International Strategies,Merger, and Acquisition

The major car companies are actively contributing to a rapid international integration and are changing the global automotive industry's nature, level of competition and structure. Fusions and acquisitions are one of the most significant forms of enhancing automotive companies' competitiveness. Big companies from advanced countries pursue new markets through mergers or acquisitions while companies from developed countries have the ability to resolve the technological gap by acquiring the requisite technology. International mergers and acquisitions of companies in the automotive industry in modern conditions have become one of the main ways of development and strategies implementation.

One of the examples of horizontal acquisitions is of Porsche by a automotive giant Volkswagen.

In 2008, the company Porsche, the manufacturer of luxury cars, sold a record number of its vehicles, 98652, giving gained profit of 13.5 billion dollars. Having a huge profit, the Director-General intended to acquire Volkswagen, the largest auto manufacturer in Germany. At that time, Volkswagen was producing 50 times more cars than Porsche. Since 2005, a small company Porsche bought shares and options of Volkswagen and in October 2008 stated about its control of 74 % of Volkswagen shares (Hitt, Ireland & Hoskisson, 2013). By 2008, the financial crisis spread to the public markets and reduced the likelihood that Porsche would be able to find sufficient funds for the purchase of new Volkswagen shares. In a short period of time, Porsche has turned from hunter to a victim. Five months later, Porsche, which was staying in one step from the acquisition of Volkswagen, had to borrow one billion dollars from company that they intended to buy. In autumn 2009, merger took place. The Volkswagen Company acquired the Porsche automotive business for $ 11.3 billion in cash (49 % of the amount was paid immediately and 51 % then, for tax reasons) (Hitt, Ireland & Hoskisson, 2013).

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Taking into account the Porsche has recommended itself as a reliable producer of market in the luxury segment, Volkswagen, the products of which were forwarded for the business class segment, made wise choice with the Porsche acquisition. This acquisition was the opportunity for both companies to interchange technological secrets and improve product quality.  

2. One of the most widely-spread tendencies of the modern market is to conduct mergers and acquisitions; however, there are some companies, which are not involved in either of the processes. One of the examples is the company Publix Super Markets, Inc.  This is a wholly owned subsidiary, the primary business of which is retail food supermarkets in most US states. The company operates mainly in Florida, Alabama, South Carolina and Georgia. The range of products of the company is wide, grocery, dairy, bakery, meat and seafood to the products of health and beauty care, pharmacy and floral products. In General, the network comprises more than 1,000 outlets. Number of employees is 140 thousand people. The structure of the Corporation consists of 8 distribution centers and 9 factories that produce goods under its own brand Publix. Key competitors of Publix Super Markets Inc. are Target and Wal-Mart.

Bi-Lo Supermarket is one of the best options for merger with Publix Super Markets, Inc. This merger can become the great and very profitable deal for both companies, as they both operate in the same market and in the same industry.  Bi-Lo Supermarket serves the supermarket needs of North and South Carolinas and operates in Georgia. The merger of the two companies will be mutually beneficial for both, as a result of it, consumers will be offered a wide range of advantages, such as discounts and coupons. Moreover, the companies can use technologies and innovations of each other in order to improve quality and present their customers with new types of products and new services.

Publix Super Markets, Inc should consider the possibility of horizontal acquisition in relation to Bi-Lo, since it will be helpful in increasing the market power of both organizations by means of using cost-based and revenue-based synergies (Hitt, Ireland & Hoskisson, 2013). If to consider the fact that both companies represent the same market, merger will lead to smoother performance of both. Bi-Lo is a good merger target for Publix Super Markets, Inc , therefore the merger will result in a highly profitable synergy.

3. Volkswagen is a world giant in the sphere of car production, and its success is attributed to a range of international business-level corporate-level strategies. Volkswagen applies international business-level strategies in order to remain competitive in the international markets.  The first strategy used by the company is differentiation of products. Thus, after the acquisition of Porches, Volkswagen is trying to focus on production of more luxury products.  The next strategy is the use of integrated cost leadership. Diversification strategy is another business-level strategy of the company. The company produces passenger and commercial vehicles and offers related services, such as financing, leasing and fleet management. To sum up, Volkswagen international-business level strategy is focused on positioning the company as global leader of car production industry.  

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Volkswagen is also famous for its international corporate-level strategies used to reach and attract people globally. This is the reason why the company demonstrates its devotion to the CSR, sustainability and innovation (Stewart & Raman, 2007). Since Volkswagen operates internationally, the company demonstrates devotion and respect to the peculiarities of different cultures play a huge role in the world community.

Volkswagen understands that corporate -level strategy considers primary concerns of people, who are engaged in each production process. This will not only ensure the stability of product quality, but guarantee customer satisfaction. In order to achieve this, Volkswagen Group has installed programs for training of it human resources before and after implementation of its business-level strategies. As a result, human resources of the company are ready to turn business–level strategies to business values.

International corporate-level strategies of the company comprise creation and maintaining excellent organizational culture, which presupposes collection of common values, norms, beliefs and attitudes among all employees of the company. In order to ensure stable positive and productive atmosphere, Volkswagen group has organizational standards for control how employees interact with each other, with the stakeholders and consumers.

Although, Volkswagen is a highly developed organization, which managed to gain the leading positions and corporate-values of which become the role-model for other organizations, there is still some improvements to be recommended. In relation to business-level strategies, the company may consider to develop new line of products for all target segments, not for business people and luxury products. As far as the corporate strategy is concerned, it would be recommended to concentrate more on the values of employees and organize meetings and questionnaires for the employees to have the opportunity to share their views and ideas about their work in the company and possible ways for improvement.  

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4. PacSun is a company, situated in the USA. It does not have an experience of doing business internationally.  Despite its sable growth, development and business-orientation, the company does not elaborate strategies for potential international expansion and development of business in other countries. On the example of huge business giants, which have been operating overseas for long years and have been increasing their values and profits, PacSun should take the first steps and enter international market. First of all, the company should develop a range of business and corporate-oriented strategies. The first strategy to consider is international expansion, as it can become potentially productive and beneficial. There are two variants of this strategy:  making the exiting business to enter new markets and merger with other company that has already been working internationally (Varadarajan & Dillon, 1982).  Taking into account that PacSun has already recommended itself as a stable and well-developed company, the chances of it to operate internationally are huge. Global expansion can be carried out through opening new outlets in other countries and new markets which have poorly presented segment of such goods. As soon as PacSun enters international market, it can consider product diversification strategy in order to widen its product line. In terms of the corporate level strategy, PacSun should promote and properly maintain its corporate culture, which would perfectly demonstrate values of its personnel and fit into the business values of the organization.

Another potential strategy that can help PacSun to enter international market is merger with the international organization, which has already an experience of international operation.  As a result of this merger, PacSun can use experience of international organization and implement it in its own business.

Speaking about the implementation of international business-level strategies for PacSun, it can consider identification of market niches in the new international market. This strategy is very useful, especially when the company is taking its first steps in the international arena. Usually, this strategy is used to know the market needs, requirements, target groups and preferences, so that to evaluate the most and the less popular products in this market and be ready to satisfy current customer demands (Varadarajan  & Dillon, 1982). Taking into account that these market niches are widespread in a business-level strategy, adapting an existing product to the particular demographic needs is another part of the strategy. In case PacSun will be able to fill the specific market niche of the market, where it is going to operate, it may set higher consumer prices, since there can be no substitutes in the marketplace. Through this strategy, PacSun can ensure stability of demand on its major products and overcoming competitors, which have the same products to offer.

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References

Varadarajan, P., & Dillon, W. R. (1982). “Intensive growth strategies: A closer examination”. Journal of Business Research, 10(4), 503-522.

Stewart, T., & Raman, A. (2007). Lessons from Toyota’s Long Drive. Harvard Business Review.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2013). Strategic management: Concepts and cases: Competiveness and globalization (10th ed.). Mason, OH: South-Western Cengage Learning