Mergers and Acquisition
Introduction
Merging and Acquisition of business is the act of two or many companies forming a partnership between themselves through consolidation of funds. The units that they use in the business organization are combined to serve as a single entity. This strategy is adopted by the organizations to enhance the competitiveness advantage in the market share by companies. Therefore, the stocks, shares and the equities associated with the businesses that are joining are looked upon as a single entity. The result by the organizations is the ability to achieve specific synergies in the business such that, the benefits are ripped by both partners on the values of each other’s shares (Jacoby et al., 2005).
Disney and Pixar Company
In the United States, almost all companies have embraced the advent of mergers and acquisition in their businesses. For instance, the example of Disney and Pixar and also the JP Morgan and Chase. These companies had grown so much in benefits and returns that history cannot remember when last, that they suffered a greater loss. In some experimental, mergers and acquisitions of organizations have led to bankruptcy and the fall of the acquired smaller or averagely performing companies. The companies get lost in the other big one it has merged with then after some time, the assets and liquidity prospects come in and haunt the economic position of the organization (Sears and David, 2003).The Disney Walt and the Pixar merged to form cartoon networks that created a platform for what kids love as a source of entertainment. To some extent, there was a success in that; Disney made almost all Pixar movies before the end of 2006, and it made a lot of impact in the world of comic movies. Profits grew, and a huge publicity was achieved from its service delivery packages. The merger developed a ‘brave inside out’ movie that saw a comfortable collaboration and the widening of airspace in the Disney world of film. It is evidenced by the cinema ‘Frozen’ that brought a grossing effect ever in the industry in the United States (Straub and Thomas, 2007).
The merger of Disney and Pixar in 2006 saw the development of an animated film producing company that brought sale and made headlines in the industry. The acquisition if Pixar revitalized portions of Disney programming via animations leading to the winning of more than five Oscar awards. In 2010, a musical throwback named ‘tangled' brought to the company close to over $600 million in returns from animated filming of movies. Every end of the year, Disney has covered a filming niche such that sales are inevitable, and customers are abundantly ready to promote the organization. This merger of Pixar and Disney is of great influence and example to other existing private corporates and the other straining merged institutions. The team has garnered over 80% of gross income from the animated films and the latest being "Ice Age". The resulting proportion means that it has overwhelmingly defeated other companies undertaking in the same business such as the "DreamWorks" (King et al., 2004).
The Disney Walt has had an active business level strategy. It includes the production of fewer movies but the use of Pixar, DreamWorks, and Marvel to produce the Disney nature films that are animated. Compared to the great Universal and Lions Gate Productions, Disney Walt has no double digital output in the streaming of movies. The strategy of differing movies to its sub-stations inside Disney Walt like Lucas film, Disney uses them as subsidiaries in that, they don’t produce the films themselves (Sears and David, 2003). They make video games and theme attractions that act as brands to Disney and in effect, they bring an enormous amount of revenue to this organization (Jacoby et al., 2005).The report by the executive at Disney showed that the return achieved by such strategies was underscoring the value of some merged acquisitions like the Marvel and Lucasfilm.
The primary revenue collectors at Disney are the consumer products and the theme games. It is a record that has been maintained for the longer periods due to the excellent managerial positioning of the products in the markets. Pixar, on the other hand, has created an attraction from Cars Land by its general consumers. The revenue collected from the California Adventures Park is massive. Disney has continued to expand its international markets to China, Europe and the Pacific nation (King et al., 2004).Their competitors like Sony has tried to produce a super-human animated film to compete with the Disney Cartoon Network but were caught in vain. The infrastructure level at Disney has allowed it to license its consumer products such that, the T.V shows and theme parks can produce branding qualities that other organizations are not able to match at ease. The numerous press releases by Disney revealed that the world-class entertainment by Disney Walt was attributed to the emergence of Pixar’s outstanding creativity and the technological advancements by Disney’s that saw the development of family’s longtime entertainment industry (Sears and David, 2003).
Domestic Companies that are privatized
The United States Small Business Administration (SBA) is a corporation that is privately owned and acts as an independent legal entity. The result only means that it is entirely liable for the debts and actions it incurs as the business moves on. The business is single-handedly operating and is not merged or acquired by any company. They are more complex in structuring and hence have high administrative and legal tax implications associated with its functionality (Straub and Thomas, 2007). It is usually formed under a registered business names and a lot of documentation before it starts operating. The organization has an active shareholder partnership with its employees such that, they pay income tax from their salaries and the company, on the other hand, pay taxes based on the profits and the dividends the corporation makes with time frames. The sole proprietors in the U.S are enjoying a lot of boosts before they think of merging their small businesses or they are single managed but huge companies. For instance, the partnership between small enterprises and the other corporates in the name of merger and acquisitions can create a stable and economically viable Corporation (Sears and David, 2003).
Benefits of a merger to a corporation
The partnerships made from these small businesses are vital to the economic existence of a merged company. The SBA, for instance, may find it critical to operating singly as an organization. The claims and reasons include the fact that the governance rules in a particular state are different with the other corporations in a different state. For example, the existence of voting rights, protections by officers and liability for misconduct deeds (Straub and Thomas, 2007). Some corporates function singularly due to the availability of possible losses from infrastructural mismanagements. In this regard, it would be advisable that the Small Business Administration find the likelihood of a stable partner so as to merge their resources and maintain synergy in the corporate world (Jacoby et al., 2005). For instance, in the U.S, a domestic corporation like the Target Company can merge with the SBA or buy it through acquisition and then perform it retail and regional business as a single entity.
The business level strategies here will include the equipment of the human resource and the marketing research models. Since Target Company deals with issues related to hotels, restaurants, retail and distribution of products, the SBA can use its influence in business education to strategies on the countering of markets by Target Company in the domestic level ion particular states in the U.S (King et al., 2004).
Benefits of business strategies to corporations
The rationale for this partnership can include the fact that Target Company has been known for quality and standard of their products. In essence, the SBA will help target in the analysis and calculation of pricing effect in the markets. There is an advantage competitive build up when such scenarios occur when companies merge to form big conglomerates. The result will be total gains and favorable returns that the combined company will enjoy through a domination and stable co-existence in the official business. Through mergers, companies can increase their share value in earnings (Jacoby et al., 2005). This form the basis for the Target and SBA to create a grand strategy whereby, the prices of products as put by Target in the previous year is reduced to attract and maintain an influx of customers to the company's doors. The SBA, on the other hand, validated the human resource by providing the skills and the expertise that the employees at Target continuously need to develop their management portfolios. The outcome will see the keeping of pace by the company via the several changes in the existing technological advancements in business structures (Sears and David, 2003).
Corporate strategy
The primary strategies by the merger of Target and SBA as domestic corporations are simply the modification of human resource and cost cutting of product pricing. The merged companies should understand the several changes in the employee skills management and enhancements. The achievement of a lower cost strategy is out the way the business competitors in the market share values. The corporation through the SBA filing systems should be able to manage the reduced costs of its products so that a competitive advantage is arrived at against their market competitors (Straub and Thomas, 2007). The cost leadership strategy is achieved in the later stage by the minimization of customer turn out but getting the maintenance of quality in products. The business and corporate level strategies are different in minimum dimensions as it is. The many business corporations as discussed above have the objective of making profits so that the aim of the organization is complete. The business levels are used in maintaining the customer base.
In the case of Disney and Pixar, Target and SBA, and many other companies, the primary goal is to achieve the trust and loyalty of customers whether it's local or international operations. On the other hand, for a company to fully embrace a good corporate-level strategy, we find that the collaboration and coordination among the merged or acquired led groups must exist (King et al., 2004).The aim of the corporation is to achieve a ground in which the products to sell and the purchasing power is equitably maintained. In the case of Disney, it had to acquisition the DreamWorks, Lucasfilm and the Marvel Studios to showcase as its brands since they were not involved in the production of movies. This gesture shows the vitality in division and specialization of Labor as a strategy for the Disney Walt Corporation (King et al., 2004).
Conclusive statements
A smooth and a good working condition are achieved from the synergy created by the corporate strategies employed by the merged organizations or the ones who chose to perform as a single entity. When the corporations at hand have employed the above strategies, the differentiation levels of produced products are attained. The goods and services become appealing to the customers eyes due to the new features associated with them (Straub and Thomas, 2007). A mix of business units is easily achieved when strategies are adhered to and followed to the latter (Jacoby et al., 2005).The business obtains a vertical integration after merger or acquisition in that; the efficiency levels are attained by the ability to have control of a company's supplier via a vertical integration process.
In conclusions, good corporate and business level strategies are vital in compiling of organizational portfolio systems (King et al., 2004). The company will, in turn, avoid issues of over taxation and liquidity compromises when collections are intact and well -kept to standards. It allows companies have the capacity and ability to merge with the right organizations that have stable cash flows. The result is the achievement of an organization that has good asset value and free of debts that can immerse a business partner in the turmoil or bankruptcy (Straub and Thomas, 2007).
References
Jacoby, Sanford M. (2005). The Embedded Corporation. Princeton, N.J.: Princeton University Press Print.
King, D. R.; Dalton, D. R.; Daily, C. M.; Colvin, J. G. (2004). "Meta-analyses of Post-acquisition Performance: Indications of Unidentified Moderators." Strategic Management Journal 25 (2): 187–200
Sears, David (2003).Successful Talent Strategies. New York: AMACOM Print.
Straub, Thomas (2007). Reasons' for frequent failures in Mergers and Acquisitions: A comprehensive analysis. Wiesbaden': Deutscher Universitäts'-Verlag (DUV), Gabbler Edition Wissenschaft.
