In contemporary society, business organizations are taking on an increasingly complex and significant role. Some corporate giants control vast resources and possess enormous influence in human daily life. Especially when they enter areas such as health care and education, they can have a more deep relationship and powerful impact on society. However, the nature of business activities is to pursue the best interests and it could lead to some conflicts between different stakeholders. Thus, proper corporate governance needs to be used to ensure corporates continue operating on a normal track. In theory, corporate governance is a kind of system that could direct and control companies. The object of corporate governance is to make maximum profit for shareholders in the past. Unfortunately, it has been considered one of the most root causes of the governance crisis in recent times. On the one hand, excessive pursuit of share price performance has neglected Continue reading
Corporate Strategies
Hostile Takeovers – Definition, Strategies, Examples and Defenses
The replacement of poor management is a potential source of gain from acquisition/takeover. Changing technological and competitive factors may lead to a need for corporate restructuring. If incumbent management is unable to adapt, then a hostile takeover is one method for accomplishing change. The primary reasons for a hostile takeovers can be the analysis that the target company is undervalued or has few strategic assets that directly complement the business of the acquiring company. The synergy of the resources can boost the growth trajectory of the acquiring company and can also increase its overall market share. Hostile takeovers generally involve poorly performing firms in mature industries, and occur when the board of directors of the target is opposed to the sale of the company. In this case, the acquiring firm has two options to proceed with the acquisition tender offer or a proxy fight. A tender offer represents an offer Continue reading
Relationship Between Firm Performance and Competitive Advantage
The firm performance is a complex term which may include different shadows of meaning as long as it relates to organizational performance, functioning of the firm and outcomes of its operations. Normally, the firm performance implies the organizational performance, including manufacturing of products and services, functioning of different units of the firm, performance of its employees and outcomes of their work in total. At the same time, the firm performance can be viewed in a broader context as a part of the business development of the firm. What is meant here is the fact that the business development mirrors the firm’s performance and allows to assess the extent to which the organizational performance is effective. At this point, it is important to place emphasis on the fact that the firm’s performance is basically measured in terms of efficiency of the firm’s operations. In fact, the more effective the firm’s operations Continue reading
Using Information Technology to Achieve Competitive Advantage
The world has grown more than enough in the context of information technology in such way that organization work more efficiency to enhance and maximize their daily productivity. Storage devices, data protection, cloud application and faster communication are the main advantages that information technology can provide to businesses. IT/IS has big impact in computer application on which nearly every work environment is dependent, therefore, since those applications are computerized and widely used, it is advantageous to incorporate IT into business. Information technology is categorized into major three group known as operation, financial and strategic system. If the operation and financial system are well integrated may result strategic system for other enterprises, however, it depends on the core business objective of the enterprise. For instance, cloud application and cloud storage are advance technology where most of the organizations are not aware of it, organization don’t consider much about technology even though Continue reading
Case Study: Frequent Restructuring at Sony Corporation
Sony Corporation is a multinational conglomerate based in Japan. The organisation’s core business is in Electronics and Entertainments. It has grow from barely 20 employees with about ¥190,000 as its capital in 1946 to today with about 150,000 employees worldwide and worth about $15 billion dollars on the share market as of May 2012. Sony has always put innovation as its main business focus. Due to its innovative business model Sony was able to bring us the very innovative products such as Walkman, Playstation, CD player and Camcorders and others. In the way all these products made Sony become a premium brand in the world, it can command the premium prices for its products. But later on Sony became so big, within there are many different divisions. The goal of Sony was to improve the financial performance and competitiveness of the company. Therefore, from the year 1994, Sony had gone Continue reading
Structuring Phase of the Acquisition Process
Once the target firm has been identified and valued, the acquisition moves forward into the structuring phase. There are three interrelated steps in this phase. The first is the decision on how much to pay for the target firm, synergy and control built into the valuation. The second is the determination of how to pay for the deal, i.e., whether to use stock, cash or some combination of the two, and whether to borrow any of the funds needed. The final step is the choice of the accounting treatment of the deal because it can affect both taxes paid by stockholders in the target firm and how the purchase is accounted for in the acquiring firm’s income statement and balance sheets. Deciding on an Acquisition Price The value determined in consideration of synergy and control represents a ceiling on the price that the acquirer can pay on the acquisition rather Continue reading