joint ventures and mergers presentation - unitedworld school of business

7/28/2019 Joint Ventures and Mergers Presentation - Unitedworld School of Business

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When one company takes over another and

clearly established itself as the new owner, the

purchase is called an acquisition.


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Gain market share.

Economics of scale.

Enter new market. Acquire technology.

Utilization of surplus funds.

Managerial effectiveness.

Strategic objectives.

Horizontal integration.


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Location: Dearborn, Michigan

Founded: 1903 by Henry Ford

Competitors: General Motors, Toyota

Brand names: Lincoln, Mercury, Volvo,

Mazda, Jaguar and Land Rover.

CEO: Alan Mulally.


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TATA GROUP150 YEAR OLD

Previously Tata Engineering and Locomotive

Company, Telco

Tata Motorss break-even point for capacity

utilization is one of the best in the industry

worldwide

listed on the New York Stock Exchange in 2004


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July 2007- Announcement from Ford that it plans to sell

Land Rover and Jaguar.

August 2- Indias Tata Motors and M&M arrive as topbidders ($ 2.05b & $ 1.9b)

Jan 2008Ford announces Tata as the preferred bidders

March 2008 - Ford agreed to sell their Jaguar Land Rover

operations to Tata Motors.

June 2008The acquisition is complete.


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Long term strategic commitment to automotive sector.

Opportunity to participate in two fast growing auto segments.

Increased business diversity across markets and product.

Jaguar offers a range of performance/luxury vehicles to

broaden the brand portfolio.


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Graph of Jaguar and Land Rover


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Group : Vodafone P/C HEADQUATERS: Berkshire, UK Industry : mobile telecommunication Presence : equity involvement in 25 countries

and network partner in 42 countries Strength : 2,30,000 employee

Revenue : 35478 million pounds (14.1%growth) Net income : 10047 million pounds (10.1%

growth)


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Background : Hutchisson Essar ltd.

Founded in 1992

Circle :16+ license for 6 circles Revenue : US $1282 million

EBITDA :US $415 million

Operating profit : US $315 million


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Telecom business in Japan and Belgium werenot performing up to the world market.

Market including the US market were maturing

and were not growing in a big way. Stiff competition among almost all major playerin industry, global telecom giants like BT, O2 ofUK version from US, maxis telecommunicationof MalaysiaAs a example:- reliance and bharti airtel fromindia


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Vodafone became no.1 for tele communicationin india (source: business standard, edition 16thapril, 2010).

India is the worlds 2nd most populated country,with over 1.1 billion people.

India benefits from strong economicfundamentals with exceeded real GDP growth in

high single digits. Increases Vodafone presence in higher growth

emerging markets.


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1. Founder- J.N. Tata2. 102 yrs. In Steel Market

3. Worlds 56th

largest4. Capacity of 30 million5. Presence in 26 nations


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1. Worlds 6th largest2. 2nd in Europe & 1st in U.K.

3. 31st

rank in fortune list4. Presence in 50 nations5. 40000 people worldwide


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Tata- Chorus deal US$ 12.2 billion Equity contribution from Tata Steel US$

3.88 billion.


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Augmented its crude steel capacity to 27million tonnes per annum

The combined entity forms the 6th

largeststeel company Capacity to produce 56 million tonnes per

annum by 2015.


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A joint venture is an entity formed betweentwo organizations to undertake economic

activities together. Both of them contributeequity and then they agree to share therevenues, expenses and control of the newlyformed enterprise.


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Both partners should appreciate the need forthe joint venture.

The partners should clearly agree on the way

the joint venture will be managed. It is important that both partners work

towards a system based on trust and

transparency. Need to have a clear long term goal and set

the terms and conditions of the venture.


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In 2003, Hyundai has an investment of $250

million in China in conjunction with BeijingAutomotive to produce 100,000 units per year.

Hyundai projects and plans production to be

200,000 units per year by 2005.


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Established in 1967, Hyundai is presentlySouth Koreas #1 carmaker, manufacturingdozens of models of cars, vans, and minivans.

Throughout the past two decades, Hyundaiintroduced various models: Pony, Excel,Sonata, and Accent.

In 1990, Hyundai introduced its own enginedesign, the Alpha. Two years later, itintroduced its second-generation engine, theBeta.


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Beijing Automotive Group (officially BeijingAutomotive Industry Ltd.) is a holdingcompany of several Chinese automobile andmachine manufacturers such as BeijingAutomobile Works Co Ltd. etc. It is commonlyknown as Beiqi.

2011 production of 1,526,300 whole vehiclesmade Beiqi the fifth largest, in terms of unitsmanufactured, vehicle-maker in China thatyear.


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Hyundai agreed to pay $250 million in a jointventure with Beijing Automotive.

Starting at 1,00,000 units in 2003, plans to expandto 200,000 units by 2005.

If the production is a success, Hyundai will invest

$1.1 billion to increase productivity to 5,00,000 by

2012.


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Production :

Starting at 1,00,000 units, production increased by

50,000 till 2005, ultimately producing 2,00,000units.

From 2005 to 2011, production increased 60,000

units per year.


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In order to be successful :

Must form synergies on all levels with China and

Beijing Automotive. Hyundai must use their experience in investing in 4

other plants in China.

Take advantage of the first mover opportunity in

Chinas de-regulated auto market.


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Great opportunity for Hyundais business

development.

Tremendous global growth potential.

Bottom line : There is lots of money to be

discovered and made in the emerging

markets of Korea and China ! ! !


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Maruti Suzuki India Limited , commonly referred to as Maruti, is a subsidiarycompany of Japanese automaker Suzuki Motor Corporation. It has a market share of44.9% of the Indian passenger car market as of March 2011.

Maruti Suzuki offers a complete range of cars from entry level Maruti 800 and Alto, tohatchback Ritz, A-Star, Swift, Wagon-R, Estillo and sedans DZire, SX4, in the 'C'

segment Maruti Eeco, multi purpose vehicle Ertiga and sports utility vehicle GrandVitara.

It is the market leader in India, and on 17 September 2007, Maruti Udyog Limited wasrenamed as Maruti Suzuki India Limited. The company's headquarters are on NelsonMandella Rd, New Delhi.In February 2012, the company sold its 10th million vehicle inIndia.

Maruti Suzuki is India and Nepal's leading automobile manufacturer and the marketleader in the car segment, both in terms of volume of vehicles sold and revenue earned.Until recently, 18.28% of the company was owned by the Indian government, and54.2% by Suzuki of Japan.

Maruti Suzuki will be introducing new 800cc model by Diwali in 2012.The model issupposed to be fuel efficient, hence more expensive.


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For Maruti :-

Suzuki Motor Corporation,the parent company,is a global

leader in mini and compact cars for three decades.

Suzukis technical superiority.

Lightweight engine that is clean and fuel efficient.

Near 75000 people are employed directly by Maruti Suzuki

and its partners.


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For Suzuki:

Large Indian market. Monopolistic Trade in the Indian automobile

market.

Availability of resources.


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Type:- Public company

Founded:- 1975

Headquarters:- Delhi, India

Services:- Electricity generation & distributionof natural gas exploration.

Revenue:- Rs.620.53 billion (US$11.23 billion)

(2011-2012)

Net income:- Rs.92.23 billion (US$1.67 billion)(2011-12).

Employees:- 26,000 (2012)


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Coal India feeds 82 out of 86 coal based thermalpower plants in India.

Joint venture has been signed between NTPC &

Coal India Ltd. For development of Brahmini &Chichro coal mine with 50:50 equityparticipation.

NTPC is ramping up its generation capacity & isexpected to increase its market share from

about 19% today to around 25% by 2017. During11th plan your company has alreadycommissioned 3240 mega watt capacity.


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INDEPENDENT ORGANIZATIONS HAVINGA CRITICAL BUSINESS DEAL.


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SA is a kind of partnership between two

entities in which they take advantage of each

others core strengths like proprietaryprocesses, intellectual capital, research,

market penetration, manufacturing and/or

distribution capabilities etc. They share their

core strengths with each other. They will havean open door relationship with another entity

and will mostly retain control.


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Boeing is the worlds leading aerospace companyand the largest manufacturer of commercialjetliners and military. It was established by

William Boeing in 1916 in Seattle, Washington.Its international headquarters now has beenlocated in Chicago, Illinois. The major productsare commercial airliners, military aircrafts,munitions, space systems and computer services.

With respect to its commercial airplanes, thiscompany has launched into the world marketmodels like 737, 747, 767, 777, and the latest oneis 787 Dream-liner (Commercial Airplanes).


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The European Aeronautic Defense and Space Company EADS

N.V. (EADS) is the largest European aerospace corporation

and was founded on July 10, 2000 from the merger among

Aerospatiale-Marta of France, Construcciones Aeronautic as

SA (CASA) of Spain and DaimlerChrysler Aerospace AG(DASA) of Germany. This company mainly focuses on

developing and producing the civil and military aircrafts,

missiles, space rockets, satellites and related systems. Airbus

is one of its important divisions. This branch has penetratedinto the global market the five big aircraft families including

A320 family , A300/A310 family, A330/A340 family, A350

family and the newest one-A380 (Airbus).


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In order to take advantage of the other nationscomparative advantages in technology and toachieve the economies of scale and to reduce

excess capability, Airbus and Boeing apply thestrategic alliance including joint R&D effortsand joint production of a particular component. Itmeans they did not produce all the components oftheir planes. Instead, they share their jobs to their

partners or concentrate on the activities in low-cost or high skills countries to increase theirproductivity and reduce costs.


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Inadequate pre-planning for the strategic alliance. The desired technology never developed. Agreements could not be reached on alternative

approaches to solve the basic objectives of the

strategic alliance. People with expertise in one company refused to

share knowledge with their counter-parts in the

strategic alliance.

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To develop communications andinfrastructure solutions that combine Cisco's

industry-leading network solutions andproducts with Wipro's infrastructure andmanaged services expertise.


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WIPRO :-

Azim Premji,

chairman, has led

WIPRO since 1966.Today it is a US$5

billion revenue IT,

BPO and R&D

services organization

with a presence in

over 50 countries.

CISCO :-

Leonard Bosak and

Sandy Lerner founded

CISCO in 1984. Todayit has a revenue of

US$ 46.06 billion on

the networking

equipment.


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To provide innovative solutions that deliverbusiness value to customers.

To create industry specific solutions forsectors such as banking, finance, retail,energy & utilities and healthcare & lifesciences.

To become the leading 360 degree strategicpartner.


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To attain technological leadership. To create differentiated joint offerings. To adopt next generation engagement

modelswhich enable customer's business outcomes.


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Developing an integrated value proposition. Board level governance to ensure strategic

organizational alignment. Market collaboration and GTM strategies. Joint cloud strategy. Scalable business architecture.


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Type of site:- Social networking service. Users:- 955 million(active June 2012) Owner:- Facebook, Inc. Created by:- Mark Zuckerberg

Eduardo SaverinAndrew McCollum

Dustin MoskovitzChris Hughes.

Launched:- February 4, 2004

Revenue :- $3.71 billion (2011)


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Industry:- Computer softwareOnline servicesVideo games

Founded:- Albuquerque, New Mexico, UnitedStates (April 4, 1975) Founder(s):- Bill Gates, Paul Allen Headquarters:- Microsoft Redmond

Campus, Redmond, Washington, U.S. Area served:- Worldwide Revenue:- US$ 73.72 billion (2012) Employees:- 94,000 (2012)


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Two companies expand advertising deal to coverinternational markets, Microsoft to take equitystake in Facebook. Microsoft took a US$ 240

million equity stake in Facebook. At the launchof Facebook, it was not used worldwide but insome places with the help of Microsoft he didthe advertisement & as a result his users

increased. Facebooks users increased from 50million to 750

million.


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July 2012, the countries with the most Facebookusers were:

United States with 155.6 million members

Brazil with 52.8 million members India with 51.0 million members Indonesia with 44.0 million members Mexico with 36.2 million members

All of the above total 309 million members orabout 38.6 percent of Facebook's 900 millionworldwide members.


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joint ventures and mergers presentation - unitedworld school of business

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