Strategy that led to the merger
Walt Disney entered into a merger with American Broadcasting Company with an aim of enhancing growth. Disney had a purpose of ensuring that its business grew to greater heights by acquiring the broadcasting company. Disney had a strong belief that merging with ABC Company will help in enhancing its growth thus enjoying the economies of scale. Besides, the merger also focused on expanding the service of the acquiring company to international levels where its presence is minimal.
The merger also aimed at increasing the portfolio of the services offered by the company. The takeover would allow the company to have many services that having control in the entertainment industry. Furthermore, the strategy was to assist Disney to control the market thus attracting more customers to its business. The move would see the company increasing its customer base that would automatically result in increased market share. Fabrikant (1995) acknowledges that the announcement of the merger by Disney received criticism from other competing companies. The rival companies argued that the strategy adopted by Disney would affect their attention to their customers. In other words, this means that that strategy would drive customers away from the other competitors to its convenience.
Moreover, Disney acquired ABC for to realize the synergy strategy. Disney had a belief that its merger would lead to increased revenues for the company. It was one way of reducing the costs of production for the company. Decreased cost of production and increased sales due to large customer base would automatically increase the sales revenue of the company and finally, would see the company enjoy higher profits than t operated there before.
In my opinion, the merger was a wise choice for Disney and ABC. First, the merger was a good idea for the companies because they operated along the same product and service. One being producer and entertainment company and the other offering broadcast and entertainment as well would lead to increased market share. Besides, it was a wise decision to enter into this merger because the company is enjoying an increase in revenue. Despite the problems that faced the merger there before, the spread of its services was key for the merger as a way of enhancing its market share. Big market share for a company symbolizes more sales revenue.
The decision was also wise for Disney to enter into the merger as a way of expanding its services else in the world. Initially, the company concentrated much on the North American market. However, with the merger the company would factor other markets of the world. The merger would enhance synergy in the cost of capital reduction. Reducing the cost of capital helps a company to develop more capital resources to enable it to expand its business further to other nations of the world.
Disney Business level strategy
Disney can overcome its problem of high costs of production through adopting a good business level strategy. For instance, the company needs to adopt cost leadership business level strategies to give it the strength to compete internationally. Cost leadership strategy focuses on cutting down the cost of operations and increasing the efficiency of a company. It is a great move the company to consider developing this strategy as a way of reducing its underlying problem. There are various ways through which the company needs to enhance cost leadership strategy. First, the company needs to focus more the use the modern technologies that allow the company to use the very fast network in its production. Use of modern technology will allow the company to integrate various networks enabling it to establish a network that will grow very fast. Reducing it costs will be a good strategy for ensuring that the company competes with others without cost pressures that able to realize a substantial amount of profit.
Tasty Catering can enter into a successful merger with Walmart Retailer. Walmart would strategically fit with Walmart since Walmart offers some of the products produced by Tasty Catering. It is worth noting that the merger between the two companies would be key in enhancing the market share for both companies. The two companies will enjoy synergy in the market since they will increase market share. A large market share for the entire merger will help increase the revenues that will result to increased profitability of the merger.
Also, the merger will lead to sharing of talents among the companies. Walmart has been for business for a lengthy time thus; it has developed good, competent employees who can offer good services to the customers. Good customer service is crucial for the merger since it will help in developing a good reputation for the merger. The resultant company will thus continue attracting more customers thus helping them in enjoying the economies of scale.
Furthermore, the merger would ensure further growth of the newly formed company. This is because the companies will bring together various resources that would ensure further expansion of the departments of the company. Walmart has a competent and experienced team of members that can assist the inexperienced managers to gain experience. Such a move is crucial for the company and would lead to growth and development of the new company.
Corporate level strategy
Disney needs to focus on market development as its corporate strategy. The company still concentrates much on the North American market forgetting to target other international markets that offer an opportunity to the company. Disney can execute this strategy through direct investment in various nations that present opportunities. It is a good move that calls the company to establish various market entry strategies that would do it to enter the new markets without any problem. For instance, the company can venture in mobile phone gaming which presents a great opportunity and target customers from various nations. The use of mobile by children has become the order of the day following the advancement in technology. Adopting such a strategy through direct investment in nations does not operate its key in enhancing its success (Osman, 2001).
Recommendation
Disney needs to concentrate on emerging markets of the world where its presence is minimal just as it has focused on the U.S. and Canada markets. There are various emerging markets that the company can venture business a good example being India. India is growing regarding movie and game production thus presenting an opportunity for the company to expand its investments and enjoy the ready market available for the products and services.
Besides, the company needs to focus on the use of the new technologies to overcome its high costs of operation. The use of the new technologies will see the company increase its efficiency thus reducing wastages. Such a move will ensure that the company uses any opportunity that can raise revenue for its products and services. Mobile gaming is an area where the company can use technology to reduce costs and take advantage of the widespread use of smartphones by most of its customers.
Tasty Catering
Tasty Catering is a company that operates in U.S. only, and it is vital for the company to pursue differentiation strategy as part of its business level strategy. Through differentiation, the company should capitalize on producing natural products that meet the needs of the consumers in the market. Tasty Catering is a new and small company in growth phase; proper marketing remains key to establishing a strong customer base in the food industry. Promotion and advertising of its products and services should target those customers who want natural and healthy products. Ideally, this is to mean that the company needs to focus more on the production of natural foods that have low-fat contents as they remain vital to many U.S. citizens. It should place its products strategically on the market before its competitors take advantage of the same.
Besides, the company needs to foster good image and reputation from the customer through the provision of quality customer services. Every customer will want ever ready to receive a new company that offers quality services as compared to the existing companies. As a result, Tasty Catering needs to take the advantage of the food market by focusing on offering good services that satisfy its customers. In so doing, the company will develop a long-lasting relationship with the customers hence able to growth and develop into greater heights due to the big customer base (Sanghoee, 2005).
Corporate level strategy
Tasty Catering needs to focus on market penetration as its corporate strategy. It is a new company in the food industry thus; there is a great need to focus ways of penetrating in various markets where it can invest its products. It is important for the company to consider market segmentation of its customers as one of its market penetration strategies. In pursuing such a strategy, the company needs to consider various segments of customers. First, the company needs to segment its customers depending the social class. The company should have various products that meet the needs of every class. It should ensure that the every social class has some products it can afford. Besides, the company should segment its customer on lifestyles. The company should focus on developing products that vary according to lifestyles of different people.
Proposal Justification
I believe these two strategies are crucial are for the company because it is new, and it is aspiring to grow and develop. The best strategies for a growing company are those that focus on market entry. Through differentiation, the company realizes a great potential in the market. It is the best strategy for ensuring that the company develops a good relationship with new customers thus able to develop loyal customers. On the other hand, market penetration is a good strategy for a growing company because the company stands a good chance of venturing into new markets. It is through the same where the company can expand its business to various markets thus taking advantage of a large customer base (Osman, 2001).
References
Fabrikant, G. (1995, August 1). The media business: the merger; walt disney to acquire abc in $19 billion deal to build a giant for entertainment. The New York Times. Retrieved from http://www.nytimes.com/1995/08/01/business/media-business-merger-walt-disney- acquire-abc-19-billion-deal-build-giant-for.html?pagewanted=all
Osman, M. (2001). Merger & Acqusition and wealth creation.
Sanghoee, S. (2005). Merger. New York: Forge.
