Билет №4
What roles do managers act out at various times?
Mergers and acquisitions have become increasingly important. What is the driving force behind them?
Mergers and acquisitions are the key to companies’ growth strategies. A major driving force has been the enhancement of shareholder value, bringing cost savings and efficiencies. There are three main types of integration: horizontal, vertical and conglomerate.
Horizontal integration (also referred to as consolidation) occurs when two businesses making similar products join together. One car manufacturer buying another car manufacturer or a supermarket chain buying another supermarket chain would be an example of horizontal integration.
Vertical integration takes place when a business integrates with either a supplier (backward vertical integration) or a customer (forward vertical integration). It is vertical because the integration occurs between two businesses at different points on the chain of production for a product. For instance, a car manufacturer buying a car component company would be an example of backward vertical integration. A catering company buying a chain of fast food outlets would be an example of forward vertical integration.
Conglomerate integration takes place when two business making unrelated products join together. For example, a cigarette manufacturer buying an insurance company would be a conglomerate takeover. A steel manufacturer merging with a health care company would a conglomerate merger.
Билет №5
Explain why a knowledge base and key management skills are important to managers.
Explain the difference between internal and external growth, a takeover, a merger and the LBO.
Most businesses which grow in size do so through internal growth, also called organic growth. This is where sales and profits grow through means such as increased investment, new product development or better marketing. However, sometimes a business will grow in size through external growth. This can be a takeover or acquisition, where one business buys another business. Or it can be through a merger where two or more businesses join together to become one business.
Takeovers and mergers can take place in any sized business with any legal organization. For example, a sole trader who owns two chemist shops may buy up, and therefore take over, a third chemist shop from its owner. Two partnerships may merge to become one partnership.
However, takeovers and mergers tend to be associated more with limited companies. Usually, one company must acquire more than 50% of the shares of the company which is being taken over. They buy these shares from existing shareholders.
Some takeovers are contested or hostile. This means that the board of directors of the company recommends to its shareholders that they should not accept the bid. Some takeovers, however, are agreed takeovers. The board of directors recommends to its shareholders that they should sell. Often a company will make a takeover offer, which the board of directors rejects because the price is too low. The takeover company must then raise a bid, which the board of directors of the company being taken targeted accept or reject.
In a merger, the boards of directors both agree to the merger having negotiated the terms of the merger. These terms include how existing shareholders may get shares in the new company. It also typically includes who will become the new chairman and chief executive of the company, and who will become its directors. Cost cutting plans may also be announced. For example, if each company has a headquarters, then it may be announced which headquarters will be closed and which will become the new one.
A further type of acquisition is the leveraged buy-out (LBO) or management buy-out (MBO), by which a group, usually managers of the company, make an arrangement, through a loan or venture capital finance, to buy out the company’s equity. The LBO is thus a means for achieving corporate restructuring, often financed by venture capitalists.