Analysis of a Mapping Programme: Neogeography

Introduction Neogeography, literally intending â€Å"new geography† is basically a â€Å"do-it-yourself† function scheduling, which is going progressively popular and powerful today ( Wikipedia.org ) . In the past, making maps online was left to the GIS specializers who knew the art and linguistic communication of GIS ( C. Morais, 2007 ) . Neogeography, on the other manus can be used by virtually anyone with no expertness or makings required in function, because of this some respect neogeography to be a subset of GIS, while others consider neogeography to hold killed GIS ( A. Turner, 2006 ) . Neogeography is fun as one can make things such as portion the location of their first buss, or vacation, ne'er once more will one battle to retrieve where a exposure was taken ( A. Turner, 2006 ) . In a nutshell, neogeography is all about people utilizing and making their ain maps, sharing information and locations with household and friends every bit good as geotagging images of vacations, wh ile obtaining utile penetration of that location. Neogeography Geocoding is of import in neogeography as they provide co-ordinates of a location, which can so be processed ( A. Turner, 2006 ) . For illustration, when users post a image to applications such as Facebook or Instagram, it besides lets them label the location where the image was taken and therefore, cognition is gained in this manner. Some illustrations of neogeography is Google Maps, Google Earth, Yelp, SaveMe999, OneMap, OpenStreetMap, UCrime among others ( A. Coote and L. Rackham, 2008 ) . While each of these have their utility, neogeography besides comes with the power to destruct. Neogeography-hit or lose? The advantages of neogeography is legion and each neogeography application has its ain specific power that makes a user’s life easier. For illustration, the SaveMe999 application designed in Malaysia, specifically to turn to the handicapped community particularly the deaf and deaf-and-dumb person ( R. Anas, 2013 ) . Undoubtedly, this is a great advantage to the handicapped citizens, as SaveMe999 uses â€Å"GPS information in the users’ smartphone to place the caller’s location† when they call and therefore assist can be sent to the right reference as location is one of the most of import facets in directing an exigency response ( R. Anas, 2013 ) . Disabled people can hence be more independent, every bit good as feel more safe and secure. Google Maps and Google Earth is another great illustration of neogeography. Google Maps is utile such that it shows waies from one location to another, either by auto, motorcycle or walking by demoing the relevant street maps. It besides shows the expected clip that it will take the user to make their finish and one of the most utile characteristic of the Google map is that it can be viewed in three different manners: terrain, a normal map position and orbiter position ( M. Cornock, 2011 ) . One can besides custom-make their ain maps in Google maps which can be saved, loaded or printed out at any clip ( L. Storm, 2007 ) . Google Maps, nevertheless, promotes communicating isolation, as before Google Maps verbal waies was an of import accomplishment to possess and understand but with the enlargement and turning popularity of Google Maps verbal waies are deceasing out ( L.Storm, 2007 ) . Google Earth meanwhile, shows orbiter and aerial imagination of the specified location in 3D. This is used for many positive effects. For illustration, the World Wide Fund uses it to protect the Sumatran Liberation Tigers of Tamil Eelams, alleviation workers uses it for crisis response after natural catastrophe, and it is besides used for environmental issues such as pollution. Possibly, the finest illustration of how Google Maps and Google Earth came to assist an environmental issue is the instance of the Appalachian Mountaintop remotion, in which excavation companies removed the tops of mountains in order to mine for coal. By utilizing Google Earth and Google Maps conservationists were able to analyze the graduated table of a really dramatic environmental job and was besides able to pass on this issue to the people in the community who so took action to protect their mountains ( Google Earth Outreach, 2010 ) . â€Å"In the 10 yearss following the release of the Appalachian Mountaintop Removal bed in Google Earth, more than 13,000 people signed an on-line request to halt mountaintop removal† ( Google Earth Outreach, 2010 ) . Therefore, it can be seen how Google Map and Google Earth is used for positive impacts. However, Google Earth and Google maps can be misused. One of the most concerning factors is privacy and security, the fact that anyone can happen anything is rather dismaying particularly for safety grounds. Other disadvantage of Google Earth and Google Map include ; inaccuracy of information, unavailability as users need right Personal computer demands and cyberspace, less developed states are ill represented every bit good ( S. Myer, 2010 ) . Furthermore, satellite imagination can capture images that are non delighting to the oculus such as force or war. UCrime.com is a free online service that provides easy to read offense maps and have automatic qui vives for people that attend universities or montages ( A. Coote and L. Rackman, 2008 ) .Users so receive immediate electronic mails if a offense has occurred near a selected college or university and in this manner there is public safety, besides users can supply tips and thoughts to assist work out offense in the country in which they operate in ( A. Coote and L. Rackman, 2008 ) . Some general advantages neogeography has to a user are ; it helps users locate topographic points based on other peoples stations, it besides increases consciousness of geographics since anyone can larn how to utilize and make their ain maps, moreover, neogeography allows everyone to lend to the development of the digital universe and immense sums of informations and information is made available by users ( A. Schuyler, 2009 ) . Using neogeography saves clip and money for concerns and organisations and eventually, possibly the greatest advantage of neogeography is that anyone can make maps, they do non necessitate to hold makings or be a professional in function. On the other manus, there are besides several disadvantages in neogeography and one of the biggest menace of neogeography is its informations quality: its truth, completeness, consistence, and quality confidence ( A. Coote and L. Rackham, 2008 ) . Since users create the maps the information might be wrong and undependable, this can severe effects, for illustration when be aftering a holiday. Besides, when making the maps the Godheads can either add excessively much unneeded information or possibly excessively small, lending to the deficiency of completeness of the information ( A. Coote and L. Rackham, 2008 ) . Neogeographic datasets makes small mention to quality confidence, some maps created utilizing neogeography have no 1 to supervise the quality and dependability of the maps ( A. Coote and L. Rackham, 2008 ) . Security and privateness as discussed before is another disadvantage, as sometimes it so happens that when users create the maps, they may roll up informations from privat e locations which the proprietors might dislike. Finally, the enlargement of the digital universe could intend less geographic expedition in the existent universe, people might worsen in sing things foremost manus as they can research topographic points online in neogeography and therefore, people may bit by bit go stray from the existent universe. Decision In decision, neogeography, if non exploited helps us a great trade and the hereafter of neogeography is in our custodies and we have a opportunity to utilize it or misapply that power. Reference ListAndrew Coote and Les Rackham. ( 2008 ) . Neogeography data quality-is it an issue? [ ONLINE ] Available at: hypertext transfer protocol: //www.consultingwhere.com/wpcontent/uploads/resources/Neogeography+Data+Quality+-+is+it+an+issue+-+V1_1.pdf. [ Accessed 28ThursdayFebruary 15 ]Andrew J. Turner. ( 2006 ) Introduction to Neogeography. O'Reilly Media, Inc. pp. 2Caitlin Dempsey Morais. 2007. Neogeography. [ ONLINE ] Available at: hypertext transfer protocol: //www.gislounge.com/neogeography/.[ Accessed 03 March 15 ] .Earth Outreach. ( 2009 ) . Appalachian Mountaintop Removal in Google Earth & A ; Maps. [ Online Video ] . 07 May 2009. Available from: hypertext transfer protocol: //www.youtube.com/watch? v=aiSzOiGFa-0.[ Accessed: 19 February 15 ] .Google Outreach. 2010. Appalachian Voices. [ ONLINE ] Available at: hypertext transfer protocol: //www.google.co.za/earth/outreach/stories/appvoices.html. [ Accessed 19 February 15 ] .Laurel Storm. 2011. Disadvantages & A ; Advant ages of Using Google Maps Website. [ ONLINE ] Available at: hypertext transfer protocol: //science.opposingviews.com/disadvantages-advantages-using-google-maps-website-1538.html. [ Accessed 04 March 15 ] .Rozinah Anas. ( 2013 ) . SAVEME999 Application-Asia Geospatial Forum. [ ONLINE ] Available at: www.asiageospatialforum.org/2013/pdf/Rozinah % 20Anas.pps. [ Accessed 27ThursdayMarch ] .

Unit 10 Study Guide

Lymphatic system study guide- complete after listening to lecture and reviewing the vocabulary. 1. This receives lymph from the rest of the body. The thoracic duct receives lymph from the rest of the body. 2. Small masses lf lymphatic tissue that rings the pharynx in the throat. Tonsils ring the pharynx in the throat. 3. This is literally a ‘eating cell’ such as macrophages and neutrophils. Phagocytic cells are ‘eating cells’. 4. What is a substance capable of exciting our immune system and provoking an immune response?An antigen provokes an immune response in the body, but they are excited by pathogens. 5. Later immune responses which are much faster, more prolonged, and more effective are called active immunity responses. 6. This contains dead or weakened viruses injected to initiate active immunity. A vaccine is an injection with dead or weakened viruses to bolster the body’s immunity to the foreign virus. 7. T cells that remain behind after an inf ection to provide immunological memory are called memory cells. . A bodywide, acute, allergic response that is fairly rare is called anaphylactic shock. 9. What is it called when the body produces antibodies and sensitized T cells that attack and damage its own tissues? An autoimmune disorder is when the body in essence attacks itself. 10. Tissue grafts taken from unrelated persons are called allografts. 11. Small proteins that diffuse to nearby cells and bind to their membrane receptors are called interferons. 2. Antibodies are also referred to as immunoglobulins or IGS and constitute the gamma globulin part of blood proteins and are formed in response to an antigen. 13. Excess tissue fluid that is picked up and returned to the blood stream by vessels is called lymph capillaries. 14. Complement refers to a group of 20 plasma proteins that circulate in the blood at an inactive site that becomes active when it becomes attached to a foreign cell.

Ibm Risk Analysis

Relative Size in the Industry IBM is part of the technology sectors in the diversified computer systems industry (IBM: Summary for International Business Machines- Yahoo! Finance). The market cap is 254 billion with IBM making up 218. 6 billion. IBM is the largest company relative to the diversified computer systems industry. In a less specific industry of computers IBM only trails Microsoft Corporation by 12 billion dollars (â€Å"International Business Machines Corp. â€Å").Because of IBM’s large size relative to its industry the relative size does not pose a large business risk to IBM because they can leverage their large market share, capabilities, and achieve economies of scales. Acceptable audit risk is affected by the relative size of IBM in the industry it operates. IBM is a large global corporation and thus there are a very large number of financial statement users. The large number of financial statement users causes the auditors to set acceptable audit risk at a lower number and thus lowering planned detection risk and increasing the amount of evidence that must be accumulated.Major Competitors IBM’s major competitors in the diversified computer systems industry are Hewlett Packard Company Common, Teradata Corporation, Cray Inc. , and Silicon Graphics International (IBM: Summary for International Business Machines- Yahoo! Finance). These competitors do not pose a large risk to IBM because they have much smaller market-shares than IBM Hewlett Packard Company Common IBM’s closest competitor only has a market capitalization of 24. 4 billion and the next closes which is Teradata Corporation only has a market cap of 10. billion (IBM: Summary for International Business Machines- Yahoo! Finance). In the computer industry IBM’s major competitors are Microsoft, Apple, Oracle, Cisco Systems, and Intel Corporation (â€Å"International Business Machines Corp. â€Å") IBM due to operating in over 170 different countries in multipl e different industry segments and competitors vary by segment from large international enterprises to smaller narrowly focused entities and thus IBM recognizes 100s of competitors (International Business Machines Corporation 2011).Intense competition regardless of IBM being a leader in almost all segments however does increase risks for IBM such as price competition which lowers gross margin ratios, losing market share, and obsolescence of current products. IBM’s major competitors by business segment are discussed in the next section. Major Products & Competition by Product IBM’s major business segments are Global Technology Services, Global Business Services, Software, Systems and Technology, and Global Financing.Global Technology Services includes strategic Information Technology outsourcing services to transform clients existing infrastructures, global process services which includes process platforms and business process outsourcing, integrated technology services which are a project based portfolio of services to optimize IT which is built around key assets and patented software to drive efficiency, flexibility, productivity, and reduce costs, and the GTS services delivery which is responsibly or delivery of IBM technology worldwide. International Business Machines Corporation 2011) Global Business Services provides consulting and system integration which bring value to the customer by improving strategy and transformation, application innovation services, enterprise application, and business analytics and optimization. Global Business Services also includes application management services which provide assistance in application development, management, maintenance and support for software and custom and legacy applications. International Business Machines Corporation 2011) IBM faces major competition in the global services segments global technology services and global business services from the broad based competitors Accenture, Computer S ciences Corporation, Fujitsu and Hewlett-Packard Company. IBM also competes with India-based service providers, public accounting firms providing consulting services, and companies that focus on local market and niche service areas. International Business Machines Corporation 2011) IBMs software segment includes the sale of middleware software which enables clients to integrate systems, processes, and applications across a standard software platform. Operating systems are the software engines that run computers. Two thirds of the revenue from software is from annuity based recurring license charges and ongoing subscription and support.One third of the revenue comes from one time charge arrangements where customers pay up front for a license which is typically from one year of subscription and support but they can purchase subscriptions and support after the first year. Software offerings include information management software, trivoli software, lotus software, rational software, se curity systems software and operating systems. This segment is in a highly competitive market and the companies main competitors are CA. Inc. , Microsoft Corporation and Oracle Corporation. International Business Machines Corporation 2011) The IBM systems System Z, Power Systems, and System X range from general purpose and integrated systems designed and optimized for specific business, public, and scientific computing needs and form the foundation for IBM’s integrated offerings. Storage includes data storage products and solutions to help clients retain and manage complex volumes or rapidly growing digital information. They address vitally important issues such as security, compliance, storage optimization, and retention and archiving, availability, etc.Retail store solutions include Point-of Sales and self-service systems and include hardware, software and services. Lastly microelectronics include semiconductor design and manufacturing primarily for use in IBM systems. In s ystems and technology IBM’s major competitors are Cisco, Dell, HP, Oracle, and EMC Corporation. (International Business Machines Corporation 2011) Global Financing facilitates customers acquisition of IBM systems, software and services and includes client financing, commercial financing, and remanufacturing and remarketing.Client financing includes lease and loan financing to end users and internal clients with terms between 1 and 7 years. Internal financing supports long term client service contracts in the Global Services department and Global financing also factors a portion of the company’s accounts receivable. Commercial financing includes short term inventory and accounts receivable financing to dealers and remarketers of IT products. Remanufacturing and Remarketing includes equipment which is returned at the conclusion of a lease contract which is they sold or leased to another client internally or externally.The company competes with Cisco HP and non-captive fi nancing entities of companies like General Electric and banks and financial institutions and in remarketing the company competes with local and regional brokers and original manufacturers. (International Business Machines Corporation 2011) The nature of IBM’s products and the intense competition in all its business segments causes many risks on the audit as a whole and the audit of specific accounts.The overall audit risks because there are many inherent risks associated with intensely competitive environments which can cause products to become obsolete, loss in market share and lowering gross margin, and the inherent risks associated with financing. One particular account that is affected by this is inventory which should be checked for realizable value and possible obsolescence. The software and services that are provided to customers are highly complicated and are bundled together and thus sales and accounts receivable should be checked for proper classification and timing .Global financing poses many risks to IBM because of its exposure to the risk of economic downturns and the tightening of credit spreads and also there is a risk that the clients they provide financing for will not be able to meet contractual obligations and or default on payments. With global financing the auditors must make sure that leasing arrangements are properly accounted for and that the appropriate presentation and disclosures are included in the notes to the financial statements.For leases the audit objectives of classification, accuracy, and realizable value are of particular importance. Major Customers No clients represent more than 10% of the company’s revenue so lack of major customers reduces risk. (International Business Machines Corporation 2011). Having major customers could be risky because losing the major customer could have a large impact on sales; also having major customers could allow those customers to have bargaining power over IBM.IBM while it does not have any major customers it is overly dependent on the geographic region of the Americas for revenue. In 2011 the Americas were the source of 43. 1% of the total geographic revenue. (â€Å"International Business Machines Corporation- Financial and Strategic Analysis Review. â€Å") This over dependence on the Americas could cause substantial business risk due to the economic downturn in the Americas and if conditions were to become adverse and or demand were to decline this could hurt the business. â€Å"International Business Machines Corporation- Financial and Strategic Analysis Review. â€Å") Locations IBM operates in over 170 different countries and one of its major strategies is to expand into emerging markets. IBM’s major markets are Canada, France, Germany, Italy, Japan, the United States, the UK, the Bahamas, Belgium, the Caribbean, Cyprus, Denmark, Finland, Greece, Iceland, Ireland, Israel, Malta, the Netherlands, Norway, Portugal, Spain, Sweden and Switzer land (International Business Machines Corporation 2011).The emerging markets that IBM is focusing on which have higher market growth rates than the global average are countries in Southeast Asia, Eastern Europe, the Middle East and Latin America (International Business Machines Corporation 2011). This causes substantial risk for the company because each country is going to have different laws to which IBM must comply with or face possible law suits.The fluctuations in different currencies can cause a lot of risk to IBM because the value of revenue in certain countries could decrease substantially and they also must value the different currencies in US dollars for the financial statements. Other risks for companies that operate internationally include acquiring export licenses, laws and business practices that favor local businesses, trade restrictions, duties and tariffs, and the risk of not accounting for taxes correctly in the multiple jurisdictions that the company operates in.IB M operating in over 170 companies and is looking to expand into other emerging markets causes a substantial amount of risk for the company and should be considered when conducting the audit. First it affects the audit as a whole because the inherent risk and therefore risk of material misstatement is increased because of IBM’s international operations. Specific accounts and or assertions that are affected by this risk would be sales. Sales should be checked to make sure that the values are accurate and that the appropriate currency conversion rates were applied when changing foreign currency to US dollars.Another balance related audit objective would be accuracy and classification related to taxes payable and tax expense because tax laws are highly complex and the company would owe taxes to multiple local, state, and federal jurisdictions due to global operations. Another audit objective that should be checked would be that all necessary disclosures regarding law suits and ot her contingencies related to foreign operations are present in the notes to the financial statements and thus satisfy the completeness audit objective and the accuracy and valuation objectives in the presentation and disclosure-related udit objectives. Impact of Technology on Business Operations IBM is part of the technology sector and thus the impact of technology on the business operations of IBM is huge. In IBM’s business of being a computer and software manufacturer and service provider the pace of technological change is extremely rapid. IBM in order to be competitive with other major companies in the industry must be a leader in innovation and constantly be developing new products and capabilities to be competitive with other companies also trying to provide similar services in the same sector.Due to the rapid change in technology IBM must invest heavily in research and development which it does with annual expenses of approximately 6. 258 billion dollars, 5. 99 billion was for scientific research and application of scientific advances for new and improved products, their uses, and also services and their applications and the other 267 million was for product engineering (International Business Machines Corporation 2011).This investment in research and development is necessary but still has inherent risks because if competitors are able to come out with similar products to IBM’s products before IBM then they could lose a substantial amount of market share also the research and development process itself is a long and risky process because it may or may not result in a marketable product with sufficient consumer demand. Rapid technological change also has the inherent risks of causing IBM’s inventory to become out- dated and thus obsolete.Rapid technological change also affects the business operations of IBM because IBM will have a lot of intellectual property as a part of their assets on the balance sheet. In 2011 alone IBM was award ed 6,180 patents and in the last 19 years IBM has been awarded 47,000 patents and been the leader in receiving patents (â€Å"International Business Machines Corporation- Financial and Strategic Analysis Review. â€Å") There is a risk that IBM won’t value these intangible items properly and thus cause misstatements in the financial statements.Rapid technological change has the overall effect on the audit of increasing the amount of inherent risk in such accounts as intangible assets, and also research and development expenses. Specifically the audit of intangible assets will be affected because the auditor must pay specific attention to the valuation and allocation assertion and make sure that the intangible assets are valued at the correct amounts and that any necessary adjustments to the value of the intangible assets is made. Another balance related objective they should make sure the client satisfies is rights and obligations.The auditor should make sure that the clien t has the right to this intellectual property which can be satisfied by checking the related patents. The other account that must receive special attention is research and development. The auditor needs to make sure that all research and development is being expensed and is not capitalized and thus the classification of transactions related to research and development are properly classified as expenses and that related product expenses are only capitalized once the product has hit the market. Special Accounting PracticesIBM is affected by special accounting principles for revenue recognition. Revenue recognition for software vendors can be extremely complex and one of the complexities for software vendors is for multiple-deliverable revenue arrangements. Software vendors are able to account for individual products and services that are bundled together as a package separately if they can make a best estimate of each items fair value selling price. Companies must come up with vendor specific objective evidence (VSOE) of the fair value in order to account for them separately.If VSOE exists for undelivered items but not for delivered items the company uses the residual method but if VSOE of fair value doesn’t exist for the undelivered items then revenue cannot be recognized until VSOE of fair value does exist or all items have been delivered. Other issues that complicate revenue recognition for software companies such as IBM are whether or not new products are more than minimally different from existing products or whether it is just an upgrade.If an arrangement does include the right to an upgrade it must be determined whether the right is specified and whether VSOE of fair value can be determined or if it is unspecified and just included in PCS. Lastly if the company makes price concessions those must be analyzed to see whether they are stand-alone concessions or whether they expect to make similar price concessions to other customers because this could have a large effect on the realizable value of accounts receivable and the appropriate numbers to report in sales. (Triplett & Miller)The complexity of multiple deliverable revenue arrangements has a large impact on the audit. First and foremost the complexity of these accounting rules causes a large increase in the inherent risk. Specific audit objectives which are affected by these risks would be the realizable value of accounts receivable, the accuracy of sales, and the timing of revenue recognition in the sales cycle. If the company commonly makes price concessions then the realizable value of accounts receivable could be over-valued unless the company makes reasonable estimates of this and recognizes it with the original sales.Sales could be over or under valued if the VSOE of fair value is not accurate and the auditors must check that there is substantial evidence to support the prices the vendors come up with. Lastly the timing of sales could be greatly affected by these acc ounting principles because if VSOE of fair value cannot be established then revenue recognition must be delayed until all items in the arrangement are delivered. Works Cited â€Å"Diversified Computer Systems Overview: Industry Center – Yahoo!Finance. †Ã‚  Diversified Computer Systems Overview: Industry Center – Yahoo! Finance. Yahoo, 2012. Web. 30 Nov. 2012. . â€Å"FASB Accounting Standards Update Number 2011-02. †Ã‚  FASB. org. Financial Accounting Standards Board of the Financial Accounting Foundation, Apr. 2011. Web. 30 Nov. 2012. . â€Å"IBM: Summary for International Business Machines- Yahoo! Finance. †Ã‚  Yahoo! Finance. Yahoo, 2012. Web. 0 Nov. 2012. http://finance. yahoo. com/q? s=IBM â€Å"International Business Machines Corp. †Ã‚  International Business Machines Corp. : NYSE:IBM Quotes & News – Google Finance. Google, 2012. Web. 30 Nov. 2012. . International Business Machines Corporation (2011). 10-K Annual Report 2011. Re trieved from SEC EDGAR website  http://www. sec. gov/edgar. shtml â€Å"International Business Machines Corporation- Financial and Strategic Analysis Review. † Global

Managing Competing Agendas Assignment Example | Topics and Well Written Essays - 1000 words

Managing Competing Agendas - Assignment Example incipal information officer who drives this objective by managing the development and execution of an initiative -level information technology framework (Corbett &Kappagoda, 2013). Health and Human Services Department is committed to ensuring efficient and effective management concerning the information resources that are meant to support the public health vision and mission, human service program, and the U.S. health system. In addition to overseeing the department, the chief information officer is responsible for designing the its policy outline for information technology, including areas such as enterprise architecture, investment planning, accessibility, security and privacy, and records management (Venkatesh, Hoehle, &Aljafari, 2014). For instance, the security field has a strong framework, which incorporates the Federal Information Security and Management Act of 2002 (FISMA), technology guidance on safety and privacy that remains to be covered in the policies of the department. The Department of Information Technology is sizable and comprises support for many grant programs that provide information technology resources to local, state, and tribal governments with an aim to support the plans administered by Health and Human Services Department (Venkatesh, Hoehle, &Aljafari, 2014). The Department’s group also encourages everything from public and commodity information technology matters such as human resources, accounting systems and email, to the duty systems which allows research at the National Institutes of Health, Directive of Drugs, and strategies for the Food and Drug Administration. Health and Human Services Department is responsible for various sets of missions. Its operating divisions comprise of the administration for kids and families, the management for community living, the management for health examination and quality, various Centers for Medicare and Medicaid Services (CMS), the Nutrition and Drug Management. The information technology

Group types and group characteristics Essay Example | Topics and Well Written Essays - 1250 words

Group types and group characteristics - Essay Example However, not all groups are formally authorized by the management. Nevertheless, well-managed groups can mean the difference between successful and unsuccessful organizations. According to Robbins and Coulter (2002), most teams are either, temporary or permanent, functional or cross-functional, and self-managed or supervised. Primarily, groups are mainly classified into formal and informal groups. Formal groups and teams are those that are created by managers (Jones and George 2009, 599). These include top-management teams, cross-functional teams, self-managed work teams, command groups, cross-cultural teams, task forces, virtual teams, and project teams. Informal groups are those that may be created organizational members. Informal groups like friendship groups and special interest groups, however, serve more of a social and recreational purpose (DuBrin 2012, 471). The top management team is a sort of cross-functional team that consists of members from each of the functional units or departments from across the organization, including finance, human resource, marketing, and so on. Cross-functional teams contain specialized members from each functional unit, who work together on a variety of tasks. Cross-functional teams may be assigned for a particular process that requires members from different areas of expertise. Self-managed work teams are formally recognized and consist of team members, generally employees, who are responsible for an entire project such as product or service development. Self-managed work teams are based around the concept of job enrichment which is why self-managed work teams are characterized by greater control and autonomy over their tasks and duties. Self-managed work teams also include self-directed teams and work teams (DuBrin 2012, 471). Members of a self-managed work team work together on an ongoing basis as opposed to members on a task force. Members are usually led by a team leader who is

Technology is Bad for Us Essay Example | Topics and Well Written Essays - 1500 words

Technology is Bad for Us - Essay Example Advancements in technology have made many changes in life. It has made the life of people much easier than before. The benefits of these technological advancements are not limited to a single field of life but these changes have brought a complete alteration in lives of people. This paper discusses the useful and harmful effects of some of these technological advancements on our lives. The most common blessing of continuously developing technology is computer; computers have made the life of individuals easier than before. They are used not only in businesses but also in other fields of life. Computers are used in education and made it easier for the students to carry out information about any topic easily. The use of computer and internet has made it easier for businesses and to gather data and information. People are now also free to transfer useful information to each other using this advancement of technology. Hospitals, railway stations, schools, colleges, airports, businesses a re all kind of depended on computers these days. I. Drawbacks of Common technologies like Computers A. I believe that the drawbacks associated with computers include the time that students and young generation waste playing games, chatting, listening to music and net surfing. B. In addition, the continuously changing software has made it impossible for older employees to continue working with the new technological advancements at their work places. This factor has led to an increase in unemployment. However, there is a technique available to solve this issue which involves the participation of employees in training programs but it would lead to higher costs for the businesses. The security issues that are link to the data stored in computers are also counted as a drawback of computers (Fisher & Lezion 2009). II. Benefits of Common Technologies like Cell phones A. Cell phones are one of the fastest ways of communication today. They have brought a great change in the communication mea ns. People are now able to communicate each other from any part of the world. The benefit of the cell phones is that it is faster than other communication mediums and is available for the users all the time regardless of the days. B. My point accompanied by various researches, however, cannot be ignored. People often misuse cell phones. Younger generation wastes hours talking with friends mostly on useless topics. This does not only waste their time but also cost them in monetary terms. People also use it to send messages which include some disgracing jokes about religions, races and cultures. This fact is creating distances among the people and is posing a threat to the overall peace among the people belonging to different backgrounds (Castells 2007). III. Technology, People and the Environment A. Automobiles are an effective mode of transport in the world today. These automobiles have really made journeys and transportation easy. Because of it the distances previously travelled in weeks are reduced to a single day or even hours. Not only this, automobiles also have a proper setup the individuals travelling in it. This setup consists of seats and air-conditioning systems. Because of these factors automobiles also provide a comfortable environment. Thus, they are really effective for transportation and travelling purposes. B. However, on the other hand, I argue that automobiles also have their bad effects. Firstly, most of the automobiles designed in the world consume fuel so that they can work. The fuel which is used by it is scarce and thus the usage of fuel is causing scarcity of important resources of this world. Moreover, automobiles also release different harmful gases in this world which can cause global warming to increase. For example it releases Carbon Dioxide. This gas constitutes an important part of the global warming. Not only this, the gases also have a toxic effect on the body of a human being. Thus automobiles have their own share of bad effec ts too (Alters 1999 p 837). IV. Technology Helps in Building and

Maritime Commerce Essay Example | Topics and Well Written Essays - 2750 words

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Right to Refuse Treatment Research Paper Example | Topics and Well Written Essays - 1500 words

Right to Refuse Treatment - Research Paper Example The right to refuse treatment is now well established for some kinds of patients, especially in cases of psychiatric treatment. Different states have adopted various procedures of addressing the right to refuse treatment and for the overriding of this refusal. Oregon's administrative procedure for override depends on an evaluation by an independent examining psychiatrist. Every state has laws governing the right to refuse medical treatment and advance directives about this right. It is essential for nurses to ensure that they are familiar with the legislations of their state. There is a complex relationship between the right to refuse treatment and the right to treatment. The Right to refuse treatment includes the right to refuse involuntary hospitalization. (Godard, Bloom, Williams, and Faulkner, 1998) More often than not, Nurses find themselves in the front line when the situation arises to deal with patients that refuse medication or treatment. Evidently, a voluntary patient has the right to refuse treatment and must not be treated against his or her consent, with the exception being in situations in which the patient becomes actively to others or to himself. The right to refuse treatment is closely related to the rights of the Mentally Disabled Persons, and every Nurse is required to be familiar with the guidelines laid down in the laws of the State in which they practice, so that they can administer medications properly to committed patients as well involuntary patients. Within the last 30 years, there has been a shift in opinion concerning patients’ right to make their own medical treatment decisions.

Health Physiology Essay Example | Topics and Well Written Essays - 1000 words

Health Physiology - Essay Example It gives the exerciser freedom to reach their physical activity goals through different types and amount of activities each week. Moreover, the general suggestion for maintaining health and preventing diseases is doing at least 150 minutes of moderate physical activity per week. How regularly one does exercise is a vital aspect of fitness in order to stay healthy and with continued progress. This prescription often starts with 2 to 3 times a week and progress to 4 to 5 times per week. Depending on the current fitness level and the exercise history, the prescription may possibly start with as little as ten minutes of steady exercise and build upwards. Preferably, you will strive for a minimum of 20 to 60 minutes of regular exercises about three times a week. The intensity of the exercise prescription may be the most important aspect of an efficient, safe and fun program. Because every person responds differently to exercises and finding the right intensity and balance between effort and rest is critical, this is where skills of the specialist are put to test. But mostly, exercise program will usually follow a similar order, but this varies depending upon your training goals. All programs will begin with a warm up and end with a cool down and stretching. A go od exercise prescription is adjustable and flexible and can be modified frequently and easily while still moving you towards your goals. Adjustments are a steady and ongoing part of exercise prescription for the rest of your life. You will find that you need to constantly change your routine, try new activities; take breaks increase and decrease your time and intensity over the years. A huge part of exercise prescription is what type of exercise you will do. A good prescription will include a range of exercises and a balanced practice to build core strength, flexibility and endurance and base fitness first and then become much more

Different elements of a contract Assignment Example | Topics and Well Written Essays - 500 words

Different elements of a contract - Assignment Example The next element of a contract is the acceptance. An acceptance is â€Å"an expression of absolute and unconditional agreement to all the terms set out in the offer. It can be oral or in writing. The acceptance must exactly mirror the original offer made†(Smithies, 2007). The offer should be accepted without any conditions. If there are any changes, modifications or additions in the original offer made, it is considered as a counter-offer which must also be accepted by the offeror. A counter-offer cannot be considered as an acceptance. An example of this is when the offer price for a car is $20,000 and the offerer gets back at the offeror and asks that the price instead be $18,500. The legal consideration is that thing of value which the parties to a contract must receive(Smithies, 2007). A contract will only be binding if it is supported by something of value. For a contract to be valid, the persons entering into a contract should have the legal capacity to do so. This means that they should not have any mental impairment; they must be of legal age, i.e. they are not minors and must not be prisoners(Fitzroy Legal Service Inc., 2010). For example, a person who is suffering from autism cannot enter into a contract with another person because of his mental impairment. He might be entering into an agreement which he does not fully understand, which is not fair for him and the other party.

Case Study Analysis Paper Example | Topics and Well Written Essays - 1000 words - 1

Analysis Paper - Case Study Example The fact is that the summer is approaching and Arthur does not have a reliable pool of workers (replacement or otherwise) to run his business during this period. He is likely to face a high turnover and incur heavy losses because of a lack of workers to keep his business operational. His losses are likely to stem from spending more than he is earning – the replacement workers are actually more expensive than his normal permanent employees. Arthur’s turnover is too high to keep his business running during the summer. Since summer vacations are quite long, the losses incurred must be incredibly high during this period. An interesting fact is that turnover is higher in replacement employees than permanent workers who normally work for the company. Since his fulltime workers always return at the end of the summer or when they recover from their various illnesses, Arthur cannot afford spending a lot of money on temporary workers who are not always available and are too expensive to keep on the payroll. The solution to this problem is to do away with temporary workers permanently (Uhl, 2013). The solution is to develop a schedule whereby there are two pools of workers: permanent and fulltime. However, the replacement workers are only hired during the summer and paid decent wages to keep them on the job. Arthur’s method of looking for new workers every summer is flawed and will only lead to losses in productivi ty and revenue. He should always have replacement workers on standby. Ideally, they should be working in all the other seasons except summer, when they replace all the permanent workers. So, regardless of whether a permanent worker is sick or on vacation, there is a steady pool of replacement employees ready to take their place (Bridger, 2014). Arthur should change the summer vacation to a permanent off season for permanent workers. As soon as summer reaches all the permanent workers are given leaves and they only return

A Wallet Full of Money and a Life Full of Nothing Essay Example for Free

A Wallet Full of Money and a Life Full of Nothing Essay In â€Å"Citizen Kane†, Orson Welles shows the viewer how an adult’s life can be tormented by their divested childhood. In his movie, Welles portrays Kane to be a man with the world in his hands yet he possesses nothing of sentimental value. Not being able to appreciate the people who surround him the way that they appreciate him, Kane turns to money and power to fulfill the love and affection he didn’t receive as a child. Welles portrays Kane’s robbed childhood, his vanity, and his hunger for power as the cause to Kane’s failed relationships and his lonely death. Shortly after the beginning of the movie, Welles uses symbolism to expose how Kane’s childhood innocence and purity had been taken from him at an early age. In this scene, Kane is out playing in the pure and white snow, which can be interpreted as Kane enjoying his innocent years in the essence of purity that comes with childhood. When his parents, along with Thatcher, go outside to inform him about his trip, Kane uses his sled as a defensive tool against Thatcher. This can be a reflection on why Kane never accepted Thatcher’s attempts at discipline and guidelines. Kane saw Thatcher as the person who deprived him of his childhood and took him away from his most prized possession, which was Rosebud, his sled. Towards the end of the scene, the sled is left out in the snow for years as the snow begins to pile up on it; this could be seen as a metaphorical correlation to Kane leaving his innocence and the purity of his childhood to become a man with a polluted soul who is ruled by money and power. As Kane grows up to become a man of wealth and power, many of his personality issues can be traced back to his childhood upbringing. The viewers are given an insight to the controlling and manipulative person Kane is when they come across the scene where Kane walks into the Inquirer and tells the editor-in-chief that he is literally going to live in his office. Because he couldn’t control his unsatisfactory childhood upbringing, Kane grew up to be an awfully controlling man. His controlling personality then led him to publish subjects that would on ly bring him attention. As a child who was taken away from his parents at only eight years old, he wanted all  the attention possible, hence the deceptive subjects he would publish. Kane’s childhood lacked the essentials of parental love and attention, which later transformed him into an egocentric, power-hungry monster. Possessing both money and power, Kane became obsessed with himself; the more power he obtained, the more he felt in need of it. At the age of twenty-five, Kane buys the New York Inquirer without even the slightest clue on how to run a newspaper business. One can thus determine that Kane would use his money to help him gain a voice. Kane never cared about his money, or the spending of, because he had plenty of it. What Kane really wanted was to affect the people. His original plan, when taking over the Inquirer, was to help and become the voice of the poor and underprivileged, but he quickly forgot about his promises, as he continually grew more and more corrupt by printing stories that would only get him attention. His hunger for power became bigger than him when he ran for Governor of New York and would print insulting cartoons of his opponent. Kane started out with a plan that would affect the people in a positive way but consequently became a highly unlikeable man who would only t hink about the power his money could bring to him. Not only was Kane a man who wished for more power but also he was a man who was also ruled by vanity. Throughout the movie, Welles interprets Kane’s vanity by showing the viewer how Kane would use his controlling personality to make sure all his surroundings were nothing but perfect. A good example of this is when Leland writes a newspaper article about Susan’s mediocre singing skills and Kane reads it. After he reads Leland’s notice, he is determined to make Susan a better singer so he forces her to train and perform in numerous cities. Because of his vanity, Kane is concerned with the public’s opinion of his wife. He does not want to be known as the man who married a singer with amateur singing skills. Welles also does a magnificent job in portraying Kane’s vanity in the scene where Susan leaves him and all Kane is truly worried about is all the guests in Xanadu who might witness her departure. How he appears to the public is much more important to him than the fact that his own wife is leaving him. As a man who was drunk on his own power and rule d by his vanity, Kane failed to see how much he would hurt the people who were closest to him, especially his second wife, Susan. Ever since he met her, the first sign of his complicated personality was shown when he demanded her to sing for him. In that scene,  the viewer could foresee the kind of controlling and demanding spouse Kane would be. Throughout their relationship, one could notice how he would treat Susan more as an object than his wife. By forcing her to perform and become a better singer, he was treating her as one of his statues. His statues were beautifully sculpted and that is what he wanted Susan to be. A beautiful woman who lacked a beautiful voice was not an option for the wife of Charles Foster Kane. As Susan grew tired of Kane being absent most of the time and being forced to live in their home as one of his many statues, she decided to leave him. Kane always treated people as if they were his property and Susan was no exception. When she informed Kane of her intention to abandon him, he said to her, â€Å"you can’t leave me† which goes to show how he thought of Susan as one of his statues. Kane’s statues would literally and physically never leave him, which is why he was shocked by Susan’s decision. When she does leave and Kane can’t do anything about it, he becomes f ull of anger and destroys Susan’s room. For a man who was just left by his wife, his anger towards her is also a big sign to the viewer that Kane only saw her as his property. Because of so many failed relationships throughout his life, a man of endless wealth and power ends up in his deathbed alone with no one to care for him. Throughout the movie, as Thompson goes on a search to figure out the meaning behind Kane’s last words before his death, the viewer is exposed to the many reasons why Kane died a lonely man. His relationship with Thatcher never developed further because Kane always saw him as the person who robbed him from sharing his childhood years with his family. The friendship he had with his closest friend ended when he fired him because of a simple statement that offended his vanity. The relationship with his first wife not only ended because of his infidelity but also because of his need for more power. Kane would spend more time at the Inquirer than with Emily, which made the relationship bound to terminate. Last but not least, his relationship with Emily was a complete failure because he saw her as an object as opposed to his wife. Every person who would get emotionally close to Kane would eventually end up leaving him. As a result of his big ego, Kane never managed to develop relatio nships with those who surrounded him therefore, the only company he had while lying in his deathbed was a snow globe and his childhood memories. As one can conclude, because of his miserable childhood, Kane grew up to lead a life  full of luxury and riches but he lacked the true meaning of life- to live. Money only bought him objects and power but never bought him true love of any kind. His last words were in reference to an object that he owned as a child and that goes to show that his only happy memories were back when he lacked the fortune he now had. Kane’s robbed childhood, vanity, and his hunger for power were the reasons why Kane lived such a lonely and unfulfilled life up until the day he died.

Merger Acquisitions and Value Creation

Merger Acquisitions and Value Creation LITERATURE REVIEW Many firms used corporate mergers or acquisitions as business strategy to accomplish various objectives. For instance, businesses used acquisitions to enter into new markets and regions, allocate capital or gain technical expertise and knowledge. Therefore, organizations often utilize strategic mergers and acquisitions in order to grow or survive. However most of the poorly managed acquisitions or merger resulted in disappointing performance and up to 50 percent are considered unsuccessful (see Louis, 1982). Furthermore, according to Smith and Hershman (1997), it was held by Mercer Management Consulting that in 1980s, 57 percent of acquisitions were failed and the successful corporate acquisitions in 1990s were hardly 50 percent (p.39, cited in Smith and Hershman, 1997). To date, merger or acquisition is one of the most widely used instruments to enhance the growth of organizations. Systematic and sophisticated corporate research helps companies to understand the pre and post-acquisitions performance and achieving other business objectives (as discussed in Singh Zollo, 2000). However, according to Sirower (1997), empirical academic literature does not provide any clear understanding, which facilitates the managers to maximise the success of acquisitions or merger programs. Therefore, understanding the source of value creation is critical to determine the causes of failure or success in corporate merger or acquisitions. The literature review presented in this section critically evaluates and analyze the earlier studies in order to solve the paradigm of Merger Acquisitions and Value Creation. Corporate Acquisitions and Their Research Paradigms Datta et al. (1992) suggested two distinct frameworks for acquisitions programmes to identify sources of shareholders wealth i.e. strategic management and financial economics literature and both approaches follow different research directions. The strategic management approach focused on factors that have been controlled by management. For instance, Datta et al (1992) suggested that in order to assess the post-acquisition performance, this approach attempts to differentiate between various diversification strategies and types of acquisitions or types of payment in acquisitions (i.e. stock vs. cash). In contrast, financial economic research attempted to prove the unique hypothesis of market for corporate control. This approach views the acquisition activities as a contest among different management teams in a competition to control corporate firms as argued by Datta et al (1992). Therefore, this view suggests that the value creation through merger or acquisitions is decided by capital market and its characteristics including its competitiveness such as regulatory modification affecting a particular market (see Datta et al, 1992). However, these two methodologies are unable to explain the factors resulting in unsuccessful corporate acquisitions. Thus, many academics such as Chatterjee (1992), attempted to identify critical variables of ineffective performance in acquisitions or merger activities by studying the relationship between post-acquisition performance and integration. While the initial notion by Kitching (1967) that the key factor for a successful corporate acquisition is the post-acquisition integration process, it was recognised that acquisition or merger activities create value not only from strategic factors realised through synergies (see Chatterjee, 1992), but also from the process itself, which leads to anticipated synergistic factors, as reflect in capital market expectations (see Jemison and Sitkin, 1986). Therefore, it is very important to understand the processes and factors resulting in corporate merger and acquisitions value creation before we critically evaluate the research paradigm of value creation. Evolution of Acquisitions In order to improve the understanding of the research hypothesis, firstly this paper attempts to review trends of acquisitions and mergers followed by comments on value creation during these periods. For illustration purposes, I will focus my attention to the US economy considering the fact that corporate sector is enriched with these activities and capital markets of United States are much developed comparative to rest of the world. Following section presents the analysis of corporate mergers and acquisitions programmes dated back to1897. The First Wave, 1897-1904: According to Gaughan (1999), this particular period is dominated by horizontal acquisitions resulting surge in stock markets and ultimately creation of monopolies. Some of the todays giant conglomerates created in first wave include General Electric, American Tobacco, Du Pont, Kodak and Standard Oil (see Gaughan, 1999). First Merger Wave 1897 1904 Year Number of Mergers 1897 69 1898 303 1899 1208 1900 340 1901 423 1902 379 1903 142 1904 79 Table 3.1 First Merger Wave 1897 1904 Source: Gaughan (1999), p.24 Figure 3.1 First Merger Wave 1897 -1904 Data Source: Gaughan (1999), p.24 The Second Wave, 1916-1929: In contrast to first wave which is termed as merging for monopoly, the second wave is termed as merging for oligopoly. Gaughan (1999) pointed out that the reason of this terminology is the predominance of vertical or horizontal integration of companies during the period of 1925 to end of the decade. Moreover, Jemison and Stikin (1986) argued that the abundant capital availability stimulated by favourable economic conditions resulted in prominent corporate mergers and integration. Further according to Gaughan (1999), the antitrust law force during this era was stricter comparative to the first merger wave, which created more oligopolies and vertical integration and fewer monopolies in contrast to earlier wave. The Third Wave, 1965-1969: According to Gaughan (1986), the decade of 1960s observed controversial of the merger and acquisitions activities and termed as conglomerates. The companies such as ITT (International Telephone and Telegraph Corporation, USA) and Textron acquired numerous unrelated businesses to diversify and to reduce cyclic risks. Furthermore, during this period the conglomerates not only grew rapidly and profitably but the management were perceived to be skilful as well, which facilitated the diversity in acquisitions and operations of the companies (see Judelson, 1969). For instance, Geneen (1984) documented that during this wave ITT built itself into a highly diversified conglomerate by acquiring various businesses such as insurance, food and car rentals. Moreover, he found that executives of the company used the advanced financial tools like detailed budgeting and tight financial controls to make these acquisitions successful and well-functioning. Following figure presents the overview of the a ctivities during the period: Scholars like Goold and Luchs (1993) argued that general management skills were one of the vital factors in successful acquisitions and mergers during this era, which also helped corporations to diversify in different businesses. Moreover, engaging in unrelated business by many companies was based on the assumptions that different businesses would not require dissimilar managerial skills (see Goold and Luchs, 1993). However, in late 1960s companies start facing performance problems and the share price of these conglomerates such as Textron fell almost 50% comparative to 9% drop in Dow Jones Industrial average (see Bonge and Coleman, 1972). Furthermore, in early 1970s companies began to experience profitless growth like General Electric sales increased by 40% from 1965 to 1970 but its profit actually dropped (see Goold and Quinn, 1990). According to Gaughan (1999), the era has been ended when ITT spin off in three different companies. It is perceived that most of the mergers during the period failed and companies jettisoned their under-performing and unrelated business to face the competitive environment (see Sikora, 1995). In addition, Sadlter et al (1997) observed that the combined value of businesses separated from their parent firms significantly increased to more than $100 billion in 1996 comparative to 1993 figure of $17.5 billion. Acquisitions in the 1970s: The merger and acquisition activities decreased significantly in 1970s, which can be seen in the following figure. Figure 3.3 Merger Acquisitions in 1970 -1980 Source: Gaughan (1999), p.36 As a consequence of problem in merger and acquisitions activities experienced by conglomerates, the senior executives realised that only general management skills are not sufficient for a successful transactions (see Chandler, 1962). Therefore, they focused their attentions toward the long term companys objectives instead of operating of strategic business units (see Christensen, 1965). Andrews (1971) highlighted that this change introduced the concept of corporate strategy for firms and most CEOs of the organizations started accepting that strategy is their unique and primary task. However, corporate strategy poses some practical problem and did not help executives in deciding about allocation of resources among businesses especially when each investment proposal has a different strategy (see Goold and Luchs, 1993). Moreover, Bower (1970) argued that investment decision should be part of overall business strategy rather than prevaricate on project to project basis. In 1970s these revolutions in corporate finance lead to the development of portfolio planning by Boston Consulting Group (1970). Soon, portfolio planning became famous in corporate sectors and according to the survey of Haspeslagh (1982) by 1979, 45 percent of the Fortune 500 companies were using portfolio planning in some form. However, with the passage of time problems related to portfolio planning emerged. As Goolds and Luchs (1993), argued that the corporate manager with long experience of particular sector of the industry found extremely difficult to manage their newly acquired businesses in vibrant and unfamiliar sectors. Consequently, this affected the performance of new acquisitions or mergers of the firms. In search of solution to this problem Hamermesh and White (1984) found that administration was a vital factor in explain business performance of mergers or acquisitions but many organizations incorrectly addressed the approach. The Fourth Wave, 1981-1989: The decade of 1980s seen another merger wave in business world. In this period, merger deals were frequent and larger and total value of mergers were approximately $.13 trillion in US (see Sikora, 1995). This was influenced by service sector and significant support from investors; lenders and globalization facilitated companies to finance the buyout deals (see Sikora, 1995). Moreover, the reasons of the fourth merger wave were excess capacity (see Jensen, 1993), agency problems (see Jensen, 1988), market failure (see Shleifer Vishny, 1997), and tax and antitrust law changes (see Bhagat et al, 1990). It seems that during 80s, diversified firms do not have capacity to create values therefore companies start re-thinking about role of corporate management as well as appropriate strategies for diversified firms. As highlighted by Goold and Luchs (1993) highlighted that in order to survive firms cut back costs and scale down their staffs but these were not adequate to create value. Furthermore, they argued that diversification strategies failed to create value for many businesses. Nevertheless, these failures compelled senior managers to transform their primary goals to creating shareholders values instead of building huge businesses (see Porter, 1987). Moreover, management of the companies started evaluating corporate performance like stock market by using economic indicator instead of accounting measures and take whatever steps were essential to enhance the value of their firms stock (see Goold and Luchs, 1993). However, value based planning based on financial tools of Return on Equity (ROE), internal rate of return and discounted cash flow provided different views to managers about competitive advantages and stock prices (see Rappaport, 1986). Further, Goold and Luchs (1993) pointed out that a higher stock price could be a reward for creating value. However, during the era of 80s firms that did not diversify into unrelated businesses and specialize into their core industry were able to create value and turn out to be successful companies (see Peter and Waterman 1982). Mintzberg and Lampel (1999) also support this notion by arguing that focused corporations which know their customers, have deep knowledge and understand their missions were better able to create value in contrast to companies that applied the diversification concept of value creation. In summary of the merger and acquisitions activities in 1960s and 1980s, it can be assert that conglomeration and diversification were the dominant trends in 1960s contrast to specialization and consolidations phenomena of 1980s. However, empirical evidence on value creation tends to suggest that significant merger and acquisitions of 60s reversed subsequently and did not lead to profitability. According to Shleifer and Vishny (1994) many of the conglomerates created in 1960s were destroyed in 1980s, which provides the evidence of failure in notion of merger acquisitions and value creation that was not expected in 1960s. The Current Wave, 1990-Present: According to Gaughan (1999), in contrast to 1960s decade of conglomerates and 1980s period of Leveraged Buyouts (LBO), the dominant deals of 90s were designed with a view to fit strategically among merging firms. Moreover, the forces behind the merger and acquisitions activities were different than earlier periods and corporate sector seen some of mega-deals during that period. For instance in 1996, the top 100 deals of merger and acquisitions were worth more than $1 billion or approximately 53.5% of total transactions (see Sikora, 1997). Merger Acquisitions in 1990s Year Number of Deals Value ($ Billions) 1980 1558 34.8 1981 2328 69.5 1982 2299 60.7 1983 2395 52.7 1984 3176 126.1 1985 3490 146.1 1986 2523 220.8 1987 2517 196.5 1988 3011 291.3 1989 3825 325.1 1990 4312 206.8 1991 3580 143.1 1992 3752 125.3 1993 4148 177.3 1994 4962 276.5 1995 6209 375.0 1996 6828 550.7 Table 3.2 Merger and Acquisitions in 1990s Data Source: (www.mergerstat.com) The era of 90s was said to the decade of Consolidation; which means combination of operating and management resources between two companies as well as their stocks, assets and liabilities (see Lipin, 1997). Furthermore, in 1990s, stable economic environment, relax antitrust laws, stock markets favourable conditions and low cost of capital were the catalyst of merger and acquisition trends. However, still many firms failed to create shareholder value and according to study by Mercer Management Consulting Inc. (1997) 48 percent of mergers failed to generate shareholder value in 90s comparative to 57 percent failure of 1980s (p.39, cited in Smith and Hershman, 1997). Nonetheless, the firms in 90s believed that larger pools of assets are essential either to survive or to grow but the question remains that how to discover ways to create value for portfolio of firms businesses? (see Goold and Luchas, 1993). To resolve this anomaly, three possible explanations have been identified: Firstly, as shown by Porter (1985) that diversification should be limited to companies which have synergy potential and without synergy a diversified business is nothing more than mutual fund. He also suggested that synergies can be attained when the portfolio of businesses create values more than sum of its individual components. Besides, the notion of synergy should be based on economies of scale and cost saving strategies (see Porter, 1985). However, in practice it has been found by studies such as Chatterjee (1992) that gaining synergy is not an easy task and most acquisitions and merger gains arise from either disposals of assets or from restructuring rather than synergistic benefits. It seems that synergy was a primary rationale for merger and acquisitions in the era but remains anomaly from value creation prospective as discussed by Goold and Luchs (1993). Secondly, the corporate strategy of the firms should focus on exploiting core competencies. For instance, Prahalad and Hamel (1989) suggested that the corporate portfolio should be based on technological competencies instead of portfolio of businesses. Similarly, Itami (1989) argued that invisible assets like reputation, brand names or customers list are the most valuable source for sustaining competitive advantage and could be used to create value by exploiting competitive opportunities. Furthermore, other competencies such as technology or managerial expertise can also be used to enhance the performance of business portfolio (see Haspeslagh and Jemison, 1991). However, this approach also has some drawbacks; for example, Goold and Luchs, pointed out that it can be difficult to assess the contribution of investment in building the competencies of a business especially when the investment is in new business area. Thirdly, the best way to create value via successful diversification is to build a portfolio of businesses, which fits with the managers logic and their management style (see Parahalad and Bettis, 1986). If conglomerates diversification is based on business with similar strategic logic then its possible to add value to business by adopting a common approach across all the business units. For instance Goold and Luchs (1993) exposed that sharing the skills or activities across organization can help corporate management to realize synergies. Moreover, Goold and Campbell (1987) found the evidence that top executives also find it difficult to deal with a wide range of styles and approaches. Review of Major Areas in MA This section presents the literature review of major areas focused by academics in merger and acquisition field. Consequently following five sub-sections have been established to review the academic literature: Performance Success in Merger and Acquisitions People in Merger and Acquisitions International Prospects of Merger and Acquisitions Best Practices in Merger and Acquisitions Valuation Issues in Merger and Acquisitions The measurement of success in merger and acquisition activities is mainly through quantitative research and is subject to various studies such as Gosh (2001); Healy et al (1992), in the field of finance or economics and also other directly related fields. People are normally unobserved in merger and acquisitions, however extensive studies like Bliss and Rosen (2001), addressed issues from ethical and organizational learning to more in depth personal perspective. Similarly, increasing trend of international trade and globalization attracted the attention of many researchers, for instance Rossi and Volpin (2004). The valuation of the companies is often overlooking in the field of merger and acquisitions. However, it is a very critical part of acquisition process and could be very helpful not only in the pre-acquisition stage but also during the acquisition process as well as at post-acquisition stage (see Becher, 2001). Finally, the best practices research in the field of merger and acquisition is usually done in the form of case studies but the quality and intensity of these studies vary widely (see Marks and Mirvis, 2001). Performance and Success in MA As stated before companies often engaged in the series of acquisitions and merger activities and early studies such as Barney (1988), tend to show that related acquisitions performed better than other acquisition transactions. However, relatedness itself does not create value for acquiring companies but synergy is the vital factor that helps companies to generate abnormal returns from acquisition programs. For example, Barney (1988) showed that synergistic cash flow stemming from relatedness, which is unique and private creates abnormal returns for shareholders of acquiring firm. However, later studies such as Hayward (2002), suggested that different level of relatedness results in various degree of success and moderately similar companies tend to be more successful than the companies that are highly similar or dissimilar in business or size to one another. He further concluded that if a firm experienced small losses in past acquisition in contrast to high losses or high gains then it has better chances of success in prospective acquisition. In addition, the timing of acquisition plays a vital role in success of the transaction and should not be too close or far-away from central acquisition (see Hayward, 2002). Similarly, Brown and Eisenhard (1997) argued that companies benefit differently depending upon their experimenting and timing of the merger and acquisition activities. Moreover, when the acquiring company has some inimitable resources then it can create value by utilizing these resources in targets company as suggested by Capron and Pistre (2000). However, they also added that if the source of synergies is recognized in target firm than market associate expected gains to target firm due to the competition among potential bidders. Consequently, this competition raises the price of target firm and would create value for shareholders of the target firm but also lead to under performance of acquirer. Nevertheless, performance success through merger and acquisitions is still controversial among academics as pointed out by Cording et al (2002). To resolve the issue Chatterjee (1992) measured the cumulative average of abnormal returns (CAAR) during the period of 11 months before the tender offer until 60 months after the tender offer. After studying the sample of 577 tender offers between the periods of 1963 to 1986; he suggested that net gain arises for the economy from these transactions but it does not necessarily create gains for everyone involved in merger and acquisition. More specifically, CAAR after 60 months were observed to be negative for unsuccessful bidders, zero for successful bidder and positive for target company. Furthermore, Chatterjee (1992) found much higher positive CAAR for restructured target companies in contrast to non-restructured targets. Certain studies view the merger and acquisition transactions from a different prospective. For example, Golbe and White (1993) proved in their study that macroeconomic environments influence the merger activities and the number of merger transactions increases in time of economic expansion comparative to decrease in programme at the time of economic down turn.Similarly, Amburgey and Miner (1992) studied the effects of companies momentum on merger activities and suggested that managers follow the past patterns. The academics such as Capron (1999), also attempted to assess the performance of the merger and acquisition activities by conducting the survey of prime stakeholders in merger activities. He further concluded that the available financial data is too gross to allow the separation between the types of pure value-creating mechanism. Moreover, he also argued that more often the objective of the companies is to retain the top management team of the targets firm, whether its a conglomerate or related merger. International Prospects of MA The emergence of globalisation and increasing trends in international trade fasten the number of local as well as cross-border acquisitions and merger activities. For instance, the cross-border acquisition activities in United States increased to 19% in 1999 from 6% in 1985 (see Seth et al, 2001). According to the study of Seth et al (2001), the evidence suggests that there are three motives for cross-border acquisitions such as synergy seeking, managerilism and managerial hubris. Moreover, the research tends to show that there is a positive relationship between the level of value creation and reverse internalization, asset sharing, financial sharing and market seeking ( as discussed by Seth et al, 2001). In addition, there seems to be association between value creation and governance system of bidders country. For instance, Seth et al (2001) argued that bidding companies from group-oriented governance system like Japan and Germany appear to be engaged in acquisitions and merger activities with higher level of value creation in contrast to bidding firms from market oriented governance system such as United Kingdom. Further enhancement of research in the area of cross-border merger and acquisition suggests that experience in merger and acquisition activities can be utilized to create value in another country. For example, Gugler et al (2003) compared the data of 15 years and proved that post merger patterns are similar across different countries. Moreover, their evidence also signifies that there are no major differences between domestic and cross-border mergers as well as manufacturing and service sectors around the world. With the passage of time and in the era of globalization the merger and acquisitions activities are increasing especially in emerging economies. The multinational companies often use the tools of acquisition and mergers to penetrate in new markets and economies particularly in emerging countries such as Central and Eastern Europe (see Milman, 1999). However, in many countries MNC mergers and acquisitions are seen as threats by government agencies, privatized companies and state enterprises. Therefore, in order to develop a successful alliance the acquisition or merger program should be designed in such as way that creates value for companies as well as the host-country governments (see Rondinelli and Black, 2000). Lastly, yet the number of merger and acquisitions across border appears to be increasing but it seems difficult to integrate and manage the successful processes. Hence, Inkpen et al (2000) suggested that the companies should critically evaluate the areas of decision making, communication, networking and socialisation, communication and the structure of authority and responsibility before involving in the process of MA. People in MA Only looking to financial aspects might limit the understanding about the question why MA activities are so widely used by companies as a tool to grow. Hence, another area focused by academics, such as Karitzki and Brink (2003), is related to merger and acquisitions and people. Generally, one of the motives for merger activities is to follow the cost-cutting strategies including synergy and targets customers. Often, the employees are laid off in the process of merger and acquisitions and consequently this creates new but conflicting networks of relationships in new companies as suggested by Vermeulen and Barkema (2001). Thus, it affects the success and results in under-performance of merger and acquisition programmes. Therefore, considering the affects of MA on employee or managers of the potential target firms are of similar importance as financial issues. Similarly, the research in the area of executive compensation pointed out that prior to acquisition or merger, management of acquiring company receive significant higher packages comparative to the executives of target firms (see Lynch and Perry, 2002). Hence, these issues can lead to turnover and morale issues that ultimately affect the success of anticipated integration from MA. Furthermore, in extreme circumstances, issues like these emerging from dissimilarities create hurdles to achieve the objective of the original merger and acquisitions. Thus, reconciling the differences is one of the major issues faced by the combined company to create value (as discussed in Lynch and Perry, 2002). Moreover, successful merger or acquisition depends upon the people in both target and acquiring firms. The attitude and opinion of the employees regarding acquisition or merger can change over the time. Schweiger and DeNisi (1991) conducted the survey of employees and compared the attitudes in pre-acquisition and post-acquisition period. Their results show that attitudes of the employees three months after the announcement of merger changed significantly and turn towards continual negative consequences (see Schweiger and DeNisi, 1991). Likewise, Covin et al (1996) studied the attitude of 2845 employees from a large manufacturing concern in post merger period. The results show significant differences between the target firm and acquiring companys employees in satisfaction with merger. The employees of acquired company faced high level of dissatisfaction and ultimately felt more stress due to changes introduced after merger. In addition, this stress is aggravated due to the direct competition between target firm and acquiring company. Furthermore, Covin et al (1996) pointed out that factors such as loss of power and status, changes in salary or benefits and lack of managerial direction result in high level of stress and dissatisfaction from merger activities. Hence, it has been suggested that in addition to financial aspects these types of issues should not be overlooked in order to create value and to develop a successful merger and acquisition programme (see Karitzki and Brink, 2003). Best Practices in MA It is often suggested that acquisitions are predominantly unsuccessful and numerous studies like Aiello and Watkins (2000), confirmed this fact. However, generally the conditions and environment is relevant before judging the results. Furthermore, there is lack of research in answering the question; what would happen if both the companies continued in their own separate way. Therefore, estimating the successfulness of merger or acquisition is a tricky anomaly (as discussed in Chaudhuri and Tabrizi, 1999). Moreover, the unsuccessful MA activities are more highlighted in contrast to successful programmes. Ed Libby, the chairman and CEO of AllState stated that when MAs fails they draw more notice despite the fact that lot of other projects fails in business but no one can see them because they remain within internal walls of the companies (cited in Cary, 2000). As stated earlier, there is no one strategy that fits all kinds of merger and acquisition activities, however systematic approaches such as suggested by Jan Leschly, can help companies to develop a successful plan. Jan Leschly, retired CEO of SmithKline Beecham suggested that they put their people on the boards of different companies by investing small amounts. Once the companies get going then they decide whether to buy it completely or not (cited in Cary, 2000). Likewise, understanding the various components of merger process is very vital to develop a successful merger or acquisition deal. However, it is very hard to enumerate the components especially when these are integrated with each other. According to Marks and Mirvis (2001), the successfulness of merger and acquisition is highly depended on following factors: Acquisition Plan Implementation of this plan Post-acquisition cooperation between firms after acquisition Moreover, they collected a number of factors that were mentioned in previous research such as strategic objective, clear selection, search and selection process etc. They also argued that pre-acquisition planning is very important for successful merger and acquisition plan and more prepared the people will more synergies in a combination will result (see Marks and Mirvis, 2001). Similarly, Aiello and Watkins (2000) suggested that every MA deal pass through following five stages: Screening potential deal Reaching initial agreement Condu Merger Acquisitions and Value Creation Merger Acquisitions and Value Creation LITERATURE REVIEW Many firms used corporate mergers or acquisitions as business strategy to accomplish various objectives. For instance, businesses used acquisitions to enter into new markets and regions, allocate capital or gain technical expertise and knowledge. Therefore, organizations often utilize strategic mergers and acquisitions in order to grow or survive. However most of the poorly managed acquisitions or merger resulted in disappointing performance and up to 50 percent are considered unsuccessful (see Louis, 1982). Furthermore, according to Smith and Hershman (1997), it was held by Mercer Management Consulting that in 1980s, 57 percent of acquisitions were failed and the successful corporate acquisitions in 1990s were hardly 50 percent (p.39, cited in Smith and Hershman, 1997). To date, merger or acquisition is one of the most widely used instruments to enhance the growth of organizations. Systematic and sophisticated corporate research helps companies to understand the pre and post-acquisitions performance and achieving other business objectives (as discussed in Singh Zollo, 2000). However, according to Sirower (1997), empirical academic literature does not provide any clear understanding, which facilitates the managers to maximise the success of acquisitions or merger programs. Therefore, understanding the source of value creation is critical to determine the causes of failure or success in corporate merger or acquisitions. The literature review presented in this section critically evaluates and analyze the earlier studies in order to solve the paradigm of Merger Acquisitions and Value Creation. Corporate Acquisitions and Their Research Paradigms Datta et al. (1992) suggested two distinct frameworks for acquisitions programmes to identify sources of shareholders wealth i.e. strategic management and financial economics literature and both approaches follow different research directions. The strategic management approach focused on factors that have been controlled by management. For instance, Datta et al (1992) suggested that in order to assess the post-acquisition performance, this approach attempts to differentiate between various diversification strategies and types of acquisitions or types of payment in acquisitions (i.e. stock vs. cash). In contrast, financial economic research attempted to prove the unique hypothesis of market for corporate control. This approach views the acquisition activities as a contest among different management teams in a competition to control corporate firms as argued by Datta et al (1992). Therefore, this view suggests that the value creation through merger or acquisitions is decided by capital market and its characteristics including its competitiveness such as regulatory modification affecting a particular market (see Datta et al, 1992). However, these two methodologies are unable to explain the factors resulting in unsuccessful corporate acquisitions. Thus, many academics such as Chatterjee (1992), attempted to identify critical variables of ineffective performance in acquisitions or merger activities by studying the relationship between post-acquisition performance and integration. While the initial notion by Kitching (1967) that the key factor for a successful corporate acquisition is the post-acquisition integration process, it was recognised that acquisition or merger activities create value not only from strategic factors realised through synergies (see Chatterjee, 1992), but also from the process itself, which leads to anticipated synergistic factors, as reflect in capital market expectations (see Jemison and Sitkin, 1986). Therefore, it is very important to understand the processes and factors resulting in corporate merger and acquisitions value creation before we critically evaluate the research paradigm of value creation. Evolution of Acquisitions In order to improve the understanding of the research hypothesis, firstly this paper attempts to review trends of acquisitions and mergers followed by comments on value creation during these periods. For illustration purposes, I will focus my attention to the US economy considering the fact that corporate sector is enriched with these activities and capital markets of United States are much developed comparative to rest of the world. Following section presents the analysis of corporate mergers and acquisitions programmes dated back to1897. The First Wave, 1897-1904: According to Gaughan (1999), this particular period is dominated by horizontal acquisitions resulting surge in stock markets and ultimately creation of monopolies. Some of the todays giant conglomerates created in first wave include General Electric, American Tobacco, Du Pont, Kodak and Standard Oil (see Gaughan, 1999). First Merger Wave 1897 1904 Year Number of Mergers 1897 69 1898 303 1899 1208 1900 340 1901 423 1902 379 1903 142 1904 79 Table 3.1 First Merger Wave 1897 1904 Source: Gaughan (1999), p.24 Figure 3.1 First Merger Wave 1897 -1904 Data Source: Gaughan (1999), p.24 The Second Wave, 1916-1929: In contrast to first wave which is termed as merging for monopoly, the second wave is termed as merging for oligopoly. Gaughan (1999) pointed out that the reason of this terminology is the predominance of vertical or horizontal integration of companies during the period of 1925 to end of the decade. Moreover, Jemison and Stikin (1986) argued that the abundant capital availability stimulated by favourable economic conditions resulted in prominent corporate mergers and integration. Further according to Gaughan (1999), the antitrust law force during this era was stricter comparative to the first merger wave, which created more oligopolies and vertical integration and fewer monopolies in contrast to earlier wave. The Third Wave, 1965-1969: According to Gaughan (1986), the decade of 1960s observed controversial of the merger and acquisitions activities and termed as conglomerates. The companies such as ITT (International Telephone and Telegraph Corporation, USA) and Textron acquired numerous unrelated businesses to diversify and to reduce cyclic risks. Furthermore, during this period the conglomerates not only grew rapidly and profitably but the management were perceived to be skilful as well, which facilitated the diversity in acquisitions and operations of the companies (see Judelson, 1969). For instance, Geneen (1984) documented that during this wave ITT built itself into a highly diversified conglomerate by acquiring various businesses such as insurance, food and car rentals. Moreover, he found that executives of the company used the advanced financial tools like detailed budgeting and tight financial controls to make these acquisitions successful and well-functioning. Following figure presents the overview of the a ctivities during the period: Scholars like Goold and Luchs (1993) argued that general management skills were one of the vital factors in successful acquisitions and mergers during this era, which also helped corporations to diversify in different businesses. Moreover, engaging in unrelated business by many companies was based on the assumptions that different businesses would not require dissimilar managerial skills (see Goold and Luchs, 1993). However, in late 1960s companies start facing performance problems and the share price of these conglomerates such as Textron fell almost 50% comparative to 9% drop in Dow Jones Industrial average (see Bonge and Coleman, 1972). Furthermore, in early 1970s companies began to experience profitless growth like General Electric sales increased by 40% from 1965 to 1970 but its profit actually dropped (see Goold and Quinn, 1990). According to Gaughan (1999), the era has been ended when ITT spin off in three different companies. It is perceived that most of the mergers during the period failed and companies jettisoned their under-performing and unrelated business to face the competitive environment (see Sikora, 1995). In addition, Sadlter et al (1997) observed that the combined value of businesses separated from their parent firms significantly increased to more than $100 billion in 1996 comparative to 1993 figure of $17.5 billion. Acquisitions in the 1970s: The merger and acquisition activities decreased significantly in 1970s, which can be seen in the following figure. Figure 3.3 Merger Acquisitions in 1970 -1980 Source: Gaughan (1999), p.36 As a consequence of problem in merger and acquisitions activities experienced by conglomerates, the senior executives realised that only general management skills are not sufficient for a successful transactions (see Chandler, 1962). Therefore, they focused their attentions toward the long term companys objectives instead of operating of strategic business units (see Christensen, 1965). Andrews (1971) highlighted that this change introduced the concept of corporate strategy for firms and most CEOs of the organizations started accepting that strategy is their unique and primary task. However, corporate strategy poses some practical problem and did not help executives in deciding about allocation of resources among businesses especially when each investment proposal has a different strategy (see Goold and Luchs, 1993). Moreover, Bower (1970) argued that investment decision should be part of overall business strategy rather than prevaricate on project to project basis. In 1970s these revolutions in corporate finance lead to the development of portfolio planning by Boston Consulting Group (1970). Soon, portfolio planning became famous in corporate sectors and according to the survey of Haspeslagh (1982) by 1979, 45 percent of the Fortune 500 companies were using portfolio planning in some form. However, with the passage of time problems related to portfolio planning emerged. As Goolds and Luchs (1993), argued that the corporate manager with long experience of particular sector of the industry found extremely difficult to manage their newly acquired businesses in vibrant and unfamiliar sectors. Consequently, this affected the performance of new acquisitions or mergers of the firms. In search of solution to this problem Hamermesh and White (1984) found that administration was a vital factor in explain business performance of mergers or acquisitions but many organizations incorrectly addressed the approach. The Fourth Wave, 1981-1989: The decade of 1980s seen another merger wave in business world. In this period, merger deals were frequent and larger and total value of mergers were approximately $.13 trillion in US (see Sikora, 1995). This was influenced by service sector and significant support from investors; lenders and globalization facilitated companies to finance the buyout deals (see Sikora, 1995). Moreover, the reasons of the fourth merger wave were excess capacity (see Jensen, 1993), agency problems (see Jensen, 1988), market failure (see Shleifer Vishny, 1997), and tax and antitrust law changes (see Bhagat et al, 1990). It seems that during 80s, diversified firms do not have capacity to create values therefore companies start re-thinking about role of corporate management as well as appropriate strategies for diversified firms. As highlighted by Goold and Luchs (1993) highlighted that in order to survive firms cut back costs and scale down their staffs but these were not adequate to create value. Furthermore, they argued that diversification strategies failed to create value for many businesses. Nevertheless, these failures compelled senior managers to transform their primary goals to creating shareholders values instead of building huge businesses (see Porter, 1987). Moreover, management of the companies started evaluating corporate performance like stock market by using economic indicator instead of accounting measures and take whatever steps were essential to enhance the value of their firms stock (see Goold and Luchs, 1993). However, value based planning based on financial tools of Return on Equity (ROE), internal rate of return and discounted cash flow provided different views to managers about competitive advantages and stock prices (see Rappaport, 1986). Further, Goold and Luchs (1993) pointed out that a higher stock price could be a reward for creating value. However, during the era of 80s firms that did not diversify into unrelated businesses and specialize into their core industry were able to create value and turn out to be successful companies (see Peter and Waterman 1982). Mintzberg and Lampel (1999) also support this notion by arguing that focused corporations which know their customers, have deep knowledge and understand their missions were better able to create value in contrast to companies that applied the diversification concept of value creation. In summary of the merger and acquisitions activities in 1960s and 1980s, it can be assert that conglomeration and diversification were the dominant trends in 1960s contrast to specialization and consolidations phenomena of 1980s. However, empirical evidence on value creation tends to suggest that significant merger and acquisitions of 60s reversed subsequently and did not lead to profitability. According to Shleifer and Vishny (1994) many of the conglomerates created in 1960s were destroyed in 1980s, which provides the evidence of failure in notion of merger acquisitions and value creation that was not expected in 1960s. The Current Wave, 1990-Present: According to Gaughan (1999), in contrast to 1960s decade of conglomerates and 1980s period of Leveraged Buyouts (LBO), the dominant deals of 90s were designed with a view to fit strategically among merging firms. Moreover, the forces behind the merger and acquisitions activities were different than earlier periods and corporate sector seen some of mega-deals during that period. For instance in 1996, the top 100 deals of merger and acquisitions were worth more than $1 billion or approximately 53.5% of total transactions (see Sikora, 1997). Merger Acquisitions in 1990s Year Number of Deals Value ($ Billions) 1980 1558 34.8 1981 2328 69.5 1982 2299 60.7 1983 2395 52.7 1984 3176 126.1 1985 3490 146.1 1986 2523 220.8 1987 2517 196.5 1988 3011 291.3 1989 3825 325.1 1990 4312 206.8 1991 3580 143.1 1992 3752 125.3 1993 4148 177.3 1994 4962 276.5 1995 6209 375.0 1996 6828 550.7 Table 3.2 Merger and Acquisitions in 1990s Data Source: (www.mergerstat.com) The era of 90s was said to the decade of Consolidation; which means combination of operating and management resources between two companies as well as their stocks, assets and liabilities (see Lipin, 1997). Furthermore, in 1990s, stable economic environment, relax antitrust laws, stock markets favourable conditions and low cost of capital were the catalyst of merger and acquisition trends. However, still many firms failed to create shareholder value and according to study by Mercer Management Consulting Inc. (1997) 48 percent of mergers failed to generate shareholder value in 90s comparative to 57 percent failure of 1980s (p.39, cited in Smith and Hershman, 1997). Nonetheless, the firms in 90s believed that larger pools of assets are essential either to survive or to grow but the question remains that how to discover ways to create value for portfolio of firms businesses? (see Goold and Luchas, 1993). To resolve this anomaly, three possible explanations have been identified: Firstly, as shown by Porter (1985) that diversification should be limited to companies which have synergy potential and without synergy a diversified business is nothing more than mutual fund. He also suggested that synergies can be attained when the portfolio of businesses create values more than sum of its individual components. Besides, the notion of synergy should be based on economies of scale and cost saving strategies (see Porter, 1985). However, in practice it has been found by studies such as Chatterjee (1992) that gaining synergy is not an easy task and most acquisitions and merger gains arise from either disposals of assets or from restructuring rather than synergistic benefits. It seems that synergy was a primary rationale for merger and acquisitions in the era but remains anomaly from value creation prospective as discussed by Goold and Luchs (1993). Secondly, the corporate strategy of the firms should focus on exploiting core competencies. For instance, Prahalad and Hamel (1989) suggested that the corporate portfolio should be based on technological competencies instead of portfolio of businesses. Similarly, Itami (1989) argued that invisible assets like reputation, brand names or customers list are the most valuable source for sustaining competitive advantage and could be used to create value by exploiting competitive opportunities. Furthermore, other competencies such as technology or managerial expertise can also be used to enhance the performance of business portfolio (see Haspeslagh and Jemison, 1991). However, this approach also has some drawbacks; for example, Goold and Luchs, pointed out that it can be difficult to assess the contribution of investment in building the competencies of a business especially when the investment is in new business area. Thirdly, the best way to create value via successful diversification is to build a portfolio of businesses, which fits with the managers logic and their management style (see Parahalad and Bettis, 1986). If conglomerates diversification is based on business with similar strategic logic then its possible to add value to business by adopting a common approach across all the business units. For instance Goold and Luchs (1993) exposed that sharing the skills or activities across organization can help corporate management to realize synergies. Moreover, Goold and Campbell (1987) found the evidence that top executives also find it difficult to deal with a wide range of styles and approaches. Review of Major Areas in MA This section presents the literature review of major areas focused by academics in merger and acquisition field. Consequently following five sub-sections have been established to review the academic literature: Performance Success in Merger and Acquisitions People in Merger and Acquisitions International Prospects of Merger and Acquisitions Best Practices in Merger and Acquisitions Valuation Issues in Merger and Acquisitions The measurement of success in merger and acquisition activities is mainly through quantitative research and is subject to various studies such as Gosh (2001); Healy et al (1992), in the field of finance or economics and also other directly related fields. People are normally unobserved in merger and acquisitions, however extensive studies like Bliss and Rosen (2001), addressed issues from ethical and organizational learning to more in depth personal perspective. Similarly, increasing trend of international trade and globalization attracted the attention of many researchers, for instance Rossi and Volpin (2004). The valuation of the companies is often overlooking in the field of merger and acquisitions. However, it is a very critical part of acquisition process and could be very helpful not only in the pre-acquisition stage but also during the acquisition process as well as at post-acquisition stage (see Becher, 2001). Finally, the best practices research in the field of merger and acquisition is usually done in the form of case studies but the quality and intensity of these studies vary widely (see Marks and Mirvis, 2001). Performance and Success in MA As stated before companies often engaged in the series of acquisitions and merger activities and early studies such as Barney (1988), tend to show that related acquisitions performed better than other acquisition transactions. However, relatedness itself does not create value for acquiring companies but synergy is the vital factor that helps companies to generate abnormal returns from acquisition programs. For example, Barney (1988) showed that synergistic cash flow stemming from relatedness, which is unique and private creates abnormal returns for shareholders of acquiring firm. However, later studies such as Hayward (2002), suggested that different level of relatedness results in various degree of success and moderately similar companies tend to be more successful than the companies that are highly similar or dissimilar in business or size to one another. He further concluded that if a firm experienced small losses in past acquisition in contrast to high losses or high gains then it has better chances of success in prospective acquisition. In addition, the timing of acquisition plays a vital role in success of the transaction and should not be too close or far-away from central acquisition (see Hayward, 2002). Similarly, Brown and Eisenhard (1997) argued that companies benefit differently depending upon their experimenting and timing of the merger and acquisition activities. Moreover, when the acquiring company has some inimitable resources then it can create value by utilizing these resources in targets company as suggested by Capron and Pistre (2000). However, they also added that if the source of synergies is recognized in target firm than market associate expected gains to target firm due to the competition among potential bidders. Consequently, this competition raises the price of target firm and would create value for shareholders of the target firm but also lead to under performance of acquirer. Nevertheless, performance success through merger and acquisitions is still controversial among academics as pointed out by Cording et al (2002). To resolve the issue Chatterjee (1992) measured the cumulative average of abnormal returns (CAAR) during the period of 11 months before the tender offer until 60 months after the tender offer. After studying the sample of 577 tender offers between the periods of 1963 to 1986; he suggested that net gain arises for the economy from these transactions but it does not necessarily create gains for everyone involved in merger and acquisition. More specifically, CAAR after 60 months were observed to be negative for unsuccessful bidders, zero for successful bidder and positive for target company. Furthermore, Chatterjee (1992) found much higher positive CAAR for restructured target companies in contrast to non-restructured targets. Certain studies view the merger and acquisition transactions from a different prospective. For example, Golbe and White (1993) proved in their study that macroeconomic environments influence the merger activities and the number of merger transactions increases in time of economic expansion comparative to decrease in programme at the time of economic down turn.Similarly, Amburgey and Miner (1992) studied the effects of companies momentum on merger activities and suggested that managers follow the past patterns. The academics such as Capron (1999), also attempted to assess the performance of the merger and acquisition activities by conducting the survey of prime stakeholders in merger activities. He further concluded that the available financial data is too gross to allow the separation between the types of pure value-creating mechanism. Moreover, he also argued that more often the objective of the companies is to retain the top management team of the targets firm, whether its a conglomerate or related merger. International Prospects of MA The emergence of globalisation and increasing trends in international trade fasten the number of local as well as cross-border acquisitions and merger activities. For instance, the cross-border acquisition activities in United States increased to 19% in 1999 from 6% in 1985 (see Seth et al, 2001). According to the study of Seth et al (2001), the evidence suggests that there are three motives for cross-border acquisitions such as synergy seeking, managerilism and managerial hubris. Moreover, the research tends to show that there is a positive relationship between the level of value creation and reverse internalization, asset sharing, financial sharing and market seeking ( as discussed by Seth et al, 2001). In addition, there seems to be association between value creation and governance system of bidders country. For instance, Seth et al (2001) argued that bidding companies from group-oriented governance system like Japan and Germany appear to be engaged in acquisitions and merger activities with higher level of value creation in contrast to bidding firms from market oriented governance system such as United Kingdom. Further enhancement of research in the area of cross-border merger and acquisition suggests that experience in merger and acquisition activities can be utilized to create value in another country. For example, Gugler et al (2003) compared the data of 15 years and proved that post merger patterns are similar across different countries. Moreover, their evidence also signifies that there are no major differences between domestic and cross-border mergers as well as manufacturing and service sectors around the world. With the passage of time and in the era of globalization the merger and acquisitions activities are increasing especially in emerging economies. The multinational companies often use the tools of acquisition and mergers to penetrate in new markets and economies particularly in emerging countries such as Central and Eastern Europe (see Milman, 1999). However, in many countries MNC mergers and acquisitions are seen as threats by government agencies, privatized companies and state enterprises. Therefore, in order to develop a successful alliance the acquisition or merger program should be designed in such as way that creates value for companies as well as the host-country governments (see Rondinelli and Black, 2000). Lastly, yet the number of merger and acquisitions across border appears to be increasing but it seems difficult to integrate and manage the successful processes. Hence, Inkpen et al (2000) suggested that the companies should critically evaluate the areas of decision making, communication, networking and socialisation, communication and the structure of authority and responsibility before involving in the process of MA. People in MA Only looking to financial aspects might limit the understanding about the question why MA activities are so widely used by companies as a tool to grow. Hence, another area focused by academics, such as Karitzki and Brink (2003), is related to merger and acquisitions and people. Generally, one of the motives for merger activities is to follow the cost-cutting strategies including synergy and targets customers. Often, the employees are laid off in the process of merger and acquisitions and consequently this creates new but conflicting networks of relationships in new companies as suggested by Vermeulen and Barkema (2001). Thus, it affects the success and results in under-performance of merger and acquisition programmes. Therefore, considering the affects of MA on employee or managers of the potential target firms are of similar importance as financial issues. Similarly, the research in the area of executive compensation pointed out that prior to acquisition or merger, management of acquiring company receive significant higher packages comparative to the executives of target firms (see Lynch and Perry, 2002). Hence, these issues can lead to turnover and morale issues that ultimately affect the success of anticipated integration from MA. Furthermore, in extreme circumstances, issues like these emerging from dissimilarities create hurdles to achieve the objective of the original merger and acquisitions. Thus, reconciling the differences is one of the major issues faced by the combined company to create value (as discussed in Lynch and Perry, 2002). Moreover, successful merger or acquisition depends upon the people in both target and acquiring firms. The attitude and opinion of the employees regarding acquisition or merger can change over the time. Schweiger and DeNisi (1991) conducted the survey of employees and compared the attitudes in pre-acquisition and post-acquisition period. Their results show that attitudes of the employees three months after the announcement of merger changed significantly and turn towards continual negative consequences (see Schweiger and DeNisi, 1991). Likewise, Covin et al (1996) studied the attitude of 2845 employees from a large manufacturing concern in post merger period. The results show significant differences between the target firm and acquiring companys employees in satisfaction with merger. The employees of acquired company faced high level of dissatisfaction and ultimately felt more stress due to changes introduced after merger. In addition, this stress is aggravated due to the direct competition between target firm and acquiring company. Furthermore, Covin et al (1996) pointed out that factors such as loss of power and status, changes in salary or benefits and lack of managerial direction result in high level of stress and dissatisfaction from merger activities. Hence, it has been suggested that in addition to financial aspects these types of issues should not be overlooked in order to create value and to develop a successful merger and acquisition programme (see Karitzki and Brink, 2003). Best Practices in MA It is often suggested that acquisitions are predominantly unsuccessful and numerous studies like Aiello and Watkins (2000), confirmed this fact. However, generally the conditions and environment is relevant before judging the results. Furthermore, there is lack of research in answering the question; what would happen if both the companies continued in their own separate way. Therefore, estimating the successfulness of merger or acquisition is a tricky anomaly (as discussed in Chaudhuri and Tabrizi, 1999). Moreover, the unsuccessful MA activities are more highlighted in contrast to successful programmes. Ed Libby, the chairman and CEO of AllState stated that when MAs fails they draw more notice despite the fact that lot of other projects fails in business but no one can see them because they remain within internal walls of the companies (cited in Cary, 2000). As stated earlier, there is no one strategy that fits all kinds of merger and acquisition activities, however systematic approaches such as suggested by Jan Leschly, can help companies to develop a successful plan. Jan Leschly, retired CEO of SmithKline Beecham suggested that they put their people on the boards of different companies by investing small amounts. Once the companies get going then they decide whether to buy it completely or not (cited in Cary, 2000). Likewise, understanding the various components of merger process is very vital to develop a successful merger or acquisition deal. However, it is very hard to enumerate the components especially when these are integrated with each other. According to Marks and Mirvis (2001), the successfulness of merger and acquisition is highly depended on following factors: Acquisition Plan Implementation of this plan Post-acquisition cooperation between firms after acquisition Moreover, they collected a number of factors that were mentioned in previous research such as strategic objective, clear selection, search and selection process etc. They also argued that pre-acquisition planning is very important for successful merger and acquisition plan and more prepared the people will more synergies in a combination will result (see Marks and Mirvis, 2001). Similarly, Aiello and Watkins (2000) suggested that every MA deal pass through following five stages: Screening potential deal Reaching initial agreement Condu