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Manu's Conglomerate Mergers

Date post: 28-Nov-2014
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Conglomerate mergers and Acquisitions are explained with examples
15
International Strategic management Conglomerate Mergers Presented By K. Manoj Kumar (Roll No: 41)
Transcript
Page 1: Manu's   Conglomerate Mergers

International Strategic managementConglomerate Mergers

Presented By

K. Manoj Kumar (Roll No: 41)

Page 2: Manu's   Conglomerate Mergers

What is Conglomerate

Merger..?• A conglomerate merger is a type of merger

whereby the two companies that merge with each other are involved in different sorts of businesses. The importance of the conglomerate mergers lies in the fact that they help the merging companies to be better than before.

• The term conglomerate mergers also implies that the two companies that are merging do not even have the same customer base as they are in totally different businesses.

Definition:

Page 3: Manu's   Conglomerate Mergers

Types

Pure conglomerate merger The pure conglomerate merger is one where

the merging companies are doing businesses that are totally unrelated to each other

Mixed conglomerate mergerThe mixed conglomerate mergers are ones where

the companies that are merging with each other are doing so with the main purpose of gaining access to a wider market and client base or for expanding the range of products and services that are being provided by them

Page 4: Manu's   Conglomerate Mergers

Conglomerate Mergers are Sub-dividedInto 2 types

• These conglomerates provide a flow of funds to every segment of their operations, exercise control and are the ultimate financial risk takers. They also:– Reduce risk– Improve the quality of general and functional

managerial performance– Provide effective competitive process.

Financial Conglomerates

Page 5: Manu's   Conglomerate Mergers

Conglomerate Mergers are Sub-dividedInto 2 types

Managerial conglomerates provide managerial counsel and interaction on decisions thereby, increasing potential for improving performance. When two firms of unequal managerial competence combine, the performance of the combined firm will be greater than the sum of equal parts that provide large economic benefits

Managerial Conglomerates

Page 6: Manu's   Conglomerate Mergers

ReasonsFor

Conglomerate merger

To Increase the market share

To gain the Technological advantage

To overcome the trade barriers

To Increase their product line

To diversify and distribute their products to wide range of customers

To improve their capabilities

To reduce their level of exposure to risks

Page 7: Manu's   Conglomerate Mergers

MeritsDemerits

Diversification

Customers

Synergy

Efficiency

Size

Homogenization

Culture

Integration

Page 8: Manu's   Conglomerate Mergers

Example of Conglomerate

Mergers

AOL & Time Warner

L&T and Voltas Ltd

Walt Disney Pictures and ABC Broadcasting company

Etc..

Examples:

Page 9: Manu's   Conglomerate Mergers

Overview- AOL

First established in 1983 and in 1985 named Quantum Computer In 1991 the company renamed America Online In 1992 the company went public in NASDAQ Share price increased 50000% in two years Products: Online Portals, Web Browsers, Instant Messengers, Online Gaming, VideoFunctions Served: Marketing, Advertising, Entertainment, Communications, e-Commerce.Revenue Generation Mechanism: Advertising, Subscriptions.

Page 10: Manu's   Conglomerate Mergers

Time Warner Time Warner, is a result of merger in 1989 worth $14 Billion between Time,

Established in 1922 Main business is magazine publishing Followed by cable television in late 70s by

acquiring American televesion and communication company.

Warner Brothers Established in 1923Main Business is film productionFollowed by music production and cable

television operator business in the 60s

Page 11: Manu's   Conglomerate Mergers

AOLTime Warner

In Jan 2001, it had been announced the Merger between AOL and Time Warner

The Merger aimed to - “Create the world’s first fully integrated media and communication company for the internet century ”

AOL would own 55% of Time Warner. Stock combination value was $350bn.

AOL and Time Warner failed to implement their visions and communicate them

Page 12: Manu's   Conglomerate Mergers

SWOT Analysis

Page 13: Manu's   Conglomerate Mergers

AOLTime Warner

The merger was meant to create synergies between the two companies, taking advantage of the high growth rate of AOL, its large subscriber base, the high-speed cable lines owned by Time Warner and content provided by Time Warner.

However, the collapse of the dotcom bubble in 2000 and the economic slowdown in 2001 essentially derailed this plan; in 2002 the company reported a loss of $99 billion, which was, at the time, the greatest annual loss ever recorded.

Page 14: Manu's   Conglomerate Mergers

SonySony, which had previously been primarily in the consumer electronics manufacturing business, moved into the media industry through a series of conglomerate mergers.

In 1989, Sony acquired the American film and television production corporation Columbia Pictures Entertainment Inc., made up of Columbia Pictures and Tristar Pictures, from Coca-Cola for $3.4 billion.

In 1991, the newly acquired company was renamed Sony Pictures Entertainment and became Sony's key media division.

Make. Believe

Page 15: Manu's   Conglomerate Mergers

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