Mergers and Acquisitions in Australia

A merger is one of the forms of business combination. A merger is the joining together of two or more companies for a common goal (Schencke, 2007). It can be in the form of vertical integration, Horizontal integration or diversification. Consider the case of manufactured food (bread) company: we have the flour  Ã‚   company, the bakery and a butter company.If the bread company acquires the flour company that would be vertical integration; this may be more comprehensive and risky . The management is highly involved because of the procedures involved and consequences too. This is a backward integration because it will be merging with the supply source. It might lead to restricted supply of raw materials hence inflexibility.If the bread company starts producing cakes that would be horizontal integration; this might be considered necessary in order to have a more product line whereby their consumers will now be able to enjoy more quality products from the same company. This will enable a particular bread company deal with its competitors because a variety of commodities will be available to them.The company will also command a more market share because most of its products will dominate the market. High market share determines profitability because the Total sales figure has a factor of units and sales are directly proportional to the profit margin. The particular bread company therefore becomes a market leader and enjoys all the economies of scale. High volumes can be produced at low costs and therefore the company becomes a market leader in the industry. The company can now have efficient pricing policies for the different commodities that it is offering in the market.If the bread company starts producing butter to match with its quality of bread then that would be market diversification; This results in increased market capitalization which is very healthy for a company in the industry. This kind of expanded production line may be risky and uncertain because v ery little is known about that particular product line. This may call for comprehensive research, which might be costly for the holding company. Demand and supply factors of that particular company need to be understood and analyzed keenly to determine the future of such an operation and how relevant it might because this is a complimentary commodity.Merger or an acquisition leads to lack of competitiveness and would have a high Herfindahl index. Industry concentration is also affected. In the case study above, one has reduced players in the industry due to mergers. Therefore we find that there’s no competition due to acquiring of a supply chain, producing related commodities or even engaging in the production of complementary goods. Market diversification results to company being able to control its prices for the different products it has with changing the profit.This shows that market forces do not determine prices and completion is at different levels. Some companies also become market leaders and may decide to lower its prices in the market at the expense of other companies. The fact that a company can acquire a supply chain is harmful because this may limit resources/raw materials to other companies with in the industry or supply at inflated cost. A prices control board should therefore establish to deal with this. Some companies may be forced to quit production and this may lead to monopolies in the industry, which may not be healthy.Motives for mergers include:Synergy; The expected synergy determines the purchase price for the acquiree. Synergy is the combined power of a group of companies when they are working together which is greater than the total power achieved by each working separately. Synergy can be operating synergy or financial synergy. Operating synergy includes economies of scale and economies of scope, by merging firms are able to receive huge discounts due to high volumes of production and this results in high profits, this means high price of shares and high market capitalization.Owning of supply channels means constant supply of raw materials without delays and control over the prices. This indicates low cost of production and increased profits. Being a market leader may result into a monopoly and this means enormous profits. Discounts can be offered to customers and result in high sales due to high volumes. All these work to the advantage of the acquirer. More shareholders due to improved earnings per share lead to more funding and adequate cash flows are available. Synergy can’t be compared to international expansion, which is slow. Merging is with firms already operating and with the required recourses so no lag periods experienced which might hinder the growth and development of a company, which negates the image to the shareholders and other interested parties.There might be need to expand to another geographical location. The acquiring firm will look for firms in operation at that location to merge with in order to fasten the catch period which normally due to lack of knowledge of business operations at that particular area and business smartness required. Horizontal integration in this case will be necessary. This might be after researching and identifying a possible business location. Suppliers will also be considered in this case. Financial synergy is however more questionable due to the uncertainty of business operations.Merging may be for the need to grow and develop. This can be internal or external.. Internal growth can be slow and uncertain because the company doesn’t have past business experience on a particular field. Outside expansion leads to diversification and market capitalization is improved. Growth of a company in the industry tracts more shareholders to the company and therefore funds for financing business operations are adequate. This leads to market leading and high volumes are sold bringing about high profit margin.Merging may be due to the p ride of the management team of the bidder company. The management may want to associated with all players in the country that are performing better. This will be a way for the management to market itself and therefore the same directors can be restored at the next annual general meeting. The management might have been watching the firm to be acquired and may have an idea of corrections to be made in order to increase perfection.They may w ant to acquire a firm that is just about due to liquidity issues, restore its operations and hence cash flows. They therefore be associated with the recovery of the dieing company and hence improve their employment opportunities with other companies. They may also look for promotions and being part of the recovery team may a good ground for such. They management may also want to part of the management of a market leader in the company and this calls for all necessary strategies possible including mergers and acquisitions(Schlossberg, 2007).Horizont al integration whereby a company starts producing related products leads to increased market share due to increased sales out of the high volumes of sales. This may result in very radical transactions, which might be risky. In business yield comes together with risk taking. Vertical integration in this case is considered most because its more risky but the gains might be more than the costs. Diversification into another line of production may be a motivating factor.The company may have identified another variety of related products, which might be profitable and may want to be part of that industry. Therefore the best way to go may be the merger in order to pump in capital into the other company, which is facing liquidity issues, and hence have a major share of the profits. Horizontal integration is always considered best because it involves dealing with the same kind of business, which has a better track record (Schlossberg, 2007).In Australia the following steps are necessary in m erging:Research should be first done to determine possible candidate. This needs the help of experts in the research work so that all necessary data and information is available to the management of the acquiring firmThe motive to merge should be first understood and the angle to be taken determined. Synergy should be well understood and illustrated.Evaluation should be done on the acquiring firm. The firms’ business strategy should be understood in order to determine the degree of compatibility and the other aspects of business mergers. This also helps in justifying the acquisition.Immediately after the merger, Profits go down first due to the expenses incurred in research and implementation costs. Diversifications are normally expensive and gains can’t be realized immediately. Profits are normally derived at by; Sales-cost of goods sold –expenses. The cost of goods sold=opening stock + purchases-closing stock. High cost of goods immediately after the merger ca n be due to high opening stock, high purchases and low closing stock. This will therefore result in low profits.In the long run profits are supposed to increase due to;Economies of scale and scope, due to merging with supply and distribution channels, discounts will be given to the entity and this results to low operational costs. Large volume sales enable customers to get discounts and volume of sales is increased. This other unnecessary costs are avoided leading to maximization of profits.Diversification to another line of business; this means exploring of virgin grounds and operation benefits are taken advantage of. This means that sources of gained are increased and the total volume of profits is increased.Increase in market value; High market value is due to being a market leader and commands a greater share of the demand in the market. High volumes are sold and the sales figure is high. Sales are considered to be directly related to the profit volumes.The risk taken at first y ields benefits; Diversification may be risky therefore benefits may not be realized fast. Benefits can only after recovery and it will be to the enforceable future.Geographical advantages are realized. The merged entity need time to get used to the business environment and therefore gains take time to be realized (Bruner, 2007).Merging is better than internal expansion. Merging may be a little bit fast to pick up because acquired firms have existing resources and personnel. This reduces time spend in staff professional development and growth.A troubled company needs to merge as near bankruptcy workout situation. This helps in maximizing the value of the company where such companies are considered to be damaged goods. Shareholders, Board of Directors and the managers leave for firms specializing in a workout that is salvaging the value that was assumed to be left in them.Liquidations can’t be left behind. The use of highly leveraged transactions (HLT) expanded the profile of f inancially troubled companies (Schlossberg, 2007). Financially troubled companies are businesses that were leveraged and unable meet their debt service burden but still separate acceptable or even optimal operating cash flows given their internal resources and market opportunities.PublicityA demerger is expected when competitors start taking advantage of slow growth and development and they may take advantage of opportunities created by merged entity. This is because the competitors have been having existing offices, management and resources supply. Diseconomies of scale and scope start occurring and therefore the operations may not be profitable and a demerger may be considered. The company may at times consider internal expansion to be worth while and may start investing in such hence the merger becomes irrelevant (Bruner, 2007).The expansion to another geographical areas may prove to be unprofitable and thus the firm may consider demerging and concentrating in its primary busines s operations. The external growth may start being costly and the acquiring company decides to sale its share of the acquired company. The pride of management may be at some cost to the company and the shareholders may decide to demerge. The diversification to another line of production may prove to be extremely costly to the company and a demerger may be asked for so that focus can be on the basic profit gaining activity/business.Both the acquirer and acquiree benefit. The acquiree is funded and its liquidity position is revised and merging is normally a workout for near bankruptcy situations (Gaughan, 2004). The acquirer is also in a position to enjoy; economies of scale and production, advantage of geographical expansion, this is an external growth that cant be compared to the slow internal growth with uncertainties, management pride is improved, market share is improved and they move into a business that they have clear track record. ACCC is an independent authority of the Govern ment of Australia established in 1995 with the amalgamation of the Australian Trade practices Commission and the Prices Surveillance authority to administer the trade practices Act 1974 (Cth)It’s meant to protect Consumer rights, business rights and obligations, perform Industry regulation and price monitoring and prevent illegal anti Competitive behavior (Schencke, 2007).The more of the following criteria a troubled company meets the more marketable it will be to the acquiring company:Is it a manufacturing rather than a distribution operation. Acquiring a manufacturing company will be horizontal integration and will be more profitable to the entity (Robinson, Tranter, Loughran 2007). This kind of synergy results to taking advantages of economies of scale, diversifying into other lines of production, increased market value, expanding to another geographical location and this will be better than internal expansion. Merging with a distribution company will be a vertical forward integration and may be very risky with uncertainties due to lack of a clean track record.Fills a unique product niche rather than produces a commodity item.Has a well-known brand or trademark that is undamaged by its current situation.Sustains a strong defensible market share. A company with a strong market share means that its quite stable and will be profitable to merge with. This will also improve the whole entity’s image and then the share price improves in the stock market.Has a well-maintained machinery and equipment. These are tools of production and this indicates indefinite operation of the company into the future. Such a company is not risky to deal with and may result into huge future losses. Hence the idea of merging may not be necessary.Ernest & Young (2006) pg20In conclusion, mergers and acquisitions should be considered in the company’s research and development. It involves a lot of research that collects data and information in order to evaluate worth candidates for merging. The long-term objectives should be increasing the company’s market share within the industry, making use of economies of scale available and being a market leader.Mergers resulting in long term losses should be avoided because this won’t lead to growth and development of the company. Mergers also determine the structure of an industry because they lead to a decreased number of market players in the industry. This leads to high concentration and competition is reduced. Monopolies may be formed and this may not be healthy to the industry as a whole. Price control bodies need to be in place to control the dominance of the market by a particular holding company.References:Ernest & Young, Ernest & Young LLP. (2007). Back to Basic Techniques onMergers & Acquisitions (Pg 19-23). Wiley PublicationsGuy M. Robinson, Pal. J. Tranter, Robert Loughran. (2007). Economy Society &Environment. Oxford University PressHans Schencke. (2007). Accounting for Mergers & Acquisitions in Europe. IBFDMichael A. Hit, Jeffrey J. Harrison. R Duane. (2007). A Guide to creating value forStakeholders. Oxford University PressPatrick A. Gaughan. (2004). Merger, Acquisitions and Corporate Restructuring.Wiley PublicationsRobert F.Bruner. (2007). Applied Mergers and Acquisitions. Wiley PublicationsRobert S. Schlossberg. (2007). Understanding the Antitrust Issues. American BarAssociation.

Buying into a Poor Curriculum

Buying into a Poor Curriculum Free Online Research Papers It is a common rationale that because children are the future, the welfare and education of our children should be and will be of the utmost importance. Yet, since the birth of our country, there has never been a consensus on any aspect of our public education system. Our constitution makes no mention of education, except for the 10th amendment, which relegates power to the states to govern their own respective system.(Pulliam, Van Patten pg. 122) Unfortunately, federal policies continue to be enacted which, despite good intentions, often negatively affect public education at all levels. The latest legislation to do so is the â€Å"No Child Left Behind† Act, which enacts theories of standards-based education reform. On the surface, the use of standardized testing may seem to be the solution to ensure quality education to all children. But shortcomings have been identified and now debate is as fervent as ever. The â€Å"No Child Left Behind† Act of 2002 (NCLB) is basically a reauthorization of a â€Å"number of federal programs aiming to improve the performance of U.S. primary and secondary schools by increasing the standards of accountability for states, school districts and schools, as well as providing parents more flexibility in choosing which schools their children will attend.† I believe standardized testing is the chief problem and agree with James Ryan of New York University that the NCLB is â€Å"at war with itself.†(Ryan 2004) Not only has testing proven to worsen the problems of racial equality, teacher shortages, it also has lowered actual lowered academic achievement by giving incentive for a devastating curriculum in the classroom. Actually, testing is not the real problem. The real problem, perpetuated by the NCLB, is the repercussions of not passing the test. The real problem is money. Every individual school board in the country is concerned with funding and its own finances. In order to exist, most are dependent upon federal aid. The NCLB incorporates penalties for showing a lack in proficiency by requiring schools to incur the cost of remediating themselves. If these efforts still due not improve scores, parents may opt to request outside tutoring or to move their child to another school, with the school board picking up the tab for either. This has a snow –balling effect. The schools now have fewer students and are now entitled to less federal per-student aid as well as this transportation expense. In an effort to avoid this, schools have taken a preventative approach. First, the term â€Å"proficient† is very vague and specifically delegated to each state to determine acceptable standards of proficiency by implementing their own tests. Consequently, states are manipulating the test results (South Carolina DOE 2003) by lowering academic expectations of each grade level. Second, elementary school curriculums across the country have been narrowed and have evolved into an elaborate practice test. Ultimately, students are losing out on a well rounded education with cutbacks in physical education, art and music.(Seigel 2007) School officials are under tremendous pressure and held accountable for their school’s performance. There are many critics of the NCLB, all with varying complaints. There is an overwhelming agreement that changes need to be made to the legislation before is reauthorized this year. Amendments suggested all revolve around how to obtain an objective assessment of â€Å"Adequate Yearly Progress†(AYP). Some want to amend the testing and others want to amend the results to not include all students. The latter propose that students who have lived in the country for less than three years and students who have been identified as having a learning disability need not be included.(Lewis 2005) Others propose that there should be no federal legislation at all regarding education. One Education Professor wrote, â€Å"The obvious solution is to reverse roles. Washington should supply unbiased information about student academic performance to states and local districts. It should then be the responsibility of states and local districts to improve performance.†(Ravitch 2007) Th e only real way to fix this legislation, again, boils down to money. In order for the intentions of the legislation to be fully realized, it needs to be fully funded at the federal level. (Ferrandino and Tirozzi 2004) That is not to say that Congress should replace local authority, but only it should provide unconditional aid. Schools would then reimplement a full curriculum. Teachers and other school officials would then return to the business of teaching and not operate in a state of fear. References: 1. Pullman, J.D. Patten, J.V. (2007) History of Education in America. New Jersey: Prentice Hall 2. Ferrandino, V.L. and Tirozzi G. N. (2004) Improving NCLB. Principals’ Perspective. Retrieved October 21, 2007, from naesp.org/ContentLoad.do?contentId=1215. 3. Siegel, D. (2007) High-Stakes Testing and the Status of Physical Education, Journal of Physical Education, Recreation Dance, 78(8), pg. 10. Retrieved October 21, 2007, from Proquest Direct database. 4. Lewis, A. C. (2005) Fixing NCLB Demands, The Education Digest,70(7)pg.69. Retrieved October 21, 2007, from Proquest Direct database. 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Contractual Advice Essay Example | Topics and Well Written Essays - 1500 words

Contractual Advice - Essay Example gal standpoint, the architect is simply the administrator of the contract on behalf of the employer and may not modify or supplement the terms of the contract3, neither does he have the power to create new liabilities and obligations in the parties. Consequently, the architect is considered your employee and delays resulting from his/her side may be attributed to you rather than to the contractor. In this instance, since it is the architect who has required fresh obligations on the part of the contractor which may not have been a part of the original contract; therefore this particular extension of time of two days may have to be allowed. Further, this extension of time will also allow for financial recovery by the contractor. The contractor may be entitled to claim additional costs or loss and expense, because architect caused delays are the responsibility of the employer. I would thus conclude that the delay of time of 2 days caused by the architect requirements will have to be allowed and the contractor may also be entitled to loss and expense. Another cause of delay to the work on the ground floor is the freezing temperatures for three days. Under the JCT contract, it is only unusual or non typical weather conditions that can be grounds for extension of time. A contractor is expected to allow within the contract, some allowance for adverse weather conditions.4 Since the work was taken up in the months of January and February, where adverse weather conditions such as freezing temperatures have been known to occur, some provision should have been made by the contractor in the original contract. The weather records for the past five years or so must be compared to the weather patterns subsisting this year near this particular site and the contractor may be entitled to this extension only if the freezing temperatures are unusual or non typical, as compared to the weather records of previous years. I would also like to clarify that even if the extension is

Classification Essay Example | Topics and Well Written Essays - 500 words

Classification - Essay Example Offline marketing on the other hand, involves use of media such as television, radio and newspapers for advertising. These are the conventional forms of marketing which companies have been successfully using over the years. Volkswagen has effectively made used of newspaper audio advertisements in emerging economies in its marketing campaigns. Another way of classifying marketing is through who finds whom. When the companies make efforts to reach their potential customers, it is called as outbound marketing. In this type, organizations make efforts to market their products even if customers are not searching for them or just don’t need them. Marketers use tools such as billboards, newsletters, banners and telephone calls to approach the customers. The opposite of outbound marketing is inbound marketing. In this type of marketing, the customers start with a need of a product or service and then look out for companies who can fulfill their requirement. When customers look out for a product or service on a search engine such as Yahoo or Google, the search engine optimization helps in inbound marketing. Similarly, when a person looks to buy a home, he is using this type of marketing. Another way to classify marketing is through the use of marketing methods. When marketers need to send message directly to customers without use of middlemen or third parties, they make use of direct marketing. In this marketing, they make use of tools such as mail marketing, telemarketing and direct selling. In this marketing, the marketer directly faces the customer and hence can easily interpret the success or failure of his product or service and can work on its improvement with other organizational members. Indirect marketing comprises of all other methods which are not direct. Thus, when a company uses Television, Newspapers, advertising agencies and Internet, it is making use of indirect