Discussion Question and 2 responses

Business Finance

Mergers

One of the hottest topics in the business press are rumors of major corporations merging together. Just as the entertainment press likes to report on rumors of celebrities who are dating, the business press likes to speculate about “corporate match-making”. For example, Whole Foods was subject to rumors about several potential suitors including supermarket giants such as Kroger, Albertson’s, and Walmart. But the world was somewhat surprised when a merger deal with Amazon was announced, as this seems like a bit of an “odd couple”.

Go to Google news or other news search engines and see what the latest merger rumors are. Pick one of the merger rumors that seems the most unusual to you – one that makes you wonder why these two companies think they are a good match for each other. Share the link to the article with your classmates, and discuss the following issues:

  1. Is this merger horizontal? Vertical? Conglomerate (unrelated diversification)?
  2. Why do you think these companies would or would not make a good match?
  3. Do you think this merger will actually go through? Or won’t get beyond the gossip stage?

Rubric Name: MBA/MSHRM/MSL Discussion Grading Rubric – Timeliness v1

Criteria

Initial posting reveals a clear understanding of all aspects of the threaded discussion question; uses factual and relevant information; and demonstrates full development of concepts.

Initial posting demonstrates legitimate reflection and answers most aspects of the threaded discussion question; full development of concepts is not evidenced.

Initial posting demonstrates some reflection and answers some aspects of the threaded discussion question; Limited development of concepts is evident.

Initial posting was not on topic; the response was unrelated to threaded discussion question; and post demonstrated only superficial thought and poor preparation.

Responded to the required number of students and to the professor, if appropriate, for every discussion. Demonstrated analysis of others’ posts; extends meaningful discussions by building on previous peer posts and offering alternative perspectives.

Responded to almost all of the required students and to the professor, if appropriate, for every discussion. Provided comments and new information to other posts; not all responses promote further discussion of the topic.

Responded to some students and to the professor, if appropriate, for every discussion. Little depth in response; agreed or acknowledged one other classmate’s initial posting.

Did not respond to any student or the professor.

Refers to and properly cites either course and/or outside readings in both initial posting and responses to peers.

Refers to and properly cites course and/or outside reading in initial posting only.

Makes some reference to assigned readings with some citations or cites questionable sources.

Makes no reference to assigned readings without citations or cites questionable sources.

Demonstrates mastery conceptualizing the problem; viewpoints and assumptions of experts are analyzed, synthesized, and evaluated; and conclusions are logically presented with appropriate rationale.

Demonstrates considerable proficiency conceptualizing the problem; viewpoints and assumptions of experts are analyzed, synthesized, and evaluated; and conclusions are presented with necessary rationale.

Demonstrates partial proficiency conceptualizing the problem; viewpoints and assumptions of experts are analyzed, synthesized, and evaluated; and conclusions are somewhat consistent with the analysis and findings.

Demonstrates limited or poor proficiency conceptualizing the problem; viewpoints and assumptions of experts are analyzed, synthesized, and evaluated; and conclusions are either absent or poorly conceived and supported.

Initial post occurs in a timely manner (1 – 3 days into module) allowing ample time for classmates to respond and engage.

Initial post occurs later (4 – 5 days into module) allowing limited time for classmates to respond and engage.

Initial post occurs substantially late (6-7 days into module) allowing minimal to no time for classmates to respond and engage.

Initial post occurs after the first week of the module.

Overall Score

#1

Amazon may buy Target, but Apple will buy Netflix

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posted Jun 3, 2018 12:15 PM

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This was an interesting topic and I found a few different examples of large companies that are rumored to be merging. The first is that Apple is purchasing Netflix and the second is Amazon may merge with Target. Now I will answer the 3 different questions for each of the mergers above. Is this merger between Apple and Netflix horizontal, vertical, conglomerate or unrelated diversification? This is hard to definitively pin down. Apple is such a vast company with their hands in so many different sectors of business, but if I hard to chose one I would say this is a conglomerate. Apple is primarily a tech related company and Netflix is a company that offers a video streaming service. Why do I think these companies would or would not make a good match? I think these companies would make a great match. McQueeney (2018) stated “people have been arguing that Apple should use its massive cash pile to make a major media acquisition for years now, and video streaming giant Netflix is typically the first choice among speculators.” Additionally, Apple could use Netflix’s infrastructure to add a video streaming service to their list of available services much like their popular music subscription service. Do I think this merger will actually go through? According to McQueeney (2018) “Apple is gearing up to make a major acquisition of a car company, video game company, or entertainment company. The analysts suggested that there is as high as a 40% likelihood of Apple acquiring Netflix soon.” Is the merger between Amazon and Target horizontal, vertical, conglomerate or unrelated diversification? Because both companies are in the retail industry or tertiary sector part of industry this merger would be a horizontal merger. Why do I think these companies would or would not make a good match? I think these companies would make a good match. Amazon is the premier online retailer, but they do not have any stores. Target is a premier retail store chain, which most shoppers consider to be nicer or classier than Wal-Mart. Also, Gene Munster of Fortune Magazinestated, “Amazon-Target combination would set up a U.S. retail duopoly. On one end, Wal-Mart and Jet.com would focus on the middle- and low-income consumer, controlling about 25% of the market. On the other end, Amazon, Target, and Whole Foods would go after the high-income consumer, controlling about 15% market share” (Munster, 2018). Do I think this merger will actually go through? This merger is still in the rumor stage. Amazon spent a lot of money in 2017 when they purchased Whole Foods. I do not think it would be a smart decision for Amazon to make another very large investment before proving to investors they made the right decision when they purchased Whole Foods in 2017.

McQueeney. 2018. 3 Huge Mergers and Acquisitions That Could Happen in 2018. Retrieved from https://www.zacks.com/stock/news/287701/3-huge-mergers-and-acquisitions-that-could-happen-in-2018

Munster. 2018. Commentary: 3 Reasons Amazon Will Buy Target This Year. Retrieved from http://fortune.com/2018/01/05/amazon-target-buy-walmart-whole-foods/

#2

Merger of Sprint and T-Mobile

Contains unread posts

posted Jun 3, 2018 12:37 PM

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Hello Class,

For awhile, I’ve heard of a rumor that both Sprint and T-Mobile would merge together. In this link (https://www.cnbc.com/2018/05/30/att-ceo-randall-stephenson.html), AT&T CEO Randall Stephenson believes it’ll be difficult for the merger to be appproved by U.S. regulators. In this article by Alex Sherman, Stephenson (2018) answers the first question by stating that this merger “is a classical horizontal merger where they are taking a competitor out of the marketplace” (para. 2).

The only way I see this wouldn’t make a good match if prices start to rise for phones/services from its competition. As someone who has Verizon and is happy with its service, I should I say I don’t care if they make a good match or not, but I will still keep track of the latest news and rumors regarding this merger. I personally don’t think the merger will actually go through because I see this going the same way as AT&T try to buy T-Mobile in 2011 (Sherman, 2018, para. 6). The deal never went through as the Department of Justice sued in order to block the deal from happening.

References

Sherman, A. (2018, May 30). AT&T CEO Randall Stephenson says Sprint and T-Mobile have ‘tough hill to climb’ to get merger passed by regulators. CNBC. Retrieved from https://www.cnbc.com/2018/05/30/att-ceo-randall-stephenson.html

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