Inductive Business Report: Horizontal Merger of Companies (Term Paper Sample)

Inductive Business Report: Horizontal Merger of Companies
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Institutional affiliation
Executive summary
In reference Sheltex, this report will assess how post-merger operational decisions impact on the success of the resultant company. It will further access the implication of horizontal mergers on the operations of resultant companies. Although horizontal mergers have been reported to register a higher probability of success, a drop of customer and sales is a common phenomenon of a post-merger period (Fischer, et al., 2007). Decisions of how store and stations should be modified according to company’s objective should be informed by both the human and market factors. This report will explore the importance of incorporating human factors on pre-merger considerations. Human capital is a critical resource that determines the competitiveness of the company. Skills and talents should be merged with new opportunities that will arise from such mergers. Although mergers are associated with downfalls, there are feasible opportunities that arise from it. A firm can tap such opportunities to access competitive advantages. Critical analysis of post-merger decisions of Sheltex senior management will enable future mergers to make a more informed decision and position themselves for subsequent competition. This report will anallyse the options available for sheltex and draw recommendation for the best option to be taken.
Inductive Business Report: Horizontal Merger of Companies
Fuel retail industry in Australia is maintains perfect competitive market where entry and exit of firms are free. Prices are regulated by the authorities. Such prices are set in reference to international economic state and the global price of oil. Merger and acquisition are a management strategy that restructures an organization with a primary aim of growth and expansion. Reasons for mergers range from legal to financial issues. Most mergers that are based on the operation of the law with little regard to human factors are more likely to fail (Fischer, et al., 2007). There are different types of mergers as distinguished by homogeneity or variety of products dealt with the companies involved. The case o Sheltex is a Horizontal merger since the two premerger companies deal in the same variety of products. Such mergers are usually motivated by uncertainty in the competition aspects, synergies, and potential gain. Most mergers have failed to achieve their objectives because of a post-merger decision regarding the integration of two firms. Sheltex is merger is motivated be uncertain competition trends, and its primary goal is to increase its market span. The success of an alliance deepens mostly of reasons behind the merger and the decisions of post-merger. Peter Fischer et al. in their empirical study of the factors behind failure of mergers concluded that mergers that are not market oriented like those that result from the operation of the law are likely to fail (Fischer, et al., 2007). Different types of mergers will differently impact on the success of a resultant company. While consolidation is becoming a management strategic of our time, most mergers do not make economic sense (Kunal, et al., 2014).
Recommendation
For Sheltex to succeed, a different view on the market should be taken. The dynamics of customers test and preferences in account, the firm should identify its strength or an aspect it can focus with an aim of accessing competitive advantage. Such aspect should be something that cannot be easily replicated by competitors. Before competitors could match Sheltex, it should progress to another position hence giving the competitors a moving target (an aspect that cannot be easily replicated by the competitors). Decisions made should pay more attention to human factors. Prepare employees for union with their traditional competitors. Skills and talents should be landed on positions that they count. The decision of transforming some stations to supermarkets, is aspect of enterprising but will not meaningfully engage the human resource that was manning the stations before. It may not be rational for a firm to lay off a big number of employees who cannot fit anywhere after some shops are transformed to new line of products.
Suggestion to Mechanizing' Supply Chain Management
Interest in supply chain management has been increasing recently. The advancement communication technology and logistics have enabled firms to develop efficient supply chain. Competition among retail companies is primarily centered on the Supply chain management. There is limitless technology that is progressive and can be integrated to supply chain to improve efficiency and accuracy. Although the classical Cooper and Paghs are still handy, technology has been changing, and a proactive firm can integrate technological aspects with a supply chain system for efficiency (Valenzo-Jiménez, et al. 2015). Sheltex could also integrate technologies such as RTLS and RFIDs in their supply chain to improve their efficiency, accuracy and speed. An efficient supply chain management translates to customer satisfaction.
Sheltex is capital intensive, and it is, therefore, able to invest in mechanization to the point where its competitor cannot sustainable compete in that area. Automation will reduce the cost of operation enabling Sheltex o offer goods in a lower price than its competitors.
Winning and maintaining customers
Customers are dynamic. Sheltex should adapt communication strategies that will enable them to receive feedback from the customers. The customers behavior should be monitored and urged to defect should be suppressed with better services and lower prices. An efficient communicating system is key to maintaining and anticipating the actions of a customer.
Sheltex should have standees services and products across all chains. Services should satisfactory to the customer. The actions of the competitors like lowering prices should be meaningfully countered if there is a possibility that customers will be lost.
I recommend option1: one station to sell certain type of products while the other sells the rest. Since the two stations are under one command and work towards a common goal, a non-competitive environment should be created while allowing the minimal disturbance to customers’ routine. The first option will enable the firm to achieve both passive conditions and maintaining most customers. Option two will see most of the customer lost to competitor since the shop will be changed to an entirely different line of products. Although it is an enterprising proactively, the clients who shopped at such stations cannot be influenced to move to the nearby station.
Option number two will cause little disturbance, and more customers are likely to be maintained. Since Sheltex is a merger of two major retailers, it is obviously a capital intensive entity that can invest in mechanization and supply chain technologies that cannot be sustainably acquired by other competitors who smaller in both capital base and assets. Automation of the supply chain management will reduce the cost of operation by reducing required human resource and increasing the speed and distance in which products are delivered. For a good positioning, a firm should identify its strengths and meaningfully capitalize on them. The bottom line is being able to reduce the market price for products. This is achieved through reduction of operational cost which is dominated by supply chain management and logistics. Sheltex can reduce such costs by investing development of efficient supply chain management. Progressive technology can be innovatively interpreted into supply chain management. If done right, mechanization will allow the firm to access competitive advantage.
Incorporation of technology into the firm's processes
Modern business environment is characterized by technological advances incorporated into business activities. A firm should stay adept technologically in order for it to compete meaningfully with other firms. Customers change in preferences is triggered by advancement in communication technology. The customer’s expectation is rising fast due the availability of information regarding other options that could be explored by a customer. The company, therefore, stays adept and informed in regard to information technology. This way the company reads in the same script with the customers. If a change in customer’s test and preferences are monitored for a considerable length of time, such trends can eventually be predicted with a high accuracy.
Information system plays a key role in developing strong customer relations. Online marketing and other marketing technologies that have significantly contributed to customer relationship can be attributed to information technology. Personalized product Recommendation has been adopted by most firms. This is an IT related technology that has enabled companies to anticipate customers’ expectation and ensure satisfaction (Zhang, et al., 2011). According to Zhang et al. (2011),an empirical interrogation of data collected generally showed that information that can be obtained to help a company build customized the need of a customer greatly affect the loyalty of customers in a great way. Information technology is, therefore, an important aspect of retail and businesses should invest in it.
Sheltex could adopt information technologies that will enable it to anticipate the trends in the market and access customers’ opinion on products and services.
Information technology is a number of technologies integrated to help a firm collect, store and share information. Such information includes customers’ qualitative and quantitative information, market related information and emp...