Merger and Acquisitions

Choose two (2) public corporations in an industry with which you are familiar – one (1) that has acquired another company and operates internationally and one (1) that does not have a history of mergers and acquisitions and operates solely within the U.S. The annual report will often provide insights that can help address some of these questions

In business, mergers and acquisitions infer to the buying, selling, dividing and combining of the resources and expertise of different companies that have same entities to minimize the cost, improve productivity and maximize their profits (Ferreira, Santos, de Almeida, & Reis, 2014). The primary objective of mergers and acquisitions is to make separate business entities can benefit from a particular enterprise through the reduction of competition, increase in output and increase in their market share. Mergers and acquisition also assist in the creation of a subsidiary, joint venture or a minor entity. It is imperative to appreciate that acquisition entails the corporate action in which a corporation buys another company or a business entity.

In the current business atmosphere, most of the larger businesses often purchase the smaller business entities with smaller business entities with a minor stake in the market. It is through the acquisition that larger firms acquire the management control of the more modest firm (Lebedev, Peng, Xie, & Stevens, 2015). One of the companies that company that has merged with other more minor entities is the Pepsi Co. Inc. Pepsi Company is a company that offers beverages.  PepsiCo Inc is an American multinational company whose headquarters is in the United States (“Our History – PepsiCo”, 2017). The company that has no history of any mergers and acquisition is the Gullah Gourmet (“Gullah Gourmet”, 2017). The firm is involved in the service industry offering gourmet meals, dressings, dips, sauces, and desserts. The two companies will significantly benefit from quality business and the strategies that I will present below

For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.

As mentioned previously, the company that has history of history of mergers and acquisition is Pepsi. Pepsi- Cola was first developed by a Caleb Bradham by a popular pharmacist in the late 1890s. On the other hand, Frito Company was formed by Elmer Doolin in early 1932 (“Our History – PepsiCo”, 2017). The company merged with Pepsi- Cola to create PepsiCo and Frito-Lay. PepsiCo was later involved in several other companies. The subsequent mergers were with Pizza Hut Inc, Gamesa, and Tropicana Products in 1977, 1990 and 1998 respectively. The company was later involved in more mergers with South Beach Beverage Company and Quaker in 2000 and 2001 respectively. In 2006 PepsiCo was involved in double merger with IZZE Beverage Company, Sandora and Naked Juice Company and later in 2010, a publicised merger with Wimm- Bill- Dan (“PepsiCo, Inc. | History & Facts”, 2017).

The most excellent merger decision that PepsiCo was involved was with the Quaker in 2001. The merger allowed PepsiCo to have a significant control over Quaker’s products. The products also include the most popular sport drink Gatorade. The merger had momentous impact to the market share of PepsiCo since it led to an increase in its market stake of noncarbonated beverages (Editorial, 2017). It is noteworthy to appreciate that the current revenue from Gatorade is more by $300 million when compared to the Coca-Cola’s product Powerade. Therefore, PepsiCo made enormous revenues from only one acquisition.

The nutritive value of these two products is identical. Therefore, these products are likely to be involved in price wars. Currently, Coca-Cola’s product Powerade is slightly lower by $0.50 when compared to Gatorade for every 20 fluid ounce bottle. Despite the stiff competition, the Gatorade still towers Coca-Cola products. Some of the strategies that make Gatorade have a higher market stake are primarily influenced by better brandings, extensive advertising, and endorsements by famous athletes and sports organizations. Currently, the acquisition of Tropicana and Quaker by PepsiCo has led to the increase in revenue to $43.5 billion and the distribution of these products to over 200 countries.

For the corporation that has not been involved in any mergers or acquisitions, identify one (1) company that would be a profitable candidate for the corporation to acquire or merge with and explain why this company would be a profitable target.

The company that has no history of mergers is the Gullah Gourmet Inc. The company was formed by Deborah Nelson. The current headquarters of the business is at Charleston in South Carolina. The enterprise is involved in the production of homemade gourmet bagged foods (“Gullah Gourmet”, 2017). The company is also involved in the production of jarred, canned and bottled. Currently, the business has one physical retail store, an online selling platform and its products can also be found in different stores.

The company has no history or intentions of mergers or acquisitions. However, after a comprehensive analysis of the business environment and the market that the company operates, I think that Gullah Gourmet Inc can make an ideal candidate for a larger company to merge or acquire it. Over the last few years, the financial health of the company has been sound with the annual sales averaging to about $2.1 million. One of the features that would make the merger successfully is informed by the brand loyalty, the quality of the products and the better branding associated by Gullah Gourmet.

For the corporation that operates internationally, briefly evaluate its international business-level strategy and international corporate-level and make recommendations for improvement.

Value to customers is to be provided by the PepsiCo’s corporate strategy via diversification of products. It is through acquisitions and mergers that the company has built an extensive portfolio of products.  They provide different products to their customers, and this helps in promoting a strong recognition of the brand that focuses on directing differentiation of the business-level strategy. PepsiCo is maintaining its competitive advantage via attaining as well as creating new products on a consistent basis.

The business units of the company tend to follow the same business-level strategy in their geographical locations which include Europe, Africa, Americas, Middle East and Asia. It is evident that the business-level strategy takes part in strategy that embraces low cost via marketing and taste. They engage in mass production of products with the aim of creating low costs thus taking advantage of the economy. It is due to the recession that the PepsiCo began pursuing a low-cost strategy in 2009. They started by producing affordable products to their customers, and the company has continued to offer discounts to its customers on Frito-Lay snacks and beverage (Krishnaswamy, 2017).

For the corporation that does not operate internationally, propose one business-level strategy and one corporate-level strategy that you would suggest the corporation consider. Justify your proposals.

I propose that the Gullah Gourmet Inc. should identify a market niche in a larger geographical area since their markets are limited to the locals and tourists. They can have an opportunity that might help them expand their size via conducting an economic analysis that might help them discover new customers. Additionally, I propose that Gullah Gourmet Inc.  Should partner with a grocery store that is prestigious. They could also think of being made part of the store on matters related to distribution with the aim of reducing the overall prices of products. The company deals with products that are not commonly found in a grocery store. Any partnership with a larger company could lead to massive gain to the involved parties (Drnevich & Croson, 2013).

Conclusion

There are a variety of strategies that can be adopted by a business with the aim of increasing its revenues and level of operations. PepsiCo is a company that embraces new aspects that focus on expanding its ventures into new markets. They have made much progress via merging with other companies that have promoted their growth and thus has helped the company become successful. On the other hand, Gullah Gourmer Inc has also made progress towards success where it has managed to expand in size and revenue. I believe that sooner or later Gullah Gourmet Inc. will soon begin to engage in numerous partnerships and mergers.

References

Drnevich, P. L., & Croson, D. C. (2013). Information technology and business-level strategy: Toward an integrated theoretical perspective. Mis Quarterly, 37(2).

Editorial, R. (2017). ${Instrument_CompanyName} ${Instrument_Ric} Company Profile | Reuters.com. U.S.. Retrieved 12 December 2017, from https://www.reuters.com/finance/stocks/companyProfile/PEP

Ferreira, M. P., Santos, J. C., de Almeida, M. I. R., & Reis, N. R. (2014). Mergers & acquisitions research: A bibliometric study of top strategy and international business journals, 1980–2010. Journal of Business Research, 67(12), 2550-2558.

Gullah Gourmet. (2017). Gullah Gourmet. Retrieved 12 December 2017, from http://www.gullahgourmet.com/

Krishnaswamy, S. (2017). Sources of Sustainable competitive Advantage: A Study & Industry Outlook. St. Theresa Journal of Humanities and Social Sciences, 3(1).

Lebedev, S., Peng, M. W., Xie, E., & Stevens, C. E. (2015). Mergers and acquisitions in and out of emerging economies. Journal of World Business, 50(4), 651-662.

Our History – PepsiCo. (2017). Pepsico.com. Retrieved 12 December 2017, from http://www.pepsico.com/company/Our-History

PepsiCo, Inc. | History & Facts. (2017). Encyclopedia Britannica. Retrieved 12 December 2017, from https://www.britannica.com/topic/PepsiCo-Inc