Acquisition and International Strategies Essay

Today, the world of business has grown into a very competitive field where both local and international business organizations face stiff competitions from other firms operating in similar industries. Various issues such as globalization of markets, technological advancements, changes in legislations and signing of trade treaties between nations has also sparked stiff competition amongst businesses. This increase in competition and other factors such as lack of adequate resources like finances has forced most organizations to enter into mergers or be acquired by other businesses that are well established. Moreover, the dynamisms of the business arena has also led to development of various business-level and corporate-level strategies by business so as to enable them effectively cope and compete in the business arena. In this research paper, I will look at various organizations that have been either acquired by other organizations or entered into mergers. This paper also evaluates various business-level and corporate-level strategies that have been adopted by some local and multinational public corporations in America.Acquisition and International Strategies EssayAcquisition and International Strategies Essay

Acquisition of Fisher Body by General Motors. General Motors: Background Information. General Motors (GM) is one of the world’s largest automobiles manufacturer. The headquarters of General Motors is located at Renaissance Center in Detroit, Michigan. General Motors employs nearly two hundred and fifty thousand people in its major branches worldwide. According to Cray (2011), General Motors operates in more than one hundred and fifty countries. Its major production plants are located in thirty-one countries across the globe.In 2011, General Motors was listed the largest automobiles manufacturer in the world based on the total number of unit sales (Serrin, 2011). The company also collaborates with other organizations to produce automobiles in countries where its presence is low.

Some of the major automobile brands of General Motors include Cadillac, Chevrolet, GMC, Vauxhall and Daewoo. XXX lists United States of America, China, Germany, Canada, Italy and Brazil as the major national markets for General Motors. General Motors also has adequate presence in various countries in Africa, for example, Egypt, Kenya, South Africa and Nigeria.

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In attempts to diversify its investments in the automobiles industry, General Motors also has a subsidiary called OnStar, which specializes in provision of motor vehicle safety, security and information services. For a whole decade, OnStar has been considered the industry leader in provision of vehicle safety, security, tracking and communication services in the United States of America (Musselman, 2009).

Fisher Body. Fisher Body is an automobiles company that specializes in building coaches. The company was founded in 1908 by the Fisher brothers and has its headquarters located in Detroit, Michigan. Fisher Body has been the major supplier of automobiles parts to General Motors since its inception.

The acquisition of Fisher Body. In early 1919, General Motors purchased sixty percent of the shares of Fisher Body. This gave General Motors reasonable control over the activities of Fisher Body. One year later, General Motors accused Fisher Body for inflating the prices for its automobile supplies in order to make more profit. General Motors also claimed that Fisher Body was intending to relocate its manufacturing plants away from General Motors. These allegations prompted General Motors to acquire the whole company so that it can exercise full control of operations of Fisher Body.

In 1926, Fisher Body was fully integrated as an independently functional division of General Motors. When General Motors acquired Fisher Body, it became an in-house division responsible for building and construction of coaches. In 1984, Fisher Body was completely dissolved and merged into General Motors.Acquisition and International Strategies Essay

Strategies that led to acquisition of Fisher Body by General Motors. Firstly, General Motors alleged that Fisher Body was inflating the prices of its supplies so as to increase its profits base. This implied that General Motors had to purchase the automobiles supplies at a higher price. Consequently, the costs of production would shoot up. High costs of production would then be transferred to the final consumers. As a result, the vehicles of General Motors became more expensive as compared to those of competitors. This led to decrease in sales. In order to curtail these malpractices, General Motors opted to acquire Fisher Body.

Secondly, General Motors acquired Fisher Body so that the company would be able to adopt appropriate and efficient production methods that would help in reduction of total costs of producing its automobiles.

Thirdly, the acquisition of Fisher Body would also lead to consistent supply of automobiles parts, hence elimination of possibilities of shortages in supply of parts required for manufacturing automobiles at General Motors.

Personal Perspective on the Acquisition. In my opinion, the acquisition of Fisher Body by General Motors has enabled GM to produce a wide range of high quality and affordable automobiles for its customers and other motor vehicle dealers.The acquisition also enabled General Motors to establish a reliable strategy for growth and development. It is worth noting that General Motors identified an opportunity for expansion in Fisher Body. The acquisition also provided General Motors with increased opportunities for diversification in business.

From my perspectives, the acquisition of Fisher Body by General Motors was a wise decision. This is because it created new grounds for business expansion for General Motors. Moreover, the acquisition posed minimal challenges to General Motors because the operations of Fisher Body were in line with business activities of General Motors. The acquisition did not require Genral Motors to enter into a new industry, which would be more challenging.

In addition, the acquisition was also in line with goals and objectives of General Motors which include achieving strong investment in the automobiles industry and reducing costs of producing automobiles. The acquisition of Fisher Body by General Motors also helped in reducing unforeseen inefficiencies in supply of materials for automobiles production.Acquisition and International Strategies Essay

Finally yet importantly, the acquisition of Fisher Body also gave General Motors the ability to exercise control over quality of automobile parts, thus ensuring production of high quality vehicles.

Possible Merger or Acquisition of Organizations not already Acquired or Merged. K-Swiss Inc. and Nike .K-Swiss Inc. is a public company in the United States of America that specializes in manufacture of sports footwear products. The headquarters of the company is situated at Westlake Village, California. K-Swiss is well known for designing, manufacturing and marketing a variety of sportswear under its brand, K-Swiss. According to Aaker (2008), K-Swiss Inc. was founded by two brothers, Art Brunner and Ernie Brunner. While on a visit to U.S.A, Art and Ernie developed great interest in tennis, hence decided to introduce the first leather tennis shoes. Since its inception in 1966, K-Swiss Inc. has gradually grown to become an international company with annual global sales exceeding five million U.S. dollars. In addition to footwear, K-Swiss develops and markets other apparels and accessories for athletics under its K-Swiss brand.

In the past few years, K-Swiss Inc. has reportedly been suffering from increasing short-term debts, poor corporate governance and declining profit margins. Aaker (2008) estimates that the total debt owed by K-Swiss to its suppliers stands at approximately seventeen million U.S. dollars.

Moreover, K-Swiss has also been facing stiff competition from giant sports footwear manufacturers such as Nike, Adidas, Umbro, BIKE Athletic Company, Puma and Reebok among others. These companies are well established and thus pose greater threat to emerging manufacturers.

In my view, in order to compete effectively in the sports footwear industry, K-Swiss Inc. should merge with a giant sportswear manufacturer, such as Nike, which has adequate resources and greater capacity for efficient management and production. For example, Nike has more experienced workers who specialize in production of athletics footwear. Moreover, Nike has adequate access to financial resources that it would use to repay the debts currently owed by K-Swiss. Statistical estimates by Koskivaara and Pilli-Sihvola (2010) indicate that K-Swiss has a capital of approximately one hundred and fifty million U.S. dollars and a price to sale ratio of 0.50. Additionally, Nike brand has a global recognition that would facilitate its efforts to increase international sales. Consequently, increased sales would translate to increased profit margins.Acquisition and International Strategies Essay

Alternatively, K-Swiss Inc. can merge with another medium-sized footwear company such as Sketchers, Merrell, Genesco or Crocs. In my opinion, a merger would help K-Swiss boost its operations and stocks significantly. A merger with another company would also help K-Swiss grow and expand substantially, thereby giving it the capacity to compete with global brands such as Nike, Adidas and Puma. A merger would also result into increase in operating capital margin as well as increase in marketing networks and distribution channels. According to Foerster and Kreuz (2007), a company may also merge in order to share the costs of production with the other company. Consequently, profit margins would rise. From my part, K-Swiss Inc. should focus on its growth strategies, and possibly, a merger with another well-established firm would be the most appropriate way forward for it.

Analysis of International Business-Level and Corporate-Level Strategies for an International Corporation: General Electric. General Electric (GE) Company is a multinational company based in New York, United States of America. General Electric provides goods and services to four major segments of the economy, that is, the energy sector, technology infrastructure, consumer and industrial markets and capital financing. In 2011, General Electric was listed as the sixth largest public corporation in United States (General Electric Company, 2012). General Electric provides a wide range of goods and services which includes generation and distribution of Electricity, provision of aviation services, supply of medical equipment as well as manufacture of automobiles such as jet engines. General Electric targets and serves in the global market.

General Electric Company has adopted differentiation strategies as one of its international business-level strategies. This strategy was adopted due to increasing competition in the global market caused by creation of free markets, international markets and entry of new firms into the energy industry. In my view, I would recommend that General Electric should focus more on how to improve its ability to adopt to the various environmental changes that occur in the global markets, for example, changes in laws governing trade in foreign countries.Acquisition and International Strategies Essay

Additionally, the company should focus on training and development of its employees so that they would utilize new skills and technologies. In this regard, the company would be able to produce highly differentiated goods at low costs. Similarly, General Electric Company should focus on increasing its competence in production of goods and services using new technologies. This would eventually lead to production of high quality goods with differentiated features that are appealing to customers. Consequently, the customer base would be increased. In other words, the company should focus more in developing unique products that very different from those of competitors.

On the other hand, General Electric formulated exploration of international markets as one of its international corporate-level strategy. In my opinion, the company has not fully implemented this strategy because most of its products are not yet available in certain parts of the world, for example, niche markets in Central and Southern Africa still remain unexploited by General Electric. I would thus propose that General Electric should conduct market researches and economic analysis in various parts of the world where its presence is still minimal. Exploring new markets would help the company in increasing its sales volumes and market share. Effective exploration of new markets would also lead into overall growth and development of the company. General Electric may also enter into joint ventures with foreign firms to enable it increase its presence in foreign countries and penetration of the international markets.

Proposed Business-Level and Corporate-Level Strategies for a Non-International Corporation: Anaren Inc. Anaren Inc. is a local firm that manufactures and distributes consumer electronics such as radio and television sets, microwaves, washing machines and other household electronics. It also supplies information and communication technology (ICT) components such as computer accessories.

Despite being in business in the consumer electronics industry for more than ten years, Anaren Inc. has little success to brag of. In that regard, I would recommend that Anaren Inc. should adopt customer focus as one of its major business-level strategies. Through customer focus, the company will be able to identify the various needs and wants of customers, after which it shall formulate the most appropriate ways of satisfaction such needs and wants. In my view, this can be achieved through development of goods and services that surpass the expectations of customers, for example, through value addition.Acquisition and International Strategies Essay

On other hand, I would recommend Anaren Inc. to adopt cost leadership as its corporate-level strategy. Cost leadership entails determination of various costs incurred by the organization and formulating methods of reducing such costs. As Swaan and Waalewijn (2010) postulate, cost leadership can only be achieved through effective determination and control of costs. In my view, if Anaren Inc. effectively manages to reduce its costs of production, for example, through outsourcing some business operations, the company will be able to sell its products at lower prices as compared to products of competitors without comprising quality. Consequently, customers would prefer products of Anaren over those of competitors, hence increased sales volume and profits margins.

Conclusion

Mergers and acquisitions may appear to be lucrative business ventures, however, great caution should be taken to ensure that such actions do not diversify the strategies, vision and objectives of the participating organizations.Acquisition and International Strategies Essay