Enron Corporation is an energy trading, natural gas, and electric utilities company located in Houston, Texas that had around 21,000 employees by mid-2001, before it went bankrupt. Its revenue in the year 2000 was more than $100 billion and named as “America’s most innovative companies for six consecutive years by Fortune. Enron was a company that was able to profit by providing the delivery of gas to utility companies and businesses at the fair value market price. Enron was listed as the seventh largest company in the United States and had the domination in the trading of communications, power, and weather securities. In 2002, the company used to be a member of the top 100 fortunes companies but later on after facing an accounting scandal, the company started to collapse. The scandal of Enron has been the largest corporate scandal in history, and has become emblematic of institutionalized and well-planned Continue reading
Business Strategies
What is Corporate Restructuring?
Corporate restructuring is one of the most complex and fundamental phenomena that management confronts. Each company has two opposite strategies from which to choose: to diversify or to refocus on its core business. While diversifying represents the expansion of corporate activities, refocus characterizes a concentration on its core business. From this perspective, corporate restructuring is reduction in diversification. Corporate restructuring is an episodic exercise, not related to investments in new plant and machinery which involve a significant change in one or more of the following Pattern of ownership and control Composition of liability Asset mix of the firm. It is a comprehensive process by which a company can consolidate its business operations and strengthen its position for achieving the desired objectives: Synergetic Competitive Successful It involves significant re-orientation, re-organization or realignment of assets and liabilities of the organization through conscious management action to improve future cash flow stream and to Continue reading
Concepts of Windows and Corridors for New Ventures
A window is time horizon during which opportunities exist before something else happens to eliminate them. A unique opportunity, once shown to produce wealth, will attract competitors, and if the business is easy to enter, the industry will become rapidly saturated. Bicycles did not become viable commercial products until people needed them as transportation. When that need occurred, hundreds of bicycle manufactures rushed to take advantage of the “window of opportunity.” Literally every successful product and service has had an optimal period of time for commercialization. Those introduced too early have usually failed, and those introduced too suffered from crowded markets. A brief period of opportunity opened for electronic spreadsheets when micro-computer hit the fast growth curve. Several entrepreneurs entered the market with good spreadsheet products. The first, VisiCalc was designed for the Apple PC. VisiCalc was quite successful, and later versions for Ms-Dos systems were even more successful. But Continue reading
Case Study: America Online (AOL) Merger with Time Warner (TWX)
A merger between America Online (AOL) and Time Warner (TWX) was announced on January 10, 2000. A new company named AOL Time Warner Incorporated was planned outcome of the merger. AOL shareholders would receive 1 new share for each AOL share, and TWX shareholders would receive 1.5 new shares for each TWX share. The merger captured the imagination of the public. AOL agreed to pay stock worth about $165 billion for Time Warner, a 70% premium. At the announcement, it was estimated that the market value of the combined companies would be $350 billion. As important as the large value of the deal was the combination of “new economy” and “old economy” companies. AOL’s stock prices boomed in the late 1990s as a hot Internet stock. Investors saw its potential for the significant future earnings growth based on its implementation of technology. Meanwhile, Time Warner (TWX) was a leader of Continue reading
Case Study: Dell Social Business Strategy
Dell Inc. is one of world’ largest multinational technology corporation that manufactures sells and supports personal computer and other computer related. Dell was founded as PC’s Limited in 1984 by Michael Dell, with a start-up money totaling $1,000, when he was attending the University of Texas. Michael Dell started his business with a simple concept that selling computer systems directly to customer would be the best way to understand their needs and give them the most computing solutions. The first product of the company is a self-designed computer called Turbo PC which had lower prices than major brands. PC’s Limited was not a first company to do this but was the first to succeed, grossing $73 million in its first year trading. The company changed its name to Dell Computer Corporation in 1988. They tried to sell computer through stores in 1990 but was unsuccessful and they returned to sell Continue reading
Bharti-Zain Deal: Is it a Good Deal?
Bharti Group: Bharti-Airtel Groups, with a customer base of more than 121million subscriber, form the largest cellular service provider of India. The Bharti group is now the world’s third-largest, single-country mobile operator and sixth-largest integrated telecom operator. The groups cater the mobile service in India under the brand name of Airtel and are headed by Sunil Bharti Mittal, He is termed as the Indian Telecom Mogul because of his largest telecom service provider in India. He is the chairman and the managing director of the Bharti Groups. The company has a turnover of US$ 12 billion. The businesses at Bharti Airtel have always been structured into three individual strategic business units (SBU’s) – Mobile Services, Airtel Telemedia Services & Enterprise Services. The Company has a market share of around 24.6% of the whole chunk of the mobile subscriber in India followed by Reliance Communication with 17.7% and Vodafone by 17.4%. Continue reading