Week 6 discussion Responses
Week 6 Discussion Responses for Fin_Acct and Int_Biz
· Respond respectfully and challenge opinions with back support of sources
· Check Spelling and Grammar
· 1 page per response
· APA 6th Edition rules
Int_Biz
Discussion 1 Response
BY: M,F,R
The term strategic alliance refers to a business arrangement between two or more companies working together to achieve mutual benefits/goals. Companies seeking to expand into other countries enter into strategic alliances with businesses in those countries. There are two different types of strategic alliances including a bilateral alliance (between two organizations) and network alliances (between several organizations). The main reasons why companies from different countries form strategic alliances include obtaining competitive advantage, sharing knowledge and resources, minimizing risks, reducing costs and entering new markets (Czaja, n.d.).
To illustrate this topic, I decided to research Eli Lilly and Company which is an American global pharmaceutical company founded in 1876. During the last 140 years, Eli Lilly has been developing and delivering trusted medicines for treatments in the areas of oncology, cardiovascular, diabetes, critical care, neuroscience, men’s health and the musculoskeletal fields. Eli Lilly has over one hundred partnerships around the world devoted to the discovery, development and marketing of new products (“Who we are,” n.d.). Eli Lilly has been forming alliances for nearly a century. For example, in March 2015, Eli Lilly and Innovent Biologics, Inc., which is a leading biopharmaceutical company in China, announced one of the largest biotech drug development collaborations in China (Garde, 2015).
This collaboration was created to support the development and potential commercialization of three cancer treatments as well as possible new treatment options for cancer patients. Under this strategic alliance, Innovent received $56 million upfront. In October 2015, Eli Lilly expanded its Research and Development partnership with Innovents Biologics, adding another $1 billion in potential value to this strategic alliance. Under this alliance, Lilly is able to develop and commercialize the treatments outside of China, while Innovent retains the local rights. Even at this early date, this alliance has been very successful and has allowed both parties to have accomplishments that neither could have achieved individually (Garde, 2015).
References
Czaja, J. (n.d.). Examples of Successful Strategic Alliances. Chron. Retrieved from http://smallbusiness.chron.com/examples-successful-strategic-alliances-13859.html
Garde, D. (2015, October 12). Lilly signs a $1B deal to deepens its oncology ties with China’s Innovent. FierceBiotech. Retrieved from http://www.fiercebiotech.com/partnering/lilly-signs-a-1b-deal-to-deepen-its-oncology-ties-china-s-innovent
Who we are. (n.d.). Lilly. Retrieved from https://www.lilly.com/who-we-are
Discussion 2 Response
BY: A,Z
Strategic alliances are when multiple companies partner together in order to achieve mutually advantageous results and profits. As opposed to mergers and acquisitions, an alliance is a more cost-effective and beneficial option for all companies involved as companies are able to share their resources, technologies, information and risks (Hill & Hull, p. 362, 2016). One of the most mutually beneficial and popular alliances in the past decade has been between Target and Starbucks. In 2008 in an effort to compete with Walmart post-recession, Target lowered their prices (and quality of items) and slowly started losing their competitive edge with trendy (albeit pricy) clothing and accessories. In Canada, for example, Target growth slowed down dramatically post-recession as competitors such as Tim Horton’s (with a McCafe inside) were running the show. With the addition of Starbucks cafes inside of Target stores roughly around 2013, Target’s growth rate in Canada began to boom. “‘Target surveyed the Canadian landscape and explored our options,’ Lisa Gibson, a spokesperson for Target, said. ‘Ultimately, the brand fit with Starbucks, which has a presence of 1,100 cafes in Targets across the United States [alone]’” (Sturgeon, 2013). With Target being one of the largest food distributers in Canada (and parts of the United States) and Starbucks being one of the largest coffee distributers in both countries, it makes perfect sense as to why combining the two would make unimaginable profits.
Due to Target’s affordable items, coupled with its ability to meet every consumer’s shopping needs under one roof, the addition of a Starbucks café was a win-win for both companies. Starbucks also knows that the foot traffic in Target stores across the United States alone (not including the recent expansions in Canada, Novia Scotia and British Colombia) would be able to create a profit for them at a much quicker rate than at their stand-alone stores.
Target provides employees to work at the café as well as a space for it (usually at the front of the store by the exit doors – which tends to cajole more people to grab a quick coffee or bite on their way out) while Starbucks provides their authentic barista training, coffees, teas and food. The two companies are able to combine their resources at fixed costs in order to achieve mutually beneficial profits. While Target is the third largest retailer in the United States and Starbucks is a conglomerate coffee mogul, the two combined bring profit better than most competitors. Take for example your average Target and Starbucks consumer: a busy mom with limited time and money to spare. Said mom needs to make a quick run to the store for diapers but also needed a quick cup of coffee on the way. Instead of stopping at two places (and usually waiting in a long line at the stand-alone Starbucks) it would be more beneficial for her to be able to do it all in one place; saving time and money. Added perk: if she owned a Target promotion credit/debit or gift card, she would also be able to save some money on the same cup of coffee that she would have gotten at a stand-alone Starbucks. Combine all of the needs of your average consumer and you have yourself a strong, beneficial, and strategic alliance.
The more stores Target opens, the more opportunity Starbucks has for expansion and growth. Starbucks’ deal with Target is by far one of the most successful mutually beneficial strategic alliances in our time.
References
Forbes. (2016, September 19). Let's Look At Starbucks' Growth Strategy. Retrieved from Forbes: Investing: https://www.forbes.com/sites/akamai/2017/09/14/companies-under-threat-of-dns-attacks-must-measure-risk-appetite/#68194b3c6078
Hill, C. W., & Hult, G. M. (2016). Global Business Today (Vol. 9e). New York, NY: McGraw Hill Education.
Mississauga News. (2012, February 16). arbucks and Target join forces. Retrieved from Mississauga News: https://www.mississauga.com/news-story/3123959-starbucks-and-target-join-forces/
Sturgeon, J. (2013, August 9). Target, Starbucks partnership brews up perfect blend. Retrieved from Global News: : https://globalnews.ca/news/771537/target-starbucks-partnership-brews-up-perfect-blend/
Wahba, P. (2016, April 14). This Is Starbucks CEO Howard Schultz's Advice to Target. Retrieved from Fortune Magazine: Business Leaders: http://fortune.com/2016/04/14/target-starbucks/
Fin_Acct
Discussion 1 Response
BY: M,H
The main concern of Mr. Coyote buying new trucks and it negatively impacting the company’s liquidity and making his solvency ratios look bad is a valid point. The other options that should be considered are renting trucks from a company. Initially, comparing prices from rental companies to see what are the best options available to meet the needs of ACME. Next, I would advise looking at the frequency and the amount of trucks needed necessary for ACME to complete their daily tasks. I would advise creating an excel spreadsheet of the finances from each truck company, the size and amounts of trucks and what it would quarterly and annually cost ACME. Then I would encourage running a three month trial and see what pros and cons were documented from those three months to include; if the ordered and planned amount of trucks were consistent, were there any additional charges that arose, did the trucks have any maintenance or safety issues, and how did the trucks overall affect the flow of the business. This 3 month analysis would be presented to the board at ACME Construction Company to decide with a vote to continue with this plan or adjust to best meet the needs of the business.
Discussion 2 Response
BY: J,G
As president of ACME Construction, it is Mr. Coyote's responsibility to position the corporation to take advantage of business opportunities without substantial risk. Acquiring additional trucks requires one of three options: purchasing the trucks, acquiring trucks on debt, or leasing the trucks. The fact of the matter is, his best option would be to purchase the trucks by reinvesting profits in his business (but that is not allowed via the prompt). Acquiring via debt doesn't just affect his liquidity and solvency ratios, it puts the business at substantial risk if the business project falls through and they lose revenue. Leasing is a viable alternative and limits the long term liabilities, but costs the company more over the short term as a payment for not taking on the long term risk.
Prior to purchasing, Mr. Coyote should consider improving efficiency of current assets or working with other construction companies that might have unused trucks that could be acquired for the short term without significant costs. If Mr. Coyote decides to acquire the trucks with debt, he has a few option for adjusting his company's financial statements. First, he could sell unnecessary or unproductive assets (equipment or property) to increase the capital to take on less debt upon acquisition. Alternatively, he could lower his current liabilities by paying off outstanding debt or accounts payable.
Ultimately, Mr. Coyote should not be worried as much to what the financial statement says but rather what it means. By negatively impacting his company's liquidity, he is inherently acquiring risk that can cause financial problems if future expectations are realized as results. His job as president is to make smart financial decisions that do not significantly compromise the company's position. If he feels that purchasing these new trucks is too much risk, he should either wait until a better option is available or optimize the business to mitigate the risk of debt.