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Sample Research Paper on Merger, Acquisition and International Strategies

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Sample Research Paper on Merger, Acquisition and International Strategies

Introduction

A merger or acquisition entails a coming together of two organizations where one corporation is completely absorbed by another organization. The less insignificant organization in mergers and acquisitions loses its identity and converts into an important part of the larger organization, which preserves its identity. A merger douses the merged organization, and the remaining organizations adopt all the rights, freedoms, and liabilities of the merged organization. In many instances, many people confuse between mergers and consolidations. Nonetheless, the two are different concepts. Ina consolidation, the two organizations corporations lose their discrete identities and come up with a completely new corporation. Several organizations have taken part into mergers and acquisitions as a result of different reasons. In the United States, mergers and acquisitions are controlled by the Federal and state laws. This paper will focus on the merger of the Coca-Cola Enterprise with two European Bottlersm Coca-Cola lberian Partners (CCIP) and the Coca-Cola Enfrischungsgetranke AG (CCEAG) and its significance. Additionally, this paper will also discuss about US Foods Inc. in the United States, which has no history of mergers and acquisitions and what they would signify to the organization.

Organizational Analysis

Coca- Cola Enterprise

Coca-Cola Enterprise is the global leading refreshment organization that operates in more than 200 nations in addition to a market assortment of more than 3000 drinks items encompassing nonalcoholic sparkling beverages and refreshments, for instance, water, squeezes, juice drink, espressos, drinks and caffeinated beverages. The organization main office is in Atlanta, Georgia, and is acknowledged to have more than 92,400 co-partners or bottling companies in all the continents in Eurasia, Africa, Europe, Latin America, North America and Pacific region (Girad, 2005). The organization production process involves manufacturing refreshment bases and syrups aimed at enhancing the organizational brandthrough quality products and packaging operations (Mok, Dai & Yeung, 2002. Additionally, the organization also has a license and the brands to operate legally in different nations. Generally, the company sells its concentrates and syrups to bottling companies, which go ahead and produce the finished dilutions and pack them for consumer’s consumption. Coca Cola Enterprises (CCE) global expansion strategy was started the 1920s until now with an international presence.

CCE Merger with Two European Bottlers

In May 2016, Coca-Cola Enterprises entered into a merger with two main European bottlers companies Coca-Cola Iberian Partners SA (CCIP) and Coca-Cola Erfrischungsgetränke AG (CCEAG) (Coca-Cola Enterprises, 2016). The three organizations made known their intention of collaborating their business operations into a new company that was later referred to as Coca-Cola European Partners Plc. The main objective of this merger was toestablish a transformational transaction, which would form the globe’smajorautonomous Coca-Cola bottler in terms of net revenues. Additionally, as a result of world-class manufacture, sales and distribution platform for the Coca-Cola system in Western Europe, Coca-Cola European Partners was intended to be positioned in a good status toprovidebiggerperformance and customer service, which will enhancelastingworth creation for shareowners.

Merger Strategy

            With close to more than 50 bottling plants and almost 27,000 allies, Coca-Cola European Partners was intended serve a consumer population of more than 300 million. This was targeting 13 nations in the entire Western Europe, for instance, Andorra, Belgium, France, Germany, Great Britain, Iceland, Luxembourg, Monaco, Norway, Portugal, Spain, Sweden and the Netherlands. Additionally, the merged organization was targeting to operate in the four major markets for nonalcoholic ready-to-drink beverages in Western Europe encompassing Germany, Spain, Great Britain and France.

Through the merger, the Coca-Cola European Partners strategy was also aimed at influencing and operating on the best practices from each corresponding market and bottler that was to enhance service to customers and consumers through a steadier strategy for product development and market accomplishmentin the entire Western Europe (Rossolillo, 2016). The expanded scale and tractability of Coca-Cola European Partners’ in the broader European geographic footmarkwas also aimed at enhancing the organization tohave a competitive edgein the nonalcoholic beverage product category.

            Another strategy that led to the organization merger and creation of the Coca-Cola European Partners was the need to generate considerableconcerted effort, for instance, supply chain advantages as well as operating competences. These collaborationswere aimed enhancing an annual run-rate pre-tax savings of around $350-375 million after three years of closing. Furthermore, the new organization combined operations were also aimed at positioning the firm foramplified investment in sales and customer-facing undertakings to enhanceconstant growing profit growth in the long term.

            Furthermore, the strategy also was aimed at combining the Coca-Cola European initial partners exclusive market gen, that is CCE, CCIP and CCEAG, which would enhance improved coordination and invention to enrich services to customers and consumers both at a local and international level in all markets. Through the merger, the organization being largeand diverse was also toallow it to continue to invest, produce and distribute locally, hence upholding a resilientobligationboth the economic and social well-being of all the communities they serve.

            According to the chairman of and CEO of The Coca-Cola Company, Muhtar Kent, the establishment of a superior, amalgamated Coca-Cola bottling partner in Western Europe is a huge stepin the current globalbusiness system evolution. This was because the new company would adapt the business model to revolutionize, capitalize and expand alongside the varyingconsumer demand and those of the entire market (Rossolillo, 2016). Alongside the strong quality leadership skills from all the three former organizational management teams, Coca-Cola European Partners would be in good position to offer better and more operational service to consumers in the entire Western Europe as well as drive profitable developmentin the non-alcoholic beveragescategory.

            This merger and creation of the Coca-Cola European Partners was a wise choice because the organizations are set to continue enjoying the benefits of unification of efforts, which are the cost savings and an increase in sales growth. In the future coming years, the total operating expenses of the organization will be increasedfrom around $350 million to $375 million that is equal to around 3% of the total net sales a development that development that will also raise profits by over 50%. Furthermore, the merger was worth it since the organizations combining operations is significant in enhancing thecompetition that is intense in the region, that is, Western Europe (Rossolillo, 2016). Most of this competition emanates from other beverage providers and countering willbe an added advantage in enhancing Coca-Cola sales growth and distribution. In the recent past, the organization has seen its sales fall, for instance, the 2015 totals falling by about 1.5% as compared to 2014.

 

Coca-Cola International Strategy

            One if the Coca-Cola international business strategy is the differentiation strategy. This entails involves marketing technique that has been applied by the manufacturer to create a strong identity in a distinct market in the competitive advantage (Banutu, 2012). In other terms, this may also be reoffered to as segmentation strategy. Since its formation, Coca-Cola has always strived to differentiate its products from other competing firms with an intention of creating a strong position in the market. The common unique brands are Fanta, Sprite, which ate produced through strict guidelines. This differentiation strategy has helped the organization to uphold a top market leadership position. Differentiation in the international arena is incorporated in all of the company’s aspects, for instance, labeling, advertising and bottle shapes among other features. Other business strategies include, reduce d cost of leadership and focus strategy.

            Additionally, the organization has employed some corporate level strategy internationally. The main corporate strategy is the growth strategy, which has seen the organization invest heavily on business expansion across the globe. It is approximated that the organization is in around 200 nations across the globe. This growth has also been attained through different methods, for instance, the introduction of new products, penetrate into new markets, mergers and acquisitions among others. Other corporate strategies that the organization has employed include stability strategy in the international scale, particularly in addressing internal issues. Coca Cola organization has become one of the global organization to reckon with. Nonetheless, the organization needs to more sensitive on the social element of its clients in its strategies, particularly addressing the heath concern as a result of the high rate of disease that have been associated with manufactured foods and drinks. Additionally, in the phase of competition, the organization does not only need what to be introduced bust also to determine the products than need to be phased out of the production. This way, there will be a provision for removing the products form the market, particularly if they bear a negative implication or if they have a low market.

US Foods Inc.

            US Foods, Inc. entails a foodservice distributor in the United States, which provides a variety of fresh, frozen and dry food, as well as non-food products with around 400,000 stock-keeping units. The organization provides services in autonomously owned single and multi-unit restaurants, regional restaurants, national restaurant chains, hospitals, institutions, government and military agencies, and retail locations. In October 2011, the organization initiated it new brand identity that reflected its planned motivation on producing better food offering and effective service experience for the consumers. This made the organization to introduce more specialized products, brands and services that met customers’ needs thus enhancing growth. In line with the development, the organization also changed its name from U.S. Foodservice, Inc. to US Foods, Inc. in September 2011. It was started in 1853 with its head office located in Rosemont, Illinois.

            With an approximation of about $23 billion in its annual revenue, US Foods is among the leading private organizations in America (Nord et al., 2010). Several units that make up US Foods were formed during the 19th century, for instance, the unit that sold provisions to tourists who were destined to the west in the 1850s gold rush. The organization provides more than 350,000 nationwide brand products besides its own special brand items, extending from fresh meats and products than need to be prepackaged and frozen foods.  In its employee capacity, the organization has a workforce of about 25,000 located in more than 60 locations in the United States.

            As a result of the current market globalization necessities, it would be better if the organization decides to engage in a merger, which willenable it form a world-class foodservice company hence being significant to its stakeholders (The Hale Group, 2013). The most suitable organization that will be suitable to merge with is Systems and Services Company (Sysco). This is one of the largest food distributor across the globe and is better candidate for merger because of its services and experiences on the international front. This will be unofficial for the US Foods. Through a merger, the total enterprise value of the transaction will unite both Sysco and US Foods’ corresponding strengths, for instance,endowed and enthusiastic associates, an expanded product range, supply chain superiority and anassurance to constantdevelopment.Through a merger, the firms will also unite in creating value for consumers achieved through effective product invention and enhanced services that are not only food conscious. Furthermore, the merger will also increase the geographic market and scale of the organization thusenhancing the litheness and receptivenessof the food products that will improvesave customer’s time and increase performance.

Business and Organization Strategy

            In enhancing its corporate strategy, the organization need to expand its market penetration. Limiting the business in the United States restricts the firm form reaching other customers who may not be in the nation or the travelling clients who may end up pledging their loyalty to other competing firms. Additionally, penetrating to the international market also will enhance the organization to build a strong brand.

            Additionally, US Foods need to implement an expanded value proposition, which is aimed at excelling the organization’sproducts. The organizational distributors also need to uphold the strategic collection of products and other services that will address the different needs of customers through different brands.Distributors and other organizational management also need to be innovative and data-driven processes. The application ofreal time data and automatic solutions provides an all-inclusiveoutlook of the organization,thus addressing both the macro and micro environmental issues affecting the organization.

            In my opinion, I would also recommend that the organizationenhances its model agility. This involve theabilitiesrequired to providecurrent and trendy and innovative services that will be provided at a high level of efficiency.

Conclusion

            Generally, it is important for all organizations to expand and grow in their provision of goods and services. These can only be achieved through effective business and organizational strategies combined. An organization expansion also encompasses a growth in capital and profits. One of the ways in which the organizations can grow is through mergers. When effectively collaborated, mergers provide organizations with greater opportunities, mainly in terms of capital share and market reach.

 

 

 

 

 

 

 

 

 

 

References

Banutu-Gomez, M.B. (2012). Coca-Cola: International business strategy for globalization. The Business & Management Review3(1), p.155.

Coca-Cola Enterprises, I. (2016). Coca-Cola Enterprises, Coca-Cola Iberian Partners and Coca-Cola Erfrischungsgetränke AG to Form Coca-Cola European Partners. Business Wire (English).

Mok, V., Dai, X. & Yeung, G. (2002). An internalization approach to joint ventures: Coca-Cola in China. Asia Pacific Business Review9(1), pp.39-58.

Nord, M., United States& Food Assistance & Nutrition Research (Program: U.S.). (2010). Household food security in the United States, 2009. Washington, DC: U.S. Dept. of Agriculture, Economic Research Service.

Rossolillo, N. (2016). What Coca Cola Enterprises’ Merger Means for Investors. The deal affects Europe’s largest bottler of Coca-Cola beverages. Retrieved from http://www.fool.com/investing/general/2016/05/20/what-coca-cola-enterprises-merger-means-for-invest.aspx

The Hale Group. (2013). What the Sysco/US Foods merger means for foodservice manufacturers. Retrieved from http://www.ifmaworld.com/articles/what-the-sysco-us-foods-merger-means-to-foodservice-manufacturers/

 

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