar, 2014). It is common in an acquisition for a larger company to purchase a smaller firm. There are a number of reasons for mergers and acquisitions. Some do it to pave the way for entering new markets and gain a substantial advantage over their competitors. Others want to survive and cut down financial burden in order to increase shareholder value. Whatever the reasons behind the merger and acquisition, it can lead to success or failure. PepsiCo Inc. is a public company which manufactures food and beverages, and it is as a result of a merger of other smaller companies. Ingles Markets, Inc. is a local American supermarket operating mainly in the Southeastern region of the U.S. the company does not have a history of mergers and acquisitions.
PepsiCo Acquisition of Quaker Oats Inc.
PepsiCo Inc. is a global food and beverage business. The company manufactures, markets and distributes a variety of drinks, foods, and snacks in more than 200 countries (Tabassum et al. 2014). The company was formed by the merger of Frito-Lay Inc. and Pepsi-Cola companies. It has expanded ever since and now has some of the leading brands like Pepsi, Tropicana, Frito-Lay and Schweppes. Currently, PepsiCo is ranked the top distributor of food stuff and beverages in North America. This has allowed the business to increase revenues to $ 43.3 billion dollars.
The achievements of PepsiCo are due to mergers and acquisitions. One of the greatest success of the company was the acquisition of Quaker Oats in 2001. PepsiCo wanted to counter competition from the Coca-Cola Company. For a long time, Coca-Cola was the largest distributor of beverages in the world. PepsiCo wanted to gain a competitive edge in an industry dominated by the rival company for a long time. PepsiCo $13.6 billion purchase of Quaker was successful and made its business more efficient in operations like sales and media buying. (Murphy, 2002). The acquisition gave PepsiCo control of the coveted Gatorade sports brand by Quaker. In 2005, PepsiCo sales surpassed those of Coca-Cola Company for the first time indicating the success of the acquisition. The various acquisitions and mergers have allowed PepsiCo to come up with a range of variety from carbonated drinks to beverages. In 2009, Coca-Cola was the largest distributor of carbonated drinks in the United States, but PepsiCo led in the distribution of beverages in the region. PepsiCo’s decision to produce a variety of products was critical instead of competing with Coca-Cola in carbonated drinks. PepsiCo acquired a very attractive company with competent managers. Quaker operated in almost the same industry and was successful. Hence it transferred the skills and activities to give a competitive advantage to PepsiCo.
Ingles Markets Inc. merger with Publix Super Markets Inc.
Ingles Markets Inc. is a chain of supermarkets in the Southeast United States with more than 200 stores (Ingles Markets: Company Profile, 2016). The company is listed on the NASDAQ, but it is controlled by the Ingle family which has about 85% voting power. The company was founded by Elmer Ingles more than 50 years ago. It has grown ever since and now has a market capitalization of $544 million. Apart from the supermarkets, the company operates a milk processing plant, shopping centers, and gas stations. The company locates the supermarkets mainly in the suburban areas and rural communities. The founder was committed to the local farms, and this has continued to this day. Ingles works hard to support the local farmers and other businesses in order to strengthen the local economy and preserve the local culture. The company operates in a competitive industry dominated by larger supermarkets and chain stores like Wal-Mart Stores, Inc. and Target Corporation.
If Ingles Markets Inc. merges with Publix Super Markets Inc. (commonly known as Publix), it will be a great combination. Publix is a private company which is owned by both past and present employees (Solomon, 2015). George W. Jenkins formed the business in 1930, and now it operates 1100 retail food supermarkets. Just like Ingles, Publix does not service customers outside the United States. A merger between the two companies will be beneficial since they operate in the same industry. Customers will enjoy a variety of products at discounted prices. Additionally, the merger will help the two corporations improve their services and satisfy their clients better. The two will cover a larger geographical area and reach a wider customer base in the region. This will increase sales and generate more revenue for both corporations.
PepsiCo international business-level strategy and international corporate-level str...