Merger and Acquistion

The following are important reason for Merger and Acquisition


1.Economical

Sometime it is more economical to buy a business then to establish a new business. The buying a new business save many cost . The examples of cost which can be saved by acquiring a business include feasibility study, installation of machinery,  Import duties , etc.


2.Quick Entry

The acquiring a business provide you a quick entry in the market while establishing your own business require a great deal of time. some business require even 5 to 10 year to establish.


3.Use Goodwill

The other reason is to take advantage of goodwill already created by the business. it is proven facts that it takes a long time to build goodwill in the market.


4.Remove Competition

The one reason is that you want to be a market leader and you buy a major operator in the market.


5.Diversification

The diversification has proved to be an effective stratgey against business and financial risks. The over reliance on one business may create serious threat in future.


6.Utilization of surplus fund

The organization may have surplus fund in hand and in accordance to financial management rule the extra fund must be invested in new project to maximize wealth.if organization find good opportunity of earning it can invest those surplus fund.

7.Acquiring competent Management

The one of the reason may be to get entire management of the other company, This is the case if other company is performing reasonable well then organization may decide to buy all management by buying the entity.

8.Improve Balance Sheet Asset Side

The earning is good but assets are also important if organization want to back up the earning with assets then a new organization with health balance sheet asset side may be acquired.


Important Consideration for Merger Decision


1. Price of acquisition

The most important question is that what should be the price of acquisition . The many factor play role in determination of the price of the acquisition.These factor includes the earning of the entiry , the asset of the entity, future prospects of the entity, Goodwill of enity in the market.

2. Employee React

The other important factor that how employees of acquired entity will react and how those employee will be integrated in the existing company. 

3. Business Practices introduction

What is the plan for implementing the existing business practices and cultures to the new acquired entity. 

4. Financial recognition

The financial recognition of new acquired entity in the books of account is also a challenging task.

5. Management integration

The integration of exiting management with new entity management is also be considered. The management working under different culture and organization have different attitude and styles and it is not easy to covert the old cultures and styles in new one.

Stakeholder objective in organization

There are different stakeholder in organization and the have different objective.


Employee objectives

Job Security

The one of the important objective of the employee they want job security. This Job security will bring the peace in the lives of employee and they can focus on work and their social life.


Health working condition

The second objective is safety in working condition. The employee want safe and secure for his work. The employee would be more happy if provided with a pleasant working environment . The minimum health standards is the basic right and demand of the employees.


Reward for Services

The employee want appropriate reward of his services. The employee want recognition of his services in financial terms.

Career Development

The employee want to grow in his career and therefore he expect different training and growth opportunity from the organization.


Customer Objectives

Quality Product at reasonable price

The first demand of customer is that he must get right product for his price. and the definition for right product is very simple and clear that a quality product at reasonable price. The quality may be define in different way for different product .

Characteristic of quality product

1. Use standard raw material
2. Durable Product
3. Meet expected performance level
4. Comfortable
5. Reliable
6. International standard for health
7. Features

Promised Services

In case of service industry the customer expectation is that promises will be fulfilled by the organization in true letter and spirit. in service industry no tangible thing is being offered therefore it is more important to keep your promise otherwise the customer will switch to your competitor.



Supplier objective

Regular business

The supplier is interest to get continue business order from the organization.

Payment of good in time

The second objective of supplier to receive the due payment in time.



Society objective

environmental issue

The society does not want to pollution due to the industry in the area.

Social Service

the society expect that business do something good for the society . The example of organization contribution may

1. Public library
2. Drainage system
3. Public park
4. Charity
5. Small Hospital
6. Small infrastructure improvements

Characteristic of Mission Statment

The mission Statement


1. Explain the existence

The mission statement must be effectively explain the purpose of existence and also tell about its competitive advantage.

2. Strategic Direction

The statement should effectively and briefly explain the the strategic direction of the organization.

3.Policies and procedures in place

 The mission statement must give a view of management about policeis and procedures.

4. Cultural values

The statement must give a overall view of cultural prevailing in the organization. This includes but not limited to business practices, integrity and honesty, positive behavior.


5. Brief & Concrete

The mission statement should be brief but concrete to deliver the message effectively. The user must be able to understand the mission statement message easily.


6. Allow Change / Flexible

The mission statement should be frame in a way that allow future change in the statement.


7. Unique 

The statement should not give an impression of copying from somewhere . The statement must be constructed in distinctiveness and unique style.




Limitation of Mission Statement

More focus on words

The many people believe that mission statement is just a good presentation and have nothing to do with the actual practices and operations.


General Idea

The other advantage is that the mission statement give only general ideas about the business and if the missions statement of same industries are compared . all mission statement are claiming the same practices and objectives.


Public consumption

The mission statement is just a formality for public consumption and has no role with practice business and internal management.

Benchmarking

What is Bench marking

Bench marking basically setting standard of performance and then comparing the actual performance with those set standards. The idea is to achieve best practices in the organization. The best practices are procedures information is gathered and then standards are established to be following.

Types of Bench-marking

1.       Internal Bench-marking

2.       External Bench-marking

1.Internal bench-marking

Internal Bench marking focuses on comparison different unit within industry.

2.External Bench-marking

This type of bench-marking is not limited to the specific industry. The standards outside the organization may also be selected to follow.

Bench-marking process

1.Senior Management involvement

 The bench-marking is a very complex and important process it requires specially expertise and a lot of experience of business. Therefore some senior management person must be responsible for oversee the process.

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2.Identify Critical Areas

The other step is to select the critical area which required the benchmarking. It is to be noted that every business have some key operations and normally benchmarking are done for those area. The concept is that if the key area or critical areas are upto required level of performance. The effect will be noticed on other areas as well.

3.Performance indicator

 Set performance indicator for the identified area. The performance indicator means how the critical areas would be evaluated in term of performance.

4.Get Data

The first step is to gather data for setting the standards. This is more important stage if the data is not gathering properly, it would not be possible to establish the accurate standard and the whole process would be at stake. Therefore some experience and senior level person should be given the responsibilities to overview the process of gathering data

5.Comparison of Performance

 After appropriate time period compare the performance and find out the shortcoming and deficiencies in the performance of the organization. It is continue process and one must not expect that by setting standards the desired performance could achieve.

6.Corrective Measure: - 

The adjustment is made to achieve the desire level of performance as set by the bench-marking.

7.Monitor the Result:- 

The comparison after appropriate period of time will not work , the continuance monitoring of is also required. The monitoring would put special emphases on the adjustment made by management because if the mistakes are repeated then there is fair chance of failure in achieving the objective set by bench marking.

Advantages of Bench marking

1.Knowledge of best practices

 The bench-marking is involved the study the other organization . this bring new knowledge to the business and also play important role in skill development of the individual. The more knowledge improves your profile value.

2.Establishing the Position

The bench-marking process is really helpful to identify your position in the market. The positioning is one of the best tools to measure your performance in the market,

3.Improve Efficiency

Best practices have a primary objective to improve efficiency of different process in the organization to maximize the profit.

Types of Management Level

Types of Management Level

There are basically three types of management

1.       Top Management

2.       Middle Management

3.       Lower Management

1. Top Management

Top management is responsible to determine the overall direction of the organization. The top management normally makes long term decision which is ranging from 1 to 10 year. The top management makes the decision about new Market, Launch of new Product, Acquisition of Business, Equity Structure, Dividend payment.

2. Middle Management

 Middle management makes short term decision which is normally form within range of one year. The management makes decision which is mainly related to achieve the overall objective set by the top management. The decision normally includes the resource allocation, Performance target and control procedures, Budgets. The middle management basically provides support to top management by achieving medium term targets.

3. Lower Managment

 Lower tier of management is normally responsible to control day to day operation of the organization. These decisions are mostly related to control and lower management is not directly involved in making planning of the organization. The lower management is responsible of his area of responsibility and it is the responsibility to control the performance and efficiency of that area.

Relationship between different Level of Management

The management though have different domain but ultimate objective remains the same which is setup by the top management. It is therefore important that each level of management must achieve the target and direction set by the top management. If any management level is not performing it means that organization is not on track. For example if middle management cannot set appropriate target or provide the required resource then it will have negative impact on the performance area of lower management. Therefore all management level are closely linked and decision making of one area is greatly influenced by the overall direction.

Types of Management Decisions

Decision Making

Management make many decision to run the business. The management make variety of decision from the short term day to day operational decision to strategic level investment decision. The important aspect of decision making is to choose among alternatives.

Types of Decisions

The management need to make variety of decision. Following are the few type of decision for reference only.

1. Investment Decision
2. Lease or Buy Decision
3. Production
4. Pricing Decision

Decision Making Process

The typical decision making process include

1. Collection of Relevant Data
2. Analyzing Data
3. Explore available options
4. Choose an option
5. Implement the Chosen option
6. Monitor the Result.

Types of Corporate Obejctives

Corporate Objective

Different organization has different corporate objective, however, the following are the most important corporate objective of almost all organization.

1.Profit Maximization

Profit maximization is deemed to be the most important objective of all business organization. in simple words, one can say that business for profit maximization. There are multiple objective organization, however, profit maximization is at top of all other objective.

2. Market Share

Market Share Maximization is also an important objective of many organization . The major market share is a vital reason for profit maximization in long run. Great market share result in strong customer relationship.

3. Customer Satisfactions

Customer Satisfaction is also important factor. Customer satisfaction is necessary to win customer loyalty. it is important factor because research has proved that customer retention is more profitable option that attracting new customer.

4. Employee Satisfaction

Employee Satisfaction is one of the corporate objective because more satisfied workers will improve efficiency of workers. The efficiency will improve the profit.

5. Supplier Satisfaction

Supplier Satisfaction will reduce the risks of shortage of supply and as matter of fact that supplier is free source of finance so improved relationship will ensure to the provision of free credit.

6. Compliance with laws

Compliance with laws and Regulation is also corporate objective as non compliance may be serious threats to organization operations.

Important Factor of competitive Advantages

The important Factor of competitive Advantages are

1. The use of the advanced Technology
2. More professional and competent team
3. The distribution network of the organization
4. The quality of product offered
5. The additional services offered
6. Geographical Coverage

Important Factor of competition

Important Factor of competition:-

The following are considered to be important factor of competition

1. Nature of Market
2. The customer ability to switch
3. The market player ability to exist the market
4. The industry set up costs
5. The new entry requirement also know as barrier of new entry
6. Availability of market space also known as growth opportunity
7. Long term aspect of product and services.

Factors of Bargaining Power

 Factors of Bargaining Power

The bargaining power can be classified as under

1. Bargaining power of customer
2. Bargaining power of supplier

Important factor of Bargaining power of Customer

1. Customer ability to buy
2. Importance of product to the customer
3. Customer ability to switch to other supplier
4. Availability of supplier
5. Quality related issue of product
6. Procurement office ability and skills

Important factor of Bargaining power of Suppler

1. Market Nature (Monopoly etc)
2. Possibility of new entry in the market
3. Uniqueness of supplier product
4. Customer switching cost and ability to switch

Characteristics of Good Planning Process

  

 Characteristics of Good Planning

1.Participation 

The everyone in the organization are involved in planning. The information is gather from the all relevant departments.

2.Documentation 

 Plans are formally documented for future reference.

3.Specify the Goals 

The plans specify the goals and target that are to be achieved.

4.Properly communicated 

The plans are properly communicated to all stakeholder in writing.

5.Organized Structure 

 An organized structure of planning is developed . The plans are structure from long term to short term .

6.Role and Responsibilities 

The plans clear identify the roles and responsibilities for achievement of target set out in planning.

Types of Strategic Decisions

Types of Strategic Decisions

1. Scope and Overall Direction:- The strategic decision mainly set the overall direction of the organization and deal in scope of the organization. for example the organization may decided that in next five year we want to capture 80% of market share is a strategic decision.

2. Major Investment and Resource Allocation:- The strategic decision also related to make investment in the existing business or in new operation.


3. Capabilities enhancement :- The strategic decision also analyze the organization capabilities and take necessary course of action to develop new capabilities or enhance the existing capabilities of the organization. for example the management may decide the establishment of a training institute to improve the skill of employees . The management may also decided to develop a reseach and development department to promote the innovation and creativity in the organization.

Types of Planning

Types of Planning

There are mainly two types of planning

1. Bottom up Planning
2. Top-down Planning

1.Bottom up Planning :- 

The decision making process start from the bottom the decision making information collected and process at lower level and the top management is provided with the available solution . 


The main advantages of bottom up planning is

1.Participation :- 

The everyone is involved in planning so it is self motivating factor to achieve the target of planning. because the plan were made by you then you are more committed to achieve the target set by yourself. This is also a good feeling gesture for employee that they are important for organization.

2.Better understanding of Organization 

This planing also help management to better understand the organization. All section provides a details analyses of problems and solutions. it is very helpful for the management to identify the key issues or critical areas within organization.

3.Many Solution and Option available 

This type of planing is a kind of collective wisdom and provide the management with many solution and options for planning and decision making. The management function to plan effectively depends on useful information and this planing serve the purpose.

The disadvantages of bottom up planning

1. Difficult to achieve overall objective organization
2. Coordination and communication is lacking
3. Overall direction of the organization is not set

1.Difficult to achieve overall Corporate Objective

The main disadvantage of bottom planning is that overall objective is lost in the process. Every department and section bringing the solution and ideas to improve their performance. The lower tier of management takes little care of the overall objective of the organization.

2.Difficult to set Overall Direction

Different people will come with different solution and mainly those solution would be related to their problems and for example a machine supervision may suggest that if the new machinery is installed the repair will reduce substantially. The machine will not consider the financial possibility of the option . Therefore it is difficult to set a overall direction of the organization under bottom up planning

Types of Corporate Decisions

Types of Corporate Decisions

The corporate decision is related to success of the organization. These decision are the in support of overall direction of the company. These decision is normally a short term planning and controlling of the organization activities.

1.Profitable Operation 

 The profit target are set and those target are monitored and strategies are formulated to achieve profit target in the short term.

2. Market Share 

 The strategies are formulated to retain the current market share and attract enhance the customer base.

3.Cash Flow Requirements

 The cash flow requirement of the organization is determined through periodical cash budget .

4.Customer Satisfaction 

 Promises with customer are fulfilled.

5.Healthy Relationship with Supplier 

 Management try to maintain a healthy relationship of the supplier it is important because supplier is important factor for production and supplies.

6.Organization Image 

The management also take some decision to improve the organization image in the market.
Compliance with Laws and Regulation:-