Assignment 8 : After reading Chapter 13 in the text, it is time to do some MBA-level thinking. Suppose you received a call from Martha Stewart. She tells you that she needs your advice. You are after all a smart MBA student. Ms. Stewart is concerned that several of her products – notably her detergent product – has received pretty negative reviews by Consumer Reports and others. She says she thought about withdrawing her name, even suing the company. But, now she is thinking it might be better to do something about the product or about how her name is used in reference to the product. Write a brief response (400 – 600 words) on the most critical Mergers and Acquisitions concept revealed in Ms. Stewart’s current situation.
I would like to highly recommend strategic alliance. There are some reasons to avoid other strategy.
First, mergers and acquisition is too expensive and she doesn’t need to buy the whole company to improve just a part of products. Actually, there would be some difficulties to improve products which is under control of other management even if it is her bland products but it seems that there is already existing strong relationship between Martha Stewart and the management regarding her name on product. It very looks like strategic alliance. However, there is also some reason she can’t control the management.
Secondly, joint venture strategy is also too costly. At this time, we are not going to develop R&D and estimate long term both company’s future cash flow and we are not going to improve distribution system or global network access. Joint venture is too big for her to improve just a part of her product even if she used to succeed in a various kind of investment as venture capitalist.
Finally, she would choose strategic alliance. This is not costly but this needs strong reliance between the relationships. I also recommend she should engage in strategic alliance position because she has a lot of experience of analyzing company’s condition. She will flow her question which is “how her name is used in reference to the product” as alliance knowledge. This is a just advice and we are not sure for this is unlawful or not. However, it will be regarded as alliance strategy from the point of view of many marketers.
However, if they refuse her proposal, she could conduct M&A such as hostile TOB. Her products and managerial methods would be Crown Jewel for the target and this is not bad idea for her to reorganize company because the target company’s revenue is actually gone down and there are some possibilities of bankrupt or liquidation. If it occurs, it would hurt her brand equity. However, the target is able to escape this M&A by separating the Crown Jewel or using poison pill. According to her carrier, M&A would be tough so I think she should insist her rights from the point of view of patent, license, copyright and so on.
He is always funny Japanese 