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4Ps Walmart
BusinessManagementMarketingWriting

4Ps – Walmart Marketing Mix Greatest Impact

by Shamsul August 8, 2022

How does Walmart Marketing Mix Impact Business Promotion?

 

Walmart is a leading and wide-reaching retail store. In the year 1962, the company made the first move towards hypermarket. It has opened thousands of retail stores worldwide. Walmart has served customers in 50 different countries, with more than 2 million employees. Let’s analyze Walmart Marketing Mix.

Basically, Walmart is a wide-ranging family business. In order to run a business on a large scale successfully, Walmart requires utilizing Marketing Mix strategies. Definitely, establishing a business on a global basis cannot only rely on large capital or luck. The management practices and marketing mix are wisely planned for affluent and successful Walmart businesses.

Here are some details of the five marketing mix core standards that Walmart has followed to achieve worldwide acknowledgment. These principles are known as the four Ps: Price, Product, Promotion, and Place.

 

Price – The Basic Walmart Marketing Mix

The cost impacts the future permanence and accomplishment of a product. It shows the ratio of profit through its competitive position and sale in the marketplace. If a high price is set, the yield per item will increase. Comparatively, if the price is set low, then its demand in the market rises. It depends on the companies to adjust low volume with high value or high volume with near to the ground value. Walmart has worked and selected the perfect price through the following strategies:

  • Instead of overcharging the customers, Walmart prefers to announce bulk sales and affordable prices to increase the sale.
  • Up-to-the-mark strategies enable the company to deal with the highly economical troupes in the supply chain. Consequently, the prices of different products remain accessible in the pocket of buyers.
  • Diversification makes it inevitable that the presence of flattering goods will also increase the sale of under-promoted products.
  • SKU and widespread bar-coding systems develop an efficient supply chain to maintain low prices.
  • In order to buy large and high-priced items, pay cash, as well an installment option is given.
 

Product – Walmart Marketing Mix 

There is an array of products available at the Walmart store. The company provides in the market whatever customers demand. In fact, it is pretty easy to promote and put up for sale a demanding product rather than introducing a totally new product in the market. Here are the strategies Walmart follows while choosing product mix:

  • Walmart offers various products related to every category, including wellness, health goods, appliances, furniture, groceries, entertainment, and hardware.
  • The company purchases in bulk to get discounts.
  • Walmart has a friendly relationship with dealers.
  • White label exclusive products are accessible in stores.
 

Promotion – Third P of Walmart Marketing Mix

To attract the public, Walmart gets the support of promotional strategies with great discount offers. Effective slogans such as “Save Money & Live Better” and “Worry-Free Fresh” are introduced to inspire the audience.

  • Social media, eCommerce platforms, billboards, and TV ads are some of the mediums Walmart uses for advertisement.
  • In the case of online delivery, Walmart prefers secure and safe shipping techniques so customers can enjoy quality service within the promised time frame.
  • To build the trust of buyers, replacement and warranty policies are also available.

 

Place – Walmart Marketing Mix

Place plays a significant role in business progress. Customers rely on geographical accessibility. That is why Walmart has utilized different strategies to ensure that an effective and comfortable location is selected.

  • An influential eCommerce strategy encourages customers to buy goods online without visiting the store physically.
  • A premeditated distribution network makes it comfortable for retail stores to receive orders and deliver the products without delay to customers.
  • A highly developed Information Technology system facilitates the companies to trace manufactured goods irrespective of inventory or transit nature.
  • In the USA, Walmart has selected the outlets’ locations on a strategic basis. The best geographical position has helped in developing friendly terms with customers.
  • Walmart has arranged a fleet of highly advanced trucks to deliver goods from door to door in a short time period.

Different Walmart outlets support various brands like Walmart Express Stores, Walmart Neighborhood Market, Walmart Discount Stores, and Walmart Supercenters.

 

Bottom Line – Walmart Marketing Mix 

 Marketing Mix strategies of Walmart help new businesses to learn some practical principles:

  • In order to create demand for a product, the best option is to announce within means price. It is a company’s responsibility to understand the correct position of a product and an effective way of selecting the price.
  • Through a successful supply chain, vendors are given a chance to deliver cost savings to buyers as middlemen are not involved in getting their profit.
  • Promotion is a means to boost the demand for products. It also serves to build trust and confidence in first-time customers. Especially, warranty and return policies encourage buyers to try new products.
  • Businesses need a digital presence to survive and prosper in the modern world. It is as important as the physical presence of a retail store. Definitely, the ideal location of the physical store and strong online presence are the two marketing strategies to capture the attention of maximum buyers.
 
 

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August 8, 2022 0 comment
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Product Marketing
Better TipsBusinessManagementTrendingWriting

An Introduction to Product Marketing & Role of Product Marketer in Business Growth

by Shamsul June 20, 2022

An Introduction to Product Marketing & Role of Product Marketer in Business Growth

 

Product Marketing is a planned advertising function that overcomes the space between marketing communication and product management. Moreover, it covers processes like the positioning of a product, launching, messaging, and ensuring that buyers and salespeople recognize the product. In simple words, product marketing helps in introducing a product to market. 

Companies have modified the description of product marketing. However, the term is new and companies prefer to modify the role according to their needs. It is the reason; a product marketer needs to be adaptable and flexible. In this regard, the leading role of the product advertising manager is to identify and size target value propositions and target markets. Whatever is the nature of the product, the product marketer must be 

  • Product expert
  • Market expert
  • Customer expert

The Product Marketing Role

A product marketer has a deep understanding of the market as well as the target buyers. Indeed, he gives value to external and internal audiences. It is necessary for a product marketer to know the feelings and behavior of customers and inform the internal audience (stakeholders in the company) about buyers’ reactions. 

Product marketing directly depends on the growth of the organization a marketer works for. Comparatively, the buyers are the external audience. Moreover, the product marketer manages and makes the product understandable for consumers. For this purpose, the Product team gets the support of the CS team, Sales and Marketing strategies. Side by side, the peripheral analysts and investors also act as part of the outside audience.

Early Stage of Product Marketing

There is no specifically defined procedure and team for an early stage business. The company and product marketer needs to do a lot of things and research in detail about the market and perfect customer character. 

Side by side, a product marketer requires being an expert and designing the best strategy for the features and the product itself. Building and developing content is also part of your job. It is important to place a product according to buyers’ feedback. While verifying the position, it is necessary to establish a storyline for upcoming processes. At this stage, internal communication covering all applicable stakeholders is required. 

Developed Companies and Nature of Product Marketing 

The products of developed companies are not unfamiliar to buyers. In fact, they have already given the feedback. Now, the responsibility of the product marketer is to utilize the feedback and develop a viable intelligence program. It is the time to promote the target audience and understand deeply the persona of your customers. This is the best way to bring changes in the product as per the customers’ desires. 

It is part of your job to keep in touch with stakeholders and give value to customers’ achievements and sales. For this purpose, create different materials to show the product in an understandable way so that the CS and sales team use these materials while communicating with buyers. 

As the company is already growing, it’s time to make sections of the market and find out the ways to expand the product. At this stage, the product marketer is also involved in keeping the revenue record and developing the product roadmap.

Mature Companies & Nature of Product Marketing

A product marketer for a mature company focuses particularly on partner marketing as it is necessary to find techniques for product competencies. 

In a mature company, it is useful to understand the metrics deeply and figure out ways involved in customers’ expedition. Marketing at this stage is connected to buyers’ retention and learning new ways to amuse loyal customers. This strategy is equally important for early-stage and growth companies as well. In the end, an analysis is carried out covering win and loss along with figuring out the reasons behind the loss or win deals. 

Different Teams Alliance with Product Marketing

A product marketer works among various teams; therefore, the way to interact with different groups impacts their success level. Here are some ways a product marketer should communicate with multiple teams:

1- Product Teamwork & Product Marketing

Product marketer contacts frequently with the product manager and performs various things in collaboration with the product manager, including the formation of a product roadmap, and analyzing and structuring of the personas. 

Research of a market is necessary for the product marketing team as well as the product. After completing the product commences cycle, the product marketer carries out a loss/win investigation to understand things in a better way. The concluding result comes with an improved product matching the requirements of customers. 

2- Buyers’ Success Cooperation & Product Marketing

The success of customers gives the best product outcome. It is the reason, buyers’ needs, desires, and problems are necessary to share out. CS team gets training for supporting better products than marketer competitors. Buyers’ success in collaboration gives way to high client retention and more contented customers.

3- Sales Teamwork & Product Marketing

Potential customers communicate with the sales team and provide them with valuable information, covering their problems. With the help of satisfactory content and product guarantee, the sales team can convey the product to buyers rapidly. Always ensure that the sales team is working in collaboration with the operations of the product team. 

In case of ineffective collaboration, train the staff and support them in understanding the product. Both teams need to work together and highlight the buyers’ experience and the values specific product is conveying to customers. 

4- Marketing Team Partnership with Product Marketing

In fact, the marketing team is a significant stakeholder that supports the product marketing team in messaging, product positioning, and verifying how to utilize it in remunerated campaigns and relevant activities. Both teams work on content creation, measuring KPIs, and using cases. Furthermore, team collaboration helps in resolving the pricing plans for given products. 

Metrics for Product Marketing

Metrics vary from one company to another. These rely on the preset objectives. It is important to bring into line the company objectives with the goals of product marketing. In other words, if your company’s objective is to receive 5000 users by the Q2 end, it is necessary that the characteristics of Q2 must support the company to achieve the goal. 

The measures are not always in quantitative form. There are qualitative metrics as well. Product marketers can measure the below-mentioned metrics:

  • Revenue
  • Results of campaign
  • Feedback of clients
  • Leads 
  • Percentage of Feature adoption
  • Users’ number 
  • Content usage
  • Percentage of clients’ retention
  • NPS or Net Promoter Score
  • Market share

It is not possible to get all these metrics. Some metrics are calculated on an organizational level. The metrics, as mentioned earlier, are measured with team support. Always show a responsive attitude towards these metrics and make it certain to utilize your activities to achieve the company’s goals also.

Product Marketing Expertise

  • Last but not least, a product marketer must have some skills to accomplish the target. First of all, they must have the capability to carry different hats. The job of a product marketer is dynamic and changeable. You need to work with copywriters, CMOs, PMs, performance marketers, and developers and communicate at all levels. It is the reason; a lot of product marketers are basically the generalist and have done a variety of marketing tasks therefore competent enough to deep-dive. 
  • It is necessary for a product marketer to be an impressive writer. Product marketers are great writers. Obviously, they are not professional writers; however, their writing skills support them in becoming the best product marketer. 
  • Product marketers are proficient to interpret complicated ideas into simple content. Moreover, a product marketer accepts the developers’ task and converts it into comprehensible and simple content for consumers.
  • No doubt, product marketers are great communicators and skilled to be in touch with all the teams present in a company. 

In a nutshell, companies need to understand customers on their terms. Consequently, a great number of companies have hired product marketers to figure out customers’ requirements and develop the customers-centered product to perk up the business position. 

 
 

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June 20, 2022 0 comment
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SWOT and PESTLE
Better TipsBusinessManagementMarketingSWOT & PESTLE TrendingWriting

When to Use SWOT and PESTLE Analysis?

by Shamsul May 25, 2022

When to Use SWOT and PESTLE Analysis?

 

When starting or running a business, project, or company, it is crucial to know about those factors that can impact them. Internal and external factors are highly vital in this process. There is no shortage of strategic planning tools. From SWOT to PESTLE, you can use any tool to learn about your business. However, both these tools are used frequently for strategy planning. When to use SWOT and PESTLE Analysis? Here is our brief answer for our readers.

 

What is SWOT?

SWOT stands for strengths, weaknesses, opportunities, and threats.

Strengths:

It represents those advantages that you have over other companies or businesses.

Weaknesses:

It represents disadvantages of your company when compared with others.

Opportunities:

This represents external trends that you can utilize to leverage your company.

Threats:

It represents external negative points that can create problems for your business. They affect your business negatively.

In SWOT, weaknesses are also considered liabilities. By conducting SWOT analysis, you can find out those internal and external factors that can work for or against you. The biggest advantage of SWOT is that it also highlights external factors of your business or project, which could create a huge difference in the failure or success of your business. It is very easy to create and conduct a SWOT analysis.

By exploiting all the resources and information, you can conduct SWOT analysis and run your business successfully. It helps to uncover specific problems that you can mitigate easily. It would be great for you and your business to use a SWOT analysis with your team members. In this regard, brainstorming could help you as it allows you to gather relevant factors for each section of SWOT analysis.

 

SWOT and PESTLE Analysis

What is PESTLE?

Before starting or launching a new business or project, you should conduct thorough market research. If you find it a difficult task, then PESTLE analysis is here to help you.

Political:

Political factors like regulations, the influence of a political party, global issues, laws, and legislations have huge impacts on your company. They are very serious factors that you must take into consideration.

Economic:

Economic factors like stock markets, customer confidence, taxes, inflation, and interest rates are crucial to evaluate.

Social:

Any changes in purchasing trends, lifestyle, norms, publicity, media, events, and advertising fall in this category.

Technological:

The impact of the latest technology on your business, existing technology infrastructure, manufacturing, communications, licensing, and other similar factors are technological factors.

Legal:

Any potential changes in legislation, foreign trade policy, or everything in between can affect your company’s business performance.

Environmental:

Whether local or global, environmental issues like climate change, waste management, carbon emission, and pollution are considered as environmental factors.

Unlike SWOT analysis, PESTLE analysis mainly focuses on external businesses that are outside of your control. The above-mentioned factors of PESTLE affect the business and can decrease your business growth. However, it also aids in finding new growth opportunities.

Comparison Between SWOT and PESTLE Analysis:

There is no doubt about it that both methods are widely used for strategic planning. They are highly useful for giving complete insight to run your business efficiently. So, comparing them will not be a great way.

There is one disadvantage of PESTLE. It doesn’t analyze the internal factors of your project. It just only analyses the external factors of your business. So, if you want to fully analyze your business, you must take the help of SWOT analysis.

On the other hand, SWOT analysis equally analyses your business’s internal and external factors. Strengths and weaknesses are internal factors, whereas opportunities and threats are external factors in a SWOT analysis. So, it provides a deep and detailed analysis of your company.

 

Working as a Team for the Success of a Business:

If you are conducting a SWOT or PESTLE analysis, but your team is not in the same room, then it would be difficult to collect information and brainstorm. There is a chance that you will miss important factors. This thing is not ideal for your project or business. It is imperative to work as a unit or team and collaborate with each other. The leader of the project can draw PESTLE or SWOT diagram to make things easier. Collaborate with relevant departments or people to get the right and correct information. In this way, you can reduce the chance of error.

 
 

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Mergers and Acquisitions

May 25, 2022 7 comments
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Brazil PESTLE Analysis
Better TipsBusinessManagementMarketingSWOT & PESTLE Writing

PESTLE Analysis of Brazil

by Shamsul May 3, 2022

PESTLE Analysis of Brazil

 

In this PESTLE Analysis of Brazil, you will realize that the PESTLE tool is very effective to run an entity including the country. Brazil is a South American country and one of the largest in Latin America. The Federative Republic of Brazil touches the border with every South American country except Ecuador and Chile. Brasilia is the capital city of Brazil. Sao Paulo is the largest city in the country. The total area of Brazil is 8.516 million km2 and its total population is 212.6 million (2020). In terms of area and size, it is the 5th largest country in the world. In terms of population, it is the 6th most populated country in the world.

Brazil is the home of various tribal nations. In 1500, Portuguese came and colonized the country. However, the country got independence in 1822. It became the Empire of Brazil. The country follows the presidential form of government and administration. From 1964 to 1985, a military dictator ruled the country. In 1988, the civilian government established the federal republic country.

In this article, we will conduct the PESTLE analysis of Brazil. This tool is really helpful in analyzing macro-environmental factors such as political, economic, social, technological, legal, and environmental. Hence, the impact of these factors is really huge on the country. Here’s the complete PESTLE analysis of Brazil,

 

Political Factors | PESTLE Analysis of Brazil

Government System:

The country follows the federal republic democratic system of government. Brazil comprises federal districts and 26 states. The country falls under the types of middle income countries of the world. So, the country holds significant importance in international affairs. Moreover, it is worth mentioning that the country has the largest democracy in the world. It shows that its consumer markets are really huge. According to some experts, these indicators show that this country has various growth chances and potential. There is a chance that they can make a prominent position in the top 10 economies of the world.

  • Alliances:

The country has very friendly relations with neighbors such as the US, Venezuela, and Argentina. Moreover, Brazil has strong alliances and membership in some leading institutions like the UN, G20, IMF, World Bank, BRICS, Mercosul, Organization of Ibero-American States, Organization of Portuguese language countries, World Trade Organization, and more.

  • Corruption:

Like other South American countries, Brazil’s main issue is corruption. They have been facing this problem for several decades. However, government institutions are taking appropriate initiatives to remove the roots of corruption. Such initiatives and steps could decrease the level of corruption.

 

Economic Factors | PESTLE Analysis of Brazil

  • Gross Domestic Product (GDP):

In 2020, the annual gross domestic product (GDP) of the country was 1.363 trillion dollars which is the 13th highest in the world. Its per capita income was 6450 dollars which is really low as compared to the other neighboring countries. In 2015, the country faced one of the most difficult economic recessions. It is still facing its perks in 2022. The recent pandemic of covid-19 has also affected the country’s economy very badly.

  • Productive Industries:

When it comes to coffee-producing countries, Brazil falls under the category of the world’s top countries. The country produced 32.99 million bags of coffee during the period of 2021 to 2022. During 2016-2017, the country produced a record-breaking 55 million bags of coffee. When it comes to the power industry, sugar is the most powerful one. Brazil exports sugar and coffee to more than 100 countries. These economic indicators are really bright for the country’s financial condition.

  • Imports and Exports:

Cars, crude petroleum, soybeans, iron ore, and raw sugar are some of the country’s top exports. So, the country exports these things to the USA, China, Argentina, Germany, and Netherland. Moreover, Medicines, medicine packaging, refined petroleum, cars, and integrated circuits are the main imports of the country. So, The country imports these products from China, the USA, Germany, South Korea, and Argentina.

  • Foreign Direct Investment (FDI):

Several international countries are investing in Brazil. Being a member of BRICS, it receives foreign direct investment from South Africa, China, Brazil, Russia, and India. The purpose of this alliance is to enhance the level of foreign direct investment in the country.

  • Unemployment and Taxes:

In 2020, the unemployment rate was above 13 percent of Brazil. It has climbed due to the perks of covid-19. The tax rate was over 28 percent in 2021 which is really low. These factors show that the country is going in the wrong direction.

 

Social Factors | PESTLE Analysis of Brazil

  • Demography:

The total population of Brazil in 2020 was 212.6 million. The main religion of the country is Christianity and more than 89 percent follow the religion. The remaining 11 percent are minorities. The official language of the country is Portuguese, but they also speak English and Spanish. In short, Brazil is one of the most beautiful countries in the world. They are football lovers and their team and players are highly famous in the world.

  • Crime and Poverty:

In the recent few years, the country has evolved economically. The government is trying to remove the poverty level. More than 10 percent of the population of the country is living under poverty. The gap between the poor and rich has enlarged in the past few years. Just because of this, the crime rate is going up in the country. Some of its cities are very bad-reputed due to the violent crime rate.

  • Social Problems:

Currently, the country is dealing with several social challenges such as poor education, poverty, crime, child labor, bad housing, and a poor healthcare system. The overall social condition of the country is pathetic. Drug dealing, prostitution, and other similar things are very common. Gender bias and race is a common things.

  • Trends:

When it comes to fashion, Brazilians are very fashion-loving and modern. Middle-class families are growing in the country. Moreover, they love branded and luxury clothes and lifestyle products. Football and baseball are very popular in the country.

 

Technological Factors | PESTLE Analysis of Brazil

  • Social Media:

Brazil is growing in the tech sector such as software, web development, and mobile. The Brazilian people love to use mobile phones and the internet. They are actively present on social media sites like Facebook, Instagram, YouTube, Twitter, and LinkedIn. The largest city in the country is Sao Paulo.

  • ICT Growth:

When it comes to information and communication technology (ICT), Brazil falls under the category of the world’s leading countries. They love to communicate with each other using the latest technologies and devices. Due to this reason, many tech multinational companies are investing in the country. On the other hand, some of its areas still don’t have access to the internet and technology.

 

Legal Factors | PESTLE Analysis of Brazil

  • Regulations:

The legal system of the country promotes foreign investment and businesses. However, the employment rate is a bit low in the country. However, multinational companies can target the country to give employment chances. On the other hand, the country does not allow nuclear energy companies, postal services, and security agencies to work in the country.

 

Environmental Factors | PESTLE Analysis of Brazil

  • Environmental Challenges:

The country is facing some of the worst environmental challenges like air pollution, deforestation, smuggling, illegal poaching, oil spills, water pollution, and land degradation. The government and individuals are taking aggressive steps to address these environmental challenges.

  • Tourism Industry:

Brazil is a beautiful country and it attracts millions of visitors every year across the globe. They are strengthening the country’s economy. The country has more than 2000 beaches, rainforests, landscapes, the Amazon River, Iguacu Falls, and 62 National Parks.

 

Final Thoughts | PESTLE Analysis of Brazil

After this careful study, we have realized Brazil is one of the developing countries in the world. However, the country is facing some serious problems like crime rate, poverty, unemployment, environmental challenges, and other issues. The country has the potential and resources to become a leader.

 
 

Need Help or Advice in Content Management:

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Moreover, if you want any help to write content to drive more traffic and boost conversions, get in touch through Contact our team?

Do you want any help writing quality content, driving more traffic to your website, and boosting conversions? You can contact me through my Freelancer.com profile also. I always prefer to work through Freelancer.com for smooth functioning. Here you pay safely and securely.

 

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May 3, 2022 0 comment
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Merger and Acquisition
BusinessManagementMarketingScholarlyWriting

Mergers and Acquisitions

by Shamsul April 29, 2022

 

Mergers and Acquisitions

Table of Contents

Introduction. 4

Introduction. 4

The Process of Acquisition. 5

Mergers And Acquisitions – Fact-Based Decision Making. 7

Decision Models For Target Screening Process. 7

Methods Of Target Screening. 8

Strategic Decision Criteria. 8

Organizational Decision Criteria. 10

Financial Decision Criteria. 14

Decision criteria for evaluation of industry and business environment. 15

Candidate Selection. 16

Creation of Acquisition Strategy. 17

Forming List of the Potential Target. 17

Refining Criteria of Your Target. 17

Target Prioritization. 18

Target Evaluation. 18

Strategic Match Analysis is primary for M&A Analysis. 18

Target Screening Process. 19

Step 1: Figure out where to play. 19

Step 2: Pinpoint Companies of Interest. 21

Step 3: Prepare for pursuit. 24

Step 4: Move forward with due diligence. 25

Research Methodology. 25

Research Philosophy. 26

Data Collection. 26

Secondary data. 27

Primary Data. 27

Qualitative Research. 29

In-depth interviews. 29

Interview themes. 33

Value Creation. 33

Target Selection. 33

Due Diligence and Valuation. 33

Analysis And Presentation Of The Empirical Findings. 36

Pre-Acquisition Process. 36

Value Creation. 36

Analysis of Value Creation. 36

Target Selection. 37

Interpretation. 39

Conclusion. 41

References. 42

Introduction

According to many types of research, the base of Merger & Acquisitions is on strategic and financial motives with the goal of creating value that will not emerge or come out if two companies started to act individually (Bower, 2001; McCarthy & Dolfsma, 2013; Schweiger & Very, 2003; Seth, Song, & Pettit, 2000). Hitt, Hokisson, Duane and Harrison stated in (2001) that synergy is the essence of value creation. Hence, it is essential for the acquiring companies to recognize factors for creation of synergy while looking for acquisition objects. Jameson and Haspeslagh (2006a) came to know that synergies basically depend on organizational and strategic fit between acquiring organization and acquiring company. Reasons for the acquisitions are the aim of reaching the new markets, increasing the efficiency of present resources or gaining the new resources (Bower, 2001; Haspeslagh & Jemison, 1991; Hubbard, 2001; Schweiger & Very, 2003).

Bower (2001) made outlines different activities of strategies that he proposed as the basis for the engagement of companies in mergers and acquisitions. The 5 strategies which he identified were:

  1. The geographic roll-up M&A
  2. The overcapacity M&A
  3. The M&A as R&D
  4. The market or product extension M&A
  5. The convergence of industry M&A

The extended explanation of these objectives came in 2001 from Hubbard which related strategic motives to strengthened position of the market and future growth. The objectives of acquisition were sorted further into 6 categories:

  1. Market penetration
  2. Financial synergies
  3. Vertical expansion
  4. Horizontal acquisition / Synergy or asset potential
  5. Market entry
  6. Economies of scale

Very and Schweiger took a similar approach in 2003 to objectives for the undertaking acquisition that, combined with the explanation of Hubbard (2001), gave rise following description in acquisition objectives:

The meaning of market penetration is the acquisition that is made with the intent of gaining market share and market power. Financial synergies do come from acquisitions that are made with the intent of improving earnings through enhanced facility ownership, enhanced terms of finance, and accounting variations. Vertical Integration means acquisitions that are made with the intent to enhance control over the resources, the distribution channels, or technology by the acquiring companies which have similar characteristics. Horizontal acquisitions which are also known as asset potential are made with the intent of optimizing the use of assets of the acquired company. Market entry acquisitions are developed to enter new regions, industries or unrelated or related markets for enhancing market coverage. Economies of scale mean acquisitions with the intent of integrating fragments or entire acquired companies for optimizing the earning abilities (Hubbard, 2001; Schweiger & Very, 2003).

The Process of Acquisition

The acquisition value depends on the ability of management to deal acquisition process regardless of strategic objectives which an organization has (Cartwright & Schoenberg, 2006; Gomes et al., 2013; Haspeslagh & Jemison, 1991 and; Jemison & Sitkin, 2006b). The theory of acquisition process mainly throws light on process of acquisition. It proposes that final acquisition outcome is determined by factors and activities in acquisition process (Jemison & Sitkin, 2006b). Moreover, acquisition process is used for understanding of creating the value in acquisition instead of determining company value (Haspeslagh & Jemison, 1991).

The process of acquisition is seen basically as two underlying major sub processes, that are pre-acquisition and post-acquisition process (Gomes et al., 2013; Lasserre, 2003; Hubbard, 2001; Haspeslagh & Jemison, 1991 and; Jemison & Sitkin 2006b). Pre-acquisition process consists of decision-making issues with regard to acquisition, that includes rationales for justified acquisition like analyzing, screening and strategically evaluating prospects of acquisition (Haspeslagh & Jemison, 1991). Post-acquisition process contains implementation phase of acquired company like products, cultures, values and integrating processes which are the capabilities that play part to value of acquisition (Haspeslagh & Jemison, 1991; Pablo et al., 1996).

Haspeslagh and Jemison (1991) came to know the perspective of acquisition process in 1991 that was being explained by researchers through decades. It is a linear process that starts with pre-acquisition and ends in the post-acquisition process. (See Figure Summarized Acquisition process model adapted from Haspeslagh and Jemison (1991), Lasserre (2003), and Gomes et al., (2013).

The process of pre-acquisition is described by a set of the strategic motives for undertaking acquisition and evaluation of various targets of acquisition to notice which target creates good synergies for the acquirer (Hubbard, 2001; Lasserre, 2003). Mainly, the process is evaluated by a strategic fit which is the identification of the contribution that an acquisition makes and after that it determines if the proposed target of acquisition fulfills strategic contributions. For example, in the terms of products or new customers which contribute to an increase in non-financial or financial goals (Jemison and Sitkin, 2006b).

Organizational fit mainly is being used to a lower extent for the identification of possible problems which can lead to interruption in process of value creation (Bing and Wingrove, 2012). The process of post-acquisition is characterized by an integration of the acquired company and transition to new standards and cultures too as a business operation that is supposed to produce enhanced value is transferred (Lasserre, 2003). This process takes into consideration the organizational fit as organizational differences sometimes cause issues that lessen the probability of succeeding with extracting operational and financial gains (Gomes et al., 2013). The other aspect in which the acquiring organization sometimes faces problems is a willingness to do fast or quick endorsement of the acquisition process. So, the chance of ignoring important organizational fit and strategic issues is more and it can disturb the transition from two individual entities into one acquisition (Gomes et al., 2013; Jemison and Sitkin, 2006a).

Mergers And Acquisitions – Fact-Based Decision Making

Mergers and Acquisitions have become an integral part of the corporate strategy which is a combination of the buying and selling of business corporations or assets with the aim of promoting the growth of the business in its respective sector. The amalgamation of two corporations can result in increased financial power, business activity as well as market share (). In addition to this, this offers opportunities to synergize through efficiencies gained by economies of scale. According to the figures released by Statista (2017) the total value of international M&A deals amounts to approximately 4.74 trillion U.S. dollars however, the rate of merger and acquisition failures is somewhere between 70% to 90% (Statista, 2017).

The primary cause of this rate of failure are varied however, it will not be unfair to say that the entire failure of the deal starts with flawed decision-making criteria. In simple terms, a haphazard process of decision-making tends to generate haphazard results. When a haphazard decision-making process is involved in the target screening and selection process it will definitely result in a failure. Moreover, this result can have a long-lasting and detrimental impact on the acquirer. Having the fact that mergers and acquisitions will increase in the next few years, most businesses are moving toward eradicating haphazard decision-making processes from their M&A approach so as to improve the overall M&A decisions.

Decision Models For Target Screening Process

The task of screening as well as management of target companies is a very classic challenge of portfolio management.it involves considering various factors, the alternatives for evaluation along with the decisions that should be made. Emphasis should be on over-analyzing available data along with engaging all internal stakeholders for leveraging their insights, experiences and decisions.  This situation can be best controlled by developing one or more decision models so as to enable a multi-criterion decision-making process. Decision models comprise of goals, measures, weighted criteria along with an associated rating scales. These models help decision-makers to consistently and comprehensively evaluate and rate the value of the business of the alternatives that effectively contribute toward the decision objective (Sahu et al., 2013).

Decision models offer distinct advantages which include:

  • Assuring a comprehensive analysis of every possible alternative
  • Balancing of multiple qualitative and quantitative factors
  • Improved justification for business decisions
  • Promoting cost vs. benefits assessment
  • Enabling fast reprioritization in response to the ever-changing business conditions.

Methods Of Target Screening

Criteria for evaluating potential and screening acquisition targets present the benchmarks against that for the evaluation of a company (Srivastava and Datta, 2002). In this part overview of the strategic financial, industry, organizational and business environment related decision criteria which is used by the corporates acquirers in process of selection of candidate.

Strategic Decision Criteria

The main aim of strategic screening is to search whether characteristics of target match with objectives of acquisition of acquirer and whether there are strategic risks linked with firm (Becker, 2016, p. 303). In strategic screening, decision makers have a look whether any of potential synergistic gains have chance to be realized (Eschen and Bresser, 2005; Jemison and Sitkin, 1986).

Criteria of strategic decision implemented by decision makers during strategic screening process are usually derived from acquisition strategy (Lucks and Meckl, 2015, p. 123) and capture that which of the “white spots” in firm’s strategic positioning must be closed with acquisition (Becker, 2016, p. 302). These gaps of strategies may link to dimensions like product portfolio, market shares, customer segment, business or technology models and geographical markets (Becker, 2016, p. 302). Therefore, it relates to target characteristics which determine whether “strategic fit” is found between acquirer and the target. Strategic fit can be defined as degree to that target company complements or augments parent’s strategy and by doing so makes known contributions to both financial as well as non-financial goals of the parent company (Bettinazzi and Zollo, 2017;). The main argument of discussion is the loss or gain from acquisition are dependent on strategic fit between acquiring company and target (Lubatkin, 2003). The higher is the probability of a strategic fit of the acquirer and the target, the more gains can be expected from the deal (Calipha et al., 2010). The table given below provides an overview of the literature on criteria of strategic decision.

Organizational Decision Criteria

On one hand, this criterion relates to the concept of the organizational fit while on the other hand it relates to the characteristics describing capabilities of target and resources which can be considered important for the acquirer. Scholars have evaluated organizational fit in the terms of the various dimensions. For example, these include the Top Management Team compatibility in the terms of cultural differences among top management teams (Chatterjee et al., 2007; Datta, 2002), the fit similarity or compatibility of the management style (Larsson and Finkelstein, 2010; Rao et al., 1991), various functional backgrounds (Haspeslagh and Jemison, 1991; Krishnan et al., 2007; Wiersema and Bantel, 2002) control and reward system (Datta, 2002). Moreover, Dollinger and Saxton have operationalized the organizational fit as scale which reflects similarities in information system, human resources, organizational structure, culture among two companies and information and accounting system. A dimension which is discussed very frequently of organizational fit concept in both M&A literature as well as amongst practitioners, is cultural compatibility, cultural fit or degree of relatedness of culture among acquirer and target in the terms of national and organizational cultures (Ahammad and Glaister, 2013; Bauer et al., 2016; Marks and Mirvis, 2001; Stahl and Voigt, 2008; Tarba et al., 2017; Weber, 2018).

Second, the firms engage in the acquisition to reach critical resources of organization which can be valuable and which may be particularly lacking (Granata and Chirico, 2010). These resources can be tangible (e.g., physical and final assets) and intangible (capabilities of TMT, corporate reputation, human capitals and brands). Prior research of M&A suggests that comprehensive screening of target acquisition and the evaluation process should include assessment of target’s both tangible as well as intangible resources and assets (Harvey and Lusch, 1995; Hitt and Pisano, 2003). It is for this purpose that the resource-based view of firm gives suitable perspective for investigating the acquirer’s target screening processes. It is because the profile of target can be regarded as the combination of intangible and tangible resources. Specifically, during organizational screening, the acquirer commonly investigates the firm specific capabilities and knowledge like market, industry, production, technical know-how (Hitt et al., 2000) and R&D, which are important competitive assets that the firm has (Grant, 1996). This type of firm specific knowledge is often found in human capital, in particular firm’s TMT and the senior managers. Henceforth, organizational screening involves the evaluation of target’s capabilities of the top managers and key executives (Hitt et al., 2000; Kiessling and Harvey, 2006; Marks and Mirvis, 2001). Most of the times, the top manager’s implicit knowledge about the industry, the corporate strategy along with the strengths and weaknesses of the organization along with maintaining of interpersonal networks of external and internal relationship which is very crucial for the business activities (Kiessling et al., 2008; Kiessling and Harvey, 2008). Further, information-based assets and resources which are sometimes evaluated in the corporate acquisitions are the intellectual brands, the reputation of target among customers or suppliers and property rights (Capron and Shen, 2007; Hitt et al., 2000; Hitt and Pisano, 2003; Kiessling and Harvey, 2006; Mahajan et al., 2014; Rao et al., 1991; Saxton and Dollinger, 2004).

Financial Decision Criteria

This is the third step in evaluation of “financial fit”. In early pre acquisition screening, financial fit’s assessment does not include the detailed valuation of company and assessment of the thing whether expected price of purchase lies below or above this value (Lucks and Meckl, 2015, p. 128). Financial screening on this stage consists of initial assessment of transaction’s financial feasibility and evaluation of consequences which are possible for annual profit and other main performance indicators like debt ratio or profit per share (Becker, 2016, p. 303; Lucks and Meckl, 2015, p. 128). Decision makers can easily have a rough estimate about deal’s affordability by calculating price range for expected price of acquisition. It is done by usage of valuation multiples like EBIT(DA) of the companies in close group of them (Lucks and Meckl, 2015, p. 128). The acquiring firm can get some useful ideas about the acquisition premium by determining expected price range of acquisition. It tells about how much the acquisition is ready to pay for target firm (Laamanen, 2007; Reuer et al., 2012). It also includes assessment of financial situation by the study of historical statement of income of target. It can also be done by studying the financial forecasts and balance sheet. By using the data available at this point, the decision makers evaluate and calculate the key performance and its range (Henn et al., 2018; Hitt et al., 2000; Hitt and Tyler, 1991; Kim and Finkelstein, 2009; Very and Schweiger, 2001, p. 13). With help of balance sheet products, financial analysis includes consideration of target’s intangible (like brands, patent, reputation, human capital) and tangible assets (like financial and physical) and liabilities (Kiessling and Harvey, 2008). Accounting valuation can differ in different regions because of unsafe conditions (Harvey and Lusch, 1999). Financial assessments can provide the foundation for making of forecasts on cost, future revenues, profit scenarios for target and financing requirements (Harvey and Lusch, 1995; Very and Schweiger, 2001).

Decision criteria for evaluation of industry and business environment

This is the final step in process of target screening. Prior researches have shown that the attractiveness of company is determined usually by industry’s structural effectiveness and competitive strength within its industry (Porter, 2008). Scholars have therefor suggested that screening activity must incorporate assessment in terms of dimensions (Rajagopalan et al., 2013). Resources of firm depends on environment type of industry where resources are usually employed (Heeley et al., 2006). Environmental factors can have an impact on the value and performance of firm. PEST analysis includes thorough and rigorous environmental screening with four dimensions: economic, socio-cultural, political and technological aspects (Gupta, 2013; Sammut-Bonnici and Galea, 2015). PEST analysis can guide environmental assessment and support acquirers. This type of analysis is important for cross-border deals or transactions. When assessing the potential target of acquisition, the acquirers should look at industry context too (Anand, 2005; Anand and Delios, 2002; Bauer and Matzler, 2014). Normally, attractiveness of industry in which target operates actually depends on structure of industry (Porter, 2008), which on other hand, drives the competition among firms (Porter, 2008). Five forces model is important for attractiveness of industry (Porter, 2008). This model involves qualitative and quantitative assessment of other competitors and direct competitors force stemming from suppliers, new industry, substitute products and customers. According to literature, two common quantitative measures are average profitability and growth of industry (Dawson, 2011). It is important to consider the industry’s growth because it can allow the ability of target to increase the revenues in future (Wright et al., 2001).

Candidate Selection

When you come to know that one company is acquiring other, it sounds like the process is done in a blink of eye. You hear about the merging of two companies for example ABC Co. has announced the plan to merge with or acquire XYZ Corp for $20M stock and then occurs the transaction and you think “this is what I heard about and they were doing it”.

But in actual the process of acquisition is longer than the blink of eye. You will notice that whenever there is a news about acquisition, there is always a word used “plan”. It is because a lot of hard work is done in process to bring this so far. The critical steps involved in planning process of the target screening.

Creation of Acquisition Strategy

Acquiring companies which are very successful are pro-active. They are not waiting for some bankers for investment deals, instead, they have acquirers as hunters. Acquiring companies are actually keen hunters, they are passionate about the acquiring targets. In the start, they need to identify the potential targets which make sense overall business goals of company (Canila, 2009).

The companies don’t merge or acquire company because of acquiring purpose. Instead, they look for places where chances of success are high. They go with the theory of economic function of acquisition, reason of business transaction and relationship resulted between merging entities. As a result, acquisition strategy is created where assiduity has identified most promising segment of market for growth and points out financial and commercial hurdles for the potential deals. An acquisition thus can result into new market exposure, growth, enhanced efficiencies by addition of more synergies and growth. To do it all, acquisition team should know about the strategy, profile of acquisition target and their company inside and out (Chen and Liang, 2011).

Forming List of the Potential Target

When the clear and clean acquisition strategy is ready, next important step in process of planning is to form a list of those companies which are potential target. Acquiring company should select industry or company it is targeting and then compile list of those companies which match to their acquisition strategy to some extent (DePamphilis, 2010).

Refining Criteria of Your Target

Development in target list goes on with increased number of information lists of the targets. It can come from working with M&A experts, market, institutional learning and research in market segment where the acquisitions can create value. They will find potential segment and perform complete examination of value chain of industry and ecosystem. By this research, it is easy to identify potential sources of profit with disruptive and emerging technologies, important part of competitive advantage and customer buying pattern. Once, the initial list is developed, then they will refine list by setting criteria for the target companies. By doing so, initial list is developed which is based on descriptive screening criteria (Gaughan, 2010).

Target Prioritization

When the initial list of the potential targets is formed by screening criteria, then acquisition team of company can reduce list to further those potential targets who are at priority. Availability of assets in market, potential for the value creating synergies and parenting strategy are basis for culling of potential targets to categorized list (Gomes et al., 2013).

Target Evaluation

With refined lists of the targets, acquiring company contacts with sellers. Maximum work on this stage is about to gather data about potential target and data should be maximum. If the acquiring company fails to do so, then it will have to make request to target for initial data. This information can help the acquiring company to know that either forward motion in M&A process is good from both points i.e., financial and strategic standpoint. Due diligence on this point in target screening process appears to be quite critical. Formation of the acquisition strategy is critical step for acquisition process. Explaining detailed criteria to the screen- potential target can become point where acquiring company is sure about its choice (Kim et al., 2011).

Strategic Match Analysis is primary for M&A Analysis

M&A are probably driven over considerations of being strategically fit. Both the qualitative and quantitative factors can be closely considered with the screening process based upon the strategic fit aspects. Those targets that pass from the initial as well as subsequent evaluations and filters needs to be compared as well as prioritized based upon a consistent criterion. A good example can be the development of a strategic fit assessment matrix. This matrix can comprise of assessing the competitive position of the target including competitor retaliation, distribution channels and the risk associated with substitutes along with the power relation with the suppliers including supply chain, economies of scale and supply contingencies and proposition to buyers including pricing, quality and portfolio (Holland et al., 2003).

Apart from a strategic fit, companies that were selected in the target screening process should be supported through profiles so as to better evaluate and assess their potential of value integration.

The profiles need to incorporate product lines, and business segment, manufacturing sites, manufacturing sites and recovery, recent company news, selected history of transactions as well a potential risk.

Whilst the fact that investigation of every target firm fits within the acquisition strategy of the company, it still holds key importance in the screening and selection process. Screening targets for assessing strategic fit also involves avoiding any issues or potential pitfalls at an earlier stage, prior to having a huge amount of money and time involved.

When strategically fit companies have been screened down, the list of options that are viable for the deal is further reduced. This is the time when more in-depth value-analysis can be applied: a typical way pf assessing the strategic fit of a target company include:

  • Application of subjective screens inclusive of various challenges like integration challenges, product for, etc.
  • Determining how each target will effectively contribute towards M&A strategy.
  • Identification of unique challenges as well as red flag s for every target and potential acquisition.

Target Screening Process

 

Step 1: Figure out where to play

Many organizations consider M&A as a beneficial opportunity for the business. They do so when there is an attractive target or when they are mentally prepared to increase the cash available to them (Christensen et al., 2011). But value cannot be created by using acquisition opportunistically. Finding the right target for acquisition has no shortcuts. Using a comprehensive method for acquisition tells about where to look for the target in first place. It is called “where to play”. It is not right to see the reviews of good candidates directly. Instead, there is a whole process which starts with exploration of industry ecosystem. It means the environment in that acquirer works and interacts with customers, suppliers and partners. Then, there is analysis of potential-opportunity portion or segment. It means the segment where there are attractive companies to purchase. It ends with long list where there is a long list of potential candidates (Haberberg and Rieple, 2008).

Analyzing Industry Ecosystem

The underlying reason is to challenge the acquirer to create a defensible rationale of acquisition. The business should be able to explain that how this deal will proceed and it will create good value. Whether the purchase will be helpful for the core growth of acquirer or not. Will there be any change in technology, will it prove a game changer and will it be attractive for customers? It should properly tell that how acquisition will help to strengthen position of acquirer and create nice value for all shareholders.

This stage does not only look at the recent factors which will influence industry but it also looks at the future progress of industry in future. For example, in the retail sector, analysis can consider the speed of recent multichannel sales-activities along with determining the new waves of mechanization which will be there in future such as grocery will be delivered by drones (King et al., 2008).

Defining Opportunity Segments

After the identification of the generic industry sectors, the next step is the identification of opportunity segments which are specific. For every search direction, we have summarized the results of analysis in scoring matrix. It looks at 2 dimensions:

  1. The strategic fit should be strong with acquirer (in the terms of attractiveness of business model, technological suitability and customer perspective)
  2. This segment should be attractive (in the terms of margin potential, competitive intensity and growth).

Those segments which have good scores in both dimensions are opportunity segments.

Creating Long List

Within the opportunity segment, the search starts for the discrete targets. Each potential acquirer may start its search by using SIC codes and databases that are obtained from them. But this search does not throw light on all sides of acquisition universe. Some companies have data or tools to do so. It is not simple to identify target universe. It is done by involving functional experts.

Source: BCG, (2011)

 

Step 2: Pinpoint Companies of Interest

The previous step helped in identification of relevant industries and this step helps in focusing the specific industries. Now, it is time to mark those companies which are best for the acquisition candidate. It is important to keep in mind that it will not happen in blink of eye but it will take time. Real discipline is required in this process. There is a process called robust gate stage which helps in identification of right companies. At this point, the financial position of the target matters a lot for the acquirer. But sometimes this type of approach may fall short. Strong performers are not always attractive. For sure, the financial strength can be seen acquisition price. Long term success cannot be promised just by having a look at the past performance of company but it is important to have a look at their ability to create value and realize synergies in future. Might possible that a company which is financially distressed blooms by reconstructing efforts of acquirer and then become a good acquisition target. The acquirer can identify the target it must pursue by having a look at two dimensions: strategic fit among potential candidates & acquirer, and feasibility of deal (Bruner, 2004a).

Assessing the strategic fit

It is not about the attractiveness of company but it is about the fit of company. Its suppliers, geographical footprints, set of the customers and operations should be complementary to those of acquirer. It also matters that how much significant cost particular purchase can generate (Collan and Kinnunen, 2009).

Assessing Feasibility of deal

The thing you should know first about company is that it is available or not. Conventional approaches are sometimes not clear and it causes the wastage of time of the acquirer. For assessment of deal feasibility, there are two levels: market intelligence on chance of sale and ownership structure. Ownership structure is first level and it gives important information. For example, it is noticed from history that companies which have shareholders or which have family relations are least interested in opportunities of M&A, while companies which are owned by the financial investors are more interested in this idea. Second level supports first one. Market intelligence process means that company will be first one to know either the target company is interested in M&A or not (Harding et al., 2004).

Source: BCG, (2001)

Financial Performance

Asset’s financial performance is also under consideration in this process. As already described, financial performance is not the key or main criterion for giving priority to target. Financial performance can dictate premium & have effect on acquisition price to some extent. But it cannot be used as distinction between unattractiveness and attractiveness (Smit et al., 2005).

Defining watch list and action list

When you have the score list of every target on basis of deal feasibility, financial performance and strategic fit, then it is easy to choose a target by summarizing the results. If there are some companies which are not on high priority and they are available, then it is not important to pay attention to them. those companies which have strong strategic fit and are on list are divided into two classes.

  • Action list: It includes companies with good strategic fit & deal feasibility. According to experience, these companies are mostly available for opportunity.
  • Watch list: It includes companies which have high strategic fit with less deal feasibility. An acquisition on proper time seems difficult. So, it is better to keep them on availability changes.

Source: Krishnamurti and Vishwanath, (2008)

But it is not good to rely on watch list or action list. There should be a proper research for this purpose which can tell either the target is good or not.

Step 3: Prepare for pursuit

By doing all above step, the acquirer can short list some very attractive companies. Now, their M&A team should come in action and start working hard.

Action List

For every action list target, teams must start collecting target’s cost upsides and revenue. The experts have enough experience to do work properly so that much of information can be collected. This information can help team to add shareholder value to potential target. The acquirer team should have a solid reason of buying target so that target can agree with acquirer.

Watch List

There is a process for continuous monitoring of targets that are on this list. This process is established by BCG. These processes are used for many companies. Aim is to have mechanism which can alerts acquirer to anything that can lead to change in the availability. Continuous monitoring is required in this process. To work with them, it is possible to do regular monitoring so that you don’t miss any chance or alert.

Source: Krishnamurti and Vishwanath, (2008)

Step 4: Move forward with due diligence

After moving till Step 3, almost everyone is clear about desired target. But the thing is that only acquirer is not the only who will be interested in acquisition, there will be other options too. And here, due diligence can start.

Due diligence has 4 phases: having a close-up picture of each target’s attractiveness, examination of synergies of potential deal, reviewing feasibility of deal and digging in business plan of target. Even after following the four stages, the due-diligence projects never become same. A well-defined methodology of due diligence, documentation and the standardized processes are applied for giving predictable look and feel to results (Walker, 2000). There are some firms which are providing services and are positioned really well in due diligence to create the value. Their network is present all around the globe and that is why they deserve appreciation. The experts are present which have information about strategies, plans and the conditions. They help the acquirer to get proper information about target. They help to prioritize and identify the key issues which are unique to target by identifying relevant markets of target into all dimensions- the growth drivers, its forecast demand and segmentation logic. The clear picture of target’s environment is built up. The success factors & comparative performance is also kept in front so that it is easier to make decision. Potential of target for value creation is studied briefly and sensitivities are also told. Hence, a close analysis is provided which is helpful for acquirer to assess business case completely. Result is realistic and professional which allows a good decision (Walker, 2000).

Research Methodology

The purpose behind this type of study is to know that how strategic fit & organizational fit and acquisition can be dealt for facilitation of successful acquisition. In this section, the report will seek empirical and theoretical findings and how data have been gathered & then interpreted. Different choices are made during study and they are motivated. In it, case company used in study is described and various interviewees that were interviewed also included.

Research Philosophy

Mayer (2009) said that it is useful to classify the research methods if underlying philosophical assumptions are distinguished that guide the research. He stated that all types of researches whether it is qualitative or quantitative relies on some underlying assumptions. Along with which research is valid and what methods being the appropriate (Myers, 2009, p. 35). Hence, it becomes important to know about these assumptions.

Most famous forms of the research philosophies in management & business disciplines are interpretivism and positivism. In positivism, the assumption is that the reality is an objective and it can be described by the quantifiable characteristics, irrespective of the researcher and the research instruments. In positivism, sometimes theory undergoes tests and then a statement is formed which tries to tell about dependent and independent variables according to researched subject & relationship among them (Myers, 2009).

There is an assumption about access to reality by social structures like instruments, consciousness and language in interpretivism. Within this approach, independent and dependent variables are not specified by researches. Instead of it, they go with interpretation which is done by information what people give them by their experiences. It is very important to understand the context. Generalizations from the subjects which are extracted depends on researcher & method used (Myers, 2009).

The interpretive approach is the author’s choice because characteristics of this study matches with purpose of study that is to see how to handle the strategic fit, organizational fit and acquisition process to get a successful acquisition.

Qualitative and Quantitative Considerations

Quantitative and qualitative are the two different forms of research approach.  Qualitative approach is characterized as constructive, inductivistic and inpertivistic whereas, the quantitative approach emphasizes over quantification and is depicted as dedudistic and objectivistic. According to Bryman and Bell (2011) an inductive approach is usually associated with qualitative research whereas, the deductive reasoning can be linked with quantitative research methods. The nature of this study is subjective as a large extent of the research is based upon interviews which associates the research method to be of qualitative nature. However, the method of algorithm-based approach was also constructed which is categorized as the quantitative research method.

Data Collection

According to Carr, Babin, Griffin & Zikmund (2010), there are 2 types of the data collection; primary and secondary data. Secondary data is the data that is assembled & recorded for reasons and prior to than research purpose. Primary data is that that is generated & obtained by researchers for some specific purpose.

Primary Data

The collection of primary data of author consists of the semi structured interviews with the main persons of management at different organizations. The purpose behind this collection was to know how organizational fit, strategic fit and acquisition process can easily be handled for facilitation of successful acquisition.

Qualitative Research

Patton (2002) and Saunders et al., (2009) had an argument that two main methods are present there: qualitative and quantitative. In qualitative method, non-numerical data like interviews or open-ended data is used for creating through by environment studies (Patton, 2002). In quantitative method, statistical or numerical data is used for testing explanations or theories with statistical validation of the hypotheses or questions.

Strategy for case study was presented earlier that how organizational fit, strategic fit and acquisition process can be dealt with facility of successful acquisition. It is aim for qualitative research to collect huge amount of information for research (Patton, 2002; Saunders et al., 2009).

Qualitative method is useful creation of understanding because examination is done with openness, in depth & focus on details (Patton, 2002). Qualitative method is better to use than quantitative method when research is being done with perspective of understanding (Saunders et al., 2009).

In-depth interviews

Method which is used is in-depth interviews. It is for those questions which have open ended character because it provides in depth responses about opinion, knowledge and experiences (Patton, 2002). Yin (2003, p. 89) further said that case study can be done properly when source of information is interview. Exploring questions will be better to ask as they’ll give developed answers (Saunders et al., 2009). Authors do know that it is difficult to analyze the open-ended qualitative questions because there is lack of the standardization (Patton, 2002). Advantage of the understanding phenomenon by respondents POV is argued so that lack of the standardization can overcome and that is why qualitative methods get used (Patton, 2002).

According to Saunders et al., (2009) and Myers (2009), there are 3 kinds of interviews.

  • Structured Interviews: Interviews where strict, pre formulated and regulated questions are used to make sure the consistency among several interviews.
  • Semi-Structured Interviews: interviews where some pre formulated questions are used but it offers room to the improvisation for pursuing new inquiry which emerge during interview.
  • Unstructured Interviews: interviews where no pre formulated questions are used and the interviewee speaks freely by mind.

In this thesis, author selected semi structural interviews according to the Myers (2009) because it is beneficial and it offers room to person for speaking by mind or show some insights.

If you want an honest interview where the purpose can be studied easily then there should be no pressure of time limit (Myers, 2009).

Myers (2009) suggested that the interviews with people who are on different positions should be conducted so that great understanding of phenomenon can be obtained. He also said that open ended questions are preferable because they increase the validity. So, author interviewed 4 people which were on various positions: CEO, the Vice CEO, HR responsible and CFO. But the HR has no influence on process of acquisition and that is why not present in thesis’s findings.

The first participant of the research is working at the position of CEO and started his career in 1997. In 2004 he was Vice President in the company and has been a part of more than 20 acquisitions in executive group.

The second participant is also the CEO and was employed in 2003, he was Vice President in 2008. He has been a part of almost 15 acquisition deals since his career within executive groups.

Another participant is the CFO is controller in an organization since 2003, he joined group of management in 2013. He has been part of more than 20 acquisitions.

Another research participant is an HR management member and is part of management group since 2013. He has not participated in any of acquisition.

During interview, questions were open-ended and semi structured so that the depth of the inquiry can be easy to obtain. There were different devices to record interviews so that there is no technical fault. The interviews are given here:

Interviews with CEO

Location: AB Headquarter, Time: 13.30 – 14.21, January, 2022

Setting: The office of the CEO, together with the HR responsible, quiet surroundings, behind shut doors and no risk for overhearing or interruption.

Immediate impressions of the interview: Openhearted answers to the questions asked, about company culture, structure, acquisition process and the organization’s ways of thinking. A good connection and relationship between the authors and the interviewee were established and a feeling of trust was present, which enabled the authors to gain deeper knowledge.

An additional meeting with the CEO was conducted, since the possibility to get confirmation and additional information arose.

Location: AB Headquarter, Time: 12.50 – 13.07, February – 2022

Setting: Lunchroom with some noise in the surroundings, the two interviewers and the CEO eating lunch together.

Immediate impressions of the interview: Rapid interview, trying to gain as much knowledge as possible over a quick lunch. Since the person has been involved in the acquisitions and knew what we are writing about he could provide us with useful information. Some stress was felt but was understandable; the interview was a reschedule due to unforeseen circum- stances for the CEO.

Interview with CFO

Location: EFG Headquarter, Time: 13.00 – 13.45, February – 2022

Setting: Quiet meeting room with a good setting for a relaxed interview and no risk for overhearing or interruption.

Immediate impressions of the interview: Slow start, required some efforts from the inter- viewers to explain the questions and our intentions. After some minutes of getting into the right context the interview went on in a highly qualitative manner. The interviewee answered the questions with details and good elaborations on the answers. It became evident that he had been a part of many acquisitions as he could develop how they thought and worked in the acquisition processes and how they evaluated the fit.

Interview with Vice CEO

Location: SBS Headquarter, Time: 10.00 – 12.10, March – 2022

Setting: The office of the Vice President, quiet surroundings, behind shut doors and no risk for overhearing or interruption.

Immediate impressions of the interview: This was a very unstructured interview with a lot of explaining through stories and anecdotes. If one question was asked, then the person being interview mentioned a lot and went on with his own thoughts instead of making sure he answered the right questions. A long meeting, which was appreciated by the interviewers, in which detailed information was given due to the fact that the person who was being interviewed had been deeply involved in over 20 acquisitions.

The Vice CEO was Swedish hence the interview was held in Swedish which was translated into English when transcribed. Due to the semi-structured nature of the questions the interviews contained information unrelated to the actual research. As proposed by Saunders et al., (2009) the interviews are not presented to full length but instead the information appropriate for this thesis. This was done to reduce irrelevant data and instead provide the reader relevant information for coming analysis.

The interview material was sorted into a matrix where data from all interview objects were categorized into themes in order to create common frames for the empirical findings. As the interviews were of different characteristics, i.e., in the number of probing questions and the authors need to direct the conversations, the matrix structure enabled the authors to extract similarities in their answers to enhance the empirical uniformity.

Interview themes

Authors have already decided to go with open ended questions which were related to theoretical aspects. Following are questions and themes.

Value Creation

Jemison and Sitkin (2006b), Haspeslagh and Jeminson (1991) and Lasserre (2003) threw light that how much important it is to find the right acquisition target in pre-acquisition part of process. Basis are some specific motives. The questions that were created to theme are given below:

  • What are your motives for acquisition?
  • Why do you want to go with acquisition?

Target Selection

It is essential to find a good acquisition target and then evaluation and analysis of target (Haspeslagh & Jemison, 1991; Jemison & Sitkin, 1986b; Lasserre, 2003). Question related to theme are

  • What is action in pre-acquisition process?
  • How to look for target of acquisition?

Due Diligence and Valuation

Lasserre (2003) suggests about how important it is to have a look at financial performance of target because it tells about what price of acquisition should be settled down. The information that had been gathered is very useful as it helps in decision making and valuation (Hubbard, 2001). Theme is given below with questions

  • How determination of value of target organization is done at the company?

Process of due diligence is important because possible best deal is usually pursued here. The analysis of acquisition & searches for synergies are done here. This step is hard and time consuming while no time is used for aspects of soft organization (Bing & Wingrove, 2012). Question related to theme are:

  • Describe the working of process of due diligence at the organization?

Integration

Integration is part where two companies come in contact with each other. in this step, value creation depends on ability of understanding (Haspeslagh & Jemison, 1991). Question related to theme are:

  • How integration of acquired companies can be done?
  • Organization issues, practices, management and cultural considerations

Datta (1991, p. 281) emphasized on influence which organizational fit can have if 2 organizations are at ease after acquisition. Differences in organizational system and management style are important for post-acquisition integration. Question related to theme are

  • Do you consider process of post-acquisition in pre-acquisition process?

Transition

This phase is linked with emerging problems and uncertainties when acquiring organization is preparing for value creation and capability transfer (Haspeslagh & Jemison, 1991; Lasserre, 2003). Questions related to theme are:

  • How can you approach transition phase?
  • What are the important things you need to focus on during transition?

Harrison, et al., (2000) said that the synergy is essence for value creation. So, it is important to recognize synergy creating factors for acquiring organizations while looking for acquisition objects. The acquisition depends upon the way management deals with process of acquisition (Cartwright & Schoenberg, 2006; Gomes et al., 2013; Haspeslagh & Jemison, 1991; Jemison & Sitkin, 2006b). Theme is:

  • What will be your act in facilitation of synergies which are identified in pre-acquisition process?

Strategic & Organizational Fit

It is important to see the degree to which acquiring organization fits (Haspeslagh & Jemison, 1991; Jemison & Sitkin, 2006b; Lasserre, 2003). Strategic fit means degree to which target firm complements parent’s strategy. It adds value to non financial and financial goals of parent (Jemison & Sitkin, 2006b, p. 146). Jemison and Sitkin (2006b). So, theme is

  • What are roles of fit in pre-acquisition process?
  • How identification of strategic and organizational contribution is done?
  • Tell about objectives you are looking for?

Quantitative Research

Because of the economic significance of the ability to anticipate corporate mergers and acquisitions, this domain ahs managed to attract considerable attention towards research aspects. There have been applied a wide range of methodological approaches so as to uncover the common characteristics towards merger targets along with forecasting targets inclusive of univariate analysis (Rege, 1984), MDA (Barnes, 1998 and; Stevens, 1973), probit / logit analysis (Meador et al., 1996, Castagna and Matolcsy, 1985), and multi-layer perceptrons (MLPs) (Cheh et al., 1999). These classification models have exhibited varying degrees of success that ranges from below 50% to around 70% out of sample.  

Most of the studies that forecast merger or acquisition targets are heavily relied over company accounting data which is supported by market data like share prices as the modelling input data. Using accounting data has a long foresight in the domains of corporate failures (Altman, 1968 and; Altman, 1993).

 Biologically Inspired Algorithms

In the previous decade, the range of computational technologies used by modellers have expanded significantly. With this, there have emerged a series of biologically-inspired methods that have a wide range of classification and prediction problems in business and finance (Brabazon and O’Neill, 2006). This methodology includes genetic algorithms, MLPs (Mitchell, 1996), grammatical evolution (O’Neill and Ryan, 2003) and genetic programming (Koza, 1992).

For this reason, this research applies a self-organizing map (SOM). Up till now, the main applications of SOM have been in the aspect of corporate failure prediction (Serrano-Cina, 1996 and, Kiviluoto and, 1998).  No previous application of SOMs for the reason of categorizing corporations as merger and acquisition targets has been noted by the authors. Hence, the aim of the study is to contribute in two ways. The first is the presentation of the description of SOM so as to disseminate knowledge related to this research method. Secondly, to assess the potential of SOM for anticipating whether the companies will be corporate mergers or acquisition targets.

Experimental Approach

Discussed data concludes the outputs obtained from 200 UD firms and is gathered in the time period of 1 January 2000 to the 31st December 2002. To collect all the needed data, Compustat database was used. Information technology data was taken into account to make sure that all the firms under data collection were free of financial difference (GICS Sector code of 45). Discussed data of 100 US firms (group 1) was gathered successfully (both merging firms and firms which were taken-over) in the above-mentioned time period 2000-2002 while the other 100 US firms data (group 2) was gathered for a separate group and in this group where the included firms were not either taking over their targets or merging in the time period 2000-2002 understudy.

The relation between both groups was made on the basis of merger acquisition year and GICS sector code in such a way that group 1 and group 2 firms were allowed to present in the mentioned time period. Dataset includes test data (50 companies) and randomized data (150 companies) collected over 5 recruits.

  1. Selection of input variables

The review of literature (Belkaoui, 1978, Cheh, 1999, Castagna and Matolcsy, 1985 and; Esphabodi and Esphabodi, 2001) helped in identifying 17 parameters for the initial study process.  All of these 17 parameters were based on below given ratio classifications.

  1. Liquidity
  2. Debt
  3. Profitability
  4. Activity / Efficiency
  5. Size
  6. Valuation
  7. Dividend payout
  8. Firm size

In the initial statistical approaches, it was made sure that any variable which is not showing any significant changes in its mean value for both groups is not further included. After initial review, 7 parameters were eliminated and 10 were left included (see table I). These above-mentioned ratios were also studied for the cross-correlation coefficients which led to the elimination of two more ratios (cash/total assets and the growth ratio) due to their relating market/book value ratios and working capital to total assets due to which these two ratios were not included further.

  • SOM Model Construction

For an SOM classifier development, below given tasks hold prime importance:

  1. Training of the SOM
  2. Determining the clusters on the SOM
  3. Using the SOM to predict out-of-sample

Firstly, normalization was taken into account to deal with possible occurring of different magnitudes in individual data elements.

To obtain SOM, modeler was needed to build many of the map parameters and mapping layer node numbers. Enhanced node quantity results in enhanced details of mapping. In next step, the mapping layer was set at a suitable size of 1000 nodes based on the trial and error process. To obtain the clusters, different clustering algorithms were made use of. In the start, every node was assigned one distinctive cluster. Then in each step, clusters were reduced in number by combining the most relating clusters. The granulity of the modeler and the set parameters play a vital role in deciding how many clusters will be left at the end. Our parameters were designed in a manner to make sure that final clusters will be 7. In next step, these clusters were divided and labelled in merged or non-merged groups by using simple voting mechanism using the state of the training data vectors. To label out of sample data vectors were labelled as clusters while the nearest layer node was kept.

Analysis And Presentation of The Empirical Findings

In this part, empirical findings that are obtained from different interviews are presented & analyzed for sake of easy interpretation. The structure of this chapter is same as that of interview themes and theoretical framework. Acquisition process is not moving from pre-acquisition towards post acquisition.

Qualitative Analysis Results

Pre-Acquisition Process

Value Creation

It is seen from researches that the basis of M&As are strategic and financial motives along with value creation goal. Value creation is not possible if two organizations carry on to work separately (Bower, 2001; McCarthy & Dolfsma, 2013; Schweiger & Very, 2003; Seth et al., 2000). Harrison et al., (2001) said that synergy is essential for creation of value. Lasserre (2003) said that there should be few reasons behind acquisition. There is a need for organizational contributions and analyzing possible strategies which are possible to assess from acquisition (Jemison & Sitkin, 2006b).

During the interview with four people at different positions, it is described that how an organizational strategy can be formed for long term growth by keeping other things in mind too. Vice CEO has said that they want to look for companies which will be of their match (Interviewee 1, 2022-01).

CFO said that there are different motives and they change with strategic conditions. Company has strategy that customer should be close to ITAB and it is essential (Interviewee 3, 2022-03). He also said that there should be a complementary target for acquisition. If a company has nice shop fitting and is competitive but it does not have good lighting, then it is good for value creation to go with a company which has nice lighting business (Interviewee, 7, 2022-03).

Analysis of Value Creation

It is important to see that in what way acquired company can help organization to grow because growth is based on 3 pillars which are geographical spread, concept platform and customer portfolio (Interviewee 2, 2022-04). Lasserre (2003) had also said that value creation is important for acquisition and growth. The analysis of organizational and strategic contribution of businesses relates to what Hubbard (2001) and Sitkin and Jameson (2006b) said. The purpose of acquisition is necessary to understand.

Target Selection

Lasserre (2003) emphasized on finding a target for acquisition that is good for strategy creation and for financial value. Acquiring organization must enlist the benefits & problems or either acquisition is according to justice or not (Lasserre, 2003).

There are some common factors which can help to estimate the organizational and strategic fit (Gomes et al., 2013; Hubbard, 2001; Jemison & Sitkin, 2006b). only two factors which are involved are facilitation of objective of acquisition and creation of understanding (Hubbard, 2001).

The company wants from all acquisitions to cause an increase in growth so that organization can move forward. CEO says that you know really well about us but still we don’t go with acquisition until we are sure that this strategy can cause growth and development (Interviewee 4, 2022-03).

CFO says that we make acquisition with those about whom we are sure that they are right people and they will fit well with us in strategies and mental compatibility. So, it is important to talk to each other to know about each other more by meetings (Interviewee 5, 2022-01).

There are similarities and differences in target organization and acquisition so they should talk about it earlier.

Analysis of Target selection

Lasserre (2003) stated that target should be of good value creation and the organization agrees with it. This is the operational strategy. When it is specified that which company can cause great value creation, then it will look for potential target among all which are available. It prefers to go with those who are clear in their objective and do have nice strategies. Organizational fit is must to examine when potential target organizations come with same strategic fit. In this case, organizational fit can deceive. Flexibility, key personnel and culture also matter. It is exactly what Gomes et al., (2013), Hubbard’s (2001) and Jemison and Sitkin’s (2006b) statement had in common.

The company prefers to know what key personnel in target company works and thinks. It is accomplished through informal and formal meetings, dinners etc.

Valuation and Due Diligence

According to theory of M&A, due diligence has a great role in process of pre acquisition so that best deal can be obtained and possible synergies can be identified by keeping eyes on financial performance (Bing & Wingrove, 2012).

Due diligence of the business is done in process of post-acquisition when acquirer and seller are agreed on deal. Vice CEO says that due diligence is the time taking step and a lot of energy is utilized in this step. So why to complete it in pre-acquisition if both organizations don’t agree later on. Then it is completely time wastage. So, it is good to conduct it in process of post-acquisition when the deal is confirmed and we are able to use our time (Interviewee 3, 2022-02). Jemison and Sitkin (2006b) and Lasserre (2003) threw light on financial valuation’s importance. There should be a set value of price of target.

CEO of AB company says that acquisition is just not opportunity. There are some good things about it and some risks are also there. So, when you are making a deal you should be ready for risks too. if you have thinking that price is bit high but it is acceptable, you are not in position to take all those risks (Interviewee 1, 2022-02).

CFO explains in way that it is essential to understand agenda of company. It is needed to be attentive and it is must to know that sellers want from you and it will help you in negotiation (Interviewee 3, 2022-03).

Analysis of Due diligence and valuation

Lasserre (2003) and Jemison and Sitkin (2006b) stated that the due diligence takes place in pre-acquisition but the CEO thinks on opposite side. The Due diligence is less time taking when it takes place in post-acquisition process. There should be a mutual trust between the acquirer and seller because the information obtained from seller is fundamental. Things will go wrong if the information of seller is wrong or misleading.

Jemison and Sitkin (2006b) and Lasserre (2003) acquisition price comprise of financial values with strategic and organizational fit. It gives business a possibility to see either risk degree and strategic value match with financial valuation. Financial valuation can affect decision that they are in mood of acquisition or not. Acquiring businesses prefers to know the strategies before so that it can become easy to know what they want to do. If the strategic fit is good, then there is less risk and ambiguity. It is important to have understanding with agenda of seller for the organization. Hence, the business can prove to be a right buyer by reaching suitable price and it creates understanding.

Interpretation

The section is dedicated to identify differences between the businesses way of formulating the acquisition procedure with that of the generic theoretical process perspective with the focus over evaluating how the acquisition process is handled for facilitating successful acquisitions.

A study carried out by Gomes et al., (2003) and Lasserre (2003), the acquisition process is the same for from decades. What has been identified by the authors is the potential explanation as to how the acquisition process can be handled in a more efficient manner through three aspects.

Simplification Of the Acquisition Process

The viewpoint of organizational acquisitions can be easily compared with a simple purchase of one item from another. Interviewee 1 states that ‘Sitting down and talking about potential acquisitions, face-to-face discussions with each other, the seller and the buyer and this is how the process should be done’. Businesses prefer not to make the process complicated than this. Previous researchers indicates that the process of acquisition is both time and resource-consuming as per a pre-set pattern. Businesses prefer sticking to a usual approach having same key personnel each time. CEO of businesses mentioned that they have been part of acquisition for more than 10 years which gives additional experience and confidence in acquisition deals.

Conducting of due-diligence in the post-acquisition process

The fact that most companies carry out due diligence in its post-acquisition phase is another aspect which tends to facilitate successful acquisitions (Lasserre, 2003). As per the interview with Vice CEO of AB company, this phase commonly sabotages the acquisition mainly because of the fact that most of the sellers and buyers hesitates in seeking advice from the brokers and auditors when they seek an advantageous deal for the client. Experts involved in the acquisition process considers due-diligence to be a part of post-acquisition process which is the time at which the deal has been agreed upon and contracts have been signed. To get this done, companies, emphasizes over the relationship between the acquirer and the seller and invests in a great deal of effort to determine the motives and agenda of the seller. Through the aim of gaining mutual trust, the dal can be carried on by trusting the information of each other regarding the important aspect of the acquisition process. Many companies also use guarantees in the due-diligence process which makes a deal with the seller without having time consuming and expensive in-depth analysis carried out by different specialists.  

Considering organizational fit throughout the entire process

In the theory of acquisition, organizational fit is used for determining whether the target company is a good fit for the acquiring organization and it is not until the phase of post-acquisition where this transition is emphasized on part of the management (Bower, 2001 and; Gomes et al., 2013). According to the analysis of the interviews, authors have determined that businesses consider organizational fit to be a criterion for acquisition in the target selection phase. Unless, a proper fit for the organization is identified, in terms of cultural and managerial values, it is less likely that the acquisition will be conducted. Moreover, depending upon the degree of organizational fit, the business starts considering probable issues that may incur in the pre-acquisition process and highlights various strategies over aligning the deal. Through the identification of factors that may incur issues, businesses prepare over how to foster mutual understanding in the deal.

Quantitative Analysis Results

Table II shows the results of our experiments and the mean classification value of insample (out-of-sample) accuracy of 94.80% (95.20) % is obtained. Press’s Q statistic (Hair, Anderson, Tatham and Black, 1998) was calculated to obtain insample accuracy along with null hypothesis stating that the out-of-sample classification accuracy does not yield a preferred output than the individual output and faces a 5% rejection level.

To check the sensitivity of gathered data and results, node number were changed (between 500 and 2000 nodes), along with the number of clusters (between five and nine clusters) which helped in map detailing. For in and out-of-sample data results, accuracies were undisturbed by changes in clusters or number of nodes.

SOM created clusters were further evaluated for better understanding and the analysis of “typical” ratio analysis of different map clusters was done (Figure 2 illustrates the final SOM corresponding to the third data recut). In Table III, the average value obtained for all the models relative to the merged firms and clusters is given along with non-merged ones. On 3rd recruit, the SOM gave enhanced in and out of sample accuracy and clusters gave smaller means than the overall data cluster means. The data given in Table I and III, leads to few common conclusions regarding “typical” takeover targets or mergers. It is observed that the target firms have a pattern of less debts, increased liquidity, less profitability and are small as compared to the non-target firms.

Conclusion

There are several researches over mergers and acquisitions as it is very crucial for the success of a business. The research concludes that a successful merger and acquisition deal involves two phases – pre-acquisition and post-acquisition process. However, it has also been identified that the more dynamic a procedure the more is the probability of a successful acquisitions.  The overall view of the entire process of merger and acquisition instead of focusing over step-wise progression facilitating the ability of assessing strategic and organizational fit in every phase for enhanced ability so as to reduce the probability of misunderstandings and problems.

Another good way to deal with the acquisition process is to conduct due-diligence in the post-acquisition process. This can be possible when there is a mutual trust between the two parties as the agreement can be created on the words of the seller and can be supported with clauses and guarantees. Additionally, mutual trust is also crucial for understanding what can be acquired along with understanding how a company can be approached in the process of acquisition. Moreover, keeping the pre-acquisition process as concise and efficient is considered to be beneficial as fewer resources will be involved. This can be made possible when the same set of experts are involved in the process which will also augment expertise as well as experience from previous acquisitions.

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April 29, 2022 7 comments
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Deliveroo SWOT Analysis
BusinessCooking & FoodsManagementMarketingSWOT & PESTLE Writing

SWOT Analysis of Deliveroo | Food Delivery on the App

by Shamsul April 26, 2022

SWOT Analysis of Deliveroo

 

Deliveroo is a popular British online food delivery provider company. It was founded by Greg Orlowski and Will Shu in 2013. It is currently headquartered in London, England, UK. The company has a strong global presence in more than 200 countries like UAE, Kuwait, Australia, UK, Belgium, France, Italy, Ireland, Hong Kong, Singapore, and more. Deliveroo has employed 2300+ employees to date to maintain its global operations. On the other hand, more than 110000 self-employed couriers are working for the brand. In 2021, the annual revenue of the company was 922.5 million pounds. Now, read the SWOT Analysis of Deliveroo.

Zomato, Uber Eats, DoorDash, ChowNow, Swiggy, Postmates, and GrubHub are the main competitors of Deliveroo. We are conducting its SWOT analysis to unearth its strengths, weaknesses, opportunities, and threats. In this way, we can easily identify the success story that the company has achieved in such a short period of time.

SWOT Analysis of Deliveroo

Company Name: Deliveroo

Founders: Will Shu, Greg Orlowski

Founded: February 2013, London, United Kingdom

Headquarters: London, England, United Kingdom

Parent Company: 

CEO: Will Shu (Feb 2013-)

Type: Public

Sector: Online Food Ordering, Food Delivery

Tagline: Proper Food, Proper Delivery

Unique Selling Proposition: Providing a network of dedicated couriers and an ordering platform.

Customers: Youth from middle and higher-income groups.

Target Consumers: People from the middle and upper-middle class.

Revenue: 1.8 billion Euros (2021)

Net Income: 108.7 million Euros (2021)

Strengths of Deliveroo | SWOT Analysis of Deliveroo

  • Robust Supply Chain Network:

The supply chain and business model of Deliveroo are really interesting. The company does not produce its products, so self-employed couriers deliver the food. Just because of it, the company has attracted so many investors and people. They all work for a common goal without even disturbing each other’s comfort.

  • Cost Edge:

The company is managing its mobile application and has complete control over it. They don’t keep permanent employees because they don’t need them every time. This thing allows the brand to save costs in terms of taxes and maintenance. Moreover, Deliveroo hires people on a temporary basis.

  • Low Pricing:

The company has partnered with kitchens that produce cost-effective products due to their relations with local suppliers. This thing gives the company a competitive edge over its rivals. In short, the customers can easily get food at affordable prices from Deliveroo.

  • Excellent Management:

When it comes to management, Deliveroo’s management is highly excellent because of its owner’s professional intellectual career. Greg was an investment banker whereas Will was a director in a software firm. So, their experiences are working for the company. It is one of the major strengths of the company.

  • Strong Marketing:

Young adults are the main market of Deliveroo. These people love to order food from their phones because they are tech-savvy. So, the company tries even the smallest update and performs attractive marketing to get the attention of these young people. They are improving their online platform to make their experience even more amazing.

  • Facility and Location:

The company is not like a traditional kind of food delivery company. They have gig workers, freelance kitchens, and innovation that allow the brand to increase its business rapidly in other locations of the world. It is another big plus point of the company.

 

Weaknesses of Deliveroo | SWOT Analysis of Deliveroo

  • Tech Malfunction:

The company is heavily dependent on the app for running its business operation. The risk of tech malfunction is always there. Its app has crashed many times. Due to this, thousands of customers lost their orders and money. The whole situation brought plenty of backlash and criticism from customers. Moreover, the company’s communication system and customer support are also not very engaging.

  • Public Relation Problems:

The brand has indulged with the public in a negative way due to the riders’ safety and cycle training. They are not giving much protocol to their workers, which brings so many negative things about the company. Just because of this, the company has to deal with the media and the press. The company is making headlines over its policies.

  • Branding Problems:

In 2016, the brand re-branded everything in order to gain a competitive edge over competitors such as Uber Eats, Amazon Restaurants, and more. Its main attraction was its competitive prices. But, now it is charging so much from customers. This thing is destroying the brand loyalty among customers.

 

Opportunities for Deliveroo | SWOT Analysis of Deliveroo

  • New Alliances and Partnerships:

In 2016, the company partnered up with a famous brand Heineken in order to deliver online alcohol products. Just like this, the company can make new alliances and partnerships with other companies to deliver their products. This would allow the company to expand its global operations and sales.

  • Food Trends:

Some customers do not prefer the food of big restaurants. They prefer small kitchens because they prepare healthy and good food. Deliveroo can take advantage of changing food trends to target new customers. They should design its promotional and marketing strategy accordingly.

  • Latest Technology:

The food industry has increased since 2015. The company should invest in new resources and projects in order to take competitive advantage. They should exploit the latest technologies to attract and fulfill the demand of new customers. In fact, the company has collaborated with TripAdvisor in order to bring innovation in its services. This would increase the brand awareness and image of Deliveroo.

Threats to Deliveroo:

  • Changes in Taste:

After the pandemic of covid-19, the trend of takeaways and car dining has become more popular. We also know that people are more conscious about their health and food. The company should ensure that the food they are delivering must be tasty and healthy. Moreover, the changing diet patterns of customers can create big trouble for companies like Deliveroo.

  • Competitors:

The online food delivery market is highly competitive due to the presence of many big players like Grub hub, Amazon, Uber Eats, Hungry House, and so on. They are cutting each other’s profit and market share by offering innovative and unique services. The company should think about some new ideas to deliver food in order to stay competitive.

  • Poor Economy:

The current economic condition and recession have created so many troubles for companies like Deliveroo. The inflation rate and other economic factors have changed the spending power of customers.

 

Final Thoughts | SWOT Analysis of Deliveroo

It is very clear that Deliveroo is one of the leading online food delivery service companies in the world. They should work on their strengths in order to exploit more opportunities. The company should build a solid business plan in order to give tough competition to its competitors.

 
 

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Ayala Corporation
BusinessManagementMarketingWriting

Marketing Strategy of Ayala Corporation

by Shamsul April 25, 2022

Marketing Strategy of Ayala Corporation

 

Ayala Corporation is the most popular and oldest Pilipino conglomerate, which the Zobel de Ayala family owns. The organization has evolved immensely and has several non-family shareholders. Today, we will discuss the marketing strategy and marketing mix of Ayala Corporation. The marketing mix covers 4Ps that are generally referred to as Product, Price, Place, and Promotion. This method enables a company to identify its marketing mix factors, pricing strategies, distribution and place strategies, and product strategies.

For making a successful marketing strategy, managers at Ayala Corporation need to understand the customers’ basic requirements. They must customize their services or products that can meet those requirements.

 

Objectives of Different Types of Marketing Strategies of Ayala Corporation:

  • Launch a New Product or Service:

Introducing a new product or service and highlighting its features, uniqueness, and superior quality.

  • Establish the Brands of Ayala Corporation:

Brand positioning is an important part of marketing and many companies spend heavily on this factor.

  • Increase Market Cap:

Marketing tactics can also be used to increase the value of the brand and its market share. It is possible by increasing sales.

  • Enhance Customer Loyalty:

Marketing can be used to attract both existing and new customers. It also helps to enhance customer loyalty toward the brand. An organization can organize events, provide information about products and services to increase customer loyalty.

  • Increase Sales:

To increase sales of existing products, marketing is a useful tool. It also helps to target a new segment of customers and positions the brand in the competitive market.

  • Bring in New Buyers:

Marketing also helps to enter new markets and boost sales. As a result, it helps to bring in new customers.

  • Get Existing Customers:

Selling accessories with the existing products is another way of marketing that helps to retain existing customers. It can also be done by increasing the usage rate of the existing products.

 

Definition of Marketing:

According to AMA (American Marketing Association), marketing is a combination of different activities that a company assumes to deliver, create, and communicate services and products that are valuable for customers, society, stakeholders, suppliers, and clients. According to Kotler, marketing is a practice through which organizations like Ayala Corporation can produce value for their existing and new customers.

 

5 Stages of Marketing Strategy Process:

The role of traditional marketing has shrunk due to the rise of AI-driven algorithms that offers marketers to measure different aspects of the market and customers. The culture of digital marketing is very useful for marketers, but creating a new market is still very overwhelming. Here are 5 stages of the marketing strategy process of Ayala Corporation,

5 Steps

  • 01 – Marketing Research and Analysis
  • 02 – Segmentation, Targeting and Positioning
  • 03 – Marketing Plan
  • 04 – Designing a Marketing Mix using Product, Price, Place and Promotion (4Ps)
  • 05 – Sustaining Value through Post-Purchase Services
 

Step 01 – Marketing Research & Analysis

Doing analysis and research is the first step in the marketing strategy process of Ayala Corporation. In this step, the organization needs to understand the unknown and even unmet requirements of customers. In order to comprehensively complete the research and analysis process, it is imperative to conduct a 5C marketing analysis framework that encompasses,

  • Customers’ Requirements:

What are the major requirements that Ayala Corporation needs to complete? Who are the potential and existing customers of new services or products?

  • Company:

What qualities or skills does the organization need to have to manufacture products that can easily satisfy customers?

  • Competitors:

Who are the biggest competitors of Ayala Corporation in the market? Do they have enough resources and a financial budget to give Ayala Corporation strong competition?

  • Collaborators:

What kind of value chain and supply chain partners Ayala Corporation needs to produce new products and provide them to the final consumer? What are the bargaining powers of the value and supply chain partners?

  • Context:

What are the micro and macro environment factors that can hurt the business environment in which Ayala Corporation works in?

Step 02 – Selecting Target Customer Segment

  • Segmentation:

Managers at Ayala Corporation can divide the big market into smaller segments in order to comprehensively understand the customer behavior, needs, and characteristics. They can divide the market on the following basis,

  1. Geographic
  2. Demographic
  3. Status
  4. Income
  5. Usage
  6. Loyalty
  7. Gender
  8. Social class
  9. Psychographic factors
  10. Self-perception

PRIZM is one of the widely used segmentation systems. It is used by advertising and marketing agencies.

  • Targeting:

After dividing the whole market into segments, it is necessary for Ayala Corporation to select a target segment. Targeting everyone is unnecessary because a product only holds a specific value proposition.

  • Conducting a Segment Analysis:

Conducting a segment attractiveness analysis is the initial factor in targeting. Under this process, all the segments are analyzed on the following basis,

  • Customer loyalty and behavior analysis:

It is vital to find out the customer behavior in each segment in order to dig out opportunities. It is also important to evaluate the customer conversion rate in order to find out the loyalty level.

  • Maturity of the market:

Let’s take an example of this process from the automobile industry. The demand for SUV cars is high than for electric vehicles. It means the SUV category is mature even though the profit margin is limited. But, anyone can predict the future of SUVs. The EV segment has higher margins, but it isn’t easy to guess its future.

  • Profitability in several segments:

As the above example shows, some segments show higher margins as compared to others.

  • Business models and types of competitions:

The way of competition also shapes the whole landscape of a market. The company needs a robust business model that can work in every market.

  • Differentiating and Positioning:

In this process, it is necessary to study how Ayala Corporation’s products or services differ from its competitors. Positioning is a process that involves where Ayala Corporation wants to see itself on the basis of functions, features, and qualities.

 

Step 03 – Making a Marketing Plan

  • Marketing Objectives:

There are plenty of objectives for which Ayala Corporation managers can create marketing plans, such as the launch of a new product, targeting new customers, venturing into international markets, repositioning of the brand etc.

  • Financial and Marketing Goals:

The second step assesses how much economic resources will be needed to perform the marketing plan. It involves a chain of processes like resources spent on a product from development to the final stage.

  • Marketing Mix:

Creating a marketing mix lies in the marketing plan goals and restrictions forced upon it by the economic resources.

  • Marketing Budget:

Budget each prospective activity that’ll be undertaken under the marketing mix process.

  • Evaluating and Monitoring Performance:

This is the last process that monitors and evaluates each marketing mix activity and compares it with the actual one.

 

Step 04 – 4Ps of Marketing Mix Ayala Corporation

  • Product:

Understand all the market dynamics and customers’ needs and develop the right appealing products for customers.

  • Place:

Analyze customers’ purchasing behavior and supply chain network costs to take a channel decision.

  • Promotion:

Connect with consumers through benefits and cases. It should be based on experience, not on the external features of a product.

  • Price:

To evaluate the price, you need to figure out several factors such as marketing strategy, firm position, brand positioning, and cost structure of the brand.

 

Step 05 – Post-Purchase Services of Ayala Corporation

The action required to attract and retain customers is very difficult and costly. The last step is crucial for retaining loyalty among customers. There are countless methods to enhance the post-purchase experience of customers,

  1. Offering spare parts and regular maintenance service if consumers want.
  2. Taking feedback and reviews and asking for suggestions.
  3. Providing installation and other similar services.
  4. Building spaces where consumers can share feedback and experience to assist other customers.
  5. Giving product care suggestions.
 
 

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WHAT IS THE BUSINESS STRATEGY – OUTLINE OF THE PLAN AND ACTIONS

April 25, 2022 0 comment
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Home Depot SWOT
BusinessManagementMarketingSWOT & PESTLE Writing

SWOT Analysis of Home Depot | The Largest home improvement retailer in the US

by Shamsul April 23, 2022

SWOT Analysis of Home Depot

 

Whether you are planning to redo your bathroom, remodel your kitchen, or modify the faucet, the first name that comes to your mind will be Home Depot. When you walk into any store of Home Depot, what can you possibly think? It’s an immense and gigantic place filled with countless products. After visiting any Home Depot store, you will feel like this store has everything to offer. Here, we do the SWOT Analysis of Home Depot.

Home Depot is one of the largest home improvement companies in the United States. The huge size of the company forces us to study its SWOT analysis which comprises strengths, weaknesses, opportunities, and threats. This American-based company operates a network of retail home supply stores across the US, Mexico, and Canada. Home improvement products and building materials are its best-selling goods.

More Than 2300 Stores in the United States, Mexico, and Canada

It carries products in building materials, lumber, and flooring. The company also provides home improvement advice, kitchen designs, and professional installation services. It has more than 2300 stores in the United States, Mexico, and Canada.

It was founded in Atlanta in 1978, and now it is one of the leading names due to the vision of Arthur Blank and Bernard Marcus. Currently, Home Depot employs approximately 500,000 people. If you are wondering how this small business turns into a global business then you must read the full article. The company has achieved this status after immense hard work and successful policies. Just because of its effective business model and strategies, the company has a significant hold in the competitive market. This SWOT analysis will aid to highlight the external as well as internal factors of Home Depot. SWOT is a great strategic management tool that helps to identify the positive as well as negative factors of an organization and its strategies.

Home Depot can take a competitive advantage in the market by using this tool. They can develop strategies for improving business.

Here’s the complete SWOT analysis of Home Depot:

Company Name:  The Home Depot

Founders: Bernard Marcus, Ken Langone, Arthur Blank, Pat Farrah, Ron Brill

Founded: June 29, 1978, Marietta, Georgia, United States

Headquarters: Atlanta, Georgia, United States

Parent Company: 

CEO: Craig Menear (Nov 1, 2014-)

Type: Home Improvement

Sector: Lifestyle and Retail

Tagline: More Saving. More Doing.

Unique Selling Proposition: It is the largest home improvement and building product retailer.

Customers: Individuals looking for home improvement products and accessories.

Target Consumers: Urban middle and upper-middle-class households.

Revenue: $151.2 billion (2021)

Net Income: $16.4 billion (2021)

 

SWOT Analysis of Home Depot

Strengths of Home Depot:

Strengths are a crucial part of any business. They must be identified first in a SWOT analysis. It refers to factors of your company that you are excellent at. They are the reason for your competitive advantage.

  • Largest Retailer:

In the United States, Home Depot is one of the largest retailers with a strong business model and strategies. It is ahead of its competitors due to its growing expansion and business policies. Being the largest retailer in the US, it is the biggest strength of the company. They have successfully gained a big portion of market share and profit.

  • Wide Range of Products:

If you love to experiment with your home, then Home Depot is the ideal retailer for you as it holds a wide variety of home improvement products, appliances, fencing, cabinets, patio furniture, faucet, and more. They have everything for you and provide great quality goods. They also have lumber, detergents, and everything in between.

  • Online Stores:

The main popularity of the brand is due to its huge-sized stores. Besides many physical stores, the company has an excellent website. You can buy everything with just a single click without leaving your comfort place. They also sell lighting products from bulbs to bathroom accessories. They are providing easy shopping services. If you are running out of building material then you can order it online from Home Depot.

  • Excellent Customer Service:

According to financial experts, the overall sale of the company has increased over the last few years. It means they are doing well. They have a dedicated and skilled workforce that provides excellent customer support and service. They know how to satisfy a customer. It is one of the major strengths of the company. They have 95.80% customer satisfaction rate which highlights its popularity and hard work.

 

SWOT Analysis of Home Depot

Weaknesses of Home Depot:

Besides strengths, Home Depot has some weaknesses too. Do you really want to know about its weaknesses? Weaknesses are those factors that hinder the performance of an organization. It helps to highlight the weak areas that you must fix.

  • Limited Worldwide Presence:

Being present in the industry for more than 40 years, the company still lacks in global expansion. They do not have a worldwide presence except in the US, Mexico, and Canada. This kind of limitation is one of the major weaknesses. Although Home Depot is a popular name in the US. However, its limited presence is still questionable. If they expand then they can earn more profits and revenues.

  • Outdated Infrastructure:

There is no doubt about it that people love the brand so much. But, its old infrastructure is really a big concern for the customers. They didn’t introduce any improvement in their stores. They invested more than 11 billion dollars in a digital revolution, but the project failed due to the outdated infrastructure.

  • Negative Promotion:

Negative publicity and scandals are highly damaging for any brand. The company has been involved in various controversies. It is considered its biggest weakness. They have spent a big chunk of money to settle the lawsuits and controversies.

 

SWOT Analysis of Home Depot

Opportunities for Home Depot:

Certainly, opportunities are growth chances for any company like Home Depot. These factors provide immense growth opportunities and they can expand into different countries. Thus, it is imperative to utilize opportunities in the right way to get maximum benefit. Here are some important opportunities for Home Depot,

  • Global Expansion:

If Home Depot wants to make itself a global leader in the retail industry, then it should expand into different countries of the world. They have been in the business for several decades so they know how to become a leader. By venturing into other countries, the company can increase its market share and profits. Emerging markets like China and India can give the right boost.

  • Acquisitions:

By acquiring similar brands and companies, Home Depot can make its portfolio even stronger. It also helps the company to enhance its global reach. They can expand their product portfolio to fulfill the needs of customers. It would help the company to grow into international markets. They can purchase or acquire those companies that are facing problems. It will help the company to broaden its product portfolio and increases its annual revenue too.

  • Diversification:

In the US, Mexico, and Canada, Home Depot is a well-reputed and popular brand. By diversifying its offerings, the company can earn more profits and increase its market cap. They can focus on interior design solutions, furnishing, and more. They can also offer full furnishing solutions and home décor services. This is a simple method to diversify product offerings.

  • Online Platform:

The company has a strong physical presence in the North American markets, but it can provide an online platform to enhance its sales. In this way, the customers can easily purchase their products from anywhere. Establishing an online platform will help the company to boost its online sales.

 

SWOT Analysis of Home Depot

Threats to Home Depot:

It is vital to consider external threats while developing a business strategy. Threats are the factors that can destroy any business.

  • Increased Competition:

Being the largest home improvement retailer, the company has been facing stiff competition from other retailers. Moreover, Low’s is the strongest competitor in the market and provides an extensive range of products including lights and furniture. Thus, competing with such a brand with old infrastructure and limited global expansion is not easy. They are eating each other’s market share by offering the same products and services.

  • Strikes and Protests:

Strikes from the employees could be the biggest threat. This factor can eventually decrease sales and popularity. The company has a strong group of employees and it is highly susceptible to strikes, protests, and other hindrances. A worker’s strike can lead to disruption in daily operations.

  • Dependency on North America:

As we have discussed many times that Home Depot is heavily dependent on North American markets. If anything happens with this market, then it will directly affect the sales and performance of Home Depot.

To Conclude:

It is very clear that Home Depot can take a competitive edge in the home improvement retailer sector by introducing diversity in its product line. They need to focus on its global expansion in order to give tough competition to other companies. The company possesses both strengths and weaknesses. There are plenty of growth opportunities for the company in the relative sector.

 
 

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April 23, 2022 0 comment
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Dolce and Gabbana
BusinessManagementMarketingWriting

Brand Identity Case Study of Dolce and Gabbana

by Shamsul April 16, 2022

Brand Identity Case Study of Dolce and Gabbana

 

Brief Introduction to Brand Image:

The brand, Dolce and Gabbana, was created based on an audacious women’s idea. The brand reflects the self-love and self-worth properties through each article. This well-known brand has been leading the fashion industry with its unique and symbolic articles. Let’s light on how it became what it is today i.e. its brand identity.

Brand Identity:

The message that any brand plans to convey to its buyers through its services or articles. The brand keeps it in mind while shaping any campaign or activity. It can be portrayed in the form of tagline, personality, or just hidden in what they do. Brand image and brand identity have close relations but are distinctive. The former is based on how a buyer observes a brand while the latter is what and how a brand plans its customers to interact with the brand.

Value of Brand Identity:

Brand identity is one of the most valuable assets of any brand whose value and importance cannot be duly stressed upon. Any brand’s identity makes it stand out.

Brand Identity Aids Brand Image:

Your brand’s identity is in your hands to some extent while how a client feels about your product or service i.e. the brand image is not. So, a clear and better image of the brand is dependent on brand identity.

Highlights the Difference:

Brand identity is the chance of any brand to stand out and develop a marketing plan that differs from the competitors. A brand can also use it to attract the desired client base.

Consistency:

Adapting to new market demands is necessary but having a consistent set of core values is a brand’s expression and visual tool. Brand identity keeps a brand consistent.

Brand Identity of Dolce and Gabbana:

The fashion industry knows these two as the most creative minds to come up with unique ideas. Their brand story is incomplete without an understanding of their own story.

Birth:

Domenico Dolce and Stefano Gabbana were born in Sicily in 1958 and 1962.  Dolce had the opportunity to have a firsthand experience of the fashion industry through the small-scale family business while Gabbana went to study graphics. They initially met in a fashion house in the 70s as designers. But their actual connection started when they had to become roommates as Dolce lets fashion house and Gabbana was looking for a place.  This connection of living together grew stronger when they saw their fashion designs and thinking has meshed. The brand, Dolce and Gabbana, initially came into being when they started working on designs together.

At first, this brand wasn’t having enough finance so it was quite simple but in 1985, they got a chance to exhibit their debut collection of real women in Milan Fashion. At that time, they used their friends as models, bedsheets as curtains, and the accessories brought by various friends. These boys, as people called them, weren’t having many funds but their talent brought them to the attention.

The bigger fame actually initiated with they became friends with Madonna, who ordered a jacket and a corset from them. Other than these two articles for the “Truth and Dare” film launch, the 1993 Girlie show collection was also designed by them on the selection done by Madonna. Since then, a Sicilian effect is visible in each article.

Business Growth:

The brand didn’t stop at clothes but also introduced a wide fragrance range. They launched an eyewear line and music CDs.  In 1996, they had their 10th anniversary on which the book “Ten Years of Dolce and Gabbana” was published. 3 years after the 10th anniversary, they launched a kid collection, then debuted a kid clothing slow in Florence, and opened a Dolce’s design-based lamp-making store in Milan.

Sicilian Aura:

This brand conveys the vibe of bold, blessed, fashionable, and courageous women. In the start, the Sicilian style wasn’t of much interest for Dolce although he grew up there but with the help of Gabbana, he not only realized the aura of Sicilian style but also made it a brand expression and impression. Their muses, Madonna, Gina Lollobrigida, Sophia Loren, and others were a personality while the sensual collection was a hit.

 

D&G Brand Identity:

D&G has a black, white, and gold logo which represents the color of secret, purity, and achievement. This brand reflects it all in each design. It has a main focus on women and menswear, both are uniquely lavish, glitzy, and deluxe. The brand has never left its Sicilian touch even though its expression is unconventional and lavish. Their articles are full of passion, innovation, and the roots of their origin. D&G women have a high amount of elegancy and a decent aura while the D&G men are about the care in detail. The whole brand image is of a successful individual and a brand thorough and thorough.

Targeted Customers:

This brand is identified as a luxurious brand having decent and classy customers. Its targeted customers are what it portrays. It attracts fashion addicted trendsetters from the infants to 50 years old range. Its innovative ideas, bright colors, and beautiful designs are attractive to anyone with an appreciating eye. It could be any socialist, actor, model, celebrity, or anyone. Its targeted customers usually fly through private jets, dine in fanciest restaurants and stay in luxurious places while planning to attend an upcoming event. It targets the individuals having a vision toward success and details.

Iconic Designs:

This brand has a separate place for its black lace, pinstripe, Italian staples, and animal prints. This brand has various iconic designs as it decided on its identity very early. Its designs are a trendsetter in Italian fashion and the global clothing industry.

Famous D&G Designs:

Pantsuit:

This brand works on portraying women as strong individuals so they symbolize women by removing the masculine element of traditional suits. Even at the start of the brand’s career, they designed a pantsuit by using pinstripe, sequins, leather etc.

This high-end brand has quite high prices so if a customer can’t afford then they prefer to get second-hand D&G pieces through consignment stores. Its regular customers are ready to pay whatever it takes to look this classy.

 
Read Also: SWOT ANALYSIS OF DOLCE & GABBANA AND ITS UNIQUE SELLING PROPOSITION
 

Marketing Strategy and Marketing Mix of Dolce and Gabbana

In order to investigate the marketing strategy and marketing mix of Dolce and Gabbana, we are going to study four important things that are called as 4Ps. This stands for Product, Price, Place, and Promotion. With these four factors, you can easily understand the business framework of Dolce and Gabbana. It also involves price adjustment, product innovation, advertising strategies, and other business approaches. These things help the company to establish itself as a successful and popular brand in the world. With the help of these factors, the company can position itself in the competitive market and can achieve business objectives. Read the complete marketing strategy and marketing mix of Dolce and Gabbana.

Dolce and Gabbana is a renowned Italian fashion brand in the world with strong brand awareness. In 1985, Domenico Dolce and Stefano Gabbana founded this company. The company is fully operational in more than 40 countries of the world with several outlets.

Product Strategy of Dolce and Gabbana:

No doubt, Dolce and Gabbana brand is one of the leading fashion brands in the world with a strong market share and brand image. It offers a wide variety of products for men, women, and kids. From clothing to footwear, bags, jewelry, and other accessories, the company manufactures a plethora of products. The main attraction of its products is its bold prints, bright colors, unique patterns, and well-crafted features that make the company special from other brands. The main product portfolio of the brand is its luxury and premium products. In short, Dolce and Gabbana is a trendsetter when it comes to the latest fashion items. It also sells plenty of accessories like makeup products, belts, sunglasses, perfumes, and much more. On the other hand, the company has collaborated with several clothing brands to enhance its market share and product portfolio.

Price Strategy of Dolce and Gabbana:

As a luxury brand, nearly all of its products are highly-priced. That’s why its customer base mostly consists of rich and elite people. Its products are considered the status symbol and the company set the price of its product accordingly. When it comes to customers, it has a loyal consumer base that loves its highly attractive and beautiful products. Many famous celebrities endorse the brand which is another major reason for expensive products. From Angelina Jolie to Jennifer Lopez, Madonna, Scarlett Johansson, and much more, there are several famous faces that endorse the brand.

Place and Distribution Strategy of Dolce and Gabbana:

Currently, the company is operating in several countries. They have fabulous stores and outlets in prime locations of the world. So, customers can easily find and purchase its products from anywhere. This kind of availability hits the brand-conscious customers differently. Most of its customers can easily afford its luxury products and these people are the main reason for the revenue generator for the company. Dolce and Gabbana also have a strong online platform and sells its product through many e-commerce channels including the company’s official website. Moreover, the company also offers special discounts and vouchers on different products at special events. Overall, the company’s place and distribution strategy of the Dolce and Gabbana brand is really awesome and they are earning huge profits and market share just because of their smooth strategies.

Promotional Strategy of Dolce and Gabbana:

The company promotes the brand through different channels such as websites, social media, TV ads, and billboards. They also promote their products through magazines. The association of other brands with Dolce and Gabbana is also a big reason of the promotion of the company. It is necessary for the company to avoid negative promotions because they can damage the overall image of the brand. The company connects with its customers through social media. In this way, customers can easily send their queries to Dolce and Gabbana. The company has also launched a mobile application to give a one-on-one experience to its users.

Conclusion:

D&G brand identity was of a bold woman but with the passage of time, changes and evolution are observed. It worked with well-known models, celebrities and created a market influence. It has developed a positive emotional connection with its buyers that compels them to buy from the brand. The brand is highly inspired by Sicilian women. It attracts and targets high-end women and men from all across the globe. The story of Dolce and Gabbana itself has a great influence on the image and identity of the brand.

 
 

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April 16, 2022 0 comment
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The 80-20 Rule
BusinessManagementMarketingTrendingWriting

The 80-20 Rule – The Pareto Principle for More Profits

by Shamsul April 9, 2022

The 80-20 Rule: The Pareto Principle

 

The Pareto Principle is also called the Pareto Effect or 80-20 rule. The founder of this rule was Vilfredo Pareto, an Italian inventor. He was an engineer, sociologist, and economist so he proposed the Pareto Principle. His study dealt with the distribution of Italy’s national wealth. According to his research, 20 % or one-fifth of Italian citizens had approximately 80 % of the assets of the state. He proposed that banks should pay attention to this 20% of people to make more profit. On the other hand, the banks would at that juncture offer 80 % of the populace with merely a fifth of their time used up.

 

What is the 80-20 rule?

This rule indicates the uneven distribution and shortage of balance between return and resource input. We have summed up the rule as follows,

  • Sales:

Only 20 % of consumers or goods generate 80 % of sales.

  • Storage:

20 % of the goods occupy 80 % of the space.

  • Internet:

80 % of online traffic data is consumed on 20 % of websites.

  • Road traffic:

Only 20 % of the roads are utilized for 80 % of the traffic.

  • Phone calls:

80 % of phone calls are made with 20 % of the existing contacts.

Moreover, the 80-20 rule is basically famous for its use in the time management process. It is a method of completing 80 % of the work in just 20 % of the time. In short, it helps to perform a long task in a minimum period of time.

 

Definition of the Pareto Principle:

The simple definition of the Pareto principle is to gain 80 % of the result just by investing 20 % of time or effort. For achieving the remaining 20 % result, 80 % effort or time is required. Due to this reason, it is also known as the 80-20 rule.

 

Advantages and Purpose of the Pareto Principle:

The purpose of the Pareto method is very clear from the above definition. It is a method of achieving something bigger by investing minimum effort or time. Sometimes, we invested so much time in a low-priority task. You can achieve something bigger with proper time management and identifying the right chances. In short, the Pareto method helps you work more purposefully and efficiently. This is an effective method to achieve something within a given deadline. This method helps to keep your focus on the right track and boosts your mind to achieve a task in the given time. The Pareto principle or the 80-20 rule is mostly used with other time management frameworks or tools like the Eisenhower principle.

 

Disadvantages and Dangers of the Pareto Principle:

There are various mistakes that often happened in association with the Pareto principle. It is a common misconception that you can achieve 80 % of the result with the usual time and effort. There is no need to fix 20 % time or effort. Honestly speaking, it makes no sense. On the other hand, 100 % result would be obtained with 20 % effort. There is a huge difference between income and expense. You can’t add them together. You need to do 100 % expenditure in order to achieve 100 % return. So, this thing often leads to over-optimistic assumptions.

However, if you completely understand this method then you will find out that 80 % of the result is just achieved by 20 % of the effort. Nevertheless, there are plenty of tasks that don’t add openly to the actual goal. It is a disadvantage of the Pareto method that it brings negligence. If a task is structured, designed, and concentrated in the right way then you can obtain 80 % of the result with 20 % of the effort, otherwise it can lead to negligence.

 

Importance and Use of the 80-20 Rule:

You can apply the 80-20 rule in different ways. You can use it as time management for your private life, work, or studies. It helps to identify which task can produce better results so you can easily prioritize your tasks. It also helps to identify which task or work should be completed first.

 

When can the Pareto principle be applied?

It can be applied to vast areas or fields of life such as in school, education, work, or everyday life. However, the 80-20 rule can be applied to practical life such as work where you have to meet deadlines. On the other, you can implement this rule in your private life to complete everyday tasks more efficiently and easily.

 

Examples of the Pareto Principle from Everyday Use:

If you are expecting unexpected guests at your home then you need some time to make it tidy. If it usually takes 2 to 3 hours then you can apply the Pareto principle to get quick results. With this rule, you can complete household tasks within an hour or a half. It helps to prioritize your tasks and tells which task should be completed first. For example, if your house is messy with clothes then you must tackle them. Put the dirty dishes in the dishwasher and clean the tables. Moreover, you must concentrate on the bathrooms because it is mostly visited by guests.

 

The 80-20 Rule and the Yerkes – Dodson Curve:

Dodson curve deals with the connection between productivity and input. It is named after John Dodson and Robert Yerkes. Their study has shown that commitment can increase productivity. But, this thing is only true in some particular aspects otherwise the productivity level will go down. It is also referred to as the Yerkes-Dodson apex.

It is a U-shaped curve that shows if you invest effort and time constantly then your productivity level increased. After reaching at a specific point, productivity decreases. Stress and performance drop are the real cause of this drop. It leads to some terrible results. Just like the 80-20 rule, the Yerkes-Dodson explains that only a particular amount of effort causes the highest productivity. Higher percentages of time or effort, conversely, do not result from much in relation to production.

 
 

Need Help or Advice in Content Management:

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Do you want any help writing quality content, driving more traffic to your website, and boosting conversions? You can contact me through my Freelancer.com profile also. I always prefer to work through Freelancer.com for smooth functioning. Here you pay safely and securely.

 

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April 9, 2022 0 comment
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