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Growth and Failures of Mergers and Acquisitions

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Executive Summary

The acquisition is a form of asset purchase and stocks of a company acquired. The methods employed in these two kinds are different in practices and solely based on shareholders’ positions.It is essential to determine that the growth rate should be for the transformation of the company and its corporate identity. Therefore, the targeted company identifies a new direction and adds some new capabilities.The management approaches define motives to work under mergers and acquisitions. This hypothesis is workable in many instances when a manager seeks to hire companies for their own interest and not for sole economic gain.

The increased competition in all financial sector develops motivation for customers to stay with that particular company.If a commercially viable strategy is not implemented, all the synergies of companies become worthless. In some cases, the cost of delivering a marketing strategy is better for the public. It is worthy to say that public institutions need to bring growth and harmony and manage high-risk assets. This report presents effective understanding of mergers and acquisitions, along with motives for success and failure from real life examples.

Table of Contents

Introduction

The union of two or more companies that forms an entity or describes a pool of interest is a merger. It is not a consolidation, which is a combination of different companies/product lines or functional areas. The mergers correspond to no new entity, while in some particular cases, an entity is created. An accounting method that is used in merges as a part of the investment is known as purchase acquisition (Bick, Crook, Lynch & Walkup, 2017). The accounting method in which pooling of interest for the merger is combined when without considering the impact of the tax. Mergers and acquisitions are a vital tool to facilitate corporate expansion with the control of assets and shares. It also offers corporate power on the market through joint strategic opportunities.

Capital budgeting analysis is used to ensure the expected return rate, which will undertake specific considerations of financial issues and tax accounting. There is usually a significant hype about the impact of mergers and acquisitions, which is not favorable. They destroy the acquirer’s acquirer’s business value. The process of mergers and acquisitions incorporates the company’s valuation with the price that takes over its assets. This process highlights that price paid is higher than the actual price (Clarasys, 2020). The common failure of mergers and acquisitions is the difficulty of cultural integration. In common practice, the merger is an entity combined with two or more firms. It reflects different leadership styles, corporate cultures, and expectations of employees. The scope of functional differences is broad and based on employee’s expectations.

The corporate law defines a merger as the combination of different corporations and continues to exist when there is asset transfer. The mergers learn shareholders that exchange shares with shares for new firms. The acquisition highlights the target company as an entity that is involved in the business, and its shares are linked to shareholders for debt or cash (GERBAUD & YORK, 2007). The acquisition is based on buying all the assets or a part of the stock. Mergers and acquisitions are the different entities described under various researches. Research indicates that an alliance can be a formation of a holding company.

Corporate managers face increasing pressure to grow company size, mainly when there is a low demand for the product. The process involves managers looking to jump-start growth, and they have to make sure that this growth can provide returns for the shareholders (Ismail, Dbouk&Azouri, 2014). The concept of the merger is different from the acquisition is the sense of resource size. This field has grabbed extensive attention in recent times. Mergers highlight an interdisciplinary framework that enables companies to grow faster and also ensures that how weak companies are acquired. This pace is kicked up from 2001 to 2004 when at a global level, 30,000 acquisitions were completed. It is observed that an increased number of assets is attributable to certain key factors such as deregulation, low inflation, and a rising stock market. Disney and Pixar/Marvel is a successful example of mergers and acquisitions in the resource-based category. The increase in this activity is witnessed in industries like information technology, healthcare, infrastructure, and the development of software.

In South Africa, the Johannesburg Stock Exchange under the control of American corporations involved in market capitalization (Ghosal&Sokol, 2013). In 1984, the political transformation was established due to democracy. Big conglomerates faced unbundling, so their level of the stake was marginalized. Another example was the Emerging Economic Empowerment companies when they participated in the stock market that involved the unbundling of large consortiums. This acquisition by Anglo American Group, like Johnnic investment, led to the emerging business of blacks and companies acquired access to the public capital. This string of emerging acquisitions in previous years illustrates the control of market capitalization despite the widening of economic empowerment. America Online and Time Warner is an example of a merger and acquisition that managed acceptable returns. In some instances, management can experience acceptable returns determined by the size of the company. In some cases, the company has to contribute to the appropriate level of returns, so it selects aggressive growth by involving in mergers and acquisitions.

Part one

Mergers and motivations work on the basis of motivations. These are particularly to increase the financial return and get national interest. The key motives in the expansion of mergers and acquisitions are to create wealth and to expand the market base. Acquisitions are the small role players that can significantly add to the benefits. Proper post-acquisition strategies are not prevalent normally. South Africans large banks acquired smaller banks only to acquire the opportunity of community arrival and reinvestment bill. The bill was managed by the government and help for the smaller banks to get housing finance.

In past South African firms understood the calculated financial risk through understanding the secured liabilities. In case, if some post-acquisition strategies lack focusing on proper management skills or on external environmental factors, the business confronts failures. Some examples from financial sector companies present a high level of competition when there is an increase in customer loyalty and a good brand image (JOHNSON & SIMON, 2009). A bank can face a high threat if no minimum liquidity threshold achieved. Banks focus on risk-free investment and deposits to cover all the extra costs as well as to maintain their capacity level. The research presents that companies have to merge to manage operations and to cut costs efficiently.

Improve Financial Performance

The improvement in financial performance is attributable to the increase in revenue or reduction in costs. Under a synergic strategy, this is accomplished to get operational motivation.

Motivation smoothen profits

The financial improvement process undertakes firm features that explain income smoothing practices. It is based on general motivations that help managers to engage in the financial improvement process. Internal expansion by Hymer has faced by product diversification, vertical integration, and mergers & acquisitions. The motive for a firm’s expansion and profit generation is the pursuit of management (Ogada, Njuguna&Achoki, 2016). This context is well explained under proactive and defensive factors that operate effectively. Under geographic diversification, these factors ensure control due to power and competition in the markets. The market power perspective is defined under proactive factors that appear attractive to the industries. They are rendered more attractive due to the use of anti-competitive conventions such as mergers and acquisitions, barriers to entry, and collusion. Cross-selling success as pros for McKinsey & Company are in the form of efficient delivery of products to realize revenue synergies. Merging firms usually underestimate this potential, but the company has achieved its targeted cross-selling goals (Penrose &Pitelis, 2009).

The cons of cross-selling for the CitiCorp Group are difficulty with challenges related to revenue synergies. They involve multiple groups that are tough to estimate and measure their financial impact. Another con is the gap between end result and goal of targeted selling, i.e., estimated at 20% when measured for 3-5 years synergies.

Increase revenue or market share

The increase in market share of revenue is related to the cost rationalization under operational motivation. The economy of scale also plays a part in managing revenue. Cost rationalization is tax loss, staff, and plant matters. In this framework, market extension and product extension are categorized under horizontal form/ competitors. The market extension links to horizontal form and overseas, so the conglomerate M&A is involved. These mergers occur between two companies that deal with similar products, yet different markets. The market extension merger ensures that companies acquire success in a big market when they work on a large client base. The example of a market extension merger is the acquisition of Eagle Bancshares Inc. by RBC Centura (Renneboog&Vansteenkiste, 2019). The pros of this acquisition were a high growth rate in the North American Market and increased operations as being successful. Some little cons exist for Dow Chemical merger and acquisition in the form of intense competition that they are facing in the financial market. This needs diversification and operations in leading US markets.

The product extension merger occurs in two organizations in similar products and similar markets. This merger allows companies to access larger sets of consumers and group together, so they earn good profits. An example is Mobilink Telecom Inc. and its acquisition by Broadcom under the category of product extension merger. The pros of this type are certification and participation in the competition, as seen in the company’s success. The cons exist for Pfizer and Warner-Lambert for this form due to easily imitated business models and a variety of products in different markets.

Manager’s hubris

An unrealistic belief about managers is managerial hubris that relates to bidding firms when assets are managed for a targeted firm. The conglomerate merger occurs when unrelated business activities located in diverse geographical areas unite and form a company. Its example is Walt Disney’s unification with the American Broadcasting Company. Its successes are pros like value creation, acquisition of assets, and diversification. The cons can be illustrated better for H. J. Heinz and Kraft Foods as tax implementation and financial vulnerability based on circumstances.

Resource acquisition

The mergers and acquisition-related to the human resource are key business tools that show a corporate entity acquires other. This acquisition relates to the professionals when they involve in identifying solutions and recognizing problems in management (WATCH, 2010). The example of resource acquisition is Exxon and Mobile, the success factors in resource acquisition are retentions of employees; good employee benefits program, and development of new policies. The cons are appropriate to discuss for AT&T/Bell South regarding uncertainty in employee performance, low participation, resistance, and high turnover because it can lead to failures.

Vertical integration

The vertical integration as a merger and acquisition illustrates the concept of manufacturing plants and store brands. The functional areas are creation, selling, and distribution of products that eliminate the need for external entities such as transportation and manufacturers. An example of vertical integration is the acquisition of Google of Motorola6 Ikea’s 2015. Its cons are the flow of the supply chain and increased relations with the partners (Renneboog&Vansteenkiste, 2019). The cons for vertical integration can be seen from Facebook and Instagram M&A face downstream on occasions and intense competition in technology.

All of these types discuss that some types of mergers and acquisitions are more likely to get success over others, considering the factors involved.

National interests

The exclusive motivation for mergers and acquisitions is used for national interests. This mainly includes natural resources and strategic resources.

Natural resources

In Africa, the natural resources mergers are made by developed world organizations, such as Europe and North America. Merger action in basic industries, like, petroleum, agriculture, mining, quarrying, hunting, forestry, and fishing, had continued pretty flat during 1988 and 2004, at times when mergers in manufacturing and services had increased and decreased many times by the percentages in hundreds. If something, natural resources mergers bear an inverse relationship with commodities prices.

In different aspects the national interests, these are really difficult to understand. As per researchers, the National interest of Australia is something that can only be described by the Australian people or Government of Australia. It is not stationary and cannot be described mechanically. The law does not offer mechanical guidelines or definitions for the national interest measurement. Due to the significance of natural resources, mergers are oriented on specific principles to get benefits. The accusations of firms under political expediency needs openness. Mergers, as national interests, show greater flexibility (Penrose &Pitelis, 2009).

Due to the large scale of production, products appear in a combined form that must avoid anti-trust issues. It is necessary to increase production to maintain the scale in the industry, so firms invest more in new products, and natural resources such as oil and gas are used to enhance benefits for the economy. In some cases, raw materials are acquired at low cost; for instance, Walmart is the main example that works on corporate expansion and has not faced shrinkage from entering into new markets or reducing prices.

Strategic resources

Strategic resources are the leading format that works on mergers and acquisitions to expand know-how and enter into a competitive environment. The structural scope of the environment is linked to the enhanced mechanism of corporate governance. In the realm of the firm’s acquisition and resources, strategic initiatives play a crucial role. The corporate information security is an integral component to consider while working under acquisitions in the public interest. It helps organizations acquire a key advantage when organizations are facing threats to work. The role of corporate activity undertakes security concepts because it controls the organizational environment. It can be easy to overlook the security matters, but it may enter an insecure connection when the proper framework is installed. The diligence process is linked to the information of an organization where the cybersecurity aspect is recognized as fundamental terms.

The technology under strategic resources is updated with the need of time. Research indicates that 41% of companies focus on mobility and technology to work as a part of their growth strategies. Accenture strategy research states that with the pace of fast-changing communication, high tech industries develop. Established players focus on innovation and stay ahead. In mergers, mostly agile startups are implemented, but they appear complex to handle. The playing field of mergers and acquisitions has opened the door of a new transformation. Due to the implementation of technology, forward-thinking communication offers new paradigms (Ismail, Dbouk&Azouri, 2014). Mergers and acquisitions redefine the boundaries of the industry and generate improved performance.

Global mergers and acquisitions in Japan are experiencing rapid growth due to optimistic nature regarding globalization. The government of Japan has developed policies for mergers and acquisitions that support research activity. At the global level, the scope of transactions in firms remains robust due to prevailed harmony and technology. The activities of mergers and acquisitions in Japan in 2018 is estimated at $358.2 billion. The economic and demographic shifts are to cater to new opportunities. If a portfolio of companies is clarifying their acquisitions, it is likely that they aim for a sharp growth rate. Surge development costs in mergers and acquisitions are attributable to research and development expenses as well as new technologies.

Companies in Japan are focusing on capital market advantages because they are pursuing cross border transactions. In 2008, the financial crisis left these companies in solid shape in financial matters, yet they were characterized by the balance sheet cash (Ghosal&Sokol, 2013). Japan market and central banks faced a rise in interest rates, but they continue to maintain a zero level rate of interest, thus giving corporate operations access to the finance deals.

PART 2

Several factors are responsible for the success and failure of mergers and acquisitions. The success factors are economies of scale, synergies, cost-saving, and rationalization of channel distribution. It explains different ways that companies adopt to focus on potential capital returns. The common reasons for buying acquisition are also discussed under it.

Strategic plan

The critical factors that impede conditions to influence the outcome of the project are the key terms that are viewed by stakeholders. Researchers view some critical factors as the measurements that are assessed by project success. These issues are project management, project success criteria, and cultural differences. The criteria of project research are fulfilled by budget and quality, according to some authors. These criteria do not necessarily measure project outcomes. To that end, project management is only considered for its operational value, not strategic (Alhenawi& Stilwell, 2017). Project success development is based on internal aspects, while external aspects can be complicated. This measurement is important for success estimation. Researchers also focused on the complex criteria of project management factors that contribute to the success of the project during the handover phase.

Assessing project success is attributable to the stakeholder community benefits, satisfaction, purpose achievement, and organizational benefit (Canback, 2004). In merger and acquisitions, the project management team focus on different perspectives required to get success within the estimated timescale(Warf, 2003). Cultural differences are key factors that may contribute or hinder in project development(Worthington, 2001). The strategic fit can be complimentary when two companies interact with different plans or identify merger strategy (Gupta, Kumar &Upadhyayula, 2012).

Implementation

Mergers and acquisitions face intuitive target when the acquired firm become more successful(Vestal, 2007). The knowledge of the industry, along with the learning curve, describes the chances of success (Cowin& Moore, 1996). The strategic failure for mergers can be poor strategic rationales, poor integration, difficulty in leading, and communication of the organization. The poor execution and increased costs provide clear evidence of failure and important issues to consider. Slow post-integration of mergers, lack of risk management strategies, and cultural clashes are some key concerns that occur during implementation, for instance, in Altria/Philip Morris(Souply-Pierard and Robert, 2017). The strategic planning policy is important to implement because it is crucial to focus on an effective alignment tool that can follow the due diligence process.

Due diligence is about the assessment of the targets under M&A, where all parties learn how to eradicate misunderstanding(Roengpitya, 2011). The process is critical because of it and comprehensive analysis of the merger, such as their financial stability and cash flow (De Noble, Gustafson &Hergert, 1988). It is found out that the complexity of mergers and acquisitions is increased, i.e., Anheuser-Busch InBev and SABMiller. This endeavor offers an experience to focus on new opportunities. Firms, in this way, face losses and stimulate experience to boost their performance(Peltier, 2004). Firms face success when it learns from past experiences. Some mergers experience consistent purchasing that contributes to the chances of success(Papadakis, 2005). The acquisition experience is not a superior factor, but quick succession allows learning of new experiences for management. The management capabilities of the team effectively implement operational excellence. McKinsey & Company have shown a good implementation of strategy fit to contribute to the merger future.

Timing (Market Cycle)

Mergers and acquisitions are the main sources of organizational growth that achieve diversity, profitability, and growth rate(Friberg, Norback and Persson, 2012). These activities are inclined to attain corporate objectives such as market share and get diversified operations(Greco, 1996). Eagle Bancshares Inc. by RBC Centura, has focused on the market cycle by visualizing the growth pattern and competition. Analysts focus on the successful mergers and acquisitions that their success factors are based on marketing and targeting the right opportunities (Okafor, 2019). For instance, Glaxo/smith Kline is a successful merger and acquisition and has experience in guiding organizations to implement strategic direction. From the marketing perspective, the scope of functioning is based on certain strategies to target the right demographics and to acquire functional planning as well as execution. Due to the structural significance of M& A, the role of the market cycle is to focus on the time frame necessary to implement strategy fit that, in turn, gain advantages(Chibuzor, 2016).

Its role in breaking monopolies and raking control of industries is linked to a marketing perspective that undertakes predatory tendencies of business to seek diversification. This framework is built on the new market entry decisions, establishing market players, and to smooth the cash flows(Boen et al., 2006). Mergers and acquisitions are playing a strong role in increasing the capital flow, leverage buyers, and to create opportunities(Majumdar, Moussawi and Yaylacicegi, 2013). This method is significant for corporate restructuring since it makes companies focus on their operational excellence (Suniram& J, 2019). Asian and European firms seek healthy investment opportunities and time frames through M & A. Timing ensures discipline and productive capacity(Boen, Vanbeselaere and Millet, 2005).

Execution

The role of mergers and acquisitions in an industry is significant to enhance opportunities in the market and develop organizational benefits. Better operations and increased production capacity are significant to generate investment opportunities. When Mobilink Telecom Inc. and its acquisition by Broadcom was executed, the plan undertook functional expertise and managerial implications (Okafor, 2019). Mergers and acquisition projects are crucial for companies to grow rapidly and execute their corporate strategies, i.e., Mylan acquisition of Meda (drug maker). This is witnessed in well-developed studies as 50-70% acquisitions increase costs or revenue and can destroy the shareholder value. Some mergers fail and confront challenges to integrate. The example of Exxon and Mobile highlights the involvement of shareholders and the execution of plans by focusing on the client’s success(ABEDIN and DAVIES, 2007). The outdated strategic plan is linked to inadequate execution and planning. In some instances, if executive leadership is not experienced, the mismatch in integration planning occurs.

M&A projects identify significant execution factors that can contribute to success and failures. Planning and execution are key steps for mergers to take over a crucial development stage and maximize their potential for success (Souply-Pierard& Robert, 2017). Researchers have found out that through mergers and acquisitions, capabilities are improved, and a smoother integration is acquired. These success factors for firms are significant to classify in two stages, first is the front end, and the second is integration. Execution, in this way, gives rise to corporate leadership, planning and facilitates stakeholder team through learning mechanisms.

Conclusion

Mergers and acquisitions significantly impact organizations and bring changes in ideology and ownership. Strategic activities and cultural cohesion play a significant role in bringing harmony in the organization. The forward-thinking approach in M&A captures core competencies, organizational skills, and knowledge base. The strategic assets enhance collaborative leadership and talent retention for the organization. Cultural values and traits are important to analyze in different workplaces. The cultural traits are easy to identify due to social group diversity. The depth of cultural influences defines discipline, beliefs, and innovation. Cultural cohesion acts as the strategic asset for M& A that provides the internal weight of the organizational structure. This process develops cultural traits. These processes are linked to maintaining the integrity of the organization, so managers are required to be equipped to meet all organizational needs.

Mergers and acquisitions can be financial or strategic. The former allows expanding finance and bringing in the planning of the financial organization as well as product diversification. The expansion into new facilities defines new horizons and product development perspectives. Through offering credibility to the organization, it appears with the power balance in the market. This report about mergers and acquisitions discussed the extensive scope of their benefits, success, and motives for profit.

The report described key successes and failures of mergers and acquisitions with the appropriate motivations. Companies are engaged in M&A under a broader scope of activities that acquire success possibility. With the discussion of profit-based motives, the acquisitions work on the basis of different objectives. Motivations are illustrated in this paper that provides success criteria for the firms under two main objectives. This aspect is explained in this paper by improvement in financial performance and the maintenance of national interest. This report has examined market revenue, operational motivation, the economy of scale, and rationalization of cost. The diversification, resource acquisition, and vertical integration are discussed under extensive real-life examples. In light of significant evidence, it is discussed that motivation is not only significant to determine the success and failure of M&A. This report has discussed the strategic plan, its implementation, timing & execution under certain dimensions such as vertical/horizontal, relatedness, and APP pricing. The extensive review of different literary studies provided that M&A works more significantly under significant managerial experience with due diligence. The discussion of M&A has also yielded a broader scope of success factors such as strategy, expertise, and diligence. Cost and revenue synergies are focused on M&A strategies to improve functionality. In the realm of advanced technology, successful strategic rationales are considered appropriate to generate good ideas.

The current discussion in this paper has fulfilled the objective of this research, and it is inferred that reducing costs, improving organizational structure, and acquiring expertise for any organization is important to understand. Today, the growth of mergers and acquisitions is also associated with negative consequences. Companies invest a huge amount in acquiring expertise, and understanding of key factors play a stronger role in the success of mergers.

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Strategic Plan for Waterstones

Pages:10

Executive Summary

The following report aims to critically review the current strategic opportunities available to the Waterstones book chain when it comes to digital transformation. These opportunities arise as a result of various political, economic, social, technological, environmental, and legal factors present within the United Kingdom’s business environment.

With the recent outbreak of the Coronavirus Pandemic, firms are trying to shift to online operations readily.And the firms already having most of their operations online, are looking to capitalize on the opportunities that are present on the digital front. This report not only just reviews these factors, but it will also try to provide strategies on how to make use of these opportunities.

The incorporation of technology, or digitalization, of all business processes, is known as Digital Transformation. It is a structural change that completely changes how a business operates and delivers values to its customers.

Furthermore, some internal and external factors are at play. This report aims to analyze those factors thoroughly and looks to provide strategic solutions on how to counter or make use of such factors.

Lastly, one of the main focus of this report is to identify a new strategic aspect that the Waterstone book chain is yet to discover and capitalize on that before any competitor firm cashes in on that.

Digital Transformation

The digitalization of a business is known as Digital Transformation. Digital Transformation changes how a business conducts its operations and creates value for its customers. Apart from an operational change, a business that introduces digital transformation has to go through a complete cultural reboot. In recent times, the emphasis on e-commerce and the digitalization of businesses has grown a lot. Businesses have started to introduce digital transformation in different areas.

Every firm has a different sort of digital transformation based on its particular business conditions and demographics. However, there are a few common elements that all digitally transformed firms have. Firms having incorporated digital transformation are more customer-centric than other firms. Their idea is to enhance and enrich the customer experience at each touchpoint. A digitally transformed firm is very smooth and agile when it comes to operations. One of the main benefits and motivations for digital transformation is the fact that it enhances operational efficiency.

Lastly, as mentioned earlier, digital transformation means a change of culture. Digital Transformation is not about introducing the latest technologies. Instead, it is more about embracing change and leaving the old practices behind.

With developments made over the last decade, digital transformation is the way to go forward. It will be crucial to any business’s success.

Current Factors

Over the last decade, the world has increasingly been shifting to online businesses. The customers are satisfied with placing their orders online and paying through online channels. Items that can only be used physically are delivered at doorsteps. In contrast, the items that can be used in softcopies are simply being stored in the customers’ computers—for example, books and journals. With the outbreak of the COVID-19 in recent months, social distancing has become mandatory. Going out of the house is considered hazardous and dangerous. With all these circumstances, digital transformation has become even more critical. When it comes to Waterstones, it has been open to digitalization. And hence it seems to be in a pole position to capitalize on the current market conditions.

Politically, the UK government’s policies regarding the use of the internet for conducting online businesses have been somewhat flexible. Through various studies, the government has discovered the growing influence of digital services on multiple age groups across the country, which allows Waterstones, a healthy space online.

The UK has had a rather stable economy over the last decade, and this crucial factor allows Waterstones to introduce digitalization throughout its supply chain. And with the support of government policies, Waterstone can easily benefit through such measures.

Socially, the general direction of the whole world, and now especially with the Coronavirus, the preference has shifted mainly to online purchasing. Since Waterstones mainly sells books, it is a massive opportunity for it to go online.(Pînzaru, Zbuchea and Viţelar, 2019)

The concept of E-Books has become dominant because all the books can now be stored on a computer. This concept saves a lot of time that a consumer takes to make a physical purchase; it saves the space that hardcopies occupy. And for students, it saves the burden of physically carrying multiple books. (Pînzaru, Zbuchea and Viţelar, 2019)

And adhering to the guidelines laid out by the governments around to combat the Coronavirus, E-Books and softcopies comply with social distancing as well.

Although Waterstones is technically well equipped, with the current situation in light of the COVID-19, there will mostly be a sharp increase in the demand for E-Books and softcopies. Hence, Waterstones could benefit from more investment in Cloud or Artificial Intelligence. Technologically, it is an excellent time for Waterstones to expand digitally and adapt to digital transformation.

Through selling books and other related items online, Waterstones can significantly reduce its environmental footprint. For books, the first and foremost thing is paper, through hardcopies the manufacturers of books is directly linked to deforestation and hence leaves a critical environmental footprint. Furthermore, the transportation of raw materials and the deliveries of hard copies of books leads to large amounts of fuel emissions resulting in severe air pollution. Indulging in such practices can seriously taint Waterstones’ brand image. Environment preservation has continued to become quite essential in recent years, and customers prefer to opt for brands who are contributing to the environment. By emphasizing more on online operations, Waterstones can make a crucial contribution to the environment and reduce its environmental footprint to a great extent.(Shaughnessy, 2018)

On the legal front, the UK government, as discussed earlier, has been somewhat flexible and supportive with online businesses. And since most of the regulations and legal issues are related to the environment, conducting business online is considerably safer in that regard.

Implementation of Strategies

The recent shift towards technology and consumer preference of buying online, combined with the business atmosphere in the UK have presented Waterstones with a bunch of opportunities that it can use. (Berman, 2012)

Waterstones can look to increase investment on its online platforms. Since the government is supportive of such ventures, there is minimal risk of any political invention in Waterstones’ online operations. Having supportive government policies can also help Waterstones in expanding abroad. Since the business is online, Waterstones doesn’t have to have a physical outlet in overseas countries. The buyers from abroad can simply connect with Waterstones on its online platform and purchase E-Books and softcopies. (Matt, Hess and Benlian, 2015)

Apart from that, the UK’s stable economy means that the general business conditions are right, and firms are having a good time conducting business. Waterstones can use this opportunity to invest in digital transformation throughout its supply chain. With each touchpoint of the supply chain introduced to digital transformation, Waterstones can drastically increase its operational efficiency. The firm policy, inflation, and unemployment rates also mean that it will be more comfortable for Waterstones to expand through obtaining cheaper loans. Moreover, such stable conditions indicate that the customers will also have enough buying power to shop online in an instant without thinking twice.

Socially, with the COVID-19 situation, the growing awareness of the general population about using digital services makes it an excellent opportunity to go digital. Waterstones can develop its smartphone app that is accessible for almost everyone. This concept makes for a unique consumer experience since each user is carrying their virtual library in their pockets. The app is a quite convenient option since everyone has a smartphone in this day and age. Waterstones can earn a lot of revenue through its app downloads and then the in-app purchases.

Furthermore, through digital transformation, Waterstones has a massive opportunity to collaborate with online giants like eBay, Amazon, and Alibaba. With its books being displayed on their platforms, Waterstones can dramatically increase its market size. Moving on, Waterstones can partner with Universities and research centres and provide special discounts to the university’s students and the members of the research centre on their E-Books. This strategy will increase Waterstones’ customers base and help it to make a long-lasting mark. Lastly, one of the best strategies the Waterstones can implement is to partner with Schools, Colleges, Universities, and NGOs. Waterstones can provide digital library services to Universities and research centres. And with the increasing shift towards technologies, students prefer carrying their course materials on their computers rather than

coursebooks to the students through their digital application. This strategy will solve the students’ burden of physically carrying books while also providing the schools with a one-stop solution for coursebook provision across all levels of the school. All of this will do wonders for Waterstones’ brand positioning and market share.

By digital transformation and automation, Waterstones automatically becomes environment friendly. And with the increasing shift towards environmental sustainability, a brand that is contributing to environmental preservation outshines others. By merely conducting its operations online, Waterstones can attract a cumbersome amount of customers, which will increase its sales, brand reputation, and successful performance.

Challenges associated with Digital Transformation

One of the main challenges faced while shifting online and using digital transformation is that it is particularly hard to gauge consumer sentiment. In the business atmosphere today, customer experience matters the most. For an online business, it is harder to gauge customer experience. An unsatisfied customer may simply stop purchasing from your online store. (Schwertner, 2017)

The results of resistance to change, show themselves in a plethora of ways. Advanced ventures crucial to an organization’s going-concern can experience difficulty in getting subsidies, resources, or advertisements. These ventures might be changed so as not to compromise retail or accomplice brands. They are kept down by worries about tearing apart other income sources. They are approached to legitimize ROI to an unusual degree of conviction. They are sent through interminable lawful audits.

Kodak envisioned the automated camera, yet it was the inside assurance from a change that drove the association to cover it since it subverted the association’s legacy film business. Did mobile phones beat the landline business? The truth is out. Regardless, Bell Atlantic “guaranteed” itself by enduring that change was not very far away, and changed by choosing the irksome decisions required to conform to that change.

Another challenge that a company faces when adapting to digital transformation is the risk of employee pushbacks. The introduction of technology across the whole business might severely demotivate the existing workforce. With technology comes a massive threat of layoffs for the current employees. This threat brings the morale and productivity of the employees down drastically. There is a massive skill gap between those employees who know how to operate technology and those who don’t. The gap means that the skilled workforce already has hands full and hence, don’t have the time to train the old employees. (Digital Transformation- The Internet of Things- Opportunities and Challenges, 2020)

One of the most crucial challenges faced by companies operating online is the problem of substandard analytics. Whenever a customer visits an online store, they like personalization. They like to be shown what they’ve been buying or products of a similar nature. Substandard analytics ruin the customer experience, having the potential to convert profits into losses. (Digital Transformation- The Internet of Things- Opportunities and Challenges, 2020)

Associations that adequately “cross the void” to modernized reasonability consistently discover they need to oblige free what they used to charge for, sell as participation what used to be “independently.” Adapt through publicizing things that used to be paid for in various habits, and reconsider how they get pay from the value that they make. Those that do so deftly can every now and again find that the gathering of an electronic procedure offers more scale, pay, and advantage than the legacy approach. However, it takes experimentation, a notion of danger, and – to be uncaring – some mistake on the way. In spite of the fact that this approach is comprehensively recognized among new organizations, it is one that the organization and money related masters being developed associations, generally, fear. Notwithstanding, this is the gauntlet they should race to gain electronic ground.

Overcoming Challenges

Challenges are there to be faced and overcome. Hence is why the challenges that are present with shifting majorly to digital transformation can be faced. Its a fact that with online businesses, it is nearly impossible to gauge customer sentiment. If the customer has a bad experience, they might silently go away without any conversation at all. To overcome this crucial challenge, Waterstones can make sure that it is not just trying to achieve a higher sales target. The focus should primarily be on customer experience. By improving and enhancing all the touchpoints throughout the customer experience, Waterstones can firmly place itself in the minds of the customers. It will also help in automatically boosting sales, and retaining customers, providing stability in future growth.

To counter the employee pushback issues, Waterstones needs to think out of the box. It can tackle this challenge by incorporating a customer-centric culture. The focus needs to be on the customer more than anything. When a company strives to provide the best experience to its customers, there is a cultural reboot from top to bottom, which ultimately leads to employee training and development. Such actions help in massively boosting the morale of the employees, and they try to produce the best results as a result. (Borate and Borate, 2014)

Waterstones might not be able to delete uncertainty and vulnerability from employees’ brains. However, you can positively reduce them. Being steady and straightforward is vital. Keep your workers connected through the entire procedure. Engage them and paint them a future they would all be able to move in a specific direction. By helping its workers comprehend what’s in question, you can positively motivate them.

The issue of substandard analytics can be resolved through investment in better AI systems. Through introducing high-quality Artificial Intelligence systems, Waterstones can dramatically increase its database and gather more data efficiently. Through a comprehensive database, personalization becomes very simple and easy. When the customers are provided with interface personalization, they are displayed content of their interest, which enhances the customer experience and satisfaction significantly. (Pichan, Lazarescu and Soh, 2015)

 

Bibliography

Berman, S., 2012. Digital transformation: opportunities to create new business models. Strategy & Leadership, 40(2), pp.16-24.

Borate, N. and Borate, S., 2014. A Case Study Approach for Evaluation of Employee Training Effectiveness and Development Program. SSRN Electronic Journal.

Journal of Xidian University, 2020. Digital Transformation- The Internet of Things- Opportunities and Challenges. 14(4).

Journal of Xidian University, 2020. Digital Transformation- The Internet of Things- Opportunities and Challenges. 14(4).

Matt, C., Hess, T. and Benlian, A., 2015. Digital Transformation Strategies. Business & Information Systems Engineering, 57(5), pp.339-343.

Pichon, A., Lazarescu, M. and Soh, S., 2015. Cloud forensics: Technical challenges, solutions and comparative analysis. Digital Investigation, 13, pp.38-57.

Pînzaru, F., Zbuchea, A. and Viţelar, A., 2019. Digital transformation trends reshaping companies—proceedings of the International Conference on Business Excellence, 13(1), pp.635-646.

Pînzaru, F., Zbuchea, A. and Viţelar, A., 2019. Digital transformation trends reshaping companies—proceedings of the International Conference on Business Excellence, 13(1), pp.635-646.

 

Schwertner, K., 2017. DIGITAL TRANSFORMATION OF BUSINESS. Trakia Journal of Sciences, 17(Vol. 15, Suppl. 1), pp.388-393.

Shaughnessy, H., 2018. Creating digital transformation: strategies and steps. Strategy & Leadership, 46(2), pp.19-25.

 

International Business Strategy Unilever UK

Pages:8

International Business Strategy Unilever UK
International Business Strategy Unilever UK

Executive summary

This report entails the critical strategic marketing strategy of Unilever in the UK regarding international expansion. The foreign market is competitive and can create significant challenges for Unilever in terms of sales and revenue. Unilever is acquiring appropriate practices and ready to get into competition at the international level. The company is facing intense competition, digital marketplace, and sustainability issues. Due to its strategic marketing, internationalization approach, and educational campaigns, the key challenges can be tackled significantly. It has to expand its operations at the international level by reducing costs of operations, streamlining the raw materials transportation process, and looking at joint ventures at the international level.

Many subsidiaries of Unilever are gaining international fame and development due to their strategic market performance. An increase in sales and revenue is easy to attain on the basis of socio-economic interactions (Awards, 2019). The institutionalization and tackling risk and transaction cost-related issues are vital parts of the strategic plan by Unilever.

Furthermore, investors’ protection, contractors’ enforcement, intellectual property rights, and economic outcomes will be gained by adopting different modes to enter into the market. The functioning of the market mechanism by Unilever in the UK needs effective implementation of a marketing strategy that can continue to strengthen its business in the home market. It has to work with strategic alliances, joint control mechanism, and undertake investment opportunities.       

  Introduction

Unilever is a global consumer products company that deals in a wide range of products like food, beverages, personal care items, etc. Unilever believes in long-term strategic growth that can be attained by genuine purposeful performance (Maljers, 2005). The brand managers undertake a critical stance to spread the positive image of the company in the society while consumers focus more on brand image.

Unilever in the UK is operating across new divisions, and its portfolio includes iconic brands to meet the specific needs of consumers. The company is spreading a positive societal image with impeccable integrity. The challenges the company is facing in internationalization are related to intense competition, digital presence, and global opportunities. 

 Strategic plan 

The internationalization path is necessary for firms to enter into the global world competition. Unilever has planned to enter in global market UK so that it can introduce its products at an international level. The internationalization strategy that Unilever will follow is ‘think global and act globally.’ This strategy is to focus on crucial competition at the global market and to adapt the comprehensive strategy by keeping in mind consumer preferences. Unilever focuses on three components of internationalization, i.e., firm-level, industry level, and country level.

The firm-level competition intends to compete with its rival brands to sell products on a global scale. It is also focusing on adding minor adaptations in products where necessary, engaging customers and to coordinate its actions (Relations, 2019). The comprehensive strategy at the industrial level tends to unify its operations to establish the brand image. This reputation at the international level implies that Unilever should coordinate its distribution and marketing activities. The successful implementation of brand concepts in the UK is vital to capitalize on growth performance. The optimal market entry strategy is a part of internationalization because its major rivals, such as Procter and Gamble, are developing new ways of product development, so Unilever strives to respond to changes at a faster pace.     

 Wholly-Own Subsidiaries (WOS) by Unilever are a vital strategy to enter into a foreign market. Principal shareholders of the company are Leverhulme Trade Charities Trust and Prudential Corpn plc. United Holdings and NV Elma hold 50% deferred shares in Unilever plc. The subsidiaries of Unilever are NV Elma and United Holdings and work under an individual shares basis. Some other subsidiaries of Unilever are Lipton, Sunsilk, Knorr, Exe, etc.
Unilever is facing sustainability challenges due to global innovation; thereby, it is creating initiatives like implementing the innovative solution, digitalization, and engaging entrepreneurs to tackle the key issues (UNILEVER, 2019). Sustainability challenges influence the strategic positioning of the UK, so it is working to safeguard the working environment and build sustainable leadership. The strategic framework, like institutional theory, applies to the working environment of Unilever to establish outcomes at the firm an industry level. The competitive strategies to acquire foreign competition are inherent to increase sales. The stable market performance by Unilever in the UK is attributable to strategic decision making while focusing competition with main rivals. The company’s decision to face intense rivalry from emerging markets is tackled by innovation and introducing the product in the UK, US, and Europe.        

The institutional distance is about the analysis of risk and transactional cost of Unilever in the target market. In the UK, Unilever is targeting middle consumers by offering necessities and improving lifestyles. It is reaching out to customers by fulfilling their needs regarding personal care, hygiene, and nutrition. The institutional approach is to expand business based on customers’ needs and to keep ahead of their preferences. Improving product quality, innovation, and knowledge-based framework for consumers is a part of the decision making strategy. Unilever is acquiring the cost of transactions, thus gaining economies of scale.

Due to its corporate social behavior and healthy relationship with retailers, the company has implemented its strategic positioning at a different level. The competing foreign market as a marketing strategy is acquired under educational campaigns, global partnerships with development institutes, and healthcare projects with Australia and Brazil (Worldwide, 2019). A competitive presence at the international level is attributable to strategic decision making. Unilever’s competitive position is further accelerated by innovation. It is investing in research and development to acquire mass marketing strategies through cross-sectoral brand extensions. Competing at the international level is risky because global expansion on behalf of other institutions needs to focus on transaction costs, transportation, and prices of raw materials.       

The strategic alliance undertakes different hybrid entry modes, such as franchising, licensing, and distribution arrangements. The market expansion tactics like franchising and licensing are carried out by Unilever. This brand value is promoted by the franchising of Unilever in different states. The company has regulated its merchandized processing through franchising. Licensing to various companies is carried out to generate revenue. There are different contractual agreements that Unilever has followed in order to get involved at the international level. Unilever has adopted opportunistic behavior to increase its loyalty rates.

The brand licensing is significant to tackle ethical complications and shape loyalty. Unilever in the UK is engaged in different licensing contracts to promote its identity at the international level. The licensing agreements are intended to protect intellectual property rights, thereby getting benefits from market size expansion. Licensors also demand high royalty rates when there is increased revenue and sales due to the brand name. Under institutionalization and licensing, Unilever has entered at the international level market and gained popularity. More influential brand-related programs are also being used at small kiosk outlets such as the Smile project in Nigeria to showcase different products at the international level.      

Conclusion

Unilever should expand in the UK due to favorable socio-economic and political atmosphere. The intense competition among similar brands in the UK is creating hurdles for Unilever, but it can face challenges by improving its strategic decision making power and internationalization approach. The foreign expansion is easier when a company brings innovation and focuses on research and development of the product (Worldwide, 2019). With licensing, franchising, and contractual agreements, it can expand at an international level with less chance of unethical behavior. The controlled environment in the UK regarding stable economic policies is significant for business expansion.  

References

Awards, Y. (2019). The Unilever Young Entrepreneurs Awards. Retrieved 22 November 2019, from https://www.unilever.pk/about/unilever-young-entrepreneurs-awards/

Maljers, F. (2005). Inside Unilever: The Evolving Transnational Company. Retrieved 22 November 2019, from https://hbr.org/1992/09/inside-unilever-the-evolving-transnational-company

Relations, I. (2019). Annual Report and Accounts 2018 Highlights. Retrieved 22 November 2019, from https://www.unilever.com/investor-relations/annual-report-and-accounts/

UNILEVER, F. (2019). Retrieved 22 November 2019, from https://www.unilever.com/Images/unilever-annual-report-and-accounts-2018_tcm244-534881_en.pdf

Worldwide, m. (2019). Unilever’s grocery market share worldwide 2012-2020 | Statista. Retrieved 22 November 2019, from https://www.statista.com/statistics/254613/unilevers-grocery-market-share-worldwide/

Strategic Plan of Youvic Technologies

Pages:8

Introduction

 

A strategy plan helps determine the potential of a business. Information technology offers details about the management of a project with technology-enabled services (Fitzpatrick, Nguyen & Cayan, 2015). This strategic plan is about Youvic Technologies. It will discuss Porter’s five forces, the role of competitors, the potential strengths and weaknesses of the company under SWOT analysis. The paper will also focus on the PESTLE framework for the technology company. The blue ocean strategy will also be discussed to get an idea about the low-cost operations to capture the market space and generate new demand.

Porter Five Forces

 
Youvic Technologies is a technology company that provides significant results to different businesses. It is working with the latest trends and innovations to maintain a strategic place in the industry. This role will be analyzed under the Porter five forces framework.

The bargaining power of buyers for Youvic Technologies is high. In the case of a product with a large number of competitors, the value is increased, and undifferentiated products tend to represent a high cost for the client. The technology-based functions of the company in the industry allow it to switch in the loyalties and offer quality to its customers. The company is offering quality management to its potential business clients while the sector has several rivals. 

The bargaining power of suppliers is low; in the technology industry, the inputs are purchased on different degrees of cost (Author, 2019). This accounts for the varying proportions of demand and hence, different levels of profit for the respective company. The one or two suppliers for an input provide the evidence of essential products, and if switching among suppliers is expensive, the supplier acquires a high level of power.

The threats of new entrants for the Youvic Technology company is high because due to advancement in technology and science, the accounting and management techniques are improved, and it needs more companies to work. A high level of demand is coped up with multiple firms, and this scenario constitutes that new companies can start producing products and offer services just like their competitors.

Threats of substitutes are low in the case of technical management, mainly due to the established demand of potential clients for the company (Business, 2019). The modern business management by the company is diversified, and it has engaged several customers by taking care of all their needs in a single place. Youvic has offered different tools to its customers and improved the performance ratio. The high threat of substitutes is based on the attractive price-performance level of trade, and when the cost of the buyer to switch, the alternative product is low.    

The rivalry among existing competitors is intense. In the case of technical firms, the scope of the value of products is high, and they offer different software and related product that are close to their rivals. The competitors in this way are numerous and they are roughly equal in size and market competition to Youvic technologies. The exit barriers are high, and there are fixed costs due to price cuts and incentives.

 SWOT Analysis

 

The SWOT analysis in a company is to discuss the potential strengths, weaknesses, threats, and opportunities for the technology industry. The company has inherent advantages in the form of offering the latest technology trends, business management solutions, and accounting business frameworks. It is providing advanced technology aid for doing business, assistance for client management, payroll, and HR activities. The role of management solutions is integral to build its customer base (Fitzpatrick, Nguyen & Cayan, 2015). Through HR-based services, several new horizons are explored. The functions related to technology development, software, and different applications are the key strengths of the company.

Potential weaknesses of the company are its interconnectivity among staff and low collaboration. It is facing difficulties in collaborating among staff members and effectively serve customers with technical trends (Author, 2019). There is a need to improve customer management services by hiring more staff and focusing on potential outlets to expand its services. The improved cooperation and affectivity of the team in responding to queries about services and products will not only help the technology company but will also advance the growth of the company.

The Youvic technologies have several opportunities; for instance, due to business expansion, it can introduce the latest software and management solution, client perspectives, scheduling, and the latest innovation about HR management (Business, 2019). It can improve its position by engaging more service outlets and broadening the exposure of staff. Working close to HR management aspects and developing new integrated software applications are liable to generate potential customers in the future.

There are significant threats to the company, for instance, increased rivalry, and a high level of new entrants that are potentially working on different projects. The scopes of Technology companies become limited if it does not focus on new techniques, software, and management solutions. There is a need to implement project management solutions with efficacy to retain its customers and position in the market.

Blue Ocean Strategy

 

 A significant pursuit that can help to develop the low-cost techniques and functions for an established firm is the blue ocean strategy (Chang & Luo, 2010). For Youvic technologies, the role of the blue ocean strategy is significant because it will not only compete with its rivals but also focus on low-cost methods for its services. This strategy is workable in case of capturing the uncontested market and reducing the competition. In technical frameworks, the scope of the competition is high, based on the latest demand and trends. It will help Youvic company to get the appropriate opportunity for marketing and make the competition less relevant (Carton, 2017).

The blue ocean strategy is useful for technology companies because it will depend on the available data for ideas and services. This approach also focuses on the goals of the company and to serve the company integrally that it will act as the best service offering a place. By redrawing the boundaries of the industry will provide a suitable marketing scope. The HMBL accounting business is providing a wide variety of ease and real-time visibility. Under the blue ocean strategy, this facility will offer brand recognition and a potential solution to its clients (Carton, 2017). It is suitable to cater to business needs and tailored to keep accounts track and connect all the clients.

PESTEL Analysis

 

The PESTLE analysis is a comprehensive framework of the macro environment of a company that identifies the potential climate of the industry. It constitutes political, economic, social, technical, environmental, and legal factors.

There is substantial scope for political factors in Youvic Technologies. It caters to business needs; serves different entities like private and public businesses; therefore, the cost framework and services offered by the company will fulfill political demands and best cooperation among various parties (Author, 2019). The full scope of its functioning is appropriate for the legislative framework in Canada.  The economic conditions for technical services and business management are open. It is rational for the company to work smoothly in an economically viable environment (Business, 2019). The business management solution, software, and application for HR imply a better economic framework under improved demand and supply mechanism.

Socially integrated platforms, business companies, and entities depend on technical-oriented functions, just like Youvic Technologies. The demographic segments in Canada provide value for the technical businesses, connectivity, freedom approach, and flexibility. Social networking is increasing due to an increase in the latest methods of connectivity. Technology savvy people are growing, and increased demand for management solutions is suitable for Youvic technologies. Different financial companies need assistance related to business management, and socially applicable software is helpful for them.

The technological factors such as new technology, implementation, and use of the internet and management solution framework are some critical aspects of the company. The public technical assistance in Canada is helpful for people to grow their businesses. The scope of accounting business under the technical framework is essential to discuss. Ecological factors that the company should focus on are a green business, ethical responsibility framework, and corporate responsibility (Chang & Luo, 2010). The environmental factors like natural calamities and disasters also matter for a company to implement its setup.  The legal framework for the Youvic technologies is different such as taxes, labor unions, government regulations, and special software licenses. Focusing on these factors will serve the company better and streamline its growth. The startup of professional business in any new country will consider these factors to get smooth functioning and better productivity. For the Youvic Technologies, it is significant to identify the potential operating environment in a place where there is increased usage of internet, better connectivity, and use of business solutions (Fitzpatrick, Nguyen & Cayan, 2015).   This will help developing accounting business and offer better and productive options for business customers.

Conclusion

 

The strategy for the technical business undertakes various aspects. It focuses on significant parts, functions, and processes of the company that can help develop new potential clients. Through business management solutions, software applications, and accounting business perspectives, in Canada, Youvic Technologies will perform significant functions. By focusing on business and corporate strategy, the company can bring long term growth rate. On accounting perspectives, it has a scope for the next ten years to flourish and use marketing activities based on PESTLE analysis. 

 

References

 

Author, A. (2019). HMBL Accounting Business by Youvic Technologies Inc. Retrieved 23 October 2019, from https://appadvice.com/app/hmbl-accounting-business/1473248855

Business, A. (2019). HMBL Accounting Business | YouvicTech. Retrieved 23 October 2019, from https://youvictech.ca/HMBLAccountingBusiness

Carton, G. (2017). A Blue Ocean Strategy for “Blue Ocean Strategy”: on Performativity of Strategic Management. Academy Of Management Proceedings, 2017(1), 17635. doi: 10.5465/ambpp.2017.17635abstract

Chang, H., & Luo, C. (2010). Analyze innovation strategy of technical‐intensive industries: scenario analysis viewpoint. Business Strategy Series, 11(5), 302-307. doi: 10.1108/17515631011080713

Fitzpatrick, B., Nguyen, Q., & Cayan, Z. (2015). An Upgrade To Competitive Corporate Analysis: Creation Of A Personal Finance Platform To Strengthen Porters Five Competitive Forces Model In Utilizing. Journal Of Business & Economics Research (JBER), 13(1), 54. doi: 10.19030/jber.v13i1.9081

 

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