This paper is a case study of Cooper Industries, a broadly diversified manufacturer of electrical and general industrial products, and energy related machinery and equipment.
Case Study: Cooper Industries OVERVIEW: Cooper Industries is a broadly diversified manufacturer of electrical and general industrial products, and energy related machinery and equipment. The company operates in three different business segments with 21 separate profit centers. These segments include electrical and electronic, commercial and industrial, compression, drilling and energy equipment.
The product line is consisted of cheap fuses to $3 million compressor tribune sets along with products such as hand tools and light fixtures. The company bid a $21-a-share tender offer to acquire Champion Spark Plug, manufacturer of auto spark plugs, as a counter offer for the Dana Corp.’s $17.50-a-share bid. Also, in the mean time, Cooper Industries was considering a $700 million bid for Cameron Iron Works. Even though purchasing either or both companies will give operational and organizational advantages, there were high financial risks involved.
Undertaking both acquisitions would result in a 55% to 60% debt to capitalization ratio. ANALYSIS: Cooper Industries acquired more than 60 manufacturing companies over a thirty year span in order to increase the size and the scope of the company. Most of the acquired companies made it possible for Cooper to be independent of the outside environment and giving full control of the manufacturing process concerning their business while avoiding anti-trust allegations. Cooper basically purchased every company that is vital to its energy industry and all the side industries that effect it. From tools to fuses to cables to the drilling equipment was manufactured and distributed by the corporation’s divisions. Each acquisition is decided from a wish list that was closely examined and studied. At the time of the take over, the Management Development & Planning division would implement the corporate strategy in a period of three to five years. This involves diversification and elimination of the products that are poor sellers. In some cases the production plant is relocated and the staff is reorganized for the best efficient set up. In time all these companies are turned into profit centers. RECOMMENDATIONS: One of my first suggestions will be to consider Cameron Iron Works first since all the valves and other natural gas and petroleum products will be more beneficiary. Apparently there is more demand for Cameron’s products than the Champions. Little adjustments in the production process along with the ‘Cooperization’ adjustment will have make the company efficient in a short period of time. In contrast, Champion is considered to have 1950’s production techniques and only one product line, spark plugs, which will require tremendous changes within the company. The other option may be to purchase both of the companies, regardless of the financial risks involved. By allocating all the departments such as Management Development & Planning in the process, Cooper may turn things around. Since the beginning, Cooper’s way of acquiring companies seem to create success stories in the end. Champion still has brand name recognition in Europe and Asia (personal knowledge) which maybe taken advantage of. Major changes for the American market may take place while the revenues from the overseas sales finance the process. And once the changes are made in here, according to the demand the product line maybe readjusted for those markets. One other option for the Champion acquisition maybe to consider other possible options in the automotive parts industry. There may be other companies requiring less adjustment, and maybe turned into profit centers in less time than Champion. If buying both the companies is not possible at the time, then Cameron seems like a better option giving independence to Cooper in the valve dependence. Utilization of this company seems more of a priority at the time. However Dana may end up buying Champion if Cooper delay the acquisition.
Cite this essay
Case Study: Cooper Industries. (2020, Jun 01). Retrieved from https://studymoose.com/case-study-cooper-industries-new-essay
This is just a sample. You can get your custom paper from our
Rate this post Liberal arts education encompasses the entire human intellectual experience, including the humanities, the arts, and sciences, both social and natural. While students’ educational and post-graduation goals (i. e. employment and graduate school programs) tend to require more and more specialization, the world that we live in today is becoming continually complex day...
Rate this post What do you understand by the phrase non-objective art? In relation to key examples, demonstrate your understanding of the term, and discuss why, within the context of the period, artists may have been seeking to work in this way. This essay will examine the movement known as non-objective art, and to question...
Rate this post Terrorism has become a world wide phenomenon these days. What precisely do the terrorists prefer to call themselves when they gain nothing by attacking common, innocent people whose death or maiming does not better the strategic or tactical position of terrorists. Common man begins to hate them and is ready to denounce...
Rate this post Growing up, children are often told things that grown ups would question, as people grow they learn to question those things too. In the book The Adventures of Hucklberry Finn written by Mark Twain. Huck faces the challenge of either following what everyone is telling him is right, but he knows is...
Rate this post I would love to go on the Washington D.C. trip with the Immokalee Foundation because I want to discover new things and enjoy with my peers, and I want to take the opportunity that Immokalee Foundation is giving me to be close to the government of my country, explore the congress buildings,...
Not Finding What You Need?
Search for essay samples now
Copying content is not allowed on this website
Ask a professional writer to help you with your text