BUS 499 Assignment 4 Merger Acquisition And International Strategies

Assignment 4: Merger, Acquisition, and International Strategies

BUS 499

Many businesses are always evolving and trying to keep up with the continuous changes in the surrounding business world. Changes in consumer needs, the economy and business strategies can lead to transformations in how companies look and operate. One way small businesses can work to lower costs or launch new products or services is to acquire another business and in many cases; it makes it easier for them to compete in the market. Effective mergers, acquisitions and international Strategies increase market power by blocking competition, increase influence on industry and market sectors and increase effectiveness in innovation, operations, management, marketing and sales, and at the same time provide product and service differentiation critical to success.

1. For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.

According to Southwest Airlines (2014), “in 2011, Southwest® Airlines acquired AirTran® Airways. Since then, we have been hard at work integrating our two airlines to provide a top-notch, seamless travel experience for our valued customers. By continuing to add destinations to our combined route map and working tirelessly to refine our business processes while keeping Customer Service a top priority, we’re making great strides every day toward becoming one airline.”

Acquiring other companies can be a great strategy in order for companies to grow their company. It can help expand your product, team, market share, revenue, or geographic presence.

Some strategies that causes a company to merge with another company, or acquired by another company is basically because the buying company wants to expand the company’s financial structure. This would greatly increase the company’s revenue or market share, and if the company was a major competitor this would be one less competitor to worry about. “Southwest said the acquisition would open the door to Atlanta, the biggest hole in its network. Hartsfield-Jackson Atlanta International Airport, the nation’s busiest airport, is Delta’s hub; AirTran is the second-largest operator there, (Mouawad, 2010).” The main reason companies merge is to save on the costs of production, particularly in a merger of former competitors. A merger also can generate capital to enter markets or launch products the companies would not be able to do as separate entities. Society believes Southwest Airlines made a wise choice because Southwest’s decision to buy AirTran. Since Southwest Airline has acquired with AirTran their earnings and soared. It would not only help profit them but it also to reach other customers. Who wouldn’t want more routes which would lead to fewer delays, cancellations, and possibly super-low sale fare? “Due to economic downturn, customers’ demand for air travel has reduced due to cuts in personal and business expenses across the US; however, the consumer demand for low-fares no-frills air travel has remained undeterred and indeed undergone growth”, (Southwest, 2014).

2. For the corporation that has not been involved in any mergers or acquisitions, identify one (1) company that would be a profitable candidate for the corporation to acquire or merge with and explain why this company would be a profitable target.

When businesses merge, management has several options for structuring the new or surviving business. One business might absorb another, two brands might operate under a new corporation or both companies might shut down to create a new business. Strayer University has been in business for over 100 years and has yet to acquire or merge with another business. There is insurmountable proof that Strayer University could benefit from the acquisition of Everest Institute/College/University.

Everest College is being investigated by state and federal agencies for its business practice. This includes allegations of falsifying job placement data used in marketing claims to prospective students, and allegations of altered grades and attendance. “Washington’s student-aid office has yanked Everest student-aid funding for next year. The company is also on heightened financial monitoring from the Education Department after failing to comply with department requests to address concerns about allegations of falsifying job-placement data used in marketing claims and allegations of altered grades and attendance,” (The Seattle Times Company Network, 2014). Since Everest is going through a hard time an acquisition would be very beneficial to both them and their students. Everest is a very popular school and has very hands on approach that many students are attracted to. They are a very profitable, and a acquisition would help both parties profit and allow students to finish their degree in a more comfortable environment.

Strayer University is one the oldest for-profit schools. They were founded in 1892 and were just a simple business college. For decades Strayer operated as a small, regional school offering training in skills such as shorthand, typing and accounting. In 1996, Strayer College established Strayer Education, Inc., and went to Wall Street to raise capital for expansion.from the 1980s to the late 1990s, Strayer College grew rapidly; enrollment increased from approximately 1,800 in 1981 and 2,000 in 1983, to around 9,000 by 1987. The college expanded the range of degree programs and courses it offered to include subjects such as data processing, management and health care management in 1987, the college was given authorization to grant Master of Science degrees. During the 1990s, the college began to focus on offering information technology courses. According to the Washington Times, high demand for computer training due to the increased use of computers in offices and movement toward “knowledge-based” employment led to higher enrollment at Strayer. In addition, Strayer began providing training programs in computer information systems for companies including AT&T and government agencies such as the IRS. In 1996, the college launched Strayer Online to offer classes via the Internet Today, Strayer is doing very well in their business practices and is always looking for more ways to attract and benefit its student. They currently offer life coaches that are there to help with financial planning, goal setting, career advice, time management, and other skills. They also partnered with Steve Harvey, a well-known celebrity that has recently become the face of Strayer.

Strayer University acquiring Everest College would not only be a great opportunity but very profitable. Colleges like Strayer are offering bigger scholarships, instituting selectivity in admissions so they enroll students more likely to graduate, and are holding the line on tuition increases for current students to deter them from dropping out. Having an affordable education is one of the most important things student seek along with having a degree of value. The acquiring could leverage its relationship with their customers/students because both companies can provide a better service, quality, satisfying customers with their customer service. They will be able to expand, have more hands on classes and offer more degree programs, and come together for tuition prices that would attract and keep new and current students. This market will create sales and revenue growth on both corporations and it will be a profitable target for both companies.

3. For the corporation that operates internationally, briefly evaluate its international business-level strategy and international corporate-level strategy and make recommendations for improvement.

Corporate-Level and Business-Level strategies have a major influence on the performance of an organization. It is very important for companies to be able to identify both their business-level and corporate-level strategies because they can maximize the life of their organization. Southwest's corporate level is to focus on obtaining more of the low-fare market of the airline industry rather than to enter into other aspects of the airline industry. The business level strategy is to continue focusing on the current customer market, which is looking for a low-cost airline to get them where they want to go at a reasonable price. Southwest is only looking to improve its services to make each customer's experience the best it can be.

The business-level strategy focus on creating a value offering that is appealing to consumers while also being cost-effective. Corporate-level strategies allow the organization to select the right pricing option that will allow them to maximize on profits. In order for a company to be successful with these strategies they need to know what kind of competition is out there. A corporation’s competitor can usually dictate what strategy fits the corporation best. Most of the companies are charging to have an extra luggage, but if Southwest Airlines propose to their customer free luggage and no charge for extra bags customer will feel happy, and they will be willing to use the airline. The low affordable flight fare in select cities and countries can bring a lot of revenues to the company.

4. For the corporation that does not operate internationally, propose one business-level strategy and one corporate-level strategy that you would suggest the corporation consider. Justify your proposals.

A Corporate- level strategy represents the strategic decisions a business makes that affect the entire organization. This includes but is not limited to the company’s financial performance, mergers and acquisitions, and human resource management. Corporate strategies are vital to businesses because it provides an overall direction for the company. This allows the business to be proactive and ahead of things. It allows the business to plan for the future and take advantage of opportunities, instead of simply reacting to changes and challenges in the marketplace as they happen. This can increase the firm's productivity, efficiency and profits. Every organization will establish business strategies that are designed to support their mission vision and values, and achieve goals specific to their market. Strayer University international business-level strategy would be to expand internationally; finding out if there is a demand for school like Strayer and if there is an area of opportunity for them to profit. Though Strayer is offers classes online they don’t have any physical campuses like other competitors/ traditional universities.

Strayer University has much competition. They do a great job with offering catering to the working adult and a variety of courses and programs that can be taken online. It can cost a lot of money to the company expanding their business strategy. Strayer University will have to continue to make sure their cost of programs are better than competition. The company will have to use a different strategy to compete, and they definitely have started with the offering of scholarships, laptops and iPad. People love incentives, it is a great way to get their attention and keep them motivated. Incentives is one good way to get people to do what you want them to do.

It motivates them to do better work, and it definitely. According to Business Insider,

Psychology research shows that rewards only yields to temporary compliance. Even though

Your behavior changes for periods, it always slide back. Rewards that involves money,

vacations, banquets and plaques, do little in ways that may change people attitudes. People

are almost like addicts when it comes to receiving incentives and some people doesn’t care

one way or another about incentives. Motivation, and happiness brings the best out of them

when they are being rewarded. The competition will always be there, whether you are flying

Southwest, Airtran, American, United or Delta because they are businesses that love their customers and want them happy. If it take incentives, this is what will happen to keep their customers happy. Strayer University will continue to expand because they look for different strategies that keep their students/customers happy.

Mouawad, Jad. (2010). Southwest, Determined to Expand, Buys AirTran. Retrieved from http://www.nytimes.com/2010/09/28/business/28air.html

Southwest Airlines Co (2014). Southwest® & AirTran® Network Connectivity. Retrieved from: www.southwest.com/html/air/intl/intl-hub.html

Strayer University (2014). Strayer Welcomes Steve Harvey & the Success Project! Retrieved from: http://www.strayer.edu/buzz/success-project/strayer-university-welcomes-steve-harvey-and-the-success-project/#sthash.0qPi2aye.dpbs

The Seattle Times Company Network (2014). 6 for-profit Everest College schools face probe, may close. Retrieved from http://seattletimes.com/html/localnews/2023980122_careercollegesxml.html