objectives you will be able to explain how businesses can reinvest their profits to grow and expand...
TRANSCRIPT
Objectives
• You will be able to explain how businesses can reinvest their profits to grow and expand
• You will be able recognize the reasons that cause firms to merge
• You will be able to identify two different types of mergers
Growth Through ReinvestmentGrowth Through Reinvestment• depreciation = non cash charge for the
general wear and tear on capital goods
• Cash flow = the bottom line, the real measure of profits– Can be allocated to investors (as dividend) or
reinvested in the business
Growth Through MergersGrowth Through Mergers
• Reasons for merging:1. grow faster — desire to be a bigger
business quickly
2. efficiency—only need one CEO, CFO etc.
3. need for new product lines ex: phone companies bought cable tv
companies to offer internet & phone as one package
4. Catch up w/ or eliminate rivals ex: --Royal Caribbean and Celebrity Cruise
merged to double in size to catch up to Carnival
--Staples tried to buy Office Depot but the gov’t said NO—it would reduce competition too much
Types of MergersTypes of Mergers
• Horizontal Horizontal --2 or more firms that produce the same kind of product
--ex. Exxon and MobileFord and VolvoDisney and MiramaxBell Atlantic & GTE = Verizon
• VerticalVertical--firms involved in different steps of
manufacturing join together
--Ex: oil company owns oil field--Ex: oil company owns oil field
refineries refineries
gas stationgas station
ConglomerateConglomerate
• A firm that has @ least 4 businesses
EX: PfizerEX: Pfizer
——makes prescription meds (Lipitor and Viagra), makes prescription meds (Lipitor and Viagra),
chewing gum (Trident, Dentyne), chewing gum (Trident, Dentyne),
razors (Schick), razors (Schick),
cough drops (Halls),cough drops (Halls),
breath mints (Clorets and Certs) breath mints (Clorets and Certs)
and antacids (Rolaids)and antacids (Rolaids)
Antiperspirants, Deodorants, & Colognes• Old Spice• Secret
Baby & Child Care• Charmin• Children’s Pepto• Clearblue Easy• Dreft• Luvs• Pampers• Pampers Kandoo• Pampers UnderJams• Puffs
Batteries• Duracell
Body Wash & Soap• Camay• Ivory• Olay• Old Spice• Safeguard• Zest
Beauty – Makeup/Skincare• CoverGirl• Max Factor• Braun• Gillette Complete Skincare• Olay
Dish Washing• Cascade• Dawn• Ivory• Joy
Feminine Care• Always• Tampax
Hair Care/ Color• Aussie• Clairol• Head & Shoulders• Herbal Essences• Infusium 23• Pantene
Health Care• Align• Braun• Clearblue Easy• Fibersure• Metamucil• Pepto-Bismol• Prilosec OTC• PUR• Vicks
Household Cleaners• Bounty• Febreze• Mr. Clean• Swiffer
Laundry & Fabric Care• Bounce• Cheer• Downy• Dreft• Era• Febreze• Gain• Ivory• Tide
Oral Care• Braun• Crest• Crest Glide• Crest Whitestrips• Fixodent• Gleem• Scope• Oral-B
Shaving• Braun• Gillette Fusion• Gillette M3Power• Gillette SatinCare• Gillette Venus
Snacks• Pringles
Baby CareProducts for the ones you love.JOHNSON’S®
JOHNSON’S® BEDTIME™
JOHNSON’S® HEAD-TO-TOE®FRAGRANCE FREE BABY LOTION
BABY.comDESITIN®
NATUSAN®
BABYCENTER®.com
PENATEN®
PRIM’AGE®
Skin & Hair CareCare for your skin and hair.BEBE®
CLEAN & CLEAR®
ROC®
VENDOME®
NEUTROGENA®
JOHNSON’S®
skin ID™ROGAINE®
AVEENO®
LUBRIDERM®
PIZ BUIN®
Wound Care & TropicalsCare for cuts, scrapes, rashes and itching.BAND-AID® Brand Adhesive Bandages
BENGAY®
SAVLON®
NEOSPORIN®
CORTAID®
DAKTARIN®
COMPEED®
TUCKS® Hemorrhoidal Ointment
Johnson & Johnson RED CROSS® Brand
Oral Health CareCare for your whole mouth.LISTERINE®
LISTERINE® WHITENING®
REMBRANDT®
Over-the-Counter MedicinesRelief for pain, colds, coughs, allergies and more.TYLENOL®
SUDAFED®
PEPCID®
NICORETTE®
MOTRIN®
IMODIUM®
DOLORMIN®
BENADRYL®
MYLANTA®
ZYRTEC® and ZYRTEC-D®12-HOUR®
NutritionalsProducts for a healthier diet.SPLENDA®
BENECOL®
LACTAID®
Vision CareProducts for vision care.VISINE®
ACUVUE® Brand Contact Lenses
MultinationalsMultinationals
• Corporation that has manufacturing or service operations in a # of different countries
Ex: GM, Ford, Nabisco, Mitsubishi, and Sony