Applied Concept Paper Essay

Custom Student Mr. Teacher ENG 1001-04 13 November 2016

Applied Concept Paper

Executive Summary

The purpose of this paper is to help me to fully understand and expand my knowledge of the concepts four in our textbook. By performing research about recent business world activities, I will be able to link the terms learned in the lecture in order to get the full picture. Although I chose terms that are found in both chapter 6 and chapter 7, most of my terms come from chapter 7, which talks about corporate strategy. Our textbook Strategic Management and Business Policy textbook by Thomas L. Wheelen and J. David Hunger is a great source of information for anyone interested in learning more about business.

According to our textbook, the three key issues that corporate strategy deals with are: 1. Directional Strategy – The firm’s overall orientation toward growth, stability, or retrenchment. 2. Portfolio analysis – The industries or markets in which the firm competes through its products and business units. 3. Parenting strategy – The manner in which management coordinates activities and transfers resources and cultivates capabilities among product lines and business units.

From the readings, I chose the terms that I found most interesting. The concepts that I chose from my readings are acquisition, joint venture, licensing agreements, long-term contracts, and strategic alliance. After doing extensive research, I came upon recent articles that have helped me to understand the book and help me to incorporate the knowledge that I have gained in this class with the real world. In this paper I fully explain how the terms learned in the textbook relate to recent articles.


1. Delphi Automotive closes on FCI unit acquisition, by the Associated Press, Published on Friday October 26, 2012 This article announces the completion of an acquisition deal that was announced in May of 2012 by the company Delphi Automotive. This deal was for the acquisition of FCI motorized vehicles unit, which manufactures auto connection systems. The deal cost Delphi Automotive 765 million euros ($987.5 million). Delphi Automotive has its headquarters in Troy, Michigan. It was saved by the United States Government in 2005. Since then, the company has recuperated; however, it has done so by decreasing its costs, such as, massive layoffs and downsizing its manufacturing business. With this merger, Delphi expects to increase its future earnings gain an approximate $0.24 per share. 2. Clariant AG : Clariant and Wilmar establish Joint Venture for amines and selected amines derivatives, by Thompson Reuters ONE, Published on Friday, October 26, 2012 This article announces the joint venture between two well established companies: Clariant Ltd. and Wilmar International Limited.

Clariant Ltd. is a specialty Chemicals Company based out of Swtizerland. It is the parent company to over 100 companies worldwide. As of December 2011, the company had an approximate 22,100 employees. Clariant specializes in growing its business by partnering or acquiring a variety of firms that will help the company maintain profitability and create a steady growth. Wilmar International Limited is a leading competitor in the agribusiness field of Asia. The company was formed in 1991 and it is based out of Singapore. Some of Wilmar’s business activities include, oil palm cultivation, oilseeds crushing, edible oils. In addition, the article goes into detail of how the companies will both benefit from this joint venture. Further detail will be discussed later in this paper.

3. Hyrax Energy and WARF enter into licensing agreement, by Bret Williams, Published on October 26, 2012. This article explains the licensing agreement deal between Hyrax Energy and the Wisconsin Alumni Research Foundation (WARF). This licensing agreement is geared toward finding alternative fuel choices for consumers. Researchers from both Hyrax Energy and WARF have already found new technology that can be used to produce alternative clean fuels and plastic materials. Furthermore, this licensing agreement allows WARF and Hyrax Energy to commercialize the new alternative fuel and generate profits not only domestically but also in the global market in the near future. In addition, the development of this new technology shows that the economy of the United States can be affected positively with the creation of new jobs and also with increased consumer demand for clean biofuels.

4. CareFirst BlueCross BlueShield, Healthways Announce Extension of Contract for Disease Management Services Through 2015, by Business Wire, Published on October 17, 2012 This article is in regards to the extension of a long-term contract between the companies CareFirst Blue Cross Blue Shield and Healthways. The companies have been working together for a few years and they have been serving about 600,000 members. The extension of this contract signifies that together these two companies are able to partner to offer their clients better healthcare services and preventative disease solutions. CareFirst Blue Cross Blue Shield has been in business for 75 years and Healthways is a company dedicated to create healthier human beings. It also serves about 40 million customers in four continents.

5. PepsiCo and Suntory Agree to Form Strategic Beverage Alliance in Vietnam, by Pepsi Co., Published on October 22, 2012 This article discusses the strategic alliance formed by PepsiCo and Suntory Holdings Limited. This strategic alliance will help PepsiCo increase its business in Vietnam. Although both companies have both experienced success in this country, their strategic alliance will catapult both companies to new heights. PepsiCo will be in charge of marketing its strong products which include Pepsi-Cola, 7-UP, Sting, Mirinda, Tropicana Twister, Lipton and Aquafina. At the same time, Suntory will be in charge of bringing its ability to successfully meet the demands of its Asian customers. These companies have successfully worked in the past in other countries, such as, the United States, Japan, and New Zealand. PepsiCo has been able to grow in the Vietnamese market since entering it in 1994. For Suntory, it is hoping to achieve one of its long-range plans, which is to expand into Vietnam.


1. Acquisition

According to Wheelen and Hunger an acquisition is a growth strategy that occurs when a company absorbs another (usually smaller) company as an operating subsidiary or division of the acquiring corporation. Acquisitions usually take place with companies of different sizes and they can be hostile or friendly. Acquisitions can also be a good way to grow into an international market. For example, a domestic company can purchase another company that is already established and operating in a different country. This benefits the purchasing company by reducing the amount of time and money it needs to spend on acquiring documentation to enter into such country.

2. Joint Venture

A joint venture is one type of horizontal growth strategy that companies use in order to penetrate international markets. This usually takes place between a domestic company and a foreign corporation. Joint ventures are created when companies wish to combine their resources in order to create new products and/or technologies. Joint ventures can be made among companies or companies with a government agency. By forming a joint venture, companies usually save themselves the possibility of expropriation in a new country by its government. In addition, a joint venture can also help companies penetrate countries that do not allow foreign vendors. (Wheelen & Hunger, 2012) .

3. Licensing agreements

A licensing agreement is another growth strategy that companies use in order to increase their profitability. According to Wheelen, under a licensing agreement, the licensing firm grants rights to another firm in the host country to produce and/or sell a certain product. The licensee pays the licensing firm in return for technical expertise. This strategy is particularly beneficial when the licensing company is well-established but lacks the resources to enter a new market in a different country.

4. Long-term contracts

According to our textbook, long-term contracts are a type of vertical integration strategy by the formation of agreements between two firms to provide agreed-upon goods and services to each other for a specified period of time. In order to be considered a type of vertical integration, long-term contracts must specify that the contract is mutually exclusive and that neither firm can enter into the same or a similar contract with a third party.

5. Strategic Alliance

Long-term cooperative arrangements between two or more independent firms or business units that engage in business activities for mutual economic gain. In order to keep up with the continuing growth and demand from consumers, strategic alliances have become a part of modern business. The length of strategic alliances may vary from a few months to a few years. Although companies benefit mutually from these alliances, conflicts often arise over the companies’ objectives and control issues. This conflict therefore leads for about 50% of strategic alliances to fail in both domestic and international markets (Wheelen & Hunger, 2012).

1. Acquisition

In the article “Delphi Automotive closes on FCI unit acquisition,” I learned how an actual acquisition takes place in the business world. One company, in this case Delphi Automotive, which is larger than FCI Group, acquired and completely absorbed FCI Group’s motorized vehicle unit. This friendly takeover will allow Delphi to expand its global reach and its ability to make electronic connectors for vehicles. In addition, this acquisition will also help Delphi Automotive increase its earnings per share in the coming year.

2. Joint Venture

In the article “Clariant AG: Clariant and Wilmar establish Joint Venture for amines and selected amines derivatives,” we see an example of a joint venture. From our textbook we have learned that a joint venture is a type of international entry option for horizontal growth of a company. Both Clariant and Wilmar are well established companies. With the formation of this joint venture, they will influence each other with each company’s individual strengths in order to increase their growth opportunites.

Furthermore, the benefits that Clariant will bring to the joint venture are: “its Industrial & Consumer Specialties (ICS) Business Unit’s sales activities of relevant amines and defined derivatives to the joint venture as well as its amines plant in Germany and production output from its amines plant in Brazil.” At the same time, Wilmar will contribute the venture with the use of its plant in China and also the company’s expertise in oleochemicals and renewable raw materials. The article ends by stating the following: “Due to its strong roots in Asia combined with plans to expand the business globally, Wilmar is an excellent partner for Clariant to support our customer base in all parts of the world”, said Michael Willome, Head of Business Unit ICS.

3. Licensing agreements

This article explains that the companies Hyrax Energy and WARF have entered into a licensing agreement. According to our textbook, companies enter into licensing agreements both domestically and internationally. In this case, the licensing agreement is domestically. Hyrax is a company that emerged from Department of Energy funded Great Lakes BioEnergy Research Center (GLBRC) and has now entered into a licensing agreement with Wisconsin Alumni Research Foundation (WARF) (Hyrax Energy, Inc., 2012). Hyrax’s strategy is to be able to use the latest technologies in order to develop alternative biofuels. In addition, Hyrax hopes that the licensing agreement helps it commercialize its biofuels in the United States and with the long term goal of expansion into the global markets.

4. Long-term contracts

According to the article “CareFirst BlueCross BlueShield, Healthways Announce Extension of Contract for Disease Management Services Through 2015,” the companies mentioned decided to extend their already prosperous long-term contract. This was an agreement previously made by both firms. This allowed them to provide each company’s goods and services to their customers. This way, the companies are successful at reaching more customers and providing better services while reducing their costs.

Since the cost of healthcare is rising, the companies are interested in offering preventative solutions in order to minimize future high healthcare costs. Although our book states that recently, companies have moved away from long-term contracts, which is a form of vertical growth strategy, in this case both companies benefit from having contracts since they offer different services to their customers, however, such services complement one another. CareFirst BlueCross BlueShield offers health insurance while Healthways offers its consumers preventative ways to stay healthy and thus helps keep the costs minimum for CareFirst BlueCross BlueShield .

5. Strategic Alliance

In the article, “PepsiCo and Suntory Agree to Form Strategic Beverage Alliance in Vietnam,” we learn how two successful companies decide to join their resources to form a strategic alliance in order to gain market share and mutual economic gain. This strategic alliance will help PepsiCo build on its current position in the Vietnam market, while utilizing Suntory’s strong brands and recognizable ability to cater to the Asian market. The strategic alliance by these two companies in Vietnam is expected to have a positive effect for both companies and will help them increase their profits. Alone each company is already successful; however, together they expect to grow their business exponentially.


Research and reading the book have taught me to better understand strategies and different techniques that companies use in order to expand their businesses. Companies are in business to create profits; they do this by thinking outside the box. Through the articles, I learned that a variety of companies in today’s market are constantly searching for ways to succeed. In addition, they must seek new ventures in order to enter both domestic and international markets. Where companies choose to join their competitors in a strategic alliance, or a joint venture, long-term contract, or simply by signing a licensing agreement, these are good options for companies to try in order to succeed in the market and avoid a potential acquisition by their biggest competitor.


Associated Press. (2012, October 26). News. Retrieved from Yahoo Finance: Business Wire. (2012, October 17). CareFirst BlueCross BlueShield, Healthways Announce Extension of Contract for Disease Management Services Through 2015. Rock Hill, South Carolina, Unite States. Hyrax Energy, Inc. (2012, October 27). About. Retrieved from Hyrax Energy: Pepsi Co., I. (2012, October 22). Media – Press Release. Retrieved from Pepsico: Press Release. (2012, October 26). Clariant AG : Clariant and Wilmar establish Joint Venture for amines and selected amines derivatives. Muttenz, Singapore. Wheelen, T., & Hunger, D. (2012). Strategic Management and Business Policy Toward Global Sustainability. Upper Saddle River, New Jersey: Pearson. Williams, B. (2012, October 26). Alternative Energy. Retrieved from Hydrogen Fuel News:

Free Applied Concept Paper Essay Sample


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  • Type of paper: Thesis/Dissertation Chapter

  • Date: 13 November 2016

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