inorganic growth-is it the right strategic move for (1)
TRANSCRIPT
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INORGANIC GROWTH-ISIT THE RIGHT STRATEGIC
MOVE FOR INDIAN
BUSINESSES
SUBMITTED BY:Shalini Prabha
Shallu DhirShubha DixitSukhwinder Singh
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CONTENTS
INTRODUCTION
MEANING
INORGANIC GROWTH STRATEGIES
MERGER
JOINT VENTURE
SUCCESSFUL MERGERS IN INDIABENEFITS
CONCLUSION
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INTRODUCTION
LPG 1991
BUSINESS ENVIRONMENT
POST LIBERALISATION
WHETHER MERGERS & ACQUISITIONSPAY?
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MEANING OF INORGANIC
GROWTHInorganic Growth means that thecompany has grown by merger,acquisitions or takeover.
Inorganic growth is attained when acompany acquires a technologydeveloping company in order to enhanceits competitive advantage and growth rateand is also known as External Growth
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STRATEGIES OF INORGANICGROWTH
External growth has been attempted bythe business houses through the twostrategies
mergers and acquisitions
joint ventures.
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MERGER
Merger is an external growth strategy.When different companies combinetogether into new corporate
organizations, such a process is known asmergers. Merger can occur in two ways:
Acquisition or takeover and
amalgamation.
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PHASES
PRE MERGER PHASE
Financial position oftransferor company
Market Value
Brand Value
Communication Issues
Share Holders & other
stake holders view
ACQUISITION PHASE
Cost of merger &
acquisitionMaintenance of
customer
relationships duringintegration phase
Knowledge transferamong units that are to be
integrated
POST MERGER PHASE
Corporate culture
Existing value systems
Staff qualification
Stress Management
Technology
HR Policy
Leadership styles
Core competencies
Post Integration
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JOINT VENTURE
When two or more firms mutually decideto establish a new enterprise byparticipating in equity capital and in
business operations, it is known as jointventure.
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SUCCESSFUL MERGERS ININDIA
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TATA CHEMICALS TOOK OVERBRITISH SALT
Tata Chemicals took over British saltbased in UK with a deal of US $ 13 billion.
This is one of the most successful recentmergers and acquisitions 2010 that madeTata even more powerful with a strongaccess to British Salt's facilities that areknown to produce about 800,000 tons ofpure white salt annually.
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RELIANCE POWER AND RELIANCENATURAL RESOURCES
Merger of Reliance Power and RelianceNatural Resources with a deal of US $11billion is another biggest deal in the
Indian industry. This merger between thetwo made it convenient and easy for theReliance power to handle all its powerprojects as it now enjoys easy availability
of natural gas.
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AIRTEL ACQUIRED ZAIN
Airtel acquired Zain in Africa with anamount of US $ 10.7 billion to set newbenchmarks in the telecom industry. Zain
is known to be the third largest player inAfrica and being acquired by Airtel it isdeliberately increasing its base in theinternational market.
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ICICI BANK ACQUIRED BANK OFRAJASTHAN
ICICI Bank's acquisition of Bank ofRajasthan at aout Rs 3000 Crore is agreat move by ICICI to enhance its
market share across the Indianboundaries especially in northern andwestern regions.
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FORTIS HEALTHCARE ACQUIRED
HONG KONGS QUALITYHEALTHCARE ASIA Ltd
Fortis Healthcare acquired Hong Kong's
Quality Healthcare Asia Ltd for around Rs882 Crore and is now on move to acquirethe largest dental service provider inAustralia, the Dental Corp at about Rs 450
Crore.
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BENEFITS TO BUSINESS
Helps reduce competition in the marketplace
Instantly adds new brands andproduct/service lines to the acquiring
companyProvides access to fresh customer base and
adds new geographical locations In many cases, an established marketing
channel also becomes availableEconomies of scale are achieved over a
period of time.A fresh breath of management skills
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CONCLUSION
A firm desiring immediate growth andquick returns mergers and takeoverafford attractive opportunities as they
obviate the necessity of starting fromscratch. However, identifying the rightcandidate for merger or acquisition is anart at which only a few managements can
really excel.
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Establishing joint venture, especially in
the international arena, is a low risk
alternative. Many firms prefer thisapproach.
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THANK YOU