WEEK 16

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

Organic Growth:

Organic growth refers to the expansion of the firm by developing new competencies and capabilities using that have potential to create value in the future. (Hess & Kazanjian, 2013)

 It involves strategies such as:

• Designing and developing new product ranges
• Implementing marketing plans to launch existing products directly into new markets (e.g. exporting)

• Opening new business locations – either in the domestic market or overseas

• Investing in research and development to support new product development

• Investing in additional production capacity or new technology to allow increased output and sales volumes

• Training employees to help the best acquire new skills and address new technology 

Mergers & Acquisitions:

Acquisition refers to the buying of another company’s assets and liabilities, as the firm continues to exist legally owned as subsidiary of the acquirer.

Merger is the association of two firms to form a new entity by exchanging shares of both companies for shares in the new company.

Strategic Alliance:

It is an agreement where two firms that have decided to share resources to achieve a certain specific goal that is mutually beneficial.

A strategic alliance will help a company to develop more effective process, expand into a new market, etc. 

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

a) Organic growth: Beiersdorf Company grown consistently and rapidly through a carefully controlled and well-managed expansion of its portfolio of products.

b) Merger and acquisition: one of the best examples for this would be Disney and Pixar, with which the two companies could collaborate freely and easily.

c) Strategic alliance: Nokia and Microsoft, for example, have entered into a broad global strategic alliance where they plan to combine assets and develop innovative mobile products on an unprecedented scale.















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

AG Barr- maker of Irn Bru is a soft drink company in Scotland that outsells Coca-Cola in its home market where as Britvic is a British producer of soft drinks. Merger between these two companies created one of Europe’s biggest soft drinks companies.

The merged group, to be called Barr Britvic Soft Drinks, will have annual sales of more than £ 1.5bn and employ 4,300 staffs.

According to the inquiry the two companies were not close competitors and had distinctive products rather than close substitutes for each other. (bbc.com, 2013)

The merger represented an opportunity for both companies to enhance their position in the industry.

The benefits from merger are:

• Creation of attractive portfolio of strong and different brands and future growth opportunities
• Achieve Cost and revenue synergies through utilization of combined distribution channels while minimizing risk
• Creating value by sharing same resources and technology
• Expansion of the market as consumer base is combined

The negative effects are:

• Large number of job losses
• Management issues
• Consumer sensitivity- leads to shifting to other brands
• Bankruptcy faced by one firm may affect the other
• Sharing of debt may not be profitable for both the company

My suggestions to the new board:

• Cost control by reducing unnecessary expenses
• Focus on communication and maintain best management style
• More focus on consumer care and feedbacks
• Proper Marketing and Advertising strategies 

Reference:

Kazanjian, R.K.,  Hess, E.D. & Drazin, R. The Search for Organic Growth: Cambridge University Press.

Strategic Alliances [Online] Available at: http://water.org/about/strategic-alliances/ [Accessed on 14th Nov 2013]

Britvic and AG Barr merger provisionally cleared [Online] Available at: http://www.bbc.co.uk/news/business-22852442 , [Accessed on 15 Nov, 2013]

http://www.britvic.com/news/news/2012/14-11-2012.aspx  [Accessed on 15 Nov, 2013]

Britvic Company Profile [Online] Available at: http://www.britvic.com/company-profile.aspx [ Accessed on 14th Nov 2013]