A Thousand Splendid Suns: Analysis

Create questions you would ask the author and at least one of the people in the book. Include why you would ask each particular question, and connect the question to a specific event (quote with page #) in the book. If I were to ask questions to the author and characters, they would be about their experiences. The one question I would ask Khaled Hosseini is, All the characters in this book were granted poetic justice, but why not Mariam? Mariam did nothing monstrous to deserve execution; her act of killing Rasheed was done in self-defense and the defense of Laila. Nonetheless, she suffered the shame and punishment from the government under which she lived in. â€Å"Like a compass needle that points north, a man’s accusing finger always finds a woman. Always. You remember that, Mariam. †pg. 364 Even though Mariam’s execution was injustice in my eyes I believe that for Mariam her death sentence was an legitimate end to her life which had legitimate beginnings. Before her death sentence, she recites lines from the Koran asking for mercy and forgiveness which portrays her humbleness and her dedication to loved ones in her life. I would like to ask Mariam why she refused to call witnesses at her trial. Why did she not try to escape with Tariq and Laila? Calling witnesses to her trial could have proved to be beneficial to Mariam; she might not have been sentenced to death but she didn’t even try. â€Å"Remembering the last time she’d signed her name to a document, twenty- seven years before, at Jalil’s table, beneath the watchful gaze of another mullah. pg. 364 There was still a little hope left her, her dreams were to see Laila and Tariq happy and to watch Aziza and Zalmai grow but just like that she gave it all up. Her life had not ended but she still acted as if there was nothing that could be done; she herself gave up her hopes which contrasted her character at the beginning of the book. Lastly, I would like to ask Kh aled why was Laila not given a chance to attend university and complete her secondary education? It is obvious in the early stages of the book that her dream is be educated and educate others so that she can play a women’s worthy role in their society. Her young self is contradicting to what her character becomes. I wonder why after building her family and living in peace she didn’t have the desire to attend university. She had a good opportunity and I feel it would have benefited her and her family a lot. One question I would ask Laila is why she wanted to move back to Kabul? Wasn’t she done with all the suffering and painful memories she endured there? â€Å"†¦Where do we go from here, Tariq? How long do we stay here? This isn’t home. Kabul is†¦Ã¢â‚¬ pg. 390 I realize it was her homeland, she grew up there and the Kabul they left during the war was now half restored; though why would she risk the lives of her family members and their freedom they obtained in Murree. â€Å"It’s a good life, Laila tells herself, a life to be thankful for. It is, in fact, precisely the sort of life she used to dream for herself in her darkest days with Rasheed. †

Managing Team Conflict

Potential sources of conflict for the team include team member’s schedules, member disagreement, lack of consideration of deadlines, lack of input, and ineffective communication. One issue to contribute to conflict is the lack of input of all team members and the failure for team members to show up and meet at the designated time agreed upon by all team members.   Since there are different knowledge and skill set levels of all the members of the team, there can be areas where these levels overlap. In addition, there can also be areas where the team is missing necessary strengths to fully assist the team in its goals.Without effective communication, team members cannot fully express skills each person currently possesses, and areas of knowledge where assistance is needed.   Communication barriers pose potential problems as well. One communication barrier that exists is failure for group members to utilize active listening. According to Hamilton (2001), â€Å"Many times whe n we are discussing a problem with others, we listen selfishly. In other words, we listen to gather ammunition for our rebuttals and to determine when we an insert our viewpoints into our conversation. Active listening requires us to listen from the speaker’s viewpoint† (312). With this in mind, it is important for all team members to utilize active listening and be open to new ideas and thinking. It is through learning from other team members that a team can increase strengths and gain additional knowledge to assist the team in its goals.One way to assist with communication is having a leader of the team. The role of the leader is essential because it helps the team maintain organization and structure. Having a leader can assist the team when decision making must be performed. In the decision making process, three leadership styles used are autocratic, democratic and laissez-fairre. Each of these leadership styles can be used by any individual within the team. Ultimate ly, the goal of the team should be to use the democratic leadership style. The democratic leadership style is the preferred method of decision making because, â€Å"two-way communication exists between leaders and followers,† (Hamilton, 319). It is this two-way communication that will assist all team members in having a say about the decision and making the decision that will best benefit all team members.Failure to utilize effective communication can lead to conflict within the group. One conflict already experienced within the group is lack of input and failure for all members to show up for designated meetings. This creates a problem since all input is needed to make effective decisions within the group. It becomes a problem for completing assignments without all input from team members and creates tension within the team since less members are available to perform all the work needed to complete the assignment. Those members who are actively working on the assignments are doing work for those members who fail to give input or report as a team.One source of conflict that is beneficial to the team is that conflict surrounding differences of opinions. Since each individual is unique and brings knowledge with him or her, having challenging opinions and views will ultimately assist the team in its knowledge and long term goals. 2. How will the team deal with a team member who will not cooperate with the team goals and objectives – for instance, the team member who is personally offensive; or, the team member who is a social loafer?Having a leader who will be in charge of the team is a way to limit the issues that arise in the team. In addition, ground rules must be established when the team is formed to minimize the risk of issues among the team. If a team member is consistently disrupting the team and not assisting the team in its goals, then action needs to be taken. If the leader of the team is unable to resolve the issue with the team member, then additional intervention may need to occur.3. Reflect once more on the experiences you’ve had within your current learning team. Describe a time when the members of your team have managed conflict by: a. Avoidance b. Competition c. Accommodation d. Collaboration e. Compromise Next, discuss which of the above conflict management methods seemed to yield the best outcomes for your learning team. Explain your rationale. Since lack of input poses to be a problem with the current learning team, avoidance is used by team members. The remaining team members who show up for meetings and actively contribute have done so in a collaborative manner in order to finish the task at hand. The six conflict management strategies can occur in all teams, but the conflict management strategy that yields the best outcome is using collaboration. Collaboration is a means of problem solving that takes all ideas and finds the best solution based upon the ideas. If all team members bring ideas to the table, the learning team can then take all ideas into consideration and determine the best solution to the conflict.4. Summarize the responses to #3 into five specific team rules about conflict management that describe how team members will respond and behave in challenging situations. Consider adopting the following phrasing: When faced with conflict, our team will manage it by†¦. A. Create a schedule that lists who is responsible for what portion and the due date for inclusion in the overall project.B. Everyone will communicate in a respectful manner.C. Take constructive criticism and compromiseD. Work cooperatively with other members of the team.E.   Participate and complete assignment on timeReferencesHamilton, Cheryl R (2001) Communicating for Results. Belmont: Wadsworth / ThomsonLearning.

The Matrix and how it relates to philosophical issues raised with Essay

The Matrix and how it relates to philosophical issues raised with skeptism and the mind body problem - Essay Example When Neo, A computer programmer, learns this, he rebels against the machines together with other people who are now free in the real world, from a dream world. The movie involves many references of hacker subculture and cyberpunk, where religious and philosophical ideas like evil genius, Rene Descartes, Vat Brain Cave’s Allegory and Homanages like Spaghetti Western, Japanese animation, and dystopian fiction. However, does the film relate to philosophical issues raised with Skeptics and the mind body problems? Many philosophical issues are dealt with in the matrix as it touches on many and different topics of philosophy. It is therefore philosophically relevant since some colleges that offer philosophy also focus on this film during the study. However, the first film was the executed, unlike the second and third, which people felt disappointed with (Meinhold 55). Matrix film is very interesting as it mixes Eastern and Western philosophy. The ancient Vedas gives the main point where all human beings are explained under the illusion of the spell of Maya. The Supreme God’s personality, energy of Krishna, is this Maya and that is what covers the entity that is living from their real identity and reality and leaves him thinking of themselves as very happy as they live in ignorance, irrespective of the condition they maybe in. this is shown when Cypher tells the agent that artificial intelligence is what cheats people while they are sleeping, and also acts as an agent of cover potency. The film is not very specific, since anyone can say it supports his point of view as well as prove it. Some people believe that every machine represents a corrupt multinational corporation or government. This is supported by the fact that we created them, we cannot control them, and they now control us, but many of us are not free because they feed us off (Meinhold 74). He adds that in order to fight them, one has to use deals that have

E-commerce Essay Example | Topics and Well Written Essays - 2250 words - 1

E-commerce - Essay Example Clear communication channels and escalation matrix should also be defined. The core team must prepare a methodology and time frame to transfer existing data to the new system. A final launch date should be adhered to or changed depending on project progress. The leadership team must pay special attention to securing staff buy in, so that the new system when launched is embraced by the users. In implementing this strategy various organizational, management and technical issues will need to be addressed. This is discussed below. Organizational Issues In order that a life insurance company moves from a brick and mortar business to an automated environment, strategic leadership is very important. The leadership team may need to evaluate: "Strategy to deal with channel conflict Prevent erosion of margins Assess type of products suitable for web distribution Techniques to strengthen customer relationships and gain new customers online" (Bloor Research). This entails huge investment in IT infrastructure. The leadership team will need to decide the payment method for this investment. One option is to outsource or share costs with a provider while the other is to take costs out of existing operations. For example Allstate Insurance, a US based insurer "restructured its workforce to support a move towards a multi-channel sales strategy encompassing the Internet, call centers and agents. It eliminated thousands of non-agent positions and converted captive agents into independent contractors. These changes reportedly will save the company $600m. Allstate has also reportedly reorganized and consolidated some of its operations to save costs" (Insurance Journal). The life insurance company needs to decide the areas to... This essay evaluates the strategy for a life insurance company to transform from a brick and mortar business to an e enterprise. The researcher focuses on the discussion of the issue of converting a life insurance company to an e-enterprise, that requires not only huge monetary investment, but also investment in keeping the energy and tempo of the employees high so that project implementation is successful. If e launch is successful, some parts of the traditional set up can be replaced by more modern processes. It will turn the insurance company from a mammoth organization to a lean firm. Reduce processing time and control cost, e –commerce and e – business solutions hold great appeal for an insurance company. Josefowicz aptly notes that a life insurance company can â€Å"maintain a small group of e-business experts to provide guidance, consistency and best practices on the five key areas of strategy, education, usability, security and standardization†. The resea rcher states that this will help the company reduce the risk of: re-inventing the wheel for each new initiative, supporting cross-purpose initiatives, lack of training, which leads to lack of adoption and user frustration, divergent interfaces, which increases training expense, and reduces adoption, expensive, unnecessary integration of divergent systems, lack of interoperability, expensive and time-consuming post facto integration. The researcher then concluds that it's competence, clear direction and enthusiasm, that can surely make the project a success.

A Business Plan Essay Example | Topics and Well Written Essays - 750 words

A Business Plan - Essay Example Following is the list of elements required for the business plan Executive summary is one of the most important segments of any business plan. It will give the brief idea of the company’s business, background and expectations from the particular group. This creates interest for the investor to read further. It should be carefully written. This is written to give an idea about the market and the company operating in. The background of the company should include information like when company started, product or services it offers, its customer base, the growth it’s experiencing and current performance. Apart from company specific information it should also include the information regarding the market and industry it’s operating in. The market can be new developing or developed. The competition and the position of the company within that market give an idea to the investors about the overall position of the company and validity of its growth projections. The clarity of vision can be supportive to attract investors. Vision gives the overall picture of the opportunity existing and how company will be growing with that opportunity. It is supported by the financials and other non financial factors. This section discusses the about the opportunity existing in the market and the roadmap through which company will be operating to earn the profits. This will include planning for various functions of the company i.e. operations, marketing, human resource management and financial management. In this segment the financial strategy should be described. The capital budgeting, break even analysis, operating cost, fixed and variable cost, projection of profits, investment requirement, cash flow and balance sheets. The financial projections will give the bank or investor an opportunity to understand the financial planning and its coherence with the overall strategy. The organization structure includes the organization chart, brief

Critically assess Marxist theories of fascism Essay

Critically assess Marxist theories of fascism - Essay Example One of these reasons is timing, in that it took several generations for the Left to realize that fascism was a not a clever manipulation of the populace by the reactionary Right, but was, rather, authentically popular to the masses. Another reason is because many states, during fascism’s heyday, tried to mimic the fascist governments, even though these states were not functionally fascist, essentially trying to identify themselves as fascists by their plumage or clothing. A third reason why fascism is difficult to define is because there is such a wide disparity between regimes due to space and time, as each fascist country derived their own fascist elements from their own community identity. For instance, religion would play a greater role in any kind of United States incarnation of fascism than it would in Europe, where the fascists were pagan. A fourth difficulty in defining fascism is that there is a tenuous relationship between its ideology and fascism as put into action (Paxton, 1998, pp. 1-4). While fascism is a concept that has eluded definition, there is some comfort in knowing that Marxist definitions and critiques generally differ from non-Marxist ones, in a number of different ways. In this way, fascism has a better theoretical ground when studied in light of fascist theories of the ideology, and these Marxist theories are the focus of this paper. That said, there are a number of fundamental differences between Marxist theories of fascism and non-Marxist theories. Marxist theories of fascism differed from the non-Marxist theories of fascism, in that non-Marxist theories do not study the class and social policies of Germany and Italy under fascism, doing little to explain how these regimes dealt with taxes, social services, business and labor conditions, as well as not asking for who benefited from fascism and for whom fascism was a detriment, while these questions are at the core of the Marxist critique of fascism (Pizzo, 1998, p. 97). This i s because the Marxist ideology sees class as central to government in general, whereas non-Marxists see state governments as being above class structures (Pizzo, 1998, p. 97). In other words, to Marxists, â€Å"fascism was a mass movement that acted independent of capitalist support† (Renton, 1997, p. 2). Another major difference between Marxist critiques of fascism from non-Marxist critiques is that the latter is concerned with fascism as a mature form of governing, focusing on the essence of fascism; non-Marxists concentrate on fascism as a movement. Thus, the non-Marxist critiques of fascism concentrate ideological themes and organizational principles of fascism than do Marxist critiques (Vanaik, 1994, p. 1730). Another major difference between Marxist theories and non-Marxist theories is that Marxist theories tend to view fascism strictly in economic terms, while non-Marxist theories see fascism in psychological and personality terms (Thomas, 1991, p. 1). According to the se non-Marxist theories, fascism is a product of a diseased society in crisis, or the consequence of moral failure and these theories revolve around the concept of a sick society and a world gone mad (Davies & Lynch, 2002, p. 4). These theories try to get into the psyche of leaders who embrace the fascist ideology, such as Hitler and Mussolini, as well as the psyches of those who were ardent followers of

Business and Society - Leadership and Motivation Coursework

Business and Society - Leadership and Motivation - Coursework Example The steps taken in managing failure include managing cash flow, avoiding debt and developing an effective business plan. Leadership and motivation are important determinants of success in a business entity. Effective leadership guides employees towards the achievement of the entity’s goals and objectives (Caroll and Buchholtz 35). Additionally, employee motivation helps improve employees’ productivity resulting in an overall improvement of the firm. Leaders are different from managers in various ways. Leaders focus on people while managers focus on structure. Leaders innovate while managers administer (Caroll and Buchholtz 42). Leaders inspire trust while managers control. Retired General Colin Powell defines leadership as followership. His definition of leadership is accurate since leaders act in a way that inspires those that follow them. I agree with his definition of leadership is all about inspiring one’s followers. There are various leadership styles including bureaucratic, charismatic, servant and transactional (Caroll and Buchholtz 45). The style I prefer most is servant leadership since the leader leads since it considers employees’ participation. The style I prefer least is bureaucratic leadership since it inhibits innovation, creativity and flexibility. Dr Phil’s and Maslow’s Hierarchy of needs can be used to motivate and manage employees. Employee motivation increases their productivity (Caroll and Buchholtz 47). It is clear that money is not the sole motivating factor, other aspects including the working conditions impact employee management and motivation. An organization is a social unit of individuals that is designed and managed to pursue collective objectives (Caroll and Buchholtz 7). The specific characteristics of an organization include an organizational culture and the ability to work towards collective goals and objectives. Corporate culture refers to behaviours, beliefs and values that establish how a company’s management interacts with its employees and how it handles any external transactions.  Ã‚  

Literature review including a research methodology, Objectives and Dissertation

Literature review including a research methodology, Objectives and research. Tobic (Internationalization) - Dissertation Example The University of Bradford is one organization that seeks to go the international way as a way of expanding its market share with the added advantage of increasing its profits among other benefits. However, there is a high risk associated with the internationalization of organizations evident in the number of organizations that have failed in the process. Some of the main challenges associated with internationalization is the complexity of the process of going international, the high costs involved and the complexity of managing internationalized entities. Objectives of the Study 1. To determine how feasible it is for the University of Bradford to internationalize 2. To determine the key issues that the University of Bradford will have to deal with in its internationalization 3. To establish the best strategy that the University of Bradford can adopt to successfully go through the internationalization process Research questions In achieving the objectives of this study, a number of q uestions will have to be answered. The following are the research questions for this project. 1. How feasible it is for the University of Bradford to internationalize? 2. What are the key issues that the University of Bradford will have to deal with in its internationalization process? 3. What strategies can the University of Bradford adopt in its bid to go through the internationalization process? 4. ... Reasons behind the Internationalization of Organizations Most economies thrive on the notion of imports and exports. Penetration into the foreign market is one of the major reasons why firms are venturing into internalization (Taylor, Walker and Beaverstock, 2002). In the 21st century, a lot of firms and businesses have been involved in international markets. Companies have been looking for ways to maximise their productivity and profitability by tapping into markets other the ones in their own home base of operations. There are different theories that have been formulated to explain the increase in international activities among different firms all across the world (Gankema, Snuif and Zwart, 2000). The absolute cost advantage is an internationalization theory that propagates the idea that institutions and firms should specialize in those products in which they have a sure advantage. This theory was popularised by Adam Smith and it implies that if a company can make a product without having to spend a lot in terms of costs per production unit (Welch and Welch, 1996). This view supports the idea that companies that have a comparative advantage do not have to have an absolute advantage to prosper in a market. Companies therefore internationalize so as to gain from comparative advantage (Taylor, Walker and Beaverstock, 2002). The prospects of new markets are another major driving force for internationalization. Internationalization opens up many opportunities for business, big and small. Advances in technology have led to the development of production techniques which ensure that companies can mass produce (Vahlne and Nordstrom, 1993). As a result, many of these companies have ventured into the international scene in search of new markets in which to sell

Segregation Essay Example | Topics and Well Written Essays - 1250 words

Segregation - Essay Example Despite variety of theoretical models suggested by US scholars to explain the ongoing discrimination in various fields of social life (Massey & Denton 1993; Borjas 1998), the key question still remains unanswered: why several decades of intensive legal and social efforts did so little in terms of eliminating such negative phenomenon as discrimination of minorities Although legal status of minorities is an essential factor in fighting discrimination and segregation, there are likely other equally important factors involved. Main Discussion The efforts to cope with the problem of minorities' segregation and discrimination undertaken during the last five decades largely failed. The seeming success of affirmative action when in 1970 - 1980's the number of students who belonged to racial or national minorities significantly increased, was achieved by reverse discrimination of the white majority: cases of Bakke and Webber (Ball, 2000) in 1970's made this fact evident to the public. Eventually, the surveys of public opinion demonstrated the controversy caused by lack of understanding of the affirmative policy in the nation. A recent survey performed by CNN in 1995 discovered that 80 percent of the respondents felt "affirmative action programs for minorities and women should be continued at some level" (RCPO, 1995). However, at the same time any possibility of reverse discrimination, which in fact had been the main feature of affirmative action programs since 1964, was opposed by 63 percent of participants (RCPO, 1995a). Affirmative action programs in education seem to cause more damage than positive effects. Laws passed to protect minorities from discrimination often led to reverse discrimination instead of... One of the most known accounts of the relationship between prejudice and negative stereotype was suggested by Milton Rokeach, who established a strong link between prejudice and the perception of intergroup differences.Therefore, affiliation with a certain group is an essential aspect of any individual's life. However, an individual affiliated with a certain group starts to distinguish between his/her group and people who belong to other groups which result in the development of two concepts: in-group and out-group. In-group is defined as "†¦ a group to which a person belongs and which forms a part of his or her social identity" while out-group is "any group to which a person does not belong". The major difference between the individual's perception of in-group and out-group members is the following: members of in-groups possess overwhelmingly good personal qualities, while out-group members are perceived with a certain share of negativism. This unique psychological mechanism is likely to be an important contributor to the ongoing discrimination and segregation in the US. This mechanism provides a valid explanation for the phenomenon of ‘voluntary segregation': segregation and racial isolation which results from voluntary choices of the minority representatives in housing, education, etc. The set of negative stereotypes which developed over the centuries when the white majority and the minorities lived on the same territory is an equally important factor in the ongoing discrimination.

The Cuban Missile Crisis Essay Example for Free

The Cuban Missile Crisis Essay Remembered as perhaps the most intense episode of the Cold War due to its nuclear threat, the Cuban Missile Crisis has been analyzed extensively by historians hoping to construct an accurate picture of its cause and development. The tight control exercised by both Soviet and American government agencies, however, has limited access to relevant documents, and thus inhibited any objective study of the crisis. Until only a few years ago, most of the world would have agreed with Arthur Schlesinger Jr. s description of the event as a brilliantly controlled1 American victory- a paragon of US dedication, morale, and diplomatic skill. But as the National Security Archive has gradually opened access to key accounts, it has become apparent that what seemed so finely orchestrated was in fact wrought with misinformation, miscalculation, and misjudgment. 2 At the time, tensions were already running high due to the fierce military and psychological rivalry between superpowers, and problems within the Eastern and Western blocs themselves made it even easier to misinterpret political signals. Failures in intelligence and a general lack of central control further complicated the situation, fuelling the fires of mistrust that were already burning with the increased urgency that accompanies the prospect of nuclear war. From these revelations, we can conclude that initial assessments of the episode as a thirteen day affair are incorrect, that it was rather the result of long-term misunderstanding. And while deliberate deception did play a significant role in the development of the crisis, we must acknowledge that it was, for the most part, perpetuated by a combination of basic mistrust and political and military mishaps. It is with this knowledge in mind, then, that we proceed to examine the complex set of factors that brought the world to the brink of a cataclysmic war. The years leading up to the Cuban Missile Crisis had seen a number of significant changes in the Cold War conflict. Things were very unstable, as new faces became prominent, new nations were born, and the rivalry between superpowers reached previously unvisited levels, both high and low, as Soviet and American governments experimented with foreign policy. While these factors had a significant influence on the status quo in both the Eastern and Western hemispheres, their effect was particularly marked within Khrushchevs domain, as he sought to assert his individuality by introducing anti-Stalinist mechanisms. His advocation of peaceful co-existence,3 and military disarmament, as well as his insistence on publicly denouncing Stalin, met with fiery opposition from within the Kremlin, and, by 1957, it had become apparent that he was losing control of the formerly centralized Communist world. With rebellions springing up across Eastern Europe, then, and China beginning to pursue a course independent of Khrushchevs support, it had become clear that a firm reinstatement of Soviet authority was needed, and soon. The pressure that this goal put on Khrushchev, and the conflicts between him and his advisers caused Soviet foreign policy to fluctuate drastically. After pursuing what seemed what seemed like rapprochement at Camp David, and making an amiable visit to the United States, the Soviet leader suddenly reverted to hostile tactics, refusing to negotiate over Berlin, and assuming a suspicious attitude about US actions in Europe. This dramatic change of approach was best displayed in the fact that, after years of silence on offensive American overflights, he unexpectedly ordered a U2 plane that was photographing Soviet territory shot down. Khrushchev went on to cite this incident as the cause for his failure to attend the Paris Summit Conference in May, 1960. Obviously, such inconsistency sent mixed messages to the American administration, increasing their distrust. Suspicion of the Soviets escalated to a new high, as many key officials sided with former Secretary of State John Dulles in describing the period of peace as a tactical ploy to lure the West into a false sense of security, while (they) pursuedaggressive goals in disguise.4 The Soviet desire to reassert its strength and control caused even further problems when it extended past attempts to preserve Russias hegemony in Eastern Europe to actions intended to undermine the American public image. Ultimately, it became apparent over the next year or so that Soviet movements were double-edged, designed to consolidate, certainly, but also to probe US defenses, to determine the actual extent of its interest and loyalty to its allies in Europe. Their efforts in Berlin constituted one such probe, as the construction of the Berlin Wall was intended both to plug a hole in the iron curtain,5 and, at the same time, to break down the relationship between the United States and West Germany. The Soviets felt that if the Americans failed to intervene despite the West Berliners cries for help, this would weaken Germanys confidence in their US allies, and make a statement to the rest of NATO confirming their fear that the US was unable or unwilling to offer substantial resistance to Eastern strategies. This sentiment had arisen with the Soviet launching of Sputnik in 1957, a statement of its progress in the nuclear arms race. The Americans, meanwhile, were aware that their failure to follow through on some of their ideas for NATO, including the goal to increasetroop strength to fifty divisions,6 was giving the impression that US support was all talk. Further problems with the French over the establishment of the European Defense Committee threatened the cohesion of the Western bloc and engendered a need to reinforce US interest in Europe, a need which so paralleled the Soviet goals that it set the two superpowers up for an almost inevitable collision. In addition, the new president John F. Kennedy was experiencing similar problems to those faced by Khrushchev. Confronted with a hawkist faction within his body of advisers, Kennedy was constantly under pressure to be more aggressive, to abandon containment and start to roll back Communism. Just as disagreements within the Kremlin had caused confusion and misinterpretations of political moves, conflict inside the White House allowed American foreign policy t o appear fragmented and thus unpredictable. These things ensured that an already precarious situation was complicated by factors that masked the true intentions of each side. Cuba may seem an unlikely place for this clash between superpowers to occur, but since 1959 it has been a key symbol of resistance to US imperialism both in Latin America, and, on a grander scale, in the entire western hemisphere. In 1947, a Treaty of Reciprocal Assistance had been signed by the US and a number of South and Central American countries, apparently an alliance of similar design to NATO. It had been the source of much trouble, however, as the Latin Americans had envisioned the pact as a mechanism for their own economic development and security, not as a means by which the US could prevent Soviet expansion in this part of the globe. When ten years passed with little tangible aid, but plenty of American interference in the political system, the civilians grew dissatisfied, a sentiment which intensified as the US threatened leftist Colonel Arbenz of Guatemala with military opposition if he did not step down as premier. The Cubans especially resented this, and, when similar threats were raised against their Communist leader Fidel Castro, they turned to the Soviet Union for assistance. By the end of 1959, Cuba had become a Russian client state, and a useful foothold for the Soviets in the western hemisphere. Despite the intense antagonism that existed between the Russians and the Americans, the US administration did not view the close relationship between Castro and Khrushchev with any real alarm. This was because they felt that while the Soviets wanted to undermine the American public image, they were not willing to take action that could precipitate nuclear war. Thus, Kennedy was reasonably sure that his warning to the Soviets not to deploy missiles in Cuba would be obeyed in the interests of the common goal of nuclear non-proliferation. It came as a shock, then, when U2 planes flying over Cuban territory showed that several missile sites were under construction. This greatly increased the American mistrust of the Soviets, and, as correspondence began to flow between Moscow and Washington, it became apparent that there was an inherent difference in the way that the two superpowers defined the Cuban problem. For instance, the Americans felt that they had a right to know what was happening in their part of the world, complaining that the Kremlin had given repeated assurances of what (you were) not doing7- in effect, that it had lied to them. The Soviets, on the other hand, asserted that they were under no obligation to inform the U.S of any activities (they were) carrying on in a third country.8 This statement was probably only made to promote a sense of strength and independence, but it was, to the Americans, a sign that even the prospect of nuclear war could not deter the Soviets from their campaign of domination and expansion. It is clear from similar incidents that a need to appear strong led each superpower to use a certain degree of deception in its dealings with the other. This did not essentially cause the conflict, however; as already stated, the missile crisis had been set up by intensifications in the East-West rivalry long before Soviet ships carrying nuclear arms set sail. It would be more accurate to say, then, that the bluffing that went on only served to delay the resolution of the problem. In addition, it was effective in that it gave the world a false understanding that, particularly on the American front, could be manipulated by government officials in order to create a more favorable public impression. The United States especially made a significant effort to present the Soviet action as a dangerous attempt to change the world-wide status-quo,9 ridiculing their qualms about a possible invasion of Cuba. Recent studies have shown, however, that these concerns were not so unfounded as has been previously supposed. According to the US Archives, a plan for an operation against the Castro regime had been in existence since April 1960, entailing sabotage, infiltration, and psychological warfare, activities with military exercisesfor a possible invasion.10 It is also clear that President Kennedy was well aware of this throughout the crisis negotiations, having endorsed the scheme with the comment that its final success would require decisive military intervention11. We can only conclude that the Americans assumed the stance they did to protect their public image- seeking to mask the traces of imperialism in their attitude towards Cuba, and, at the same time, to undermine the Soviet positio n by presenting them as bad liars to the rest of the world. The Soviets were less successful, but just as determined, in their attempts to use deception to work the situation to their advantage. They, in turn, lied to the Americans in stating that no missiles will be placed in Cubawhich would (be)capable of reaching the United States,12 and again, later, in their claim that the deployment of missiles to Cuba was a purely deterrent move carried out to save Castro. While it is clear that there may have been something in the concerns about invasion, the writings of Khrushchev himself show that the strategy was also invented as a means of equalizing what the West likes to call balance of power. 13 The double-edged nature of this Soviet probe became even more obvious in the correspondence that took place between the Kremlin and the White House, as Khrushchev requested two separate concessions in return for removing the missiles- a no invasion pledge, and a promise that threatening nuclear bases in Turkey be dismantled. These missile bases may have actually triggered the Soviet action in Cuba, as they provided the US with an unanswered first-strike capability, and, incidentally, had become operational just a few weeks before ships began to cross from Russia to the Cuban coast. Known as the Jupiter missiles, these nuclear bases were an important part of a US statement intended to counter general lack of confidence in American support. They were also, however, essentially provocative,14 capable, as the Cuban crisis had shown, of precipitating a nuclear war. As the Americans weighed up these two factors, their concerns about their public image again caused them to revert to deceptive measures. Their inconsistency did not exactly impress the Russians, who were one day confronted with the announcement that the missiles in Turkey were NATOs decision,15 and the next, told that they would be removed if the Soviets kept the news of this concession from the American allies. In the end, however, the US administration judged correctly when it assumed that Khrushchev would happily forget about publicizing the agreement if he were given what he had asked for. The missiles in Turkey continued to be a central issue, though, as ongoing denial of any explicit Turkey-Cuba deal created the impression that the Cuban Missile Crisis was a great American victory. To further confound a situation that was already complicated by long term misunderstanding and deliberate deception, a number of military and political mishaps occurred. For instance, the fact that an American plane was shot down over Cuba almost triggered a U.S. air strike because it was interpreted as a Kremlin initiated action. Evidence has shown, however, that this was a purely local effort on the part of the Cubans to assert their independence. Similar problems occurred in the US administration, as CIA officials undertook unauthorized operations that gave the Cubans even more reason to anticipate an American invasion. This lack of central control made communication vitalfor the whole world,16 as the White House at least, recognized. In a conflict involving nuclear weapons, Kennedy said, even if these are only valuable for their psychological effect, every precaution must be taken to prevent an accidental outbreak of war. It is clear, then, that the Cuban Missile Crisis was born out of mutual but conflicting desires to appear strong in the context of an intense ideological war. During the years leading up to the event, a number of factors, the most important of these being the threat of nuclear war, combined to escalate existing tensions to dangerously high levels. In addition, the fact that neither side was willing to acknowledge that relations were deteriorating meant that the situation was further complicated by diplomatic exchange. When the conflict broke out in 1962, both Khrushchev and Kennedy stumbled through negotiations as they weighed up various concerns: how to protect their public image at home, and yet, at the same time, undermine the enemys position; how to keep up in the arms race while avoiding nuclear war. These things, and may others ensured that any resolution of the crisis would have to offer a military quid pro quo which would diffuse the nuclear conflict without causing either superpower to lose face. The fact that Soviet and American officials still disagree about the details of the eventual agreement, however, shows that it was more the (nuclear) restraint that was practiced and expected17 that prevented the outbreak of war than any diplomatic feat. 1 Jonathan K. Reece Revising the History of the Missile Crisis, pg. 34. 2 Robert McNamara as quoted in Jonathan K. Reeces Revising the History of the Missile Crisis, pg. 34. 3 William R. Keych The 20th Century World pg. 304 4 William R. Keych The 20th Century World pg. 304 5 William R. Keych, op cit., pg. 316 6 William R. Keych, op cit. pg. 297 7 Letter from John F. Kennedy to N.S. Khrushchev of Nov. 6, 1962. 8 Soviet Ambassador Kusnetsov as quoted in letter from John F. Kennedy to N.S. Khrushchev of Nov. 6, 1962. 9 The Presidents Address, October 22,nd, 1962. 10 Top Secret document released to the US National Security Archives in January 1989. 11 Ibid. 12 Letter from John F. Kennedy to N.S. Khrushchev of Nov. 6, 1962 13 http://www.wilsoncenter.org/subsites/ccpdc/pubs/zart/Ch11.html 14 Eisenhower as quoted by Jonathan K. Reece, op cit. page 46. 15 http://www.gwu.edu/~nsarchiv/nsa/cuba_mis_cri/moment.html 16 Letter from John F. Kennedy, op cit. 17 http://wwww.wilsoncenter.org/subsites/ccpdc/pubs/zart/Ch.11.html

Concepts of Mergers and Acquisitions

Concepts of Mergers and Acquisitions MA CONCEPTS Introduction â€Å"The phrase Mergers and Acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying and selling and combining of different companies that can aid, finance or help a growing company in a given industry grow rapidly without having to create another business entity† The above sums up in a nutshell the concept of mergers and acquisitions. There are multiple reasons for companies to get into MA activity whether to expand into a new market or geography, to gain market share in a current market, to overcome competition or for regulatory reasons as some governments make a tie up mandatory to operate in their local economy. However it is essential to mention that in the current economic scenario MA has become an essential tool for companies to expand and grow, as successful MA strategy can be a differentiating factor for successful organization. The words and Mergers and Acquisitions are quite often used interchangeably in the current corporate world and hence can be seen in the project as well. Here is an attempt to list out some salient features which differentiate between the terms Mergers and Acquisitions. Merger A Merger can be descried as a combination of two companies into one larger company; such activities are normally voluntary in nature and involve a stock swap or cash payment to the target organization. Stock swaps allow the shareholders of both companies to share the risk involved in the deal. A merger normally results in a new company with a new brand and a new company name being created. Oxford Dictionary of Business defines mergers as â€Å"A combination of two or more businesses on an equal footing that results in the creation of a new reporting entity formed from the combining businesses. The shareholders of the combining entities mutually share the risks and rewards of the new entity and no one party to the merger obtains control over another. Acquisition Acquisitions or takeover are different from Mergers. In the case of an acquisition a company unilaterally relinquishes its independence and adopts to the acquiring firms plans. As a legal point of view the target company ceases to exist as the buyer â€Å"swallows† the business. Acquisitions have the following characteristics They are a part of a well-considered company development plan It is a unilateral process Top management structure will have fewer problems Contractual regulations are simpler Time taken for an acquisition is normally shorter than a merger. However it is essential to mention here that whether a purchase is to be considered as merger or an acquisition actually depends on the whether the purchase is friendly or hostile or in the manner it is announced. The real difference hence lies in the way it is communicated and the way it is received by the shareholders, directors and employees of the target company. History of MA Mergers and Acquisition movements were normally defined and associated with the behavior of US organizations. Various authors have tried to classify the merger movements into wave. The most prominent was Weston who in 1953 described three major periods of merger movements while studying the US business behavior. Merger waves are a very generic way to describe the predominant strategy that was being adopted by organizations in that era. This has been interpreted by the different authors in different ways depending on how they have perceived by them. However it would be wrong to consider that all organizations followed the same strategy as described in the various. The start or the first wave of the Merger movement is said to be have been post the Sherman Act in 1890. Prior to 1890 there was a predominance of the polypoly market structure, this was reduced post 1890 and partial monopolies started increasing. The economic history has been divided into Merger Waves based on the merger activities in the business world as: Period Name Facet 1889 1904 First Wave Horizontal mergers 1916 1929 Second Wave Vertical mergers 1965 1989 Third Wave Diversified conglomerate mergers 1992 1998 Fourth Wave Hostile takeovers; Corporate Raiding 2000 Fifth Wave Cross-border mergers The Great Merger Movement was primarily a US business phenomenon from 1895 to 1905. It is said that during this time 1800 of small firms disappeared into consolidations with similar firms to form large, powerful institutions that dominated their markets. The relaxation of corporate laws in the United States helped the mergers, transportation and communication networks were developed which helped achieved economies of size. The second wave (1916 to 1929) saw even greater activity in mergers. The motive behind these mergers was vertical integrations. Organizations tried to achieve technical gains and to avoid their dependence on other firms for raw materials. The third wave saw the large conglomerates looking at diversification in the 60s. the process actually reached its zenith during the merge wave and was carried to its logical extreme by the conglomerate firms that rose to prominence during that time. The fourth wave in 90s saw increase in hostile takeovers and corporate raiding by the large firms. This was a wave during which vulnerable companies were grabbed up by the larger firms. The fifth wave has been categorized as starting from the year 2000 onwards and has seen a trend of increase in Cross border acquisitions. The rise of globalization has seen increased the market for cross border MA. This rapid increase has taken many MA firms by surprise as most of them never used to consider this due to the complexity involved in cross border MA. The success of these acquisitions was also limited and we saw a vast majority of them failing. Even then in 1997 alone there were over 2300 cross border acquisition worth a total of approximately $298 Million. Source: Boston Consulting Group Research Report â€Å" The Brave New World of MA-How to Create value from MA†, July 2007 Types of Mergers and Acquisitions There are various types of mergers and acquisitions depending on the type of the business structure. The classification can be based on the type of companies merging or by the way the MA deal is being financed. Here is some type of mergers on the basis of the relationship between the two companies that are merging: Horizontal Merger- This type or a merger is between two companies that share the same product line and markets and are in direct competition with each other Vertical Merger This is between a customer and company of between a supplier and a company Market Extension Merger This between two companies that sell the same products in different geographies or markets Product Extension Merger This is between two companies that are selling different but related products in the same market. Circular Merger A circular merger is very similar to a product extension merger however in this case the products being sold are completely unrelated. The merger brings in benefits by utilizing the same channels for marketing these unrelated products, allowing shared dealerships. An example of this kind of a merger is of McLeod Russel (A Team company) with Eveready Industries ( A batteries company) in 1997. McLeod Russel however was de-merged from Eveready in 2005. Conglomeration This type of a merger is between two companies that have no common business areas. Mergers can also be classified depending on how the merger is being financed as described below Purchase Mergers This kind of a merger occurs when a company purchases another. The purchase is made through cash or through the issue of a debt instrument. Consolidation Mergers In this type of a merger a new company is formed and both the companies are bought and combined under the new entity. Type of acquisitions can be described as below Amalgamation In this type of an acquisition a new corporation is created by uniting the companies voluntarily. Acquisition/Takeover In this form one company acquires another companies total or controlling interest. The acquired company either operates as a subsidiary or can be liquidated completely. Sale of Assets A company can sell off all its assets to another and cease to exist. Holding Company Acquisition This involves the acquisition of either the total or majority of a firms stock by a company. The purpose of this form is mainly to gain management control of other companies Reverse Merger In this form of an acquisition a private company with strong prospects buys a publicly listed shell company, usually one with no business or limited assets. This helps the private company to get publicly listed in a short span of time. All mergers though have one common goal and that is to create a synergy between two companies which makes the value of the combined companies to be greater than the sum of the two companies MA Process MA process can be laid down in 3 basic phases First Phase Start with an Offer The acquiring firm once decides that they want to do a merger of acquisition, they start with an offer. The acquiring company starts working with financial advisors and investment bankers to initiate contact with the target company. The acquiring must have a strategy for a merger programme, formulated by company management and approved by the director and majority stockholders. The acquiring company also at this point does a soft due diligence with the help of publicly available data and financial advisors. The purpose of this is to arrive at an overall price that the acquiring company is willing to pay for its target in cash, shares or both. Second Phase Targets Response Once the offer has been made the target company can do one of several things mentioned below Accept the offer If the target companies top management and shareholders are happy with the offer they can simply accept the offer and go ahead with the deal. Attempt to Negotiate   If the target company management and shareholders are not satisfied with the offer they might try and work out more agreeable terms with the acquiring company. Since a lot is stake for the management of the target i.e. their jobs in particular, they might want to work out better deal to keep their jobs or leave with a big compensations package. Target companies which are highly sought after with multiple bidders would obviously have a better chance of negotiating a sweeter deal. Even manager who are crucial to the operation of an organization have a better chance of success into negotiating a good deal for them. Execute a Poison Pill or similar Hostile Takeover Defense A poison pill can be initiated by a target company if it observers a potential hostile suitor acquiring a predetermined percentage of Target company stock. To execute its defense, the target company grants all shareholders except the acquiring company options to buy additional stock at a dramatic discount. This dilutes the acquiring companys share and thwarts the potential hostile takeover attempt.  · Find a White Knight In this alternative a target company seeks out a friendlier company as a potential acquiring company. The friendlier company would offer an equal or higher price with better terms as compared to a hostile takeover bid. Third Phase or Closing the Deal Once the target company accepts the offer and all the regulatory requirements are met then the deal would be executed. The acquiring company will them pay for the target companies shares with cash, stock or both. A cash-for-stock transaction is fairly straightforward: target company shareholders receive a cash payment for each share purchased. When a company is purchased with stock, new shares from the acquiring companysstock are issued directly to the target companys shareholders, or the new shares are sent to a broker who manages them for target company shareholders GROWTH STRATEGIES Concept of Growth Growth in firms can be looked at by two broad views: organic growth, or inorganic growth. Organic growth is achieved through mainly internal expansion while inorganic growth is achieved through external expansion, i.e. through consolidations, acquisitions and mergers. Growth is something for which most companies, large or small, strive. Small firms want to get big, big firms want to get bigger. As observed by Philip B. Crosby, author of The Eternally Successful Organization, if for no other reason than to accommodate the increased expenses that develop over the years. Inflation also raises the cost of everything, and retaliatory price increases are not always possible. Salaries rise as employees gain seniority. The costs of benefits rise because of their very structure, and it is difficult to take any back, particularly if the enterprise is profitable. Therefore cost eliminations and profit improvement must be conducted on a continuing basis, and the revenues of the organization must continue to increase in order to broaden the base. Most firms, of course, desire growth in order to prosper, not just to survive. Organizational growth, however, means different things to different organizations. Indeed, there are many parameters a company can select to measure its growth. The most meaningful yardstick is one that shows progress with respect to an organizations stated goals. The ultimate goal of most companies is profit, so net profit, revenue, and other financial data are often utilized as bottom-line indications of growth. Other business owners, meanwhile, may use sales figures, number of employees, physical expansion, or other criteria to judge organizational growth. Companies which are run by a product minded entrepreneur are more concerned with the growth and profitability of a firm as an organization for the production of goods and services. While companies run by empire builders type of entrepreneurs are continuously looking at expanding the scope of the enterprise. Empire builders are not satisfied are not sa tisfied with product improvement or maintaining competitive edge In terms of access to finance there are broadly five growth stages in a companys lifespan: inception, organic growth, purchased, IPO and Beyond IPO as shown in the figure below. Each stage has its own characteristics, risks and potential financial sources. Organic Growth without MA In Organic growth, growth depends on the ability to avail the available opportunities and existing resources in a more efficient way. The extent of growth of a firm is actually determined by the ability of managers, product or market factors. There is no limit to the absolute size of the firm keeping in mind the assumption that there is no fixity of capital, labor and management and the firm is capable of acquiring these resources at a price. In addition it is also assumed that there are opportunities in the economy for investments. The economies available within the firm (such as excess productive resources or managerial capabilities) disappear after the expansion is completed as they get utilized in a new activity. This means that it is only an â€Å"entry advantage†. However the firm may have these advantages in its new operations, often set up as new subsidiaries or divisions, which may grow in response to the economies in the same manner as the rest of the firm. New operations may later be spun off from the original firm without any loss of efficiency. Further, both the original and the spun off firms will have some unused productive resources which can then be used to develop new activities Inorganic growth through MA The inorganic growth strategy is dependent on MA. The idea of acquisition is that it accelerates the business model, giving it greater impetus than organic growth. Because acquisition gives the business what it cannot get quickly or incrementally. It may be a joint venture an agreement that gives both parties something they want that the other has. Acquisition targets can include both complementary and competitive businesses complementary when the target can give something an acquirer needs or competitive when the target can stop someone else having what the acquirer wants. The risks in growth through acquisitions are significant, but they can be contained through planning and due diligence. The primary risk is integration: post the acquisition is completed the new arrangements have to work and people who were not party to the negotiation have to work together. The same goes for systems and expectations as different business would have grown in different ways. A consistent culture is laudable but a wholly consistent culture will be impossible. Add regional diversity to this and the risk would become even higher. Motivations for MA Mergers and acquisitions can be motivated by either the share-holder wealth maximizing approach or the widening share ownership. The primary objectives of MA activities are diversifications, market expansion, improving competitive position and depression immunity. Given these basic objectives a different rationale can be assigned at both individual and collective levels. From the standpoint of shareholders Investment made by shareholders in the companies subject to merger should enhance in value. The sale of shares from one companys shareholders to another and holding investment in shares should give rise to greater values i.e. the opportunity gains in alternative investments. Shareholders may gain from merger in different ways viz. from the gains and achievements of the company i.e. through Realization of monopoly profits; Economies of scales; Diversification of product line; Acquisition of human assets and other resources not available otherwise; Better investment opportunity in combinations. One or more features would generally be available in each merger where shareholders may have attraction and favor merger. From the standpoint of managers Managers are concerned with improving operations of the company, managing the affairs of the company effectively for all round gains and growth of the company which will provide them better deals in raising their status, perks and fringe benefits. Mergers where all these things are the guaranteed outcome get support from the managers. At the same time, where managers have fear of displacement at the hands of new management in amalgamated company and also resultant depreciation from the merger then support from them becomes difficult. Promoters gains Mergers do offer to company promoters the advantage of increasing the size of their company and the financial structure and strength. They can convert a closely held and private limited company into a public company without contributing much wealth and without losing control. Benefits to general public Impact of mergers on general public could be viewed as aspect of benefits and costs to: Consumer of the product or services; Workers of the companies under combination; General public affected in general having not been user or consumer or the worker in the companies under merger plan. VALUATION OF TARGET COMPANIES Valuation of target companies is an essential step in the MA process. Due Diligence Due Diligence of a company; answers the question of whether a deal is being done at the right time at the right price for the right reasons. It involves an investigation into the affairs of an entity and results in the production of a report detailing relevant data and points. The investigation is performed prior to the businesss acquisition, flotation, restructuring or other transactions Due Diligence is performed by many advisors on the team. For example there may be a separate legal due diligence, financial due diligence, tax due diligence, environmental due diligence, commercial due diligence, and information technology due diligence. Financial due diligence is a vital part of the MA process. Often a problem in the financial due diligence raises point to be dealt by other areas as well, for example a financial due diligence may uncover an unusual lease obligation which then feeds into the legal due diligence. What a due diligence involves Each MA transaction is unique in its own sense hence the scope and extent of a due diligence process needs to be tailored to fit the needs of the buyer. However broadly it should cover the following aspects: The history and commercial activities of the business The organizational structure and employees Employee benefits and labor matters Its accounting policies The information systems A detailed review of financial statements A review of the financial projections Anything else the team may uncover that is relevant for the transaction Methods of Valuation The valuation of a target company normally depends on a lot of factors, it is not sufficient to evaluate the financial aspect alone. This is possible through a valuation of the 5 Ps which are: Personnel  ­- senior management of the target company play an important role in an acquisition. The acquiring firm considers the motivation, energy and intelligence levels of the existing personnel before taking them on. Product Proprietary products of a Target company increase the value of the company. Plant The plant capacity and condition of equipments also affect the valuation of a company. Potential The potential of a firms growth as compared to the industry is also a factor in its valuation Profit The declared profits of the firm is the basis of determining price. It is normally considered easier to evaluate public limited since most of the above data is publicly available in their annually published reports. In the case of a Private company it is a little more challenging to get the same information and the Acquiring company has to depend on a proper due diligence process to complete its valuation. Financial Valuation Financial valuation should answer the simple, but vital, question â€Å"What is something worth?† The analysis of target is hence based on either current projections or of the future. The process of valuations differ substantially for a listed and unlisted companies Many types of valuation metrics are used, involving several sets of metrics. On of the most common is the standard P/E ration (Price to earnings ratio) however some of the other metrics include assets value, capitalized earnings, market value, investment value, book value, costs basis valuation, enterprise value and some combined methods as well. P/E Ratio and Market Price For an unlisted company the P/E ratio of a comparable listed company is referred to and discounted based on the voting rights in the company. For listed companies the modes of valuation can be based on either earnings or assets. The market price of shares reflects the earnings per share (EPS). P/E ratio Calculated as: The P/E ratio is the current price of shares divided by the EPS. The higher the P/E ratio the higher are the future earnings expectation The P/E multiple is calculated as the multiple of net profit used to compute the companys purchase price. For example, an investor attempting to recover his initial investment in 10 years would have to earn an after-tax return of 10% on investment, plus adjustment for discounted cash flow and inflation. Discounted Cash Flow (DCF) analysis uses future free cash flow projections and discounts them (most often using the weighted average cost of capital) to arrive at a present value. DCF is calculated as: Assets Value Tangible assets, such as land and buildings, and intangible assets are assessed as per existing business practices. Goodwill is based on the companys excess earning power for certain number of years. The asset basis valuation is either on the fair value or the open market value. The dividend approach and the super profit approach can also be used for asset valuation. In the dividend, the present share prices are taken as the values of future dividends. While the super profit approach expects to get more value for a firm in addition to the value of the net assets. Capitalized Earnings This method is based on the rate of return on the capital employed Market Value This is on the basis of quoted share values at the stock exchange. Investment Value This is the cost of establishing an enterprise such as the target company and the interest on the same. Book Value This is the secondary factor in valuations and takes into account the total worth of the assets after depreciation. If the P/E multiplier is less than the book value then the book value has to be adjusted to reflect the true value. It takes into account the present net value of the real estate, machinery and equipment. Sometimes the book value may be understated in times of inflation and overstated during depression. Cost Basis Valuation This is cost minus depreciation. Intangible assets are not taken into account. Reproduction Cost This is the current cost of replacement of properties with similar design and material. Substitution Cost Substitution cost is the cost of construction of the same utility and capacity. Enterprise Value The valuation of a company is based on the Enterprise Value (EV) and its ratio to the companys sales and operating profit (PBIDT Profit before interest, depreciation and tax). Enterprise Value is calculated as: A = Market Capitalization of Stock + Total Debt on Companys books B = Investments + Cash EV = (B A) Accounting Methods The method accounting also has a significant impact on the valuation and price the seller will receive. The acquiring firm can use two principal accounting methods for valuations, they can either use the pooling of interests method or the purchase method. The main difference between them is the value that the combined firms balance sheet places on the assets of the acquired firm, as well as the depreciation allowances and charges against income following the merger. Pooling of Interests Method The pooling of interests method assumes that the transaction is simply an exchange of equity securities. Therefore, the capital stock account of the target firm is eliminated, and the acquirer issues new stock to replace it. The two firms assets and liabilities are combined at their historical book values as of the acquisition date. The end result of a pooling of interests transaction is that the total assets of the combined firm are equal to the sum of the assets of the individual firms. No goodwill is generated, and there are no charges against earnings. A tax-free acquisition would normally be reported as a pooling of interests. Purchase Method   In this method, assets and liabilities are shown on the merged firms books at their market (not book) values as of the acquisition date. This method is based on the idea that the resulting values should reflect the market values established during the bargaining process. The total liabilities of the combined firm equal the sum of the two firms individual liabilities. The equity of the acquiring firm is increased by the amount of the purchase price. Mark Up Pricing/ Premium Markup pricing or premium is the percentage difference between the trading price of the target companies stock before the announcement of acquisition and the price per share paid by the acquiring firm. Bidding firms pay large premiums to acquire control of exchange-listed target firms. Normally premiums include pre-bid run up in the target firms stock price as part of the control premium paid by the winning bidders. The valuations by the bidder and the target depend on the information each party has at the time of the negotiation. Mark Up or premium is partly decided on the basis of the relationship pattern of the acquiring firm. The pattern in some cases is that if interlocking directorship among firms. Most firms have stable and long standing relationships with professionals such as attorneys, investment bankers and accountants. These are likely to have similar effects as to interlock directorships. Managers take advice from both their interlock partners and professional firms when deciding how much to pay. Financing an MA Organizations use various methods for financing an MA deal. Often combinations of the below mentioned methods: Cash Cash payments. These are normally preferred since the organization does not have to dilute equity and there will be no change in the number of shares outstanding. Also cash transactions save time and cash can be re-invested at the face value. Financing Financing capital may be borrowed from banks or raised from issue of bonds. Acquisitions that are financed through debt are called as leveraged buyouts if they take the target private, and the debt will often be moved down into the balance sheet of the acquired company. Hybrids An acquisition can involve a combination of cash and debt or of cash and stock of the purchasing entity. POST ACQUISITION INTEGRATION After the acquisition is completed, the acquired company needs to be integrated with the acquiring company. The process of integration actually needs to be planned during the acquisition itself to ensure that the company integrates smoothly. The success of integration also depends on the managers who are responsible for the implementation. Planning The acquiring company needs to plan the post acquisition integration period. IN the initial period the target company is more receptive to drastic changes to make the company viable. Some of the basic approaches are as follows Adapting a program This should be completely aligned with the companies goals and objectives of the company and should also take into account the limitations of the company. Effective organization and leadership structure The integration process involves creating a group which focuses on creating value through specific activities and actions. A true partnership would mean involving the senior leadership of the acquired company as well in this strategic group. Minimize post acquisition exodus of critical resources It is critical to have a preventing plan in place to minimize the damage that maybe caused to the new enterprise. Any loss of critical things like market standing, key employees, brand has to be avoided. Employee issues The empl Concepts of Mergers and Acquisitions Concepts of Mergers and Acquisitions MA CONCEPTS Introduction â€Å"The phrase Mergers and Acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying and selling and combining of different companies that can aid, finance or help a growing company in a given industry grow rapidly without having to create another business entity† The above sums up in a nutshell the concept of mergers and acquisitions. There are multiple reasons for companies to get into MA activity whether to expand into a new market or geography, to gain market share in a current market, to overcome competition or for regulatory reasons as some governments make a tie up mandatory to operate in their local economy. However it is essential to mention that in the current economic scenario MA has become an essential tool for companies to expand and grow, as successful MA strategy can be a differentiating factor for successful organization. The words and Mergers and Acquisitions are quite often used interchangeably in the current corporate world and hence can be seen in the project as well. Here is an attempt to list out some salient features which differentiate between the terms Mergers and Acquisitions. Merger A Merger can be descried as a combination of two companies into one larger company; such activities are normally voluntary in nature and involve a stock swap or cash payment to the target organization. Stock swaps allow the shareholders of both companies to share the risk involved in the deal. A merger normally results in a new company with a new brand and a new company name being created. Oxford Dictionary of Business defines mergers as â€Å"A combination of two or more businesses on an equal footing that results in the creation of a new reporting entity formed from the combining businesses. The shareholders of the combining entities mutually share the risks and rewards of the new entity and no one party to the merger obtains control over another. Acquisition Acquisitions or takeover are different from Mergers. In the case of an acquisition a company unilaterally relinquishes its independence and adopts to the acquiring firms plans. As a legal point of view the target company ceases to exist as the buyer â€Å"swallows† the business. Acquisitions have the following characteristics They are a part of a well-considered company development plan It is a unilateral process Top management structure will have fewer problems Contractual regulations are simpler Time taken for an acquisition is normally shorter than a merger. However it is essential to mention here that whether a purchase is to be considered as merger or an acquisition actually depends on the whether the purchase is friendly or hostile or in the manner it is announced. The real difference hence lies in the way it is communicated and the way it is received by the shareholders, directors and employees of the target company. History of MA Mergers and Acquisition movements were normally defined and associated with the behavior of US organizations. Various authors have tried to classify the merger movements into wave. The most prominent was Weston who in 1953 described three major periods of merger movements while studying the US business behavior. Merger waves are a very generic way to describe the predominant strategy that was being adopted by organizations in that era. This has been interpreted by the different authors in different ways depending on how they have perceived by them. However it would be wrong to consider that all organizations followed the same strategy as described in the various. The start or the first wave of the Merger movement is said to be have been post the Sherman Act in 1890. Prior to 1890 there was a predominance of the polypoly market structure, this was reduced post 1890 and partial monopolies started increasing. The economic history has been divided into Merger Waves based on the merger activities in the business world as: Period Name Facet 1889 1904 First Wave Horizontal mergers 1916 1929 Second Wave Vertical mergers 1965 1989 Third Wave Diversified conglomerate mergers 1992 1998 Fourth Wave Hostile takeovers; Corporate Raiding 2000 Fifth Wave Cross-border mergers The Great Merger Movement was primarily a US business phenomenon from 1895 to 1905. It is said that during this time 1800 of small firms disappeared into consolidations with similar firms to form large, powerful institutions that dominated their markets. The relaxation of corporate laws in the United States helped the mergers, transportation and communication networks were developed which helped achieved economies of size. The second wave (1916 to 1929) saw even greater activity in mergers. The motive behind these mergers was vertical integrations. Organizations tried to achieve technical gains and to avoid their dependence on other firms for raw materials. The third wave saw the large conglomerates looking at diversification in the 60s. the process actually reached its zenith during the merge wave and was carried to its logical extreme by the conglomerate firms that rose to prominence during that time. The fourth wave in 90s saw increase in hostile takeovers and corporate raiding by the large firms. This was a wave during which vulnerable companies were grabbed up by the larger firms. The fifth wave has been categorized as starting from the year 2000 onwards and has seen a trend of increase in Cross border acquisitions. The rise of globalization has seen increased the market for cross border MA. This rapid increase has taken many MA firms by surprise as most of them never used to consider this due to the complexity involved in cross border MA. The success of these acquisitions was also limited and we saw a vast majority of them failing. Even then in 1997 alone there were over 2300 cross border acquisition worth a total of approximately $298 Million. Source: Boston Consulting Group Research Report â€Å" The Brave New World of MA-How to Create value from MA†, July 2007 Types of Mergers and Acquisitions There are various types of mergers and acquisitions depending on the type of the business structure. The classification can be based on the type of companies merging or by the way the MA deal is being financed. Here is some type of mergers on the basis of the relationship between the two companies that are merging: Horizontal Merger- This type or a merger is between two companies that share the same product line and markets and are in direct competition with each other Vertical Merger This is between a customer and company of between a supplier and a company Market Extension Merger This between two companies that sell the same products in different geographies or markets Product Extension Merger This is between two companies that are selling different but related products in the same market. Circular Merger A circular merger is very similar to a product extension merger however in this case the products being sold are completely unrelated. The merger brings in benefits by utilizing the same channels for marketing these unrelated products, allowing shared dealerships. An example of this kind of a merger is of McLeod Russel (A Team company) with Eveready Industries ( A batteries company) in 1997. McLeod Russel however was de-merged from Eveready in 2005. Conglomeration This type of a merger is between two companies that have no common business areas. Mergers can also be classified depending on how the merger is being financed as described below Purchase Mergers This kind of a merger occurs when a company purchases another. The purchase is made through cash or through the issue of a debt instrument. Consolidation Mergers In this type of a merger a new company is formed and both the companies are bought and combined under the new entity. Type of acquisitions can be described as below Amalgamation In this type of an acquisition a new corporation is created by uniting the companies voluntarily. Acquisition/Takeover In this form one company acquires another companies total or controlling interest. The acquired company either operates as a subsidiary or can be liquidated completely. Sale of Assets A company can sell off all its assets to another and cease to exist. Holding Company Acquisition This involves the acquisition of either the total or majority of a firms stock by a company. The purpose of this form is mainly to gain management control of other companies Reverse Merger In this form of an acquisition a private company with strong prospects buys a publicly listed shell company, usually one with no business or limited assets. This helps the private company to get publicly listed in a short span of time. All mergers though have one common goal and that is to create a synergy between two companies which makes the value of the combined companies to be greater than the sum of the two companies MA Process MA process can be laid down in 3 basic phases First Phase Start with an Offer The acquiring firm once decides that they want to do a merger of acquisition, they start with an offer. The acquiring company starts working with financial advisors and investment bankers to initiate contact with the target company. The acquiring must have a strategy for a merger programme, formulated by company management and approved by the director and majority stockholders. The acquiring company also at this point does a soft due diligence with the help of publicly available data and financial advisors. The purpose of this is to arrive at an overall price that the acquiring company is willing to pay for its target in cash, shares or both. Second Phase Targets Response Once the offer has been made the target company can do one of several things mentioned below Accept the offer If the target companies top management and shareholders are happy with the offer they can simply accept the offer and go ahead with the deal. Attempt to Negotiate   If the target company management and shareholders are not satisfied with the offer they might try and work out more agreeable terms with the acquiring company. Since a lot is stake for the management of the target i.e. their jobs in particular, they might want to work out better deal to keep their jobs or leave with a big compensations package. Target companies which are highly sought after with multiple bidders would obviously have a better chance of negotiating a sweeter deal. Even manager who are crucial to the operation of an organization have a better chance of success into negotiating a good deal for them. Execute a Poison Pill or similar Hostile Takeover Defense A poison pill can be initiated by a target company if it observers a potential hostile suitor acquiring a predetermined percentage of Target company stock. To execute its defense, the target company grants all shareholders except the acquiring company options to buy additional stock at a dramatic discount. This dilutes the acquiring companys share and thwarts the potential hostile takeover attempt.  · Find a White Knight In this alternative a target company seeks out a friendlier company as a potential acquiring company. The friendlier company would offer an equal or higher price with better terms as compared to a hostile takeover bid. Third Phase or Closing the Deal Once the target company accepts the offer and all the regulatory requirements are met then the deal would be executed. The acquiring company will them pay for the target companies shares with cash, stock or both. A cash-for-stock transaction is fairly straightforward: target company shareholders receive a cash payment for each share purchased. When a company is purchased with stock, new shares from the acquiring companysstock are issued directly to the target companys shareholders, or the new shares are sent to a broker who manages them for target company shareholders GROWTH STRATEGIES Concept of Growth Growth in firms can be looked at by two broad views: organic growth, or inorganic growth. Organic growth is achieved through mainly internal expansion while inorganic growth is achieved through external expansion, i.e. through consolidations, acquisitions and mergers. Growth is something for which most companies, large or small, strive. Small firms want to get big, big firms want to get bigger. As observed by Philip B. Crosby, author of The Eternally Successful Organization, if for no other reason than to accommodate the increased expenses that develop over the years. Inflation also raises the cost of everything, and retaliatory price increases are not always possible. Salaries rise as employees gain seniority. The costs of benefits rise because of their very structure, and it is difficult to take any back, particularly if the enterprise is profitable. Therefore cost eliminations and profit improvement must be conducted on a continuing basis, and the revenues of the organization must continue to increase in order to broaden the base. Most firms, of course, desire growth in order to prosper, not just to survive. Organizational growth, however, means different things to different organizations. Indeed, there are many parameters a company can select to measure its growth. The most meaningful yardstick is one that shows progress with respect to an organizations stated goals. The ultimate goal of most companies is profit, so net profit, revenue, and other financial data are often utilized as bottom-line indications of growth. Other business owners, meanwhile, may use sales figures, number of employees, physical expansion, or other criteria to judge organizational growth. Companies which are run by a product minded entrepreneur are more concerned with the growth and profitability of a firm as an organization for the production of goods and services. While companies run by empire builders type of entrepreneurs are continuously looking at expanding the scope of the enterprise. Empire builders are not satisfied are not sa tisfied with product improvement or maintaining competitive edge In terms of access to finance there are broadly five growth stages in a companys lifespan: inception, organic growth, purchased, IPO and Beyond IPO as shown in the figure below. Each stage has its own characteristics, risks and potential financial sources. Organic Growth without MA In Organic growth, growth depends on the ability to avail the available opportunities and existing resources in a more efficient way. The extent of growth of a firm is actually determined by the ability of managers, product or market factors. There is no limit to the absolute size of the firm keeping in mind the assumption that there is no fixity of capital, labor and management and the firm is capable of acquiring these resources at a price. In addition it is also assumed that there are opportunities in the economy for investments. The economies available within the firm (such as excess productive resources or managerial capabilities) disappear after the expansion is completed as they get utilized in a new activity. This means that it is only an â€Å"entry advantage†. However the firm may have these advantages in its new operations, often set up as new subsidiaries or divisions, which may grow in response to the economies in the same manner as the rest of the firm. New operations may later be spun off from the original firm without any loss of efficiency. Further, both the original and the spun off firms will have some unused productive resources which can then be used to develop new activities Inorganic growth through MA The inorganic growth strategy is dependent on MA. The idea of acquisition is that it accelerates the business model, giving it greater impetus than organic growth. Because acquisition gives the business what it cannot get quickly or incrementally. It may be a joint venture an agreement that gives both parties something they want that the other has. Acquisition targets can include both complementary and competitive businesses complementary when the target can give something an acquirer needs or competitive when the target can stop someone else having what the acquirer wants. The risks in growth through acquisitions are significant, but they can be contained through planning and due diligence. The primary risk is integration: post the acquisition is completed the new arrangements have to work and people who were not party to the negotiation have to work together. The same goes for systems and expectations as different business would have grown in different ways. A consistent culture is laudable but a wholly consistent culture will be impossible. Add regional diversity to this and the risk would become even higher. Motivations for MA Mergers and acquisitions can be motivated by either the share-holder wealth maximizing approach or the widening share ownership. The primary objectives of MA activities are diversifications, market expansion, improving competitive position and depression immunity. Given these basic objectives a different rationale can be assigned at both individual and collective levels. From the standpoint of shareholders Investment made by shareholders in the companies subject to merger should enhance in value. The sale of shares from one companys shareholders to another and holding investment in shares should give rise to greater values i.e. the opportunity gains in alternative investments. Shareholders may gain from merger in different ways viz. from the gains and achievements of the company i.e. through Realization of monopoly profits; Economies of scales; Diversification of product line; Acquisition of human assets and other resources not available otherwise; Better investment opportunity in combinations. One or more features would generally be available in each merger where shareholders may have attraction and favor merger. From the standpoint of managers Managers are concerned with improving operations of the company, managing the affairs of the company effectively for all round gains and growth of the company which will provide them better deals in raising their status, perks and fringe benefits. Mergers where all these things are the guaranteed outcome get support from the managers. At the same time, where managers have fear of displacement at the hands of new management in amalgamated company and also resultant depreciation from the merger then support from them becomes difficult. Promoters gains Mergers do offer to company promoters the advantage of increasing the size of their company and the financial structure and strength. They can convert a closely held and private limited company into a public company without contributing much wealth and without losing control. Benefits to general public Impact of mergers on general public could be viewed as aspect of benefits and costs to: Consumer of the product or services; Workers of the companies under combination; General public affected in general having not been user or consumer or the worker in the companies under merger plan. VALUATION OF TARGET COMPANIES Valuation of target companies is an essential step in the MA process. Due Diligence Due Diligence of a company; answers the question of whether a deal is being done at the right time at the right price for the right reasons. It involves an investigation into the affairs of an entity and results in the production of a report detailing relevant data and points. The investigation is performed prior to the businesss acquisition, flotation, restructuring or other transactions Due Diligence is performed by many advisors on the team. For example there may be a separate legal due diligence, financial due diligence, tax due diligence, environmental due diligence, commercial due diligence, and information technology due diligence. Financial due diligence is a vital part of the MA process. Often a problem in the financial due diligence raises point to be dealt by other areas as well, for example a financial due diligence may uncover an unusual lease obligation which then feeds into the legal due diligence. What a due diligence involves Each MA transaction is unique in its own sense hence the scope and extent of a due diligence process needs to be tailored to fit the needs of the buyer. However broadly it should cover the following aspects: The history and commercial activities of the business The organizational structure and employees Employee benefits and labor matters Its accounting policies The information systems A detailed review of financial statements A review of the financial projections Anything else the team may uncover that is relevant for the transaction Methods of Valuation The valuation of a target company normally depends on a lot of factors, it is not sufficient to evaluate the financial aspect alone. This is possible through a valuation of the 5 Ps which are: Personnel  ­- senior management of the target company play an important role in an acquisition. The acquiring firm considers the motivation, energy and intelligence levels of the existing personnel before taking them on. Product Proprietary products of a Target company increase the value of the company. Plant The plant capacity and condition of equipments also affect the valuation of a company. Potential The potential of a firms growth as compared to the industry is also a factor in its valuation Profit The declared profits of the firm is the basis of determining price. It is normally considered easier to evaluate public limited since most of the above data is publicly available in their annually published reports. In the case of a Private company it is a little more challenging to get the same information and the Acquiring company has to depend on a proper due diligence process to complete its valuation. Financial Valuation Financial valuation should answer the simple, but vital, question â€Å"What is something worth?† The analysis of target is hence based on either current projections or of the future. The process of valuations differ substantially for a listed and unlisted companies Many types of valuation metrics are used, involving several sets of metrics. On of the most common is the standard P/E ration (Price to earnings ratio) however some of the other metrics include assets value, capitalized earnings, market value, investment value, book value, costs basis valuation, enterprise value and some combined methods as well. P/E Ratio and Market Price For an unlisted company the P/E ratio of a comparable listed company is referred to and discounted based on the voting rights in the company. For listed companies the modes of valuation can be based on either earnings or assets. The market price of shares reflects the earnings per share (EPS). P/E ratio Calculated as: The P/E ratio is the current price of shares divided by the EPS. The higher the P/E ratio the higher are the future earnings expectation The P/E multiple is calculated as the multiple of net profit used to compute the companys purchase price. For example, an investor attempting to recover his initial investment in 10 years would have to earn an after-tax return of 10% on investment, plus adjustment for discounted cash flow and inflation. Discounted Cash Flow (DCF) analysis uses future free cash flow projections and discounts them (most often using the weighted average cost of capital) to arrive at a present value. DCF is calculated as: Assets Value Tangible assets, such as land and buildings, and intangible assets are assessed as per existing business practices. Goodwill is based on the companys excess earning power for certain number of years. The asset basis valuation is either on the fair value or the open market value. The dividend approach and the super profit approach can also be used for asset valuation. In the dividend, the present share prices are taken as the values of future dividends. While the super profit approach expects to get more value for a firm in addition to the value of the net assets. Capitalized Earnings This method is based on the rate of return on the capital employed Market Value This is on the basis of quoted share values at the stock exchange. Investment Value This is the cost of establishing an enterprise such as the target company and the interest on the same. Book Value This is the secondary factor in valuations and takes into account the total worth of the assets after depreciation. If the P/E multiplier is less than the book value then the book value has to be adjusted to reflect the true value. It takes into account the present net value of the real estate, machinery and equipment. Sometimes the book value may be understated in times of inflation and overstated during depression. Cost Basis Valuation This is cost minus depreciation. Intangible assets are not taken into account. Reproduction Cost This is the current cost of replacement of properties with similar design and material. Substitution Cost Substitution cost is the cost of construction of the same utility and capacity. Enterprise Value The valuation of a company is based on the Enterprise Value (EV) and its ratio to the companys sales and operating profit (PBIDT Profit before interest, depreciation and tax). Enterprise Value is calculated as: A = Market Capitalization of Stock + Total Debt on Companys books B = Investments + Cash EV = (B A) Accounting Methods The method accounting also has a significant impact on the valuation and price the seller will receive. The acquiring firm can use two principal accounting methods for valuations, they can either use the pooling of interests method or the purchase method. The main difference between them is the value that the combined firms balance sheet places on the assets of the acquired firm, as well as the depreciation allowances and charges against income following the merger. Pooling of Interests Method The pooling of interests method assumes that the transaction is simply an exchange of equity securities. Therefore, the capital stock account of the target firm is eliminated, and the acquirer issues new stock to replace it. The two firms assets and liabilities are combined at their historical book values as of the acquisition date. The end result of a pooling of interests transaction is that the total assets of the combined firm are equal to the sum of the assets of the individual firms. No goodwill is generated, and there are no charges against earnings. A tax-free acquisition would normally be reported as a pooling of interests. Purchase Method   In this method, assets and liabilities are shown on the merged firms books at their market (not book) values as of the acquisition date. This method is based on the idea that the resulting values should reflect the market values established during the bargaining process. The total liabilities of the combined firm equal the sum of the two firms individual liabilities. The equity of the acquiring firm is increased by the amount of the purchase price. Mark Up Pricing/ Premium Markup pricing or premium is the percentage difference between the trading price of the target companies stock before the announcement of acquisition and the price per share paid by the acquiring firm. Bidding firms pay large premiums to acquire control of exchange-listed target firms. Normally premiums include pre-bid run up in the target firms stock price as part of the control premium paid by the winning bidders. The valuations by the bidder and the target depend on the information each party has at the time of the negotiation. Mark Up or premium is partly decided on the basis of the relationship pattern of the acquiring firm. The pattern in some cases is that if interlocking directorship among firms. Most firms have stable and long standing relationships with professionals such as attorneys, investment bankers and accountants. These are likely to have similar effects as to interlock directorships. Managers take advice from both their interlock partners and professional firms when deciding how much to pay. Financing an MA Organizations use various methods for financing an MA deal. Often combinations of the below mentioned methods: Cash Cash payments. These are normally preferred since the organization does not have to dilute equity and there will be no change in the number of shares outstanding. Also cash transactions save time and cash can be re-invested at the face value. Financing Financing capital may be borrowed from banks or raised from issue of bonds. Acquisitions that are financed through debt are called as leveraged buyouts if they take the target private, and the debt will often be moved down into the balance sheet of the acquired company. Hybrids An acquisition can involve a combination of cash and debt or of cash and stock of the purchasing entity. POST ACQUISITION INTEGRATION After the acquisition is completed, the acquired company needs to be integrated with the acquiring company. The process of integration actually needs to be planned during the acquisition itself to ensure that the company integrates smoothly. The success of integration also depends on the managers who are responsible for the implementation. Planning The acquiring company needs to plan the post acquisition integration period. IN the initial period the target company is more receptive to drastic changes to make the company viable. Some of the basic approaches are as follows Adapting a program This should be completely aligned with the companies goals and objectives of the company and should also take into account the limitations of the company. Effective organization and leadership structure The integration process involves creating a group which focuses on creating value through specific activities and actions. A true partnership would mean involving the senior leadership of the acquired company as well in this strategic group. Minimize post acquisition exodus of critical resources It is critical to have a preventing plan in place to minimize the damage that maybe caused to the new enterprise. Any loss of critical things like market standing, key employees, brand has to be avoided. Employee issues The empl