To merge or not to merge

IIPM PUBLICATION

M&As are growing, but caution a must

The continued hype over recent Mergers & Acquisitions (M&As) is not without reason. While Indian corporations may be riding the M&A juggernaut like a bull on a rampage, the underlying fact is that in today’s globalised markets, M&As are necessary to ensure competence on an international scale. Their importance can be highlighted by the fact that they deliver manifold purposes like increasing marketing share, generating economies of scale, increasing revenues, diversification, product innovation and vertical integration.

Some of the movers and shakers in recent times have been the offer by Porsche to take over Volkswagen, the EDS-Mphasis acquisition, Arcelor- Mittal acquisition, the IBM-ISS acquisition, the Barclays-ABN Amro acquisition, Google’s acquisition of YouTube, et al. Back home too, we have seen some frenzied M&A activity. Some instances are Tata-Corus, Jet-Sahara merger and the Vodafone buyout of Hutch-Essar.

However, quite a few mergers fail to deliver, like Daimler-Chrysler, HPCompaq and GE-Honeywell to name a few. Research proves that as a norm, most M&As end up being wealth destroyers, not to forget culture clashes and massive job losses due to redundant positions. It only goes on to show that M&As need to be carefully planned out. If companies tend to focus too much on the positives, they stand to lose much more than they hope to gain. 4Ps

4Ps B&M Research: Rohan Sachdev

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Do firms having the ubiquitous ‘non-MBA CEOs’ achieve more than those having MBA leaders?

IIPM Best MBA INSTITUTE

A majority of Fortune 500 firms have traditionally avoided hiring MBA CEOs. Professor Harry Mintzberg, one of the noted management authors, last year regurgitated a similar thought process when he said, “MBA programs train the wrong people in the wrong ways with the wrong consequences...” Guy Kawasaki, a known management author and himself an MBA, threw up much worse with respect to entrepreneurial firms, “I don’t think an MBA matters very much...” How would you describe such a distinct playing-to-the-gallery thought process? I have one word for it... Stupid! It is unbelievable that in today’s world, there could be anyone supporting such a blunderingly hollow ‘anti-MBA’ viewpoint.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

The ensuing Scottish elections expose the bitter English-Scottish divide

IIPM PUBLICATION

If pollsters are to be believed, the first of May celebrations marking the 300th anniversary of the union between England & Scotland are most likely to be cut short – the pro-independence Scottish Nationalist Party (SNP) is currently reported to be way ahead of the Labour Party in Parliamentary Elections due to be held on May 3. Speaking to B&E, the London-based former Journalist of BBC World Service, Pervaiz Alam said, “The Labour Party (the single largest party in 2003 elections) is in for a rude shock. Post elections, not only will they have to grapple with vexed issue of Scottish independence, but also reinvigorate their efforts to prevent their sliding fortunes at the national level.”

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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IIPM Best MBA INSTITUTE

These days, stories abound of Asian companies giving well entrenched American behemoths a run for their money; both in the US and many emerging markets. Toyota, Honda, Nissan, LG, Samsung, Lenovo and Haier are just a few names, amongst the flurry of Asian brands that are poised to dominate global Inc.

The sorry saga of the American appliance major Whirlpool’s tryst with the Indian market is simply a case under consideration. It entered the market with limitless ambition, underestimated the competition from nimble footed Korean chaebols and ended up with a whimper! A classic case of what happens when an American MNC attempts to spawn a cash cow on wrong notions. Small wonder that in an otherwise burgeoning Indian consumer durables market, despite having the celebrity couple Kajol and Ajay Devgan as brand ambassadors; Whirlpool has a virtually negligible market share in some of the fastest growing product categories (read: ACs & microwaves) in the segment, and is in the red by a whopping Rs.1.05 billion (accumulated losses).

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative