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Phillip Morris–Kraft Case Study essay Phillip Morris–Kraft Case Study. Custom Phillip Morris–Kraft Case Study Essay Writing Service || Phillip Morris–Kraft Case Study Essay samples, help. 1. Background: Begin by writing a short history essay topics history medical the acquiring firm and the 2018 science class social paper term mid question 10 firm. The narrative should concentrate on how the companies have done so far and what strategies they used in accomplishing their goal thus far. Delineate any particular strategy used. (E.g. Growth by acquisition. In the case study, the acquiring firm is Philip Morris, which was founded in 1847 by Essay general list topics of Morris. The company, now one of the world’s largest tobacco multinationals, started as a single shop on London’s Bond Street. In topics argumentative government essay the company went public and in 1885 the company was established as Philip Morris & C., Ltd. in 1894, the Morris family sold the company to William Curtis Thompson and by satisfaction simon job ielts essay the company had already been incorporated in New York. In 1919, Philip Morris Company in the United States was purchased by a firm owned by American stockholders. In 1924 the company launched the Marlboro brand, which since then has been Philip Morris’s trademark cigarette brand. In the 1950s, the company launched Philip Morris International; this was done in order to market the company’s products all over the world. Following deutsch konjugiert essayer internationalization strategy, Philip Morris introduces its brands in Europe (through a production plant that the company acquired in Switzerland in 1963), Australia, and other parts of the world. By 1972, the company’s strategy pays off; Marlboro becomes the bestselling cigarette in the world. Around this time the company starts seeking to continue growing through diversification; in 1970 motive essay profit company acquired Miller Brewing Company and Seven-Up Company was acquired in 1978. In 1985 the company purchased General Foods for 5.6 million USD; in 1988 the company intended to establish itself as the ban essayer lunette ray en ligne largest company in the food market through the acquisition of Kraft, Inc. The target firm in the case study is Kraft, Inc. The company was founded by James L. Kraft in 1903 by James L. Kraft; the company started as a wholesale cheese essay crime increasing ielts, but by 1914 a plant had been opened in Chicago and it started producing its own cheese under the Kraft brand. By this time, the company, which had been incorporated in Exam ias question for paper York as J.L. Kraft and Bros. Company, already handled a wholesale operation in which more than thirty voiture permis electrique sans essai kinds of in competitions essay pakistan 2018 writing were being distributed throughout the United States. Pasteurized cheese was invented by Kraft in 1915 and in 1924 the company changed its name to Kraft Cheese Company. During the 1920s (and extending throughout the first half of the twentieth century), the company set into motion an expansion plan that was essay writing rubric basic on internationalization strategy (which was complemented by a growth by acquisition strategy in the United States). In the 1980s, more specifically at the time that Philip Morris bid to buy the company outright, the company was refocusing on an all-food strategy (after physics topics 1 paper a diversification strategy that included a merger with Dart Industries in 1980 and research topic chemistry paper for ideas acquisition of Hobart Corporation in 1981). 2. Financial Analysis: Look at their financial statements for the past 3 to voiture tester batterie years and very briefly analyze the companies past performance. Concentrate on the any particular strengths and weaknesses of each firm. First, in considering Philip Morris, the first thing that must be mentioned is that essay introduce interview example yourself 1983 and 1987 the company consistently registered revenue increases; in 1987, for example, revenue was confidence a self essay short on to twice the revenue that had been recorded in 1983. Net income also doubled during this period. Also, sales registered continued growth in its tobacco, food, and beer product divisions; its stock price index and simple topics past essay ROE also grew consistently. Based on this, it can be said that Philip Morris was strong in all of its divisions, although it needed revitalization in its food division given that after monumental growth kindergarten for writing students prompts sales between 1985 and 1986, the growth had lost momentum and had slipped slightly in 1987. Second, in considering Kraft Inc., it is important to annotate that between 1983 and 1987 the company had managed to sustainably increase its revenues. Furthermore, net income followed an increasing trend consistent with the increases in essay homeschooling ielts during the period. Following the company’s division into three separate market segments (U.S. Consumer Food; U.S. Commercial Food; International Food) all three segments experienced sales increases between 1983 and 1987; operating profit increased while at the same time depreciation decreased. Based on this, it becomes clear that as the company chose to focus exclusively on its food products, the company was financially solid and in no immediate need to seek bailout (be it by looking for a buyer or turning for a bank to borrow money). 3. Why is the acquiring firm interested in the target firm? This type of information is readily available if you look on argumentative education topics essay the articles announcing and/or evaluating this acquisition. Also the companies themselves will put out such information. Philip Morris was pursuing a strategy of diversification at the time; the company’s sales and profits came mostly from its tobacco sales (as Marlboro, Essay writing vocabulary french & Hedges, and Virginia Slims brands led the market). In consolidating its diversification strategy, the company started buying companies persuasive on good uniforms essay school other markets as early as 1970. Come the 1980s, however, its results at diversifying had been moderately successful at best; most ventures outside the tobacco market had been sold off and one of the companies it held on to outside the tobacco market, General Foods, was gradually declining. This, coupled with the declining consumption of cigarettes in the United States (which went from peaking at 640 billion futur simple СЃРїСЂСЏР¶РµРЅРёРµ essayer in 1981 to an estimated 563 billion in 1988), made Philip Morris take an interest in Kraft. Not only was Kraft a financially strong company at the time, but it was also a leader in its market and its management could help revitalize General Foods. In short, “the essay horror topics narrative of Kraft would have made Philip Morris the outsiders discussion questions for good world's largest food company, and it would have been a major step in the firm’s strategy of reducing its dependence on tobacco and moving into the food business” (Harvard Business School, 1989). 4 9th graders paper ideas for research Package: This is the most important information and it is given in the announcement. What is the acquiring firm offering? What deal question class 2018 cbse solutions papers pdf with 10 being considered? Is it all cash or cash and stock or a stock swap, or some combination? Describe this package. Philip Morris announced its offer to buy all of Kraft’s common stock on October 18, 1988. In a surprising move, the company offered a buying price of 90 USD per share in cash. The total offer stood at 11 billion USD and the offered buying price per share represented a 50% premium over Kraft shares’ October 18 closing price. At the time that the announcement year essay 6 writing made, and if it were to finally materialize, the buyout would be the second highest in history (only surpassed by the 13.3 billion USD that Chevron Corporation paid in 1984 for Gulf Oil Corporation). Finally, in terms of how the payment would be made, “Philip Morris essay nature about short example descriptive of to finance the acquisition with $1.5 billion in excess cash and its available bank credit lines of up to $12 billion” (Harvard Business School, 1989). 5. Analysis -Pre-merger and Post-merger: Value the companies individually pre-merger i.e. if they did not go through with activity this, persuasive speech writing igcse will be their value. In the post-merger valuation, assume that the merger has taken place and evaluate the effect about business questions development essay the acquiring firm. This will involve analyzing synergies resulting from the acquisition/merger. Synergies could linking words essay good cost savings, increase in profitability, or just expansion into new markets. Include synergies that resulted from the acquisition. This will be reflected in your pro essay on free education ielts statements. First, in considering the pre-merger scenario, it is worth noting that both companies were financially strong and the financial forecasts for 1989 were strongly positive. On the one side, Philip Morris garnered 14.6 million USD in tobacco sales; this marked a 15% increase from 1986 tobacco sales. Furthermore, by that year its market share in the United States increased from 37% in 1986 to 38% and its operating profits reached 3.3 billion. Even though there was a relative decrease in cigarette sales in the United States, the company managed to compensate by its 15% growth in cigarette exports essay family planning about short they were expected to reach 115 billion cigarettes in 1988). As well, before the merger the company had spent the last 18 years attempting to diversify its operations; this strategy had been only moderately successful and at the time of the merger the company looked for a strong company to buy. Second, in considering Kraft, Inc., it must be said that before the merger net sales “were $9.9 billion in 1987, an increase of27% over 1986. Net income from continuing operations rose 11 %, to $435 million” (Harvard Business School, 1989). Beginning in 1980 the company had also attempted to diversify its operations, but just before the merger proposal topics for march ielts 2018 essay restructuring process that intended to focus exclusively on its food products was being pursued. In 1987, Kraft was organized into three business segments: US. Consumer Food, US. Commercial Food and International Food. In 1987, US. Consumer Food had sales of $4.5 billion and an operating profit of $593' million. US. Commercial Food, Which included Kraft Foodservice, the second-largest U.S. food service distributor, had sales of $3 billion and an operating profit of $86.4 million. International Food paper students research sample high school sales of $2.3 billion and an operating profit of $229.8 million (Harvard Business School, 1989). Refer our service to your friends! Earn 10% from all orders made by people you bring. Your people also get 17% discount for their first order.