An Investigation of Vodafones Cross Borders Mergers and Acquisitions (Term Paper Sample)

An investigation of Vodafone’s cross borders mergers and acquisitions
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Executive summary
Vodafone is among the many companies that have embraced M&As in their strategy for growth. This study aimed to explore the types of Vodafone’s cross borders mergers and acquisitions, the motives of Vodafone’s cross borders mergers and acquisitions, the influencing factors of Vodafone’s cross borders mergers and acquisitions and the challenges Vodafone’s cross-boarders mergers and acquisition. From the analysis, it is revealed that Vodafone began its Mergers in 1991 when it merged with Air torch communications to form Verizon wireless and has continued to form various cross border mergers and acquisitions.
In addition, it was revealed that some of the motives of cross border mergers and acquisitions that have been identified are country to industry factors as well as firm level factors, which include factors such as capital ability of the other firm, natural resources endowment in the cross-border country, labour availability in the cross-border county and the attractiveness of the legal, political and the cultural environment in the cross-border country. Moreover, in relation to factors that have been fuelling cross-border mergers and acquisitions, privatisation, deregulation/ liberalization and globalisation were identified. Finally, among the challenges that were identified to face cross-border M&As included the ‘double-layered acculturation’ and the ‘liability of foreigners’ challenges.
Contents TOC \o "1-3" \h \z \u 1. Introduction PAGEREF _Toc419376777 \h 11.1Background PAGEREF _Toc419376778 \h 11.2 Research aim and objectives PAGEREF _Toc419376779 \h 21.3 Research questions PAGEREF _Toc419376780 \h 22 Literature Review PAGEREF _Toc419376781 \h 22.1 The concept of mergers and acquisitions PAGEREF _Toc419376782 \h 22.2 The motives of cross borders mergers and acquisitions PAGEREF _Toc419376783 \h 32.3 The influencing factors of cross borders mergers and acquisitions PAGEREF _Toc419376784 \h 42.4 The challenges of cross-boarders mergers and acquisition PAGEREF _Toc419376785 \h 53.0 Methodology PAGEREF _Toc419376786 \h 53.1 Research philosophy PAGEREF _Toc419376787 \h 53.2 Research approach PAGEREF _Toc419376788 \h 63.3 Research strategy PAGEREF _Toc419376789 \h 63.4 Research design PAGEREF _Toc419376790 \h 73.5 Instrument choices PAGEREF _Toc419376791 \h 73.6 Sampling PAGEREF _Toc419376792 \h 93.7 Data collection PAGEREF _Toc419376793 \h 93.8 Data analysis PAGEREF _Toc419376794 \h 103.9 Research ethics PAGEREF _Toc419376795 \h 104. Limitations of this research PAGEREF _Toc419376796 \h 11Reference PAGEREF _Toc419376797 \h 12Appendix 1: Interview protocol PAGEREF _Toc419376798 \h 14
1. Introduction
1.1Background
With the increasing globalisation and technological development, Mergers and Acquisitions(M&As) have become the most favourable alternative to organisations’ strategic expansion(Vancea, 2012).The popularity of M&As arguably increased during the fifth merger wave(the decade of the 1990s) which saw most companies merge and acquire each other as a strategy for strategic growth(Brueller, Carmeli and Drori, 2014). By 1997,the available literature on the subject of Mergers and Acquisitions reveal that the Acquisitions completed to this year surpassed all the previous mergers undertaken in the 1980s(Mirna, Barac and Jelavic, 2014).In fact, Bena(2014) continues to argue that in the year 1998,the worldwide mergers and acquisitions activity amounted to more than US$2 trillion in terms of value of stock transactions announced.
Vodafone is among the many companies that have embraced M&As in their strategy for growth. Arguably, the second largest British multinational company operating in over 21 countries has had various mergers and acquisitions in its history (Nalwaya and Vyas, 2014). Vodafone began its Mergers in 1991 when it merged with Airtorch communications to form Verizon wireless and its acquisitions in 2000 when it acquired Mannesmann AG. The company has continued its efforts in pursuing this strategy until recently, when it has managed a few cross-border mergers and acquisitions, across countries such as India (Reinhardt, 2014).
According to statistics, while mergers and acquisitions involved two firms in the same country in the past, most of the mergers completed between the year 1999 and year 2000 involved firms with headquarters in different countries(Jope, Schiereck and Zeidler, 2010).This indicates that the globalisation pressure has forced organisation to engage in cross border Mergers and acquisitions. However, Brakman et al(2013) argue that as much as cross border mergers and acquisitions have become popular, the strategy has posed remarkable challenges to organisations, especially after acquisitions(the post-acquisition phase). For instance, a study by KPMG found that about 17% of mergers and acquisitions created shareholder value while about 53% destroyed it(Vancea, 2012). Given the increasing trend in cross-border mergers and acquisitions, their debated importance, the opportunities they present and the challenges they pose, it is becoming increasingly important for researchers to take the mantle and dive into the deeper understanding of this strategy. Unfortunately however, Bena (2014) argues that there is little literature review regarding this subject, because researchers have not kept pace with the changing trends in cross-border M&As. Due to growing popularity and importance of cross border mergers, and the little available literature on this subject, this study aims to explore the types of Vodafone’s cross borders mergers and acquisitions, the motives of Vodafone’s cross borders mergers and acquisitions, the influencing factors of Vodafone’s cross borders mergers and acquisitions and the challenges Vodafone’s cross-boarders mergers and acquisition faces. This study is important because it will act as a reference case study for future researchers who may wish to research on the subject of cross-border mergers. In addition, the information compiled in this study will be helpful to Vodafone as an organisation in order for it evaluate its future decisions of cross -border mergers.
1.2 Research aim and objectives
This research aims to investigate Vodafone’s cross borders mergers and acquisitions. The research objectives of the study are as follows:
(1) To investigate the types of Vodafone’s cross borders mergers and acquisitions
(2)To establish the motives of Vodafone’s cross borders mergers and acquisitions
(3) To analyse the influencing factors of Vodafone’s cross borders mergers and acquisitions
(4)To evaluate the challenges Vodafone’s cross-boarders mergers and acquisition faces
1.3 Research questions
(1) What are the types of Vodafone’s cross borders mergers and acquisitions?
(2)What are the motives of Vodafone’s cross borders mergers and acquisitions?
(3) What are the influencing factors of Vodafone’s cross borders mergers and acquisitions?
(4)What are the challenges Vodafone’s cross-boarders mergers and acquisition faces?
2 Literature Review
2.1 The concept of mergers and acquisitions
In the past two decades, Mergers and Acquisitions (M&A) have gained a spurt due to increased privatisation, globalisation, deregulation and liberalization adopted by many countries worldwide (Boudier and Lochard, 2013). Arguably, the concept of mergers and acquisitions has become attractive as an external strategy for growth following the competitiveness in the global environment, which seemingly could not be sustained by organisation’s internal strategies of growth such as product development. With the increased trend of adoption of M&As, the concept of mergers has also been developed to include cross-boarders mergers(Nalwaya and Vyas, 2014).
Defining M&As, De Mattos, Salciuviene and Lewis (2007) argue that a merger occurs when two or more companies combine into one company(where only one company survives) while an acquisition occurs when one company acquires effective control over another company, by acquiring majority shares in the company through either purchase of the company’s assets or management. Notably, in a merger unlike an acquisition, the acquired company ceases to exist since the two or more companies combine to form one company (Bena, 2014).
Arguably, unlike in the past where mergers and acquisitions mostly happened among companies headquartered in the same country, today, companies headquartered in different countries have come to strike merger and acquisition deals, what has come to be known as cross-boarders mergers and acquisitions. Trying to establish the motivating factors behind the popularity and attractiveness of M&A in the past few decades, researchers have come to find out that some of the reasons the attractiveness of M&As is that they help companies realize cost synergies in areas like product development, entering new markets, increasing shareholder value and helps companies gaining complementary strengths in order to increase their competitiveness (Kashiramka and Rao, 2014).
2.2 The motives of cross borders mergers and acquisitions
Past research clearly indicates that cross-borders mergers and acquisitions are growing rapidly. According to the recent statistics as can be collected from the past works on this subject, about 40% of all the acquisitions done in the year 1999 were cross-border acquisitions (Knoll, 2007). This trend has rapidly increased to date, arousing the curiosity of researchers on what are the motivating factors for cross-border mergers and acquisitions. Arguably, as M&am...