final report.docx

MGT 489Case 3Sec 1

BackgroundThe case here is about the acquisition between Seagram and MCA where Seagram is one of the liquor store company owned by Samuel Bronfman as well as MCA is a music corporation of America owned by Jules Stein. In addition to it there was another electrical company known as Matsushita who at first acquired MCA and now wants to sell it to Seagram as certain problem rose. The discussion of the acquisition of Seagram and MCA happened in March 1995 through the meeting between the president and CEO of Seagram, Edgar Bronfman Jr. and the senior management team of Matsushita where Matsushita showed interest to sell a portion or possibly all of MCA. It also includes that both sides agreed with a negotiation exclusively for a possible sale. In the case it also include about the selling of Seagrams some possible of its stake in E.I. Du Pont for the acquisition where it is seen problem occurred on it. But above all Bronfman has seen huge potential in the entertainment industry and he felt that by doing acquisition between Seagram and MCA the management of Seagram will be comfortable to work with it due its businesses were customer- driven and its movement towards global expansion.Journey of Seagram: Seagram was established in 1928 by a Russian immigrant named Samuel Bronfman by purchasing the Joseph E. Seagram and Sons Ltd which he later changed the name of the company to Distillers Corporation-Seagram Limited. Basically Samuel Bronfman started his career in selling liquor in 1916 by buying the Bonaventure Liquor Store Company in Montreal and used to sell the liquor by mail order because during Canadian prohibition that was the only legal way to sell liquor. Later he opened a distillery named as Distillers Corporation along with his brother Allan, Bronfman in 1924. After the end of Canadian prohibition, Bronfman established a lucrative business smuggling whiskey to the United States during 1920. Bronfman then began stockpiling whiskey as he predicted that the U.S prohibition will soon end. According to Bronfmans prediction U.S prohibition ended where he had the worlds largest supply of aged rye and sour mash whiskey. After that in addition with his Canadian operations he bought three U.S dollar distillers.OPERATION OF SEAGRAM IN 1995 :After Grand Metropolitan, Seagram took the second position as the largest distiller in 1995. It produced The Seagram Spirits and Wine Group which was marketed and distributed more than 230 brands of distilled spirits and 195 brands of wines. Champagne, ports and sherries. Spirits and wine were bottled and produces by the group at facilities located in 22 countries in North America, South America, Europe, Asia and Australia. In 36 countries subsidiaries and affiliates marketed the products whereas the distributors independently sell the company brands in other markets where the spirit and wine were sold. The best known brands of Seagram which were sold throughout world are Chivas Regal Premium Scotch Whisky, Martell Cognac and Mumm Champagne where others were sale in specific market. The company also distributes the spirit and wine produced by others with its owned brands. Vin & Sprit of Sweden awarded Seagram global marketing rights to Absolute Vodka for the best-selling premium vodka in the United States in late 1993. Tropicana is known as one of the leading brands of the world for the production and marketing of orange which is not pioneered from concentrate orange juice in the U.S. with Tropicana Pure Premium Orange Juice. APPEARNCE OF NEW CEO:The major role of Bronfman family were seen to continue in Seagram on the basis of managerial and ownership role. The establishment of the trust and the descendants of Samuel Bronfman were only for their benefit controlled of 36.4% of their company. In 1994 the selection of new president were done by making 38-years old Edgar Bronfman Jr. the president and CEO of the company and Edgar Sr. remained as chairman like before. Edgar Bronfman Jr. had left his family in New York at the age of 16 and went to board to work with movie producer David Puttnam in London. At the age of 20 he produced many several movies and a play in Hollywood. He also was a song writer were Dionne Warwick and Ashford and Simpson are artist who recorded the song co-authored by Bronfman. In 1982 he joined his family business. It is found that Bronfman has a close ties with the people in Hollywood whom he met. He has a friendly relationship with David Geffen, chairman of Geffen Records, and Michael Ovitz, influential Hollywood talent agent as well as the appearance of actor Michael Douglas, entertainment industry executive Barry Diller and Michael Ovitz is seen on the wedding of Bronfmans.

JOURNEY OF MATSUSHITA ELECTRC INDUSTRIAL AND THE PURCHASE OF MCA:Matsushita Electric is owned by Konsuke Matsushita in 1918 who is a 23 years old grade school dropout and the inspector of the Osaka Electric Light Company whereas he started his journey of production of electric sockets at his home by investing 100 yen. In the 1920s and 1930s, Matsushita Electric Industrial builds up by developing inexpensive lamps, batteries, radios and motors. It also produces televisions, refrigerators, and washing machine in 1953. By following it produced stereos, tape recorders, and air conditioners in 1959 and in addition of it also produced color TVs, dishwashers, and electric ovens in 1960. It used to manufactured under the National, Panasonic, and Technics names. Though the companys products was not playing the role of leading edge but were manufactures in huge quantities at low price.Matsushita produced and sold to Japan 5000 products which were 25000 more than the company-owned retail outlets in the late 1960s period. Besides the companys transferred from the predominantly Japanese company to global giant was attributed due to the firms success in VCR. In the late 1970s, the companys VHR became accepted as VCR standard by a tremendous battle with Sony where the companys share increased international sales growth increased by 52% in 1980 and 35% in 1981.

JOURNEY OF MCA: The journey of MCA started on 1924 by Jules Stein a Chicago Ophthalmologist as Music Corp. of America. In 1936 for his local nightclub he hires Lew Wassermann, a Cleveland theater usher and former publicity director where in 1946 Wassermann became president. By the movement of the company to Hollywood in 1937, MCA managed talent for radio, TV and motion pictures. MCA got waiver by Screen Actors Guild and its president and MCA client Ronald Reagan in 1952 from the rule prohibiting talent agencies for producing television shows. Later in 1959 MCA purchased Universal Studios and Universal Pictures and its parent, Decca Records in 1961. MCA then started its Universal Studios tour business in 1964. After that MCA acquires 42% stake in Cineplex Odeon a large movie theater chain in 1964 and also acquired Geffen Records from Davis Geffen foe $545 million in stock which made Davis MCAs largest shareholder prior to the Matsushita acquisition. In the mid- 1980s MCA searches for a partner or buyer to sell the company by concerning of needed of great access to investment capital with the three major studios Warner Bros, 20th Century Fox and Columbia where MCA risked to loose in future business opportunities from its richer competitors. The takeover of the company by Matsushita seen ideal from both sides and according to Lew Wasserman the chairman of MCA , thinks that the acquisition between this two company will provide MCA with many opportunities for expansion basically global wise. It also indicated by David Geffen that this acquisition would be the most acquisition-minded company in the world. AFTER 4 YEARS LATER OF MCA AND MATSUSHITA:The bubble economy burst in Japan hit the Matsushita very hardly which happened not long after the acquisition where the sales and profit of the company dropped within 1993 and 1994 but still the company predicts a slight improvement in 1995. But because of the poor result, Matsushitas president and architect of MCA acquisition were ousted. Beside this the new president Yoichi Morishita was also pushed a revitalization strategy focused on electric consumers goods which made Matsushita fail to support MCAs expansion goal. Without this a disagreement seen on Matsushita of MCAs proposed acquisition of Virgin Records in 1992 and the planning of joining with IIT in 1994 to bid for CBS. Beside the prediction of blending Matsushita hardware and MCAs software were also didnt happened. In addition with it the cultural clashes also occurred as a problem where it is seen that the executives of Matsushita dont speak in English while a visit in U.S and also hardly contact with MCA managers which boiled the clash in October 1994. Later MCAs chairman told Matsushita that he would resign when his contact expire at the end of 1995 unless MCA granted more management control and su fficient capital to compete with other movie studios. Disney studio chief Jeffrey and Katzenberg and David Geffen show their concern to Matsushita where the equity in the new company Dreamworks decided to split equally among 3 founders who would have estimated net worth more than $2 billion. Both Wasserman and Sheinberg endorsed the plan and film produced by Dreamworks will be distributed in one of the established studios such as Universal. The concerns of Wasserman and Sheinberg were reported publicly in the Wall Street Journal and the Los Angeles Times as well other newspaper. It surprised Matsushita executives the public announcement of MCAs managers unhappiness with Matsushita. THE PERFORMANCE AND OPERATIONS OF MCA IN 1995:In 1994 from four businesses: movie and television ($3.3 billion in revenue), music ($1.3 billion), theme parks ($440 million), publishing, software and other businesses ($525 million), MCAs had revenues of $5.6 billion and operating profit of $533 million. MCAs movie business Universal Studio in the recent years highly depends on movie produced by Steven Spielberg where MCA called it as House of Steven where this movie made him wealthy with 15% revenue. Other than this Universal also created few recent hits movie and it also control a library more than 3000 films where the value of these movies are uncertain. It is said that if MCA could make a deal with broadcast or cable TV network, the value will increase highly. Northern Exposure and murder are the series produced by MCA television business where this business owned 50% of the shares in the cable network of USA Network and the Sci-Fi Channel. On the other hand, Music Entertainment Group of MCA which is the smallest of the six leading music conglomerate made profit of $200 million and growing 10% more annually. Geffen Record is MCAs largest music label who sales $500 million and estimated profits of 90 million where in 1994 the best seller of its bands were Nirvana and Counting Crows. Geffen Records signed a long term agreement in 1994 to run the company after the expiration of David Geffen contacts in 1995. MCA also owned a concert division and the 6000 seat Universal Amphitheatre. The estimated market value increased from $2.3 to $3 billion for the music division.THE ENTERTAINMENT INDUSTRY:The two key sectors of entertainment industry were the movie and the music. The growth of entertainment industry revenues in the U.S had averaged about 10% since the early 1990s where the expenditures on food, clothing and autos had grown slowly. MOVIES: The film industry was seen to be dominated by six other major studios beside MCA for 50 years where one of them is Warner Bros owned by Time Warner in which Seagram has major stake. Warner Bros television is seen to be the largest TV show producer which moving aggressively to merchandising the advantage of animated movie like Bugs Bunny and the Road Runner. Time Warner is also engaged in book publishing, music and cable TV operation. Because of the major acquisition Time Warner lost money and had a debt of $15 billion.Another most financially sound of major studios Walt Disney was divided into 3 units: Walt Disney Motion Pictures Group which is known as the production of live action movie; Walt Disney Television and Telecommunication Group, which handle TV, home video and new technology; and the other one is Feature Animation Group which develop Disneys animated feature film. Disney seemed to release a number of new films ad seen to be successful in making animated films which includes The Lion King the most successful film in Disneys 73 year history in addition there are also many successful animated movies like Aladdin, Mermaid etc. It also building up music and publishing divisions and committed to capitalize the strength the name of the Disney. Another entertainment company is Sony Corp. Sony Pictures which owned Sony Pictures Entertainment and its studios Columbia Pictures and Tri-Star Pictures which reeling from box office failure and a succession of bad creative and financial decision. The other one is Twentieth Century Fox which was a division of Rupert Murdochs News Corp. Fox is trying to become integrated into the worldwide media network than other studios. It had formed several international distribution joint ventures and planned to produce facility in Sydney as its first time in abroad. The operation of the News Corp. includes the Hong Kong based satellites network Star TV which covers much of Asia; the London-based satellite service British Sky Broadcasting which covers Britain; the Los- Angeles based cable channel El Canal Fox which provide service in 18 countries in Latin America and the Fox network in the U.S.MUSIC: The music industry is also dominated by a small number of large companies like film industry. The market share of music business of MCA was 10.7% at 1994 being the smallest of the six major distributors. There were other major firms such as WEA, owned by Time Warner, 21.1% share; Sony with 15.2%; Bertelsmann, 12.9%; Polygram owned by Philips electronics, 12.9%; and Thorn EMI, 11.2% and other independent distributors has 16% market share. There are several respects which differentiate the movie from music. Like the average album cost a few hundred thousand dollars to produce which allow the music company to produce seven hundred titles a year at a risk. In addition to it Movie companies wait 2 years to see a revenue stream whereas the music company starts making money within the months of recording. The differentiation is also seen between this movie and music industries when it comes to develop a new artist. The success never guaranteed in movie when the most well-known stars, directors are involved but in music business relied heavily on new artists where each year dozens of new music acts were seen to be successfully recorded. For the music company new acts could be huge moneymakers as they cost low.SEAGRAM AND MCA:The Chief Financial Officer, Stephen Banner of Seagram had worked as a mergers and acquisition lawyer in New York to join Seagram. Being a merger lawyer he had worked on the acquisition of Matsushita and MCA. A conversation occurred between Banner and the low-level executives of Matsushita which showed interest of Seagram in acquiring MCA. The main attraction of MCA was the opportunity to become a controlling shareholder of one of the major firms in the entertainment industry. The analyst predicted that if the industry succeeds in expanding internationally and also if the merging of entertainment, telecommunications and computers occur then the reward for the software side of entertainment will enormous. It is seen that Seagram has less experience in entertainment industry.In the meeting Bronfman succeed in convincing Matsushita who genuinely show interested to sell all and majority of MCA. Bronfman knew he had to come Matsushita quickly with a fair offer before they change their mind. Beside this he was also aware that he had to debate with his father and other Seagram board members regarding this matter. The selling of DuPont shares on the other hand would be a contentious issue where Seagram showed interest to sell Du Pont share publicly in June 1994 by a meeting between financial analyst and Seagram management. DU PONT:Du Pont is the fourth largest Chemical industry in the world as well as the largest company in United States with $40 billion revenue in 1994. It was founded in 1802 by a French immigrant E.I du Pont de Nemours who was a manufacturer of gunpowder. It has invented many products such as nylon, Teflon, Orlon and also diversified in many areas. It had 5 major division in 1995 includes chemicals (specialty chemicals), fibers (textiles, flooring), polymers (films, elastomers), petroleum (Conoco- exploration, refining) and diversified business (medical products, printing). The largest unit of it was Conoco where sales were $17.2 billion and $1.1 billion in operating profit.Seagram owned 164 million shares of Du Pont when it dropped $30 in 1989 which at a market value was $60 each and worth $9.8 billion. Seagram had acquired $3.28 billion shares of it.

DECISIONS OF BRONFMAN: There will be enormous impact in the selling of Du Pont stake on the bottom line and cash flow of Seagram. Seagram has reported equity in unremitted earnings of $353 million of Du Pont where it also took $318 million dividends from Du Pont. It is seen that MCA can make up some of the impact of the lost Du Pont earnings and dividend through earning but not all will be possible. It wanted to look for whether the Du Pont shares will provide a steady source of income and cash flow for Seagram or not for the next few years. Bronfman has noticed problem in Du Pont business lines where most were cyclical, highly capital- intensive, and fraught with potential environmental problems. Although In the Du Pont board of directors Seagram has the third position which shows Seagram has minimal control over Du Pont. On the other side, MCA has opportunity to acquire a control interest on one of the largest entertainment companies in the world. Due to its customer driven and moving toward global expansion Bronfman had feelings that Seagram management will be comfortable with MCA. Now the decision goes on Bronfman whether MCA is the right opportunity for Seagram or not.Problem Identification1) In the acquisition between Matsushita and MCA the main problem rose as both the companies are different culturally where Matsushita is a conservative firm run by the bureaucrats and MCA is Hollywood based entertainment company.2) Matsushita seen to suffer hardly due to Japans bubble economy burst where its sales and profit dropped substantially not long after the acquisition due to which Matsushita was unable to support MCAs expansion goal.

3) The cultural clashes also seen to be occurred as Matsushitas executives seen to speak little or not in English and seen to visit rarely in United States. Beside this they contacted with MCA manager hardly and that only on the turn down requests for fund.

4) MCA seen to face problem when MCA chairman Wasserman decide to resign after the contact expired. Along with him Sidney Sheinberg also decided to leave which discouraged successful director Steven Spielberg to work with MCA as he obeys Sidney a lot due to which MCA will face problem.

5) In the acquisition of Matsushita and MCA, The public announcement of the MCA managers of their unhappiness with Matsushita made Matsushita executives surprised and they reacted on it which created frustration on both sides.

6) The problem rose in Matsushita when the Japanese customers seen to move from Matsushita retail stores to low-priced discount outlets7) When Sony was gaining the most of the shares (who acquired Columbia Pictures in 1989 for $3.5 billion) Matsushita seen to fall from the top of pre-eminent Japanese firms.

8) Another problem that is found in the acquisition of Matsushita and MCA is MCAs no involvement in any discussion which is seen when the discussion of acquisition between Seagram and MCA occurred between Matsushita and Seagram. Matsushita company didnt involve MCAs chairman Wasserman and Sheinberg in the discussion.

9) For acquiring MCA, Seagram had to sale the stake of Du Pont which will cause an enormous impact on Seagrams bottom line and cash flow.10) Some problem also seen in the Du Pont business line where mostly was cyclical, highly capital- intensive, potential environmental problems where Seagram cant help much as it has only minimal control over Du Pont strategy for having third positions on the Du Pont board of directors among 15 members.Main Issue

SWOT Analysis

STRENGTH:Operational Efficiencies:Matsushita had a long term vision and it had its own 250 years plan to run the operation for almost foreseeable future. This was very uncommon for most international companies and they are fully organized to head about with the plan. The plan was broken into 25 year stages to operate significantly.Cost Benefits :Philips focused on cost cutting through layoffs and selling off various businesses and research and development units such as integrated circuits. Then with the new leadership, and new strategies, some of these business units were needed and not available to Phillips in the development of their strategy. Therefore, Philips was resigned to continue to outsource even more of their operations and become a technology developer and global marketer.

Benefit from Competitors:MCA is a diversified company as they are involved with movie and television, music, theme parks, publishing, softwares and many other businesses. This diverse offerings from early in the companys history has leads to greater market penetration. They opened 25,000 domestic retail outlets to distribute the products. These provided sales volume and access to market trends.Gained Consumers Demand:

The shifted production earlier that other companies to low-wage countries in Asia and South and Central America. Agreed to give up its own standard and adopted the established Video Home System (VHS) format. This prevented a costly standards war. Instead the company ramped up production meet its own needs as well as those of customers such a Philips.

Benefits from the Subsidiaries:Increased sales volume allowed Matsushita to cut unit price 50% within 5 years of product launch while continuously improving quality. Close headquarters-subsidiary relations allowed grater control of the activities of globally dispersed subsidiaries. Gave overseas subsidiaries a greater choice on what products they sold.

Subsidiaries Markets in 36 Countries:Subsidiaries and affiliates marketed its products in 36 countries, while the companies brand were sold through independent distributors in virtually all other marketers in which spirits and wine were sold.

Best Winning: During the late 1993 V& S Vin & Spirit of Sweden awarded Seagram global marketing rights to Absolut Vodka, the bestselling premium vodka in the United States. In 1993 Seagram became the only company to receive approval from the Indian government to establish a wholly owned subsidiary to produce and market a range of spirit, wine and juice beverage.

Weakness:

Difficulty to control: Centralized control of foreign subsidiaries caused some negative backlash to the company, this may further damage the market impression on the company and can impact more backfire to their image.Inefficient Employment Corporate culture of lifetime employment led to inefficient production facilities. There was resistance to cutting back on manpower and plant. Vertical hierarchy within organization. Front line employees were not empowers to respond to customer needs due to the centralized organization structure.Phillips decentralized operations and research and development during World War II to United States and United Kingdom. This gave those organizations autonomy, but also made it difficult to control them post-war. For instance there was the development of V2000 format, but North American Phillips adopted Video Home System (VHS) which was a Matsushita standard.

Culture Problems:

Matsushita executives spoke very little or no English, rarely visited the United States and had little contact with MCA managers other than to turn down requests for funds. These clashes boiled over in October 1994. MCA Chairman Wasserman, now 81 and the industrys most revered elder statesman, told Matsushita that he would resign when his contract expired at the end of 1995.

Poor Productivity:

Power struggle between product divisions and national organizations. Led to divisive strategies as leadership changed. This in turn led to poor productivity thus creating a lower effective and efficient use of the resources that were used in the production process.

Opportunity:

Innovation benefit: Started out with one product instead of attempting to diversify. As a result, they had significant innovations in the light-bulb industry. Thus it was a flourishing opportunity for them to accomplish and lead the company through as a market leader.

Less Competition:They did not move on to low wage rate thus this reduced the competitiveness. This has brought a massive benefit to the firm since they were at the first phase they did not have to open up to compete with all the well establish companies. Thus it benefited them to establish themselves well to build up to be in a better position.

Diversification Helped to Keep Ease in the Market

They started with one product at the beginning, and within very small time they diversified and gained domestic market penetration by the sheer number of product offerings and retail outlets which shows a significant investment in the market thus attracting more marketers and investors to invest in their company. For instance the company diversified into many new business thats includes Texas gas field and Israil supermarkets.

Better Operation Increased Job Opportunity: They adopted the product division structure. This organized the company based on the product lines that were being developed regardless of location. Regardless of the location they operated well in almost all location and this not only helped the company itself rather it created more job opportunity in he surroundings and they made a better opportunity to spread the good image of the company in which ever location they operated.

Company Expansion Opportunity:They developed and established presence in television market. They expanded their production line to low wage countries in Asia and South America and this helped them to drive prices lower in other words it helped them to higher employees for the company at a low wage rate which again helped them to produce products in larger volume. Basically they cut cost and reinvested the extra amount in the business that helped them to earn higher.

Operates in 22 countries: Spirits and Wine were produced and bottled by the group at facilities located in 22 countries in North America, South America, Europe, Asia and Australia. Thus operating in 22 countries may create a good impact on the basis of both investors and marketers.

Owning the Market Leader:In 1991 Seagram was realigned into spirits and non-spirits groups and began purchasing shares in Time Warner which is one of the huge entertainment and one of the best media company. This this would give more opportunity to the investors to likely select to invest in the company know that it would give a better return.New Opportunity:Matsushita Electric Industrial (Matsushita) grew by developing inexpensive lamps, batteries, radio, and motors in the 1920s and 1930s. in the year 1953 Matsushita began producing television, refrigerator, and washing machines.

Threat:

Risk of Losing future Business: MCA has three major studios- Warner Bros, 20th Century Fox and Columbia. These are all owned by large conglomerates, MCA has a risk of losing future business opportunities to its richer competitors. Competitors relocate production in low cost of labor regions (South Asia and Central and South America).

Inability to Align the Interests: Inability to align the interests of powerful NOs, where each manager represented the particular interest of his region.

Failure in Globalized Production:Several failed endeavors to globalized production and research and development Apureaucratic organization that could not follow the pace of its Japanese counterparts. Painful process of shutting down plants, get rid of some business units, outsource some manufacturing, re-orient companies main focus. Philips becoming a research, developer and marketer. And they lost battle to be an efficient manufacturer.

Functional Area AnalysisPorters Five ForcesProduct Life CycleBCG MatrixEconomic Analysis:Financial statement shows the information about Whirlpools position at a time as well as its operation over some past periods of times. The analysis of financial statement helps the management's standpoint of predicting the future financial condition. For this an analysis of financial ratios are the most important step in financial analysis. The ratio shows the relationship of financial statement's accounts.

Short-term Solvency or Liquidity Ratio:

These ratios analyse the short-term financial position of Seagram, Matsushita and Dupont and indicate the ability of the firm to meet its short-term commitments (current liabilities) out of its short-term resources (current assets).

Seagram:

19911992199319941995

Current Ratio ( Current Asset/ Current Liabilities)1.268371

2.282173

1.915127

1.266355

1.020777

Quick Ratio ( Current Asset - Inventry / Current Liabilities)1.227796

2.222046

1.862207

1.227637

0.9912

Cash Coverage Ratio ( Cash/ Current Liabilities)0.041853

0.140295

0.057913

0.043725

0.038377

Net Working Capital to Total Asset0.07319

0.204699

0.187352

0.0681

0.006561

Interval Measures ( Current Asset/ Average Daily Operating Cost)398.9675

416.277

396.0792

401.2779

417.1429

Matsushita:1991199219931994


1.839434

1.61039

1.1997


1.765539

1.541792

1.145646


0.126381

0.071928

0.057808


0.111126

0.09416

0.036744


519.4606

396.0792

500.8335

Du Pont:

1991199219931994


2.184738

1.94339

1.44995


2.110843

1.874792

1.395896


0.160912

1.470529

0.107858


0.156839

0.193643

0.128833


616.9753

705.8388

499.7108

Long-term Solvency or Financial Leverage Ratio:

These ratios indicate the long term solvency of Seagram, Matsushita and Dupont and indicate the ability of the firm to meet its long-term commitment with respect to repayment of principal on maturity or in predetermined instalments at due dates and periodic payment of interest during the period of the loan.

Seagram:19911992199319941995

Total Debt Ratio ( Total Asset- Total Equity /Total Asset)0.481398

0.454109

0.512074

0.573221

0.574792

Debt- Equity Ratio ( Total Debt/ Total Equity)0.928259

0.831868

1.049493

1.343131

1.351788

Equity Multipilier ( Total Asset/ Total Equity)1.928259

1.831868

2.049493

2.343131

2.351788

Long-term Debt Ratio ( Long-term Debt/ Long-term debt+ Total Equity)0.255069

0.317291

0.288908

0.37464

0.426146

Time Interest Earned Ratio ( EBIT/ Interst)1.881657

2.703593

2.214724

2.094395

1.625628

Matsushita:

1991

199219931994


0.454109

0.512074

0.573221


0.831868

1.049493

1.343131


1.831868

2.049493

2.343131


0.317291

0.288908

0.37464


2.703593

2.214724

2.094395

Du Pont:

1991

199219931994


0.703648

1.003482

0.815775


4.462515

4.91973

5.088364


4.259789

6.762901

6.951841


0.480469

0.56017

0.50075


4.615207

1.953052

0.779221

Asset Utilization or Turnover Ratio:This is a more comprehensive measure to compute the debt servicing capacity of a firm. It shows how many times the total debt service obligations consisting of interest and repayment of principal in instalments are covered by the total operating funds after payment. These ratios are indicative of the efficiency of the trade credit management. A high turnover ratio and shorter collection period indicate prompt payment by the debtor. On the contrary low turnover ratio and longer collection period indicates delayed payments by the debtor. Seagram:

1991

1992199319941995

Inventory Turnover Ratio ( Cost of Goods Sold)28.59843

33.2807

33.34906

29.75

30.19835

Day's Sales in Inventory ( 365/ Inventory Turnover Ratio)12.76294

10.96732

10.94484

12.26891

12.08675

Receivables Turnover( Sales/ Account Receivable)5.758459

5.076

5.37533

5.160684

4.305983

Day's Sales in Receivables( 365/Receivable Turnover Ratio)63.38502

71.90701

67.9028

70.72706

75.74934

Net Working Capital Turnover ( Sales/ Net Working Capital)7.294048

2.612186

3.328423

7.566416

75.28235

Fixed Asset Turnover( Sales/ Fixed Asset)0.816172

0.840509

0.973357

0.761989

0.728815

Total Asset Turnover (Sales/ Total Asset)0.53385

0.534271

0.60382

0.515276

0.493902

Matsushita:1991199219931994

Inventory Turnover Ratio ( Cost of Goods Sold)28.75591

34.15789

33.4434

29.92241

Day's Sales in Inventory ( 365/ Inventory Turnover Ratio)16.25964

14.00211

12.44413

17.31092

Receivables Turnover( Sales/ Account Receivable)6.698308

5.876

6.256388

6.015385

Day's Sales in Receivables( 365/Receivable Turnover Ratio)80.75078

91.60757

90.10434

0.515276


3.025113

3.873977

8.819549


1.105444

1.114612

0.900717


0.130339

0.163908

0.079331

Du Pont:

1991199219931994


3.436805

4.419531

10.07268


1.237912

1.252201

1.012775


0.702678

0.801762

7.427718

Profitability ratio:

These ratios measure the operating efficiency of the firm and its ability to ensure adequate returns to its shareholders. This ratio indicates the number of times inventory is replaced during the year. It measures the relationship between cost of goods sold and the inventory level. A firm should have neither too high nor too

low inventory turnover ratio. Too high a ratio may indicate very low level of inventory and a danger of being out of stock and incurring high stock out cost. On

the contrary too low a ratio is indicative of excessive inventory entailing excessive carrying cost.

The profitability of a firm can be measured by its profitability ratios.Further the profitability ratios can be determined (i) In relation to sales and (ii) In relation to investments

Seagram:

1991

1992199319941995

Profit Margin(Net Income)0.123388

0.114578

0.147517

0.062769

0.115018

Return on Asset ( Net Income/ Total Asset)0.065871

0.061216

0.089074

0.032343

0.056808

Return on Equity ( Net Income/ Total Equity)0.127016

0.122144

0.182556

0.075185

0.1336

Market to Book ( Market Per Share/ Book per Share)24.00538

20.34891

39.9643

0.44751

24.57942

Price - Earnings Ratio( Price Per Share / Earnings Per Share)

189.0547

181.7708

220.1681

2.941176

183.8384

Price-Sales Ratio ( Price Per Share / Sales Per Share)23.31973

20.79149

32.29372

0.370653

21.16081

Matsushita:

1991

199219931994


0.130339

0.163908

0.079331


0.069636

0.098971

0.049411


0.155746

0.20284

0.095181


26.17955

47.59108

7.906019


238.806

233.8542

262.1849

100.9804


26.74894

38.45665

25.08082

Du Pont:

1991

199219931994


0.146099

0.327815

0.095893


0.078057

0.197941

0.057945


0.172547

0.223124

0.115177


32.01018

62.84462

15.36453


288.5572

285.9375

388.2353

199.0196


32.70638

19.96787

31.25836

Human Resource Planning Process:

BALANCING SUPPLY AND DEMANDHuman resource planning model:F o r e c a s t i n g D e m a n d

(Shortage)RecruitmentFull TimePart-timeRecallsTechniques: X Trend AnalysisX Managerial EstimatesX Delphi TechniqueInternal Considerations:Product/Services Demand Technology Financial Resources X Absenteeism/ turnover Organizational Growth X Management Philosophy

External Considerations:Demographic Changes X Education of the Workforce X Labor MobilityX Government Policies X Unemployment Rate Techniques:X Staffing Tables X Markov Analysis X Skills Inventories X Management Inventories X Replacement Charts X Succession Planning

ReductionsX LayoffsXTermination XDemotionsX Retirements

F o r e c a s t i n g S u p p l y

F o r e c a s t i n g D e m a n d

Internal Considerations:Product and Service Demand :An organizations internal consideration consists of product and service demands on which it simply design its human resource planning strategy. It refers to the want of a particular product that shapes by ones society and are described in terms of objects that satisfy needs, when backed by buying power of the consumers accordingly the wants become demand. MCA the largest consumer electric manufacturer in the world. They are operating in 36 countries and it had its huge success with the diversified offering that they have been serving. Seagram have wide range of products since they diversified themselves. Their investment of Du Pont was worth $9-10 billion at current market price.MCA has wide range of products such as movies and television, music, theme parks publishing, software and other business. For instance they have Universal Pictures, that is highly dependent on movies.Thus consumers considered quality to be the main factor and considered brand to be the least important factor. Though was mostly accepted by the consumers, the average customers were aware about Universal's history is interesting because it brings together Japanese electronic manufacturing, US East Coast investment in Hollywood film production, a Canadian cinema chain, the Bronfman family, the Polygram record and music publishing giant and talent agency turned media group MCA.Technology: This refers to the advances and exciting ways to learn about customers and to create tailored products; it also refers to the development of original products, product improvements, product modifications, and new brands through the firms own research and development efforts.Advancement in new technology changes the impact of production process. Since they were involved with diversified field they had to make sure that they have all their technologies up to date as their main business was based on electronics.Without developing and upgrading their technology they would not have come up with better diversified operation in numerous countries. The disposable bottles and returnable glass bottles strategy needs to keep a tack which wouldnt have been possible without technologyThey competitors had different strategies and their distribution channel was a success unlike Seagram and MCA. They conduct a study and found out their first show was an immediate success that the estimated audience was about 7million of the 12 million target audience. Without high technology usage it wouldnt be possible for them.Many activities like foreign domestic licensing, distribution of local language adaption, magazine and book publishing, interactive softwares were done by using technologies. Advertising also included better technology to bring about a change in the market to stand unique.They are currently demised on music only devicesFinancial Resource: It is the capital and equity that a firm owns. It includes the building, land, and current condition of stocks price, debt securities, liquidity, and solvency required to cope up with the marketability of the organization. Thus consumers considered quality to be the main factor and considered brand to be the least important factor. The company has diversified its operation and they are operation from several countries thus their costs were more yet they made huge success on movies and got their expected return from this department.MCA's competitors William Morris and CAA were profiled in Frank Rose's The Agency: William Morris & The Hidden History of Show Business (New York: Harper 1996), Power To Burn: Michael Ovitz & The New Business of Show Business (New York: Birch Lane 1996) by Stephen Singular - more warts - and Ovitz: The Inside Story of Hollywood's Most Controversial Power Broker (New York: McGraw-Hill 1997) by Robert Slater.Absenteeism/ TurnoverThis refers to the failure of employees to report to work when their schedules require it, whether or not such failure to report is excused. It is a process that an organization ensures that employees are recruited and developed to fill each key role within the company.Information Not Available Organizational Growth: It is something for which all organizations desires in order to strive and to prosper throughout is operation. The most meaningful measure is one that shows progress with respect to an organization's stated goals. The ultimate goal of most companies are profit, net profit, revenue, and other financial data, sales figures, number of employees, physical expansion, or other criteria to judge organizational growth are often utilized as "bottom-line" indications of growth.In order to strive and prosper they tried to extend their area as much as possible and they did. They are operating in more than 22 countries. Their aim was to serve the children by educating them interestingly and amazingly. They look for new market and demand and try to spread the light of education all over the world. Even though they start their project with a low wage they were in a better position to keep ease with the operation . They regained their market share as their business is based on diversified areas and are almost operating in many countries.Management Philosophy: It simply means the judgments of the top executive as well as the bottom line executive and other knowledgeable persons about the organizations overall strategy. This is the inner emotion and standard that the management holds in its mind while operating activities. Information Not Available Techniques: Trend Analysis: It is a qualitative approach of forecasting demand for employees. It refers to the forecasting of labor demand based on an organizational index, taking into consideration a business factor, which can be sales and labor productivity. Constructing and applying statistical models that predict labor demand for the next year, given relatively objective statistics from the previous yearInformation Not Available Managerial Estimates:This refer to the opinions or judgments of supervisors, department managers, experts or others knowledgeable about the organizations future employee needs. The name itself clarifies the main thought of this technique. Information Not Available Delphi Techniques: Delphi technique refers to an attempt to decrease the subjectivity of forecasts by soliciting and summarizing the judgments of a preselected group of individuals. Delphi is based on the principle that forecasts from a structured group of experts are more accurate than those from unstructured groups or individuals. Information Not AvailableF o r e c a s t i n g S u p p l y

Techniques: Staffing Table

Staffing table refers to graphical representations of all organizational jobs, along with the numbers of employees currently occupying those jobs and future (monthly/yearly) employment requirements.

Information Not Available Markov Analysis

This is a method for tracking the pattern of employee movements through various jobs. Markov analysis is a statistical technique used in forecasting the future behavior of a variable or system whose current state or behavior does not depend on its state or behavior at any time in the past time.

Information Not Available Skill Inventories

Files of personnel education, experience, interests, skills, etc., that allows managers to quickly match job openings with employee backgrounds. Managing employee skills and competencies lays the foundation of any organization.

Information Not Available Management InventoriesComprehensive catalog of the capabilities found in an organization's management team. It is based on the understanding gained from a manager's employment records, formal and informal education and training obtained, immediate supervisor's report, and the results of appraisal tests. There are no information provided about management inventories in this particular case.Replacement Charts

This is a chart that lists current jobholders and persons who are potential replacements if an opening occurs. This replacement chart usually determines the way of substantial job vacancies.

Information Not AvailableSuccession planningThe process of identifying, developing, and tracking key individuals for executive positions. Succession planning is a process whereby an organization ensures that employees are recruited and developed to fill each key role within the company. Through the succession planning process an organization retains superior employees because they appreciate the time, attention, and development that the company is investing in them.External Considerations:Demographic Changes: Demographics refer to selected population characteristics. To be technically precise, it is the study of populations, of population size, of population composition by age, sex, marital status and of future trends. Demographic changes refer to the statistical characteristics of human populations, such as age and income that are used by businesses to identify markets for their products by determining just who their potential customers are and to serve as a means of locating geographic areas where the largest number of potential customers live. Demographic changes are important since the company is operating from various countries thus employees needs to remain mobile to operate in every companies aspects.Education of the Workforce: Education is a social science that encompasses teaching and learning specific skills and when it comes to workforce it is very much necessary to hire an employee with the right educational background. It thus focuses on the cultivation of skills, trades or Professions, as well as mental, moral & aesthetic development. Education is very important for this particular industry so they must ensure that they hire well educated employees as most of their products require and work on technologies.

Labor Mobility

Labor mobility consists of changes in the location of workers both across physical space (geographic mobility) and across a set of jobs (occupational mobility). Labors has to be mobile though there were no direct information regarding this.

Government Policies

Government policies refer to the rules and regulations of a nation that restricts or permits the activities of organization. Government regulations make great impacts on an organization. Information Not Available

Unemployment Rate

The unemployment rate is the number of unemployed workers divided by the total civilian labor force, which includes both the unemployed and those with jobs (all those willing and able to work for pay).Information Not Available Country Risk Analysis

Seagram and MCA tried to find out the collection of risks associated with investing in a foreign country. These risks include political risk, exchange rate risk, economic risk, sovereign risk and transfer risk, which is the risk of capital being locked up or frozen by government action. Country risk varies from one country to the next. In some countries, Seagram and MCA have high enough risk to discourage much foreign investment. Some country risk does not have an effective hedge. Other risk, such as exchange rate risk, can be protected against with a marginal loss of profit potential.

United State:

MCA in United States is generally considered the benchmark for low country risk and most nations can have their risk measured as compared to the U.S. In every year, MCA earns more profit and having highest market growth rate. They are higher with longer term investments and direct investments, which are investments not made through a regulated market or exchange.

Matsushita's penny-pinching management, MCA had sat out the merger mania. It ranked fifth in U.S. music share; internationally, it was almost nonexistent. Three years after buying MCA from Matsushita, he was again in talks with a troubled electronics company set on a turnaround path by a new who was eager to undo his predecessor's foray into entertainmentand just as eager to avoid the discomfiture of a public auction. It took seven months for the deal to close seven months during which Seagram had to raise in cash. But though Seagram put tag on PolyGram's film assets, the highest bid. Meanwhile, the music industry was in limbo. By November it was clear that wholesale changes were in store labels smashed together, thousands of employees laid off, hundreds of bands let go.

Seagram dropped dozen s of low-end and mid-priced liquor brands in favor of the premium stuff, sacrificing volume and market share to concentrate on products with the best margins. Bronfman wants to do something similar with music. If they can reduce your artist roster and focus their efforts in terms of promotion, marketing, and better economically, artists will do better, and the better do the more artists will want to come to shop.

Of all the businesses Seagram is in, music its biggest bet is undergoing the most profound secular change. With the rise of the Internet, the big music companies face two threats unfettered piracy and, just possibly, their own obsolescence.

Japan:There have many issues and problems that are why MCA risk level is high in Japan. As with most actions that come from on high, however, the pattern behind these moves has not always been easy to divine. Du Pont in favor of the entertainment conglomerate then known as MCA, he was dismissed as a star struck dilettante bent on buying his way into Hollywood. By doing nothing, conventional wisdom tells us, he could have avoided reams of scathing publicity while watching his Du Pont holdings nearly double. Instead, he sold Du Pont leaving more than on the table at current prices. Similarly, Time Warner and sold it just as it began its recent climb. And in buying MCA, he lay out of a company that was last, or close to last, in all its businessestelevision, publishing, music, theme parksexcept movies.

It was a second-tier entertainment company. It had to become a first-tier entertainment company. And so, with the acquisition doubled his bet loading up on music as well as theme parks while spinning television off to move Hollywood regards as unfathomable and letting the film flounder.

The basic premise is this: The information economy will leave people across the planet with ever more time on their hands. Nobody expects them to fill it by consuming more booze, but they'll have to do something for fun. MCA the only entertainment conglomerate with a Hollywood-themed park and merging it the world's leading record company. Seagram can be designed to allow Seagram to recapture its television properties movies. But it's long term, it's radical, and it totally defies conventional wisdom. In the new Seagram, spirits and wine, the business will account for only about a quarter of the company.

Canada:Part of the risk level is moderate that Canadian whisky is made. Unlike withbourbon, the base spirit is often risk at a very high which creates a more neutral spirit that lacks flavor. It's then blended with smaller amounts of lower-proof whiskies, and the distillers are allowed to add just about anything: rum, brandy, neutral spirits, caramel, or other types of flavoring. Finally, it's usually bottled which makes it taste watered-down.

Canadian whisky came to prominence during Prohibition, when American distilleries were shut down and bootleggers smuggled it across the border to supply a whiskey-starved nation. Once Prohibition ended, companies such as Seagram's had huge reserves ready to sell on the American market, which was one of the major of reasons for Canadian whisky's prominence throughout the mid-20th century.

Canadian whisky became known as rye which not to be confused with American rye whiskey, which has become so popular lately.

Seagram tasted two brands that were launched this past spring, Royal Canadian which retails for and Caribou Crossing. Both were much more complex, spicier and creamier than the average Canadian whisky. Nice enough, but still too light and too straightforward. The panel was sparsely attended, a fact that became a running joke, especially when the lights in the ballroom went out halfway through the presentation. Canadian whisky drinkers have two defining characteristics: One, they're men. Two, they have gray hair.

Economic AnalysisIn terms of Seagram and MCA, the areas account for much of the knowledge regarding economics. These areas involve microeconomic theories and macroeconomic theories. Much of the Seagram and MCA base deals with microeconomics, which is particularly suited for economics because it centers on specific industry and market conditions.

In Seagram and MCA, macroeconomic tend to take a much broader focus on topics as labor and capital markets, as well as policy and regulatory concerns. They basement involving macroeconomic is much smaller than that using microeconomic theories. Economical encompasses many areas, emerging as a response to positivist approaches in mainstream economics. Among the most widely used frameworks for Seagram and MCA are the industrial organization model, developed which in turn drew on the contributions of other neoclassical economists. The model offers a systematic means of analyzing many abstract concepts encountered in of a specific market.

The four major tendencies that Seagram and MCA have identified are: the importance of endogenous sunk costs, the fact that marginal revenues largely equaled marginal profits, recorded quasi-public good character and, finally, its project-based nature. For each of these four trends, this section identifies the underlying economic characteristic, its dynamic implication and then assesses how the latter expressed itself historically.

Market growth in Seagram and MCA raises profits for any given quality level, making room for new entrants, but also the marginal benefit from it is now higher, leading to higher fixed sunk costs and limiting the number of firms as the market tends to infinity. Which of the two effects has the upper hand depends on the distribution of the willingness-to-pay and shape of costs associated with quality improvements.

On the supply side of Seagram and MCA, General interest lowest-command denominator radio programs moved to television, which led, first, to more music being played on radio, and second to more market segmentation, with many focusing on distinctive styles. The increasing variety of this economy was the third supply factor affecting the quality race.

On the demand side of then, Seagram and MCA, the reward for offering a higher perceived quality had increased substantially, while the three supply side factors lowered the cost of generating, delivering and marketing this increased quality. The resulting profit opportunity led entrepreneurs to sharply increase expenditure on developing, recording and promoting talent. This happened both through vertical product differentiation, with entrepreneurs and firms spending heavily on buying and developing promising or already popular acts, and through horizontal product differentiation, in which larger liked to have various segments through a wide range of different labels and acts.

In Equilibrium of Seagram and MCA, low marginal costs should lead to very low prices, and thus an inability to incur large fixed and sunk costs, were it not those companies are granted a monopoly through copyright law, and can use price discrimination to optimize the transfer of some of the consumer surplus into revenue.

The price of product in Seagram and MCA which master recordings are sold outright, the label manager or record producers incentive to increase quality is limited by the fact that they get any of the marginal revenues that their product generated for the distributor and for the retailer. The classic solution has been vertical integration or the use of revenue-sharing contracts. This in turn gives the producer the incentive to make marginal improvements in product quality that lead

to additional sales, and thus more profits, also for the producer. The latter market appears characterized by monopolistic competition: price is above the competitive level, but firms do not make economic profits. The expanded market increased the value of the rents generated by copyrights, thus adding an incentive to maximize and capture them. Therefore, companies turned away from exports and licensing which had become prevalent between the wars in order to conduct transactions.

Elasticity of Supply, Demand and Income: As the word suggests, the price elasticity of demand is the change in quantity demanded in response to a small change in price of Seagram and MCA. Elasticity has many uses; in particular it helps determine the extent to which taxes are passed on. Both Seagram and MCA cover three main types of elasticity: price elasticity of demand, price elasticity of supply and income elasticity of demand.

Price Elasticity of Demand :Assume P1 is the initial price of a product and Q1 is the quantity demanded at that price. P2 is a very slightly higher (or lower) price and Q2 is the quantity demanded at that price.

Then we can write the elasticity of demand:

Demand elasticity: ED= (Q1-Q2)/Q1 (vertical bars stand for absolute value) dividend (P1 P2)/P1 So at any point along the demand curve about Seagram and MCA, elasticity is the ratio of price to quantity divided by the slope of the line at that point, if the slope is constant, as Seagram and MCA is in the straight line demand curves we usually draw, then clearly elasticity increases as price rises and quantity demanded falls along the curve. They are the increase in elasticity with increasing price that limits how high monopolists can raise prices. Increasing elasticity means that the more they raise the price, the faster their sales fall off. The point of unit elasticity occurs at the point where revenue, R = P x Q, is a maximum.

Price Elasticity of Supply: By analogy to price elasticity of demand about Seagram and MCA, price elasticity of supply can be written:

Supply elasticity= % change quantity supplied % change price= 18203260 1151659=15.816

Unlike demand elasticity of Seagram and MCA, supply elasticity is always positive. Because quantity supplied increases as supply price increases, supply elasticity does not obviously increase or decrease as price increasesat least along a conventional straight line supply curve. However ultimately supply of Seagram and MCA is limited, so elasticity must eventually decrease as price increases and supply curve becomes more vertical.

Income Elasticity of Demand::In general, Medium class people in Japanese and U.S spend proportionately more on less immediately urgent items: less on food, and more on bigger houses, boats, and other durable goods. And with bigger houses come even bigger parcels of land.

Income elasticity: %Y change quantity purchased % change income

Alternatives Option is to do nothing. To keep the situation as it is. To protect their existing market share and their profitability.

Pros:

They will not have to concentrate on what other problem they are facing rather if they put their full concentration on what they can do further to increase their market level and build relationship with the customer to keep them loyal.

As in the first option they will not spend additional money on the competition or other campaigns.

Cons:

The minus of such option no development or move forward.

They might face risk in the future and if they do not take any caution now the risk might get more worst.

MCA can develop distribution in other parts of Japanese.

RecommendationIn terms of sourcing and entry strategies; Seagram and MCA should move into more strategic alliances and less foreign direct investment especially in global locations where local market knowledge is crucial for success. They build assembly plants for its products crucial components are in sourced globally through joint ventures and wholly-owned subsidiaries, intermediate components can be outsourced through OEMs or strategic alliances across the globe, and finally, owned or even outsourced assembly plants can be placed in strategic global locations for regional exports. Multinationals aiming to establish a long-term market development, especially when local knowledge, sourcing constrains and high degrees of uncertainty exist should think to form more strategic alliances. The strategy can be less risky than foreign direct investment or joint ventures. In terms of long term planning, the company should plan to allocate main global assembly centers

Seagram attempted to take over Conoco, one of the major oil and gas producing companies in the U.S. Seagram acquired DuPont also had designs on Conoco, resulting in a bidding war between Seagram and DuPont. When it became obvious that DuPont would emerge as the winner in the contest for Conoco, Seagram tendered. Seagram was DuPont's largest single shareholder with 4 seats on DuPont's board of directors. But Bronfman was much more interested in filmmaking than in the stodgy chemical business and thus the fateful phone call in which he offered to sell back most of Seagram's DuPont stock.

Here was an opportunity for a major reduction in the number of DuPont shares outstanding, resulting in significant benefits to remaining DuPont stockholders and to the company. The normal method would have been a simple repurchase and retirement of the shares in question at the then approximate market price of $62 per share. While the size of the transaction would have merited mention in the financial press, most likely it would have been covered in a one-paragraph statement and would not have drawn the outraged attention of Congress.

MCA--founded as a booking agent for the fourth-largest entertainment company in the United States--is the most diversified of the Hollywood entertainment conglomerates. Among its properties are Universal Pictures, Universal Studios Tour in Universal City and a similar theme park in Florida, a publishing house, record labels and interests in cable television and movie theaters. The firm has grown to become a colossus of films, records and television. The deal is the largest takeover of an American company by a Japanese firm.MCA, with about 17,000 employees last year on revenues. Profitability has been erratic over the years, but the company has never been in financial trouble.

Among the world's top 20 corporations with more than 189,000 employees, Matsushita is following the lead of Japanese rival Sony Corp. in buying access to movies and recordings that can be played on its electronics products. Sony bought Columbia Pictures Entertainment last year. Under the agreement, MCA left the door open to a higher bid by guaranteeing Matsushita up to $125 million in fees and expenses if the Hollywood company accepts any unsolicited offer from another company before the current deal closes.

One major shareholder, who declined to be identified, said that he did not regard such a bid likely. (MCA Chairman) Lew (Wasserman) would have dragged his feet if there had been a hint from the GEs or the Capital Cities of the world. But nobody was forthcoming. Breaking silence after months of closed-door negotiations, Sheinberg said in a telephone interview Monday that MCA had sought the alliance with Matsushita, a consumer electronics giant, to assure its own growth. "We felt in the world of the future, we were going to need more resources financially and otherwise than we felt we had or could get. We felt we had to be part of something more diversified.

In similar moves, there was Sony's acquisition of Columbia and Time Inc. acquired Warner Communications to become Time Warner Inc. MCA had been seeking such a partner for years, but had difficulty finding a company that could afford an acquisition that MCA could have commanded more by waiting for a better economic climate. Wasserman's age and dim view of the world economy apparently militated against that. Sheinberg said MCA officers were about the economy and doubted whether a change in the federal rules which bar TV network owners such as General Electric Co. from owning studios--would have prompted a better bid.

Implementation

The implementation of the recommendation should be conducted form all the aspects of the Seagram and MCA. The top management of both Seagram and MCA should implement the recommendation from the frontline to the top management of the organization. The frontline managers should be motivated to increase the sales volume for the corporation. The overall implementation should be close.lt monitored by the top management. Every employee should be motivated to work for the organization. Even the engineers should work for the organization & come up with new innovation to offer their customers so that the customers find it interesting to buy the products. So, the entire organization should be tied with objectives & goals that should be achieved & implemented in the sooner context.

If the top management wants to be successful in making profits then it should redesign their process of approach in the global context. First of all, the recruitment should be redesigned & qualified employees should be hired. As Seagram and MCA have the problem of employees who were not qualified enough to deal with the matter of farce competition that Seagram and MCA was facing. Thus Seagram and MCA should start restructuring their process of hiring employees very soon. Then & there he employees should be trained in a proper manner that can generate revenue for the Seagram and MCA & mark up sales for the corporation. The employees must be trained in a proper manner & they must be trained to be motivated to gain profits for the organization.

After recruiting the best employees for the organization, the employees should be assigned to their respective departments following MBO (Management by Objectives). Each department should be assigned with specific goals to complete each month then report to the top management frequently. Apart from that, these managers should be recognized for their achievements for the company.

Finance Implementation:

In this case, the finance department should generate revenue through profitable resources to increase the gross profit and net profit margin. They also control the bottling authorization of its own products in this result they will save the major option of potential revenue.

To build these large multinational organizations large amounts of long-term cash were needed. Because much of this was sunk in intangible assets that could not easily function as collateral for bank loans or reassurance for investors, there was a practical need to get access to long-term cash. Almost all successful rights-based multinationals received this from the cash flow of their parent companies.EMI and PolyGram, for example, both were owned by parents making electronic hardware, while Warner Music was attached to the eponymous Hollywood studio. BMG Music was set up with cash flows from the Bertelsmann media company, and MCA was developed by its parent, the Hollywood studio Universal.

The finance manager of Seagram and MCA will implement this solution. The sale reflected MCA's interest in using Universal's production and distribution facilities, particularly for television production as an extension of its existing Revue Television Productions operation responsible for video fodder such as Alfred Hitchcock Presents, Leave It to Beaver and Wagon Train. As Universal Television it established a profile for law & order dramas and action series. Feature film involvement included Jaws and ET.

This will be implemented by the calculation of unit cost and production cost. This will help to choose the raw materials. This find of method is expected to make the growth of profit for Seagram and MCA.

This should be calculated as soon as possible. A good financial managers or individual takes responsibility and make it easy to mentor progress. The survivors were developed by parents that could give them long-term access to cash, knowledge and synergies with an existing business, and an actual multinational organization, including the know-how needed to run it.Economic Implementation:Since it is the problem that is involved with it will definitely hamper all the companies. Due to bottling Seagram and MCA was unable to stabilize its price whilst all the other companies did not have such problem as they did not require chemicals unlike Seagram and MCA. Thus they may set the price a bit lower according to the volume they are providing. The increase in distribution capacity alleviated the need to focus on the lowest common denominator and therefore enabled additional product differentiation.

By the early, convenience-store racks had become an important outlet, particularly in the United States. During the 1970s, specialized music stores proliferated and became part of chains. During the 1980s and 1990s, super-sized megastores and specialized radio stations followed. Better measurement technology enabled a more accurate estimation.

This should be implemented by the company itself as they need to set the price according to the amount they are going to sell. The surviving rights-based multinationals typically bought many smaller local companies, rather than a few large ones. To retain the firms value, the takeovers had to be friendly and the managers had to remain part owners. The labels gave the multinational better expertise to anticipate future markets and to act swiftly when entering new fields.Hence, they should implement it soon as they have been facing a problem with the pricing of the products. The other competitors do not require products since they are not using such products that Seagram and MCA using. In the end, the jury convicted the defendants of the lesser charge of extortion. With liquor consumption in decline of major oil and gas company, Seagram lost out to DuPont in the bidding but, because of its investment in Conoco, ended up with share of DuPont and soon raised this to almost, making Seagram DuPonts largest minority shareholder.

Initially, most Wall Street analysts and the financial press took the position that Seagram had been enjoyed drinking Seagram on the rocks. But its stake in DuPont accounted for nearly of Seagrams earnings, and Mr. Bronfman was being hailed as a smart, risk-taking businessman.

Human Resource Planning ProcessInternational BusinessCountry Risk AnalysisPorters Diamond Model:

Increasingly, Seagram and MCA strategies have to be seen in a global context. Even if they does not plan to import or to export directly, management has to look at an international business environment, in which actions of competitors, buyers, sellers, new entrants of providers of substitutes may influence between Canada and Japan. Information technology is reinforcing this trend. This model allows analyzing why some nations are more competitive than others and why some industries within nations are more competitive than others. It suggests that Seagram and MCA play an important role in shaping the extent to which it is likely to achieve advantage on a global scale in the world. This home base provides basic factors, which support or hinder organizations from building advantages in global competition. Porter distinguishes four determinants:

Factor Conditions:

The situation regarding production factors of Seagram and MCA like skilled labor, infrastructure, etc, which are relevant for competition in particular Industries. So it will affect the company profit. Change in plans strategies and operations are important for company. Furthermore, sharing these changes to managers, supervisors and all level employees make able to them adjust properly to face the changing environment.

Matsushita bought MCA in cash and which was essentially the same value assigned to the company in Sunday's agreement. Since then, the yen has strengthened so much against the dollar that Matsushita would have had to get to match what it paid. Sources close to the company, however, said the company does not have to translate the dollars that it is getting from Seagram into yen immediately, and can postpone any loss it may take.

Matsushita's goal was to mesh its consumer electronics business with the so-called software of Hollywood entertainment. MCA managers thought that Matsushita provided the kind of deep pockets that the company needed to make acquisitions and keep up with such media giants as Time Warner and Rupert Murdoch's News Corp.

Instead, the two sides never meshed. Wasserman, Sheinberg and other MCA executives became disillusioned after Matsushita prevented the company from competing to acquire Virgin Records, join with ITT Corp. to bid on CBS and build Universal Studios Japan to their liking. Matsushita executives bristled when MCA executives went public last fall with their criticisms, an action virtually unheard of in Japanese corporate culture.

Demand Condition:

Home demand conditions influence the shaping of particular factor conditions. They have impact on the pace and direction of innovation and product development. According to Porter, home demand is determined by three major characteristics: their mixture (the mix of customers needs and wants), their scope and growth rate, and the mechanisms that transmit domestic preferences to foreign markets.

The negotiations between Bronfman, and Japanese electronics giant Matsushita Electric Industrial, which started in Osaka, in the law offices of Shearman & Sterling on the 21st floor of the Citicorp Center building in Downtown Los Angeles. Bronfman, chief executive of Seagram Co., formally signed the agreement with Matsushita President Yoichi Morishita after the boards of both companies approved the deal.Porter states that a country can achieve national advantages in an industry or market segment, if home demand provides clearer and earlier signals of demand trends to domestic suppliers than to foreign competitors. Normally, home markets have a much higher influence on an organization's ability to recognize customers needs than foreign markets do.For Matsushita, selling control of MCA ends a stormy, five-year marriage marked by an openly strained relationship with MCA Chairman Lew R. Wasserman, 82, and President Sidney J. Sheinberg, 60, the longest-running management team in Hollywood. That relationship worsened in the past week as Wasserman and Sheinberg deliberately were kept in the dark about the talks. In a statement, Bronfman praised to working with them to shape the future direction of MCA.

Related and Supporting Industries:

A close relationship and foster good relationships with local governments is one key to the success of a company can achieve success in the country concerned. If a company cannot develop a close and good relationship with local governments, it would hamper the company's success. Local governments may ban products made by these companies. Seagram and MCA had managed to foster a close relationship and foster good relationships with the governments.

Instead, the two sides never meshed. Wasserman, Sheinberg and other MCA executives became disillusioned after Matsushita prevented the company from competing to acquire Virgin Records, join with ITT Corp. to bid on CBS and build Universal Studios Japan to their liking. Matsushita executives bristled when MCA executives went public last fall with their criticisms, an action virtually unheard of in Japanese corporate culture.

Responding to the consummation of the deal Sunday, MCA Motion Picture Group Chairman Tom Pollock said that the dysfunctional relationship between ownership and management is over. We all hope the new ownership will bring a period of new growth to MCA.

Wasserman, a Hollywood legend whose career dates back to the Great Depression, has a lifetime consulting agreement with MCA that was guaranteed to him when Matsushita bought the company. Sources said they expect that to remain in force whether or not he stays as chairman.

Firm Strategy, Structure, and Rivalry:

The conditions Seagram and Dupont that determine how companies are established are organized and are managed, and that determine the characteristics of domestic competition.Here, cultural aspects play an important role. In different nations, factors like management structures, working morale, or interactions between companies are shaped differently. This will provide advantages and disadvantages for particular industries. International rivalry and the search for competitive advantage within a nation can help provide organizations with bases for achieving such advantage on a more global scale.

All in all, Edgar Woolard had reason to be pleased with the company's performance under his leadership. However, one of his goals had not yet been accomplished: Through most of Woolard had been pondering ways to get some of DuPont's growing pile of cash to stockholders, Wall Street shared his concern and anticipated a stock buyback. Various alternatives were examined and rejected. A phone call that would provide the frosting on Woolard's and DuPont, generate emotional media attention and give rise to cries of there ought to be a law.However, DuPont also had designs resulting in a bidding war between Seagram and DuPont. When it became obvious that DuPont would emerge as the winner in the contest By 1995 Seagram was DuPont's largest single shareholder with 4 seats on DuPont's board of directors. Here was an opportunity for a major reduction in the number of DuPont shares outstanding, resulting in significant benefits to remaining DuPont stockholders and to the company. The normal method would have been a simple repurchase and retirement of the shares in question at the then approximate market price. While the size of the transaction would have merited mention in the financial press, most likely it would have been covered in a one-paragraph statement and would not have drawn the outraged attention of Congress. General Implementation:Seagram fiscal first-quarter profit raised a better-than- on improved performances by its liquor, juice and music businesses, though shareholders were warned that problems in the Asian could affect future earnings. The company came under fire for distributing gangster rap music containing lyrics considered offensive to African Americans and women.

Seagram produces and promotes is tearing at the very core of our dignity and self-respect, William Tucker told the Montreal-based beverage and entertainment company's annual meeting, to applause from the audience. The company should implement a solid marketing plan along with the process to implement it properly.

Seagram has established an internal review process to monitor the content of music released under its labels. They focused on trying to strike a balance among an artist's desire for self-expression, marketplace preferences and demands, and community standards.

While the company managed to surprise analysts with earnings that were ahead of forecasts, Bronfman told the annual meeting that liquor sales in Asian-Pacific markets may suffer because of economic turmoil and currencies whose values have been battered against the U.S. dollar, the currency in which Seagram does business.

Since, the problem is related to provide incentives to the channel members. Incentives boost and motivate employees to work accordingly and willingly. This will not only help the company to have large number of sales rather they will be able to grab market share.

Thus it has to be implemented by the company itself and since Seagram is a huge company in Brazil they have to give a large amount of incentive to the distribution channels in order to grab market share.International Implementation:Since competitors to entry are controlled by the government, government should put competitors for the new entrants who are entering Japanese market. Sony goods can have lower price because the policy ofthe government with low tax, even no tax at all. When Japanese electronics giant Matsushita agreed to buy Hollywood stalwart MCA last month for almost it was the largest purchase ever of a U.S. company by a Japanese outfit. But it also marked an ironic. It was MCA, after all, that went to the U.S. Supreme Court in the Seventies trying to block the sale of the home video recorder.

It was also MCA that promoted the laser disc as a way to put movies in the home without danger of unauthorized copying. Today, videocassette sales are Hollywood's single biggest source of revenue, and MCA soon will be owned by the world's largest manufacturer of VCRs. An ongoing chicken-and-egg debate about hardware companies buying software companies has been under way since Sony purchased Columbia Pictures two years ago. First, Sony and Matsushita see movies and music as wise ways to invest their mountains of cash in industries closely linked to the fate of their own.

It's a very sensible strategy to diversify from hardware into software. There's a lot more money to be made in a large-scale software business than in their traditional hardware businesses.

A maker of machines can gain competitive advantage by producing programming for people to run through those machines. Sony forgot this history lesson and suffered a major marketing flop with its video recorder, which it was convinced was technically superior to the system developed by Matsushita and others. Sony set out on its own, believing the machines would be used primarily to record TV broadcasts.

Today Sony and its larger, often copycat competitor, Matsushita, are in prime positions to provide software support for any new hardware frontiers for the high-definition TV both are now introducing in Japan. Sony already is lending its HDTV technology to such filmmakers as Francis Ford Coppola, Steven Spielberg, George Lucas, and Akira Kurosawa, in the hope that their use of the medium will eventually spur demand for it.

This should be implemented immediately as once the barriers will be set no small companies will enter the market and hence Coca-Cola may keep up with smooth competition.

Appendix:Exhibit 1:It shows the income statement of Seagram in US$. It shows the sales and income of the years 1991 to 1995. It is very apparent that their income has been fluctuating but not much in the number. There is a significant decrease in the income earned per share. And during the year 1993 it has gone negative too.

Exhibit 2 shows a balance sheet of Seagram. The figures are in US$ and they have shown their financial situation of 1991 till 1995. They have assets over US$ 11,718, 000, 000 worth of assets. They have liabilities and it shows a significant increase. Thus no matter what amount of asset they have their liabilities has been increasing. During the year 1995 they have liabilities of 4,091, 000, 000.

Exhibit 3 shows Seagram segmented information for the year 1994. It clearly indicates the sales and operating income of Seagram by region. The highest amount of income was earned in Europe and most sales were allocated in United States. By product category mainly Spirit and wine has got the maximum sales.

Exhibit 4 shows Matsushita financial information for the years 1991 till 1994. The total current assets and liabilities were higher in 1992 compared to the other years, while their taxes and income both reduced. There is a significant decrease in the profit over the years.

Exhibit 5 indicates Matsushita sales by product category and region. It is apparent that most percentage is allocated in communication and industrial equipment and least is allocated in batteries and appliance. The region that is concentrated in Japan and other countries and japan is where Matsushita sells more.

Exhibit 6 shows MCA income statement for the year 1994 in $million. The total revenue in $5,571 million and their total earnings is $533 million.

Exhibit 7 shows the Du Pont financial information in US $000,000,000 for the years 1991 till 1994. The current year holds the maximum income compared to the other years. The earning per share is higher in 1994 and during 1992 the value was negative. The number of employees used now is lower that the number of employees used in previous years. There was a fluctuation in the total current asset where in the year 1992 it was seen at its highest.

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