Case summary: MRC, Inc. is a Cleveland based manufacturing company specialized in power brake systems for trucks, buses, and automobiles; industrial furnaces and heat treating equipment; and automobile, truck and bus frames. As till 1957 most of MRC's sales were made to less than a dozen large companies in the automotive industry, it was exposed to the risk inherent in selling to a few customers in a very cyclical and competitive market. To minimize the risk and to explore new business opportunity MRC's management decided to diversify their business operation. After their fifth successful acquisition, the CEO of MRC Archibald Brinton faced with a dilemma of whether to buy American Rayon, Inc. Topics which are covered in this case …show more content…
• Lessen the vulnerability of doing business in a single industry. • To release growth prospects from the cyclical and unexciting automotive industry. • Reduce the threat of backward integration by one or more major customers. After several failed attempt of internal diversification, they realized the lack of knowledge of their management about businesses outside the automotive area. so acquisition brought them quick fix where it brought already knowledgeable people in respective areas in their payroll. By the end of 1960 the diversification campaign had resulted in five acquisitions, two of which were major transactions. |Year |Company | |December 1957 |J.O. Ross Engineering Corp. | |March 1958 |Hartig Engine and Machine Co. | |October 1958 |Transportation Division of Consolidated Metal Products Corp. | |April 1959 |Nelson Metal Products Co. | |November 1959 |Surface Combustion Corp. | Q2.
In early May 2008, talk began between president of Flinder Valves, Bill Flinder and Tom Eliot, chairman and CEO of RSE about a possible acquisition of Flinder Valves by RSE. The industrial manufacturing industry had taken a hit due to rough economic times and the acquisition made sense. Both leaders were very concerned about the challenges and risks of the deal. Flinder was a company that engineered and manufactured specialty valves and heat exchangers. These products required extensive research and development and they were one of very few firms working in these types of applications. A bullk to FVC’s sales came from defense and aerospace applications. They were known for their
Over the past 14 years, Martinrea has evolved from a tiny subsidiary of Royal Laser Tech Corporation into a worldwide leader in its field. To benchmark the company’s performance, Martinrea’s financials will be compared to those of Magna Inc. (TSX:MGA) and Linamar Inc. (TSX:LNR) throughout the report. These companies are both direct competitors in the Canadian automotive manufacturing space, with Magna being the largest Canadian auto-manufacturing company, and Linamar being a highly-diversified manufacturer with revenues similar to Martinrea’s.
Joe Hinrichs, a recent Harvard Business school graduate, was hired in February 1996 to run the General Motors’s the Fredericksburg Torque Converter Clutch (TCC) manufacturing plant. At 29 years old, Hinrichs was GM’s youngest plant manager. Hinrichs was inheriting a poor performing plant that continually underachieved, losing money year after year. Improvements were desperately needed to increase the efficiency of the manufacturing process and reduce operating costs. GM had considered shutting down the plant; however, when a new bonding process, using carbon fiber, for the TCC was approved in 1995, GM instead invested thirty million dollars into the Fredericksburg plant to incorporate the new process.
The owner of Hansson Private Label (HPL) must determine whether or not to accept an aggressive expansion project that would preclude the company from pursuing any alternative investment opportunities for several years. The investment, if successful, would offer numerous benefits to the company, capturing greater market share, strengthening relationships with major customers, crowding out competition and increasing firm value. Nonetheless, the decision carries significant risks and could lead to a substantial decline in firm value, if not bankruptcy, should any number of variables prove unfavorable to HPL. Moreover, the project relies heavily on a contract with a single large
Organizations that strive to be a leader in an industry must look beyond their domestic boundaries and expand into international markets. The Ford Motor Company remains the second largest automotive manufacturer in the United States and fifth largest automotive manufacturer in the world with Toyota leading the way. This essay will address the Ford Motor Company’s strategic approach to compete internationally and identify which resources and capabilities make it attractive to compete internationally. Additionally, the Ford Motor Company’s diversification strategy options will be described. Lastly, we will identify how chosen diversification strategy options would lead to a strategic fit for the Ford
Later Rayovac Company’s (spectrum) diversification into other four industries could have been lead by the attractiveness these companies as seen in the attachments (attachment A), the first acquisitions of Remington Products Company and United Industries Corporation had very good scores on the basis of attractiveness weighted score at 7.70 and 7.1 respectively which analyst would say was way above the averages. The other two acquisitions which had an almost related
However, there has been present a considerable cyclicality in the Chemical Industrial Products manufacturing industry due to which the M&A deals have been a common tool of survival for the competitors as well as for the big players to capture the integrated products markets and create value across the value chain. Therefore, Blackstone has been valuing a backward integration as a due.
1. Is the acquisition of Royal’s linerboard mill and box plants a sound strategic move? Consider the short- as well as long-term outlook for linerboard prices and the profitability of the linerboard industry. Furthermore, what basis, if any, is there for expecting AtlanticRoyal’s combined linerboard and box mill operations to do better/worse than the industry overall?
They were not so much interested in vertical integrations, but in seemingly unrelated diversification. Their strategy for this has been to identify companies with growth rates between five and seven percent, along with other criteria. By limiting the growth size they were able to acquire large enough companies to be worth their time, but small enough companies to allow for great improvements and implementation of their DBS process.
Chapter 7: Merger and Acquisition Strategy --- The Acquisition and Restructuring of Kia Motors by Hyundai Motors (written by Seungwha Chung and Sunju Park)
The company understands the risks for working with U.S. auto industry especially during the recession in 2008, so they venture out to produce four new business units to minimize it by looking into investing on early-stage opportunities.
In reviewing this article it was observed that some employees were skeptical of the merger between Chrysler and Daimler-Benz. Daimler-Benz employees were proud of the elite image and were concerned about having that tarnished by another company. Chrysler employees voiced concerns about the addition of a foreign partner to one of America's auto manufacturers. Employees needed reassurance that this merger was going to be a success! In light of all the adversity both companies faced since announcing their plans to merge, how did they remain so steadfast in their commitment to pursuing this merger? What kept them believing this merger was a good deal that deserved a second look? To answer these questions I want to step back and discuss what I
They used many approaches to cost reduction, including bench-marking our rivals. For example, they took apart vehicles to see what they could do to modify the products and to lower costs. They went in for e-sourcing, and today they are the largest company doing e-sourcing in India and one of the leading ones in the automobile industry worldwide. In two and a half years, they reduced the break-even from nearly two-thirds of capacity utilization to around one-third, which meant that even if the market shrank by close to 60 percent, they would still be in the black. The whole organization really got together to ensure that the bleeding stopped