A merger is the unification of companies. Usually, there are five types of mergers: product extension mergers, conglomerate merger, market extension merger, horizontal merger, and vertical merger. Each type serves a unique economic function for the businesses involved. Acquisitions occur when a company takes over another firm (Galpin, & Herndon, 2014). The difference between the two strategies is that a merger is meant to combine the interests of the business entities involved thereby creating a firm that is much stronger. In mergers, the two combining companies usually get a new name. The merging companies are mostly the same size. On the contrary, acquisitions occur when a larger firm buys a smaller firm. The newly acquired firm may be retained as a subsidiary or absorbed by the core company (Gaughan, 2013). These two strategies are used when firms are seeking to increase their market share.
The merger between AT&T and T-Mobile
In the United States, the rate of mergers and acquisitions has been on the rise. Companies such as AT&T have been registered several mergers and acquisitions in their history. The firm was established back in 1885 and has been in operation ever since. It has undergone numerous mergers and acquisition such that it is at times referred to as a multinational telecommunications conglomerate (Galpin, & Herndon, 2014). It is currently the largest fixed telephone provider in the United States. In 2011, the firm merged with T-mobile. This merger made it the leading wireless carrier in the country. The acquisition aided AT&T in beating Verizon which was its main competition in wireless services (Gaughan, 2013).
Acquisitions and mergers hold benefits for all the involved parties. In the merger between T-mobile and AT&T, the two companies stand to gain. The latter gets to expand its coverage and network as well as developing its Term Evolution technology. AT&T has a great need for the wireless function provided by T-Mobile especially for its objective of creating new applications and devices for the market. On the other hand, T-Mobile had standing debts prior to the merger. The financial statistics were not promising and its stock value was degrading (Kumar, 2012). At the time, the firm only specialized in basic services such as free minutes, texting, attractive packages, and voice mail. In terms of internet network, the firm’s competitors were miles ahead. The firm lost its grip on the market after the introduction of wireless data. With the wireless data, most customers sought to use the new technology which also offered them affordable data plans (Kumar, 2012).
T-Mobile realized the shift and changes in the market a little too late. Its competitors like Sprint, Verizon, and AT&T had already adopted new technology which had new devices and wireless internet data. It was not until the company adopted the new technology that it regained some of its customers. T-Mobile introduced 4G network in the country. This was a competitive advantage for them given that its competitors were still using 3G. Unfortunately, the competitive advantage was not as sustainable as the firm had hoped. Its competitors caught up and adopted the new technology (Gaughan, 2013). The communication industry evolves fast mainly because the market always has the urge to get new devices and technology.
The two companies had reasons to merge. AT&T would finally become the main wireless firm in the country. T-Mobile gained by having its stock vale increase and its debts reduced. While each of the two firms gains from the merger, AT&T reaps the better part of the merger. It is now able to offer its customers with cheaper phones and communication packages. It has become the leasing prepaid company with the most favorable unlimited plan (Kumar, 2012). The merge was certainly a wise strategy.
Publix Super Markets
The Publix Super Markets is the largest corporation across the globe to be owned by employees. The business is based in Florida and currently operates across the Southeast. It has branches in North Carolina, Georgia, South Carolina, Florida, Tennessee, and Alabama. The firm is the largest private business entity in Florida and the eight largest in the whole country (Hill, & Jones, 2012). Since the firm was established in 1930, it has never been into a merger or acquisition. In fact, its stock is only purchased by eligible non-employee board members and active employees. Currently, the chain of supermarkets has well over a thousand stores (Hooke, 2010).
The fact that it has not engaged in mergers is not to say that there are no eligible opportunities. This year, there is the glaring opportunity posed by the Martin’s Food store Markets being for sale and the Publix entering the Virginia market. It is perfect timing. The Martin’s Food store Markets have nineteen stores in Richmond, Virginia all which are being sold (Hill, & Jones, 2012). The Martin’s stores are owned by Ahold. Ahold is a holding company that runs other stores such as the Stop and Shop and Giant stores. The holding company seeks to merge with Delhaize. The latter is known to run Food Lion (Hooke, 2010).
In February this year, Publix launched a new store in Richmond. While this has not been part of Publix business strategy, it is a viable business opportunity. Another probable merger for the company is with Bi-Lo Supermarket. For one, the two are competitors in the same industry. Secondly, a merger between the two firms will enable them to issue more coupons and discounts thereby attracting a larger market (Hooke, 2010). The benefits of such a merge are endless: getting a larger market share, increased sales and revenues, and wider coverage of the food market.
International Level and Business Level Strategy for AT&T Inc
AT&T seeks to take over the post-paid and pre-paid markets both in the local and international arena. On the business-level, the firm seeks to expand its wireless segment. The wireless section of the company is critical to its profitability. The company has established a nation-wide network which provides its customers with the voice communications and wireless data services. This section accounts for approximately 76% of the company’s income and 54% of the firm’s operating revenue (Galpin, & Herndon, 2014). After the merge with T-Mobile, the revenues realized from wireless products and services increased with 8%. The number of wireless customer subscribers also increased with 10.1%. The most significant increase is that of prepaid consumers which went 53.6% high (Galpin, & Herndon, 2014).
The company prides itself in its strengths. For one, the main source of its revenue is ever-growing. It also has established rather strong network coverage. The acquisitions and partnerships it has made have given it’s a stronger claim in the market shares. The escalating demand for LTE technology poses new opportunities for the firm to invest in and grow (Gaughan, 2013). As part of its strategy, the company intends to make more mergers and acquisitions. In 2014, the company got approved for its acquisition request of Leap Wireless International. The acquisition was worth 1.2 billion (Galpin, & Herndon, 2014). Such acquisitions give the firm access to previously forbidden territories and expand its market coverage.
In the prepaid field, the strategy is to acquire and keep prepaid customers. The firm can do so by:
Maximize the expiration on their data packages by offering rollover.
Increasing the usage of data bundles by offering the unlimited package
Using the newly acquired Cricket brand to increase its market (Kumar, 2012).
In the post paid arena, the company has been dedicated to overtaking Verizon business once most of its contracts with its customers expire. This is why the business has invested heavily in mergers and acquisitions. It is also why it merged with other firms like Time Warner and Comcast. The firm understands that timing is everything (Kumar, 2012). The strategy herein includes:
Discounting of pick and choose options
Offering more competitive and variable combinations
Using DirecTV will help enhance the coverage of bundles
Introducing bundles in areas where UVerse is not available
Introduction of the NFL Sunday Ticket which is meant to encourage its customers to get more than one line or contract (Kumar, 2012).
Publix Super Market Business Level and International Level Strategy
Publix has a strong strategy that has seen it grow to where it stands today. It has well over 150,000 employees who are referred as associates. Having its employees as the owners is the greatest strength for the corporation. Its strategy is based on providing the best products and offering premier customer service. This strategy is fuelled by the fact that employees are share holders in the company (Hill, & Jones, 2012). This compels them to pay attention to the quality of customer service they offer. 30% of the firm’s shares are owned by the employees. The firm does not publicly trade its shares.
Conclusion
This paper has analyzed how firms can use mergers and acquisitions to expand their businesses. AT&T has been through so many mergers and acquisitions that it has become the largest wireless provider in the United States. It seeks to expand its business in the international platform through the same way. This year, it has expressed its wish to acquire several international companies. The benefits of such mergers are the access to new markets and increased coverage. In addition, it increases its market share. Companies such as Publix have a preference for slow but sure growth. However, the use of mergers and acquisitions can eb highly profitable to such a company as well.
References
Galpin, T. J., & Herndon, M. (2014). The complete guide to mergers and acquisitions: Process tools to support m & a integration at every level. San Francisco : Jossey-Bass.
Gaughan, P. A. (2013). Maximizing Corporate Value through Mergers and Acquisitions: A Strategic Growth Guide. New York: Wiley.
Hill, C. W. L., & Jones, G. R. (2012). Essentials of strategic management. Australia: South-Western/Cengage Learning.
Hooke, J. C. (2010). Security Analysis and Business Valuation on Wall Street + Companion Web Site: A Comprehensive Guide to Today's Valuation Methods. Hoboken: John Wiley & Sons, Inc.
Kumar, B. R. (2012). Mega mergers and acquisitions: Case studies from key industries. Basingstoke: Palgrave Macmillan.
