Merger, Acquisition, and International Strategies Essay
Merger, Acquisition, and International Strategies
* 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. Coca-Cola Company history originated in 1886 when the “curiosity of an Atlanta pharmacist, Dr. John S. Pemberton, led him to create a distinctive tasting soft drink that could be sold at soda fountains” (Coca Cola History, 2013, para. 1). He generated flavored syrup, took it to his neighborhood pharmacy, “where it was mixed with carbonated water and deemed “excellent” by those who sampled it” (Coca Cola History, 2013, para. 1). Dr. Pemberton’s partner and bookkeeper, Frank M. Robinson, is credited with “naming the beverage “CocaCola” as well as designing the trademarked, distinct script, still used today” (Coca Cola History, 2013, para. 1).
The Coca-Cola Company is not just an average beverage company. The Company owns/licenses and markets in excess of 500 nonalcoholic beverage products, mostly sparkling beverages but also a assortment of still beverages, for instance; “waters, boosted waters (for example, Oasis, Powerade and Vitamin Water), juices and juice drinks (for example, Minute Maid and Five Alive), ready-to-drink teas and coffees, and energy and sports drinks” (Coca Cola History, 2013, para. 5). Coca Cola most popular nonalcoholic sparkling beverage brands are Coca-Cola, Diet Coke, Sprite, Fanta, Dr. Pepper and Schweppes which they market worldwide. Coca Cola Company has a market capitalization of “$177.48 billion and is the largest company in the Food and Beverage sector” (Coca Cola Company, 2013, para.1). Whether you’re out shopping, working in the office or the gym, ZICO Pure Premium Coconut Water delivers the natural replenishment you require to renew. As of November, 2013 “Coca-Cola Company and ZICO Beverages LLC announced that Coca Cola has acquired the outstanding ownership stake in ZICO” (Coca Cola Acquires, 2013, para. 1).
The merger will unlock more “capability for ZICO including marketing, selling, manufacturing, innovation and distribution opportunities” (Coca Cola Acquires, 2013, para. 1). Not only will this merger benefit ZICO, but the Coca Cola Company will gain a top position in one of the fastest rising beverage categories in the world. This final move concludes the relationship that began in 2009 when Coca-Cola’s Venturing and Emerging Brands (VEB) business unit first invested in ZICO. In 2012, the Coca Cola Company acquired a bulk stake in the brand. And earlier this year, ZICO took its home on the unique red Coca-Cola trucks to be circulated throughout the U.S. and Canada. When Coca Cola initially invested in ZICO, they did so because they saw it as a “burgeoning premium brand with the potential to be significant leader in a high growth category” (Coca Cola Acquires, 2013, para. 4). Over the past 4 year, Coca Cola has observed the coconut water industry spear revenue impressively and gain household penetration.
ZICO itself solidified its place as one of the primary brands in the coconut water industry. With this acquisition, Coca Cola plans to modernize all characteristics of the consumer experience and intensify both rate and delivery to place ZICO at the top and continue even more growth within the company. * 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 merger with and explain why this company would be a profitable target. Grocery shopping is more difficult and complex than ever before. Today’s customers are more health mindful than customers of the past. Customers are more prone to buy specialty foods over the old-style foods their parents bought. Customers across the country have access to everything from bizarre products to exclusive delivery services. Specialty grocery stores have grown in attractiveness to customers, but the main issue is that often specialty stores have restricted locations which in turn limits their reach to customers.
Whole Food’s Market and Trader Joe’s are two specialty grocery stores who have increased locations to the hundreds while adhering to an unforeseen market standing for formerly untargeted market segment. Trader Joe’s operates over 340 stores in 9 states were they “buy direct from suppliers whenever possible, bargain hard to get the best prices and then pass the savings on to the customer” (Trader Joe’s, 2013, para. 4). Whole Food’s Market is the “world’s leader in natural and organic foods, with more than 360 stores in North America and the United Kingdom” (Whole Food, 2013, para 2). Trader Joe’s and Whole Food’s Market have managed to take original ideas and spread them throughout the nation to many different customers. Although they differ not only in the technique in which they decide to bring products to their customers but also in term of inventory management and supply chain organization. These two companies have become so successful in my opinion, not by what they differ in but what they have most in common, which is their commitment to their loyal customers, employees and undeniable quality in their products they sell.
Through their loyalty to their customers and employees in addition to their irreplaceable value proportion, both companies have effectively succeeded to upturn the grocery industry and have forced outdated grocery stores and its customers to reexamine their descriptions of what institutes a positive customer experience. The merger of Trader Joe’s and Whole Food’s Market would be lucrative to both companies since Whole Food’s Market is now international, they can allow Trader Joe’s access to an international market. Whereas Trader Joe’s offers unbelievable quality, but has a poor assortment of products, Whole Food’s Market will help offer both a great assortment as well as excellence of products. * For the corporation that operates internationally, briefly evaluate its international business-level strategy and international corporate-level strategy and make recommendations for improvement. Most customers have high hopes when buying a good or a service. As a general rule, it seems that most customers want to pay a low price for products with rather highly distinguished features.
Because of these customers’ expectations, a number of firms, like Coca Cola, “actively engage in primary value chain activities and support functions that allow a firm to simultaneously purse low cost and differentiation” (Hitt, 2013, pg. 120), which is also called integrated cost leadership/differentiation strategy. The reason Coca Cola uses this strategy is to efficiently create their products with some differentiated features. Efficient production is the “source of maintain low costs whole differentiation is the source of creating unique value” (Hitt, 2013, pg. 120). Coca Cola has successfully integrated cost leadership/differentiation strategy which has allowed them to adapt quickly to today’s new technologies and to the rapid changes in today’s society/cultures around the globe. The ultimate goals of Coca-Cola’s business strategy is to “rise volume, develop their share of world-wide non-alcoholic ready-to-drink beverage sales, maximize the long-term cash flows and create economic-value-added by improving economic profit” (Coca Cola Acquires, 2013, para 8). Corporate-level strategy “specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets” (Hitt, 2013, pg. 164).
Coca Cola Company has long been committed to the product development strategy in which case they do everything they can to become the best in their industry. They have moved into different geographic market such a Japan, United Kingdom, ect., Coca Cola have acquired competitors such as ZICO as discussed above, and also they have bought bottle suppliers to help grow the company even more. With all of these moves that Coca Cola have made over the years, this has allowed them to penetrate existing markets with new products due to their high brand awareness. You can’t go hardly anywhere these days without seeing a Coca Cola product of some sort being advertised or sold.
This strategy capitalizes Coca Cola’s favorable trademark reputation, “Open Happiness.” Coca Cola has developed great business and corporate level strategies but there is always room for improvement. We are living in a social media world and I would suggest that Coca Cola take full advantage of this new world of communicating with their customers. So many people communicate through social media and find new products through social media that developed a marketing strategy evolving social media will ultimately be a win-win strategy for any company. * For the corporation that does not operate internationally, propose one business-level strategy and one corporate-level strategy and make recommendations for improvement.
A differential strategy is an “integrated set of actions taken to produce goods or services (at a acceptable cost) that customers perceive as being different in a way that is important to them” (Hitt, 2013, pg. 115). I would suggest this differential strategy to Trader Joe’s because they currently are offering unique quality, private labels and outstanding pricing that other traditional grocery stores are not offer. To have success with the differentiation strategy, Trade Joe’s must consistently upgrade differentiated features that their customers value and/or create new valuable features with any significant cost increases to the customers. To do so, Trade Joe’s needs to constantly update and change their product lines. This means that the products that are not saleing get rid of them quickly.
Look into the new developed and increasing fades that customers are looking into. And because differentiated products satisfies customers’ unique needs, Trader Joe’s will be able to charge premium prices which allows them to out price their competitors and earn above average returns. A multidomestic strategy is an “international strategy in which the strategic and operating decisions are decentralized to the strategic business unit in individual countries and regions for the purpose of allowing each unit the opportunity to tailor products to the local market” (Hitt, 2013, pg. 235).
I recommend a multidomestic international corporate level strategy for Trader Joes because this strategy is used with companies that have high local responsiveness but have low global integration. This strategy should maximize Trader Joe’s competitive response to the idiosyncratic requirements of each market it is in. The multidomestic strategy is most appropriate for use “when the differences between the markets a company serves and the customers in them are significant” (Hitt, 2013, pg. 235).
Coca Cola History. Retrieved November 29, 2013, from
http://www.worldofcoca-cola.com/coca-cola-facts/coca-cola-history/ Coca-Cola acquires ZICO, Retrieved November 29, 2013, from
http://m.newhope360.com/mergers-amp-acquisitions/coca-cola-acquires-zico 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. Trader Joe’s Our Story, Retrieved November 29, 2013, from http://www.traderjoes.com/about/our-story.asp
Whole Food’s Market, Company Info, Retrieved November 29, 2013, from http://www.wholefoodsmarket.com/company-info