Recent orders
ACT Aviaries Pty Ltd ACN 008 999 979
Dale Godwin
Director
ACT Aviaries Pty Ltd ACN 008 999 979
Dear Attorney General
ACT Aviaries Pty Ltd appreciates the opportunity to provide this submission expressing the need for urgent amendment of the new Commonwealth Legislation.
Dale is the Director and Owner of a small business, ACT Aviaries Pty Ltd. Dale appreciates the new Commonwealth Legislation relating to sale of goods contracts, which is yet to be amended. He acknowledges that the Act will bring solution to sellers and other persons suffering losses and damages through inability to recover goods and other properties from buyers who default payment. The current Sale of goods legislation in Australia provides remedies to the seller where the buyer defaults payment depending on the terms of the contract. However, in some cases, it does not provide any remedy, irrespective of the terms applied in a sale of goods contract. To small business traders, the problem is compounded by the fact that most of them have limited knowledge in relevant legal details relating sale of goods contract. Thus, in many respects, the new Commonwealth Legislation will codify the existing sale of goods law and will provide some certainty to the small business traders in areas where in the past, uncertainty has flourished. Dale is concerned that there are many pending cases relating to the aforementioned issue, which are likely to see more sellers suffer losses or damages under the current sale of goods legislation. Therefore, he urges that there is urgent need for amendment of the new Act to rule the pending cases, including his own.
Evidence of need
Generally, the sales of goods legislations in Australasia stipulate that the risk of loss, damage or destruction to the goods passes from the seller to the buyer upon the delivery of the goods to the buyer and not upon the transfer of title. Further, it provides that if a seller passes goods to a buyer, who later becomes insolvent without having settled the full debt, the goods forms part of the bankrupt estate and hence, becomes part of the properties to be distributed on prorata basis among all the unsecured creditors, including the sellers. However, the same legislation provides allowances for introduction of retention of title clauses or a Romalpa clause into a contract by the parties which allow them to decide when the property in goods is to pass from the seller to the buyer.
Romalpa clauses provide a chance for the seller to take advantage of appropriate sale of goods legislation to reserve the title of the goods sold on credit terms until the buyer pays the full price for them. Therefore, Dale acknowledges the various advantages of applicability of Romalpa clauses in contracts. For instance, the Romalpa clauses give an opportunity to the seller to recover the goods, in circumstances where the buyer becomes insolvent, notwithstanding the fact that the agreed final date for payment is not due. In addition, these clauses help in creation of a trust relationship between the buyer and the seller especially where the goods are meant for a re-sell.
However, there are several difficulties that attend to the application of Romalpa clauses that mostly affect small business traders. For example, no remedy is provided for to enable the seller to trace goods or the proceeds from a re-sale of goods by a buyer, but which are not invoiced as unpaid items by the buyer. In addition, it is difficult to trace the proceeds from a re-sale of goods are not kept in a special account on behalf of the seller. This explains the fact that though the use of Romalpa clause have served as instrument for commercial certainty for small business trades such as ACT Aviaries Pty Ltd, there have been myriad of complications surrounding their application.
The recent ACT Aviaries Pty Ltd and Parklife Pty Ltd case illustrates many of the issues that are at stake with the current sale of goods legislation in Austrasia. In this case, Dale Godwin, Director and Owner of ACT Aviaries Pty Ltd signed a contract with Eric Sully, the director of Director of Parklife Pty Ltd to supply different items necessary for installation of a butterfly enclosure. In the agreement, the parties incorporated the following Romalpa clauses;
Clause 5(a) provided that the seller retains ownership of the goods until all accounts owed by the buyer to the seller are fully paid
Clause 6 provided that if the goods are resold, or products manufactured using the goods are sold by the buyer, the buyer should hold such part of the proceeds of any such sale as represents the invoice price of the goods sold or used in the manufacture of the goods sold in a separate identifiable account as the beneficial property of the seller and shall pay such amount to the seller upon request.
Parklife Pty Ltd was required to pay the purchase price to the seller within a period of 90 days after delivery in accordance with the terms of the agreement. During the time of delivery, Dale had left surplus aluminium railings worth about $800 for future maintenance of the Aviary. However, the credit period was barely over before Eric Sully contacted Dale to inform him that Parklife Pty Ltd had become bankrupt, without having settled the bill for the butterfly enclosure. After receiving the insolvency report, Dale sought to collect the aluminium railings he had left at the site but Eric Sully informed him that they had been combined with other materials by the employees of Parklife Pty Ltd and used to make model butterflies, which had been given to Weston Primary School. Dale learnt that the School’s Parents and Community Association donated $1000 to the Butterfly Park as an indication of their appreciation. The railings were not part of the unpaid bill by Parklife Pty Ltd. The current sales of goods legislation in Austrasia does not provide remedy where goods in question are not traceable in the invoices of the seller as part of the unpaid bill by the buyer. Hence, despite the inclusion of the above Romalpa clauses in the contract, it is difficult for Dale to trace total or part of the proceeds given as a donation to the park.
In a separate contract, Dale offered bird cages to Eric Sully for sale at $50 each on the condition that Dale retains ownership of the items until Eric clears the bill for the items. They agreed that Eric would keep the proceeds on behalf of Dale in a special piggy bank. Later, Dale asked for the bird cages back and Eric Sully declined honour the request stating that the items were selling like hotcakes. Eric promised the Dale that he would save the remaining cages for the gift shop and keep the proceeds in a special piggy bank. In accordance with the current sale of goods legislation and the terms of the contract If Dale can trace the proceeds kept in the special piggy bank as well as the remaining cages from Eric if he honours the promise. However, Dale may not be able to trace proceeds from the already sold cages if Eric fails to keep the monies in a separate special piggy bank as agreed. Despite the inclusion of a Romalpa clause giving Dale right over the proceeds and the cages, he may only be able to recover the remaining bird cages in that case. These cases demonstrate just a few of the many complications that small business traders are encountering with the current sales of good legislation in Austrasia. Thus, among other issues, the new Commonwealth legislation needs to be amended urgently so as to address the aforementioned issues among others.
The need and to give effect to trust to extend the meaning of proceeds
There are two issues that the new legislation needs to address in relation to whether trust has been created in a contract. To start with, an issue arises on whether an agreement for a trust is capable of operation. The case between Dale Godwin and Eric Sully makes it clear that the provision for trust within the conditions set in the contract will be effective when trust is created between the parties. Secondly, it must be established whether trust has been applied in the contract in accordance with the agreement between the parties. This makes it more difficult for the sellers for practical reasons.
Despite an agreement, the buyer may fail to keep monies received by from a re-sale in separate account to service the debt owing to the seller. But the Queensland District Court in Rondo Building Services v Casaron case held that where the buyer failed to honour the agreement to keep the proceeds in a separate account, the trust never operated. Though this is arguably correct, it is quite restrictive to my view. In reference to the case between Dale Godwin and Eric Sully, this makes it difficult for Dale to trace the proceeds in case Eric fails to keep the keep the monies received from the resale of bird cages in the special piggy bank.
Finally, as demonstrated in the ACT Aviaries Pty Ltd and Parklife Pty Ltd case, there is need to extend the meaning of ‘proceeds’. Currently, there is no remedy to the seller for proceeds derived by the buyer from goods delivered by the seller but which are not part of the unpaid bill, even under the equitable doctrine of tracing. Thus, where tracing is concerned in regard to such proceeds, the new law need to preserve the right of the seller, even if it means tracing part of the proceeds. However, it may be argued that if trust has arisen between the parties and the buyer fails to honour the agreement, the seller may still rely on other legislations such as the Discrimination Act 1991. But this might meet some difficulties given the other rules affecting an agreement such as the rules of insolvency.
Conclusion
The new Commonwealth Legislation will be of great utility with respect to the commercial sale of goods. It will help in addressing number of difficult legal issues that have arguably proper operation of the current sale of goods legislation. Most importantly, it will help in providing solutions to small business traders who are mostly affected and who are on the verge of experiencing lose or damages. This explains the fact that there is urgent need to amend the new Act, which will reflect the interests of small business traders and hence, bring certainty to sellers who have pending cases.
References
ACT Parliamentary Counsel, Discrimination Act 1991, 2011, [Accessed, 15 September, 2011], http://www.legislation.act.gov.au/a/1991-81/current/pdf/1991-81.pdf
Gillies, P, why it is important to know when title has been transferred, Business law, Federation Press, Sydney, 2004.
Hamilton, G. H, Invalidation of securities upon insolvency, Federation Press, Sydney, 2000
Jones King Lawyers, “Retention of Title (A Fresh Perspective)” 2010, accessed [15, September, 2011], http://www.worrells.net.au/library/insolvency/Retention%20of%20Title.pdf
Kelly, D., Hayward, R., Hammer, R. & Hendy, J., sale and supply of goods and services, Business law, Taylor & Francis, New York, 2011.
Sihombing, J. E., Goods: sales and securities, Hong Kong University Press, 1997
Thampapillai, D., J, Retention clauses in Australia, 2010, [Accessed, 15 September, 2011], http://works.bepress.com/cgi/viewcontent.cgi?article=1000&context=dilan_thampapillai&sei-redir=1#search=%22romalpa%20clauses%22
Turley, I, Principles of commercial law, Routledge, London, 2001
Tomasic, R., Bottomley, S & McQueen, R, Corporations law in Australia, Federation Press,
Sydney, 2002
Acquisition Report of OF Y LIMITED
Acquisition Report of OF Y LIMITED
Student Name:
University:
Subject:
Instructor:
September 19, 2013
Table of Contents
Content…………………………………………………………………………………Page
Letter of Transmittal…………………………………………………………3
Executive Summary…………………………………………………………4
Introduction…………………………………………………………………..4
Analysis………………………………………………………………………5
Recommendations…………………………………………………………….8
Conclusion……………………………………………………………………8
References……………………………………………………………………9
Letter of Transmittal
To: THE MANAGING DIRECTOR, X LIMITED
From: “PUT YOUR NAMES”
Ref: 45, INDIA, BOMBAY
RE: ACQUISITION OF Y LIMITED
A per your request to prepare a report detailing advice regarding the potential acquisition of Y limited, I have assessed the fundamental information concerning the subject matter and the report is as outlined above.
The main aim of this analysis is to provide the potential returns and risks of this impending acquisition. In doing so, the report has narrowed down its findings to country-specific risks and returns as it applies to the IT industry.
It was a wonderful experience working on this project, and hope to continue working with you in your future projects.
Thanking you,
“YOUR NAME”
Executive Summary
Expanding into new global markets through acquisition is much the same as venturing into a new enterprise. Most multinational companies often fail to succeed in international markets because of poor or lack of due diligence of the host-nation’s culture, as well as country specific aspects such as national politics, societal attitudes, technological differences and economic barriers. Companies need to be vigilant to factors such as political landscapes, for instance terrorism and civil wars to they make acquisition decisions because such elements can ultimately result in enlarged costs of conducting business operations comprising hiring of security personnel to secure your premise or buying business insurance to protect your business against possible damages.
Potential investors need also to consider intangible assets while determining the value to the company to be acquired. Intangible assets entail, the level of the management team (whether strong or not, the reputation of the company, the growth trends of the IT industry, whether the company has skilled workforce, the customer loyalty and concentration, the trade secrets of the company, the quality of reporting its financials since Y is a limited company and the geographical location of the company. Therefore, in establishing the real value of Y limited, X limited should peg the value of Y limited on those unique strategic advantages that only Y limited can achieve.
Introduction
Several multinational IT corporations and not just Indian firms are increasingly venturing into the global markets because they have noted that success cannot be achieved only within their domestic markets. For Indian IT Company, venturing into international markets does not merely mean that there are opportunities outside Indian geographical segments that they can tap, but it also means the opposite (i.e. other multinational IT companies are also India as a potential investment location). For companies with great vision and mission such as X limited, they aspire to grow and expand both in the domestic and global markets. Hence, international venture is being sought by X limited mainly to acquire economies of scale and to reduce the risk of the reliance on the saturated local and geographical market segments with regard to their global rivals.
Analysis of the potential returns and risks
Economic barriers: International concerns causing business failures include hidden costs for instance internal regulation and bureaucracy. The monetary and fiscal policies in Europe can affect the monetary exchanges in France that play a significant role regarding the operational expenses such as paying of wages and purchasing of materials. France has an open tax system and there are no hidden fees which can result in the increased cost of running business.
Societal factors: The perception of the public is a significant component of a company’s global reputation. Therefore, looking at the country’s societal beliefs and issues are important for the success of X limited. According to (Sherman, 2007 pg, 16) a survey carried out by GlobalScan, 8 out of ten people in France belief that companies should be partly responsible for minimizing human abuses in states where they conduct business. Societal elements comprise a company’s impact on the religious beliefs, the environment and local communities. Also, because Indians mostly speak English and their business counterparts and customers in France speak French, Language barrier may affect the company operations and could cause increased costs for hired translators and cultural misunderstanding.
Future Returns: The value of the business should be determined from the perspective of its future returns and performance. The 5-year financial and performance history of Y limited is important to the extent it assists in projecting the future returns and performance of the Y limited once acquired by X limited. Strategically, the future returns and performance of Y limited firmly relies on the current status of the company and has outlined, the Y limited has been recording impressive performance and returns of up to 20% per annum, a clear indication that the future returns and performance of the company would be look good unless something tragic happens. Because the value of the business is not entirely based on the price (for example the million Euros that Y limited has proposed), X limited has to look at associated deal Terms and structure.
Various business values can exist due to various operating assumptions, payment terms, and deal structure among others and not because of various valuation modes. Some of the drivers of business value include; future performance, cash flows as opposed to profits, deal structure, financial return expectation, as well as the asset type.
Political Risks: Political events and decisions usually have an unpleasant effect on the operations of a company. Political risks comprise actions of political groups and governments, which restrict company transactions, causing profit loss. In severe instances, political risk might include property confiscation. Political risk can take various dimensions. France, for example after last year’s general election some policies may change, because of the new leadership that may have a different ideology and change earlier policies. Within the macro-level, the political risks may arise as result of external elements such as fractionalization of ethnic groups, political systems, societal fragmentations along the lines of religion, caste, and language, political instability of the neighboring states and reliance of major political power. Within the micro-level, the potential risks may be caused by changes in policies and laws in areas such as import duties and taxation, currency convertibility, and the control of dividends repatriation among others.
Micro-Analysis
The best way to assess the level of country-specific risks is through understanding the way the country/government views the operations of the company. X limited should pay attention to the following scenarios and their effect when the acquire Y limited in France.
It can be viewed by the government as a threat to the independence of the country. This is particularly true in scenarios whereby the MNC acquires control of strategic national resources or assets such as IT infrastructure or oil.
It can be viewed by the government as a threat to the local companies. Specifically, the host nation (France) could be concerned about the local companies from declining sectors and those within the promising sector, which require hand-holding.
It can be perceived by the government to be the hiding value, through depressing revenues to minimize tax liability or by way of transfer pricing regulations. In some instance, the government may suspect that the company is intentionally keeping the best technology out of the country.
Potential Advantages of Acquisition
Goodwill and market has been established
There is generation of cash flow
The relationships with the banks and suppliers have been established
There great potential from growth
Economies of scale and scope
Marketing and managerial expertise
Financial strength
Advance technology
Potential Disadvantages of acquisition
Religious heritage
Human resource norms
Corruption and nepotism
Integration of Cross-border supply chain
Supply-chain disruptions
Recommendations
Based on the above, X limited should adopt some defensive and integrative strategies to manage those potential risks.
Integrative Strategies:
X limited should establish proper communications channels with the host nation.
They should make the expatriates familiar with the culture, customs and language of the host nation
Ensure extensive deployment of the locals to manage the business operations
Defensive Strategies:
The company should raise as much debt and equity as possible from the host nation
Where possible, the company should insist on host nation guarantees and
Employ few host-nation citizens in key position
Conclusion
After conducting a thorough background information check, past returns and performance of Y limited as well as the projected returns, together with the potential risks, micro analysis, country-specific risks, and intangible values such as the reputation, customer loyalty, location and quality workforce of Y limited, this report concludes that is appropriate for X limited to go ahead with the acquisition plans because France, has desirable fiscal and monetary policies backed with great political stability.
7. References
Smith, J. 2001. “How do foreign patent rights affect U.S. exports, affiliate sales, and licences?” Journal
of International Economics Vol.55, pp. 411-439.
Gaughan, A. 2001. Mergers and Acquisitions. New York: Harper Collins.
Owen, S. H. and M. s. Daskin, 1998, “Strategic Facility Location: A Review”, European Journal of Operations Research,111, pp
423-447
Sherman, J. 2007. Running and Growing Your Business. New York: Random House.
Wilson, D., 2003. Strategy as decision-making. In Images of Strategy. Oxford: Blackwell.
Hofstede, G. 2001. Culture’s consequences: International differences in work-related values.
Newbury Park CA: Sage.
Acquisition of New Companies by Technology Corporations
Major Project: Similar Change in two Companies.
Students Name:
Affiliated School;
Date;
Acquisition of New Companies by Technology Corporations
In the technology Industry, changes are the daily occurrence and they always bring about improvements and increase the clientele base. It is for this reason that two of the most influential firms in global technology decided to acquire new firms. Oracle Inc and SAP are two of the most influential and well established firms it the global technology industry (Stone, 2004).
Oracle Inc is a multinational company that has been around in the technology industry for the longest time. The company specialized at first in making computer hardware however in 2004, the company acquired Sun (Stone, 2004). This is a company that deals in the development of software. It allowed the Oracle to be able to penetrate into the enterprise application market. The market for the company’s products increased as the clients were able to purchase the hardware with already installed software.
SAP is a company that initially dealt in the production and sale of software, but with time and after the acquisition of Sybase, it ventured into the sale of computer hardware. SAP is a company known for consistency and it deals with its products (McDonald et al, 2006). The acquisition of the company was a counter-reaction to the acquisition of Sun by Oracle Inc.
Oracle Inc and SAP were companies that related very well because they were all in the technology world but in different areas. Oracle Inc dealt with hardware while SAP dealt with software. However when Oracle Inc acquired Sun and ventured into an industry dominated by SAP rivalry started. This led to competition for both hardware and software markets (McDonald et al, 2006). The companies are now dealing with both markets and continue to acquire more companies in an attempt to outdo each other.
The two companies are very similar; this is because they adopted a change by acquisition of other companies, in order to venture into a market where the product they produced initially can find a bigger clientele base.
Brief Description of the Firms
In the competitive world of technology and software development change is a constant and real factor and flexibility is necessary. This is the reason as to why in 2009 Oracle Inc, one of the leading firms in IT bought Sun at $7.4billion. This was to combine the two in order to increase the market share control of the firm in the industry and to increase their client utility level (Ries, 2013). In the same industry, a competing firm, Germany’s Sap, bought a California based company that deals in software, Sybase, at $5.8billion (Inc. Kogent Learning Solution, 2011).
The two companies were able to acquire companies that deal in software in order to increase their clientele base and market share control. Once the companies acquired the software companies, they were able to offer their customers more and better services. This is because the customers could be able to access their services via smart phones. This was a response to change in technology and consumer taste and preference.
Need for change
In any industry, when a company makes a major change, it is taking a big risk. At times it stands losing millions of dollars so the question is: why should the company take the risk of changing?
The main reason is to increase the profit margin. This is because changes in the business are inevitable because there are changes in consumer preference with time. At the same time increases market share-control. This not only increases the market and clientele base for a company. It also creates the insistence aspect in the clients, this means demand will no longer be responsive to increases in price and this is the same as being at the top of the pyramid in the industry.
Changes Experienced after Acquisition of Sybase by SAP
External Change: Market Structure
The acquisition was not to allow for SAP to venture into a new market; this is because Sybase has a small market share especially on database. It was simply to offer the clients of SAP a new improved option and expand in-memory to the already existing applications. This would increase consumer utility and create insistence. But the acquisition meant that Sybase would be no more as it would become part of SAP. The fact that the two companies are from different countries, was a breakthrough in the global market, however in the American market, there was a decrease in popularity (Information Week, 2010).
b). Internal Change: Administrative Structure
There will be an incorporation of both working cultures. The employees from both companies were brought on board; this is because there was need to have all the necessary knowledge and experience combined (Thomasch, 2009). New contracts for the employees from Sybase were drawn up under the new management.
4. Changes experienced after Acquisition of Sun by Oracles Inc
a). External Change: Market Structure
Sun is famous for production of hardware. The acquisition exposed Oracle to a new market; this is because it was formerly famous for the production and sale of software. Diving into a new market led to drastic changes n the strategies employed in marketing and sale. Oracle Inc made the two a pair, in order for a client to purchase hardware; it had to come with the software. Software was to be sold to already owners of the hardware.
b). Employee resignation and shift in production
Due to the acquisition most of the employees from Sun resigned, this was inclusive of the CEO and the engineering team. This led to great shifts in the production and sale of the products. At the same time it became a challenge to be resolved up to date (Thomasch, 2009).
5. Comparison of the two companies
a). The Similarities
Both companies deal in the IT world. They offer software and applications to be used in increasing business transactions by customers. They have e-business as their main basis. They have also improved and increased in capacity and market share by mergers, acquisition and partnerships (Inc. Kogent Learning Solution, 2011).
b). The differences
Product line SAP improves and enhances the core product it started with while Oracle moves towards fusion. This makes SAP to be more stable and predictable and Oracle to be innovative and visionary as well.
Cost and implementation period Oracle experiences a 20% less cost in production of its products and also takes less time to implement a change in the products compared to SAP.
Benefits and Business application SAP’s applications are more practical and preferred by most businesses as opposed to Oracles applications. This means that SAP has more benefit over Oracle in awareness and exposure in the business circle.
Flexibility Oracle is more flexible and easily adopts changes in the industry and this means it easily meets the needs of the customers. SAP is based on bureaucratic processes that take long and make it to be less flexible and decrease the rate at which changes are implemented.
6. Image analysis
Navigator
The change will be as a result of a well planed and strategically placed plan. It is due to pressures from the external forces like change in market and consumer preference and internal forces like change in employee and management structure, or even improvement in innovation. These forces will be directed at the managing team and there is need to come up with the best alternative to navigate through the forces and come out victorious.
Coach
The need for change will be a constant factor. This is because the industry is dynamic and is greatly influenced by the changes in technology. The management team will have to come up with an organizational culture that embraces flexibility. Designed to adopt to any changes in the industry. This means there must be clearly set practices that are capable of ensuring that with every change in the industry the steps taken will lead to a improvement in the organization.
Nurturer
The management will ensure that with time the firm grows to be strong enough to handle any change in the industry. This will be by training staff and creating better strategies to handle change. Adapting to changes will be easier as the firm will have grown and developed in that environment.
Part 3: Diagnosis
Introduction
A diagnostic model is used to come up with the best actions to be taken by a company in order to meet the needs. Different companies in different industries will have different diagnostic models (Rupp, 2010). The model is usually based on the proper analysis of the firm and its environment, identification of the key variables and proper research into the factors affecting the company (Harrison, 2005). This is followed by interpretation of data and statistical analysis that allows for a proper conclusion.
Oracle Inc is a company that has been around for years and was once the biggest company in terms of capacity and revenue in the industry. However poor marketing strategies and managerial decision have made it to be surpassed by other more recent firms. SAP is a firm that is based on bureaucracy but down the years there have been many mistakes and errors made that have cost a lot of time and money. The two companies are trying to come up into the market, but there is need to ensure they are healthy commercial enterprises that will not succumb to economic factors of the business cycle (Samson, 2012).
An efficient diagnostic model for the two companies is the four frames of organization model. It is a holistic model that takes a pragmatic analysis at the business and is time efficient.
The Diagnostic Model
The four frames of organizations model is meant to ensure that all aspects of the firms are well catered for. It analyzes the following four sectors of the firms:
Structural frame.
This focuses on the structure and functioning of the firms in the following areas:
The hierarchy of power and authority – it should be based on bureaucracy where the roles and responsibility of each and every position are clearly outlined. The functions are predetermined to ensure proper coordination, accountability and responsibility. The chain of command is clearly outlined and every department has a head that is to be responsible for the actions of the subordinates (Levy, 1986).
Specialization and division of labour- the required technical qualification and experience for a position. The proper roles should be enhanced to ensure there is efficient utilization of all factors of production for maximum output.
Set goals and objectives for the firm- these should include all long term and short term goals and objectives and a futuristic plan for expansion in both size, magnitude and market influence (May, 2010).
Control and coordination mechanisms- these are supposed to ensure that the actions of the employees and their roles are in line with the already set goals and objectives of the firm.
Human Resource Frame.
Harmony- there should be harmony between the needs of the employees and the needs of the organization.
Work relationship- there should be a good work relationship between the juniors and the seniors. A well structured working environment that offers space for competition, innovation and growth.
Compensation package- this is to ensure that the firm stays competitive and its labour is well satisfied.
Political Frame
Equitable distribution of power- this is to aid in meeting the vested interests of all stakeholders in a democratic way. It also allows for all the stakeholders to feel they are equally represented.
Tactics and conflict resolution strategies-it is meant to ensure that people follow the rules and at the same time the rules lead to efficiency performance by the labour force without any conflict of interest.
Symbolic Frame
Work Culture- focuses on symbolic meaning of actions, words, occasions and even physical structure. It represents the history, the present and the history to be made.
Image Maintenance – the image of the company will be a product of the culture. The work and the output will determine how the firm will be viewed and the PR of the products in the market (Levy, 1986).
Application in Oracle Inc.
Oracle Inc is a dynamic organization that can easily adopt changes; however there are areas that can be improved like:
The structural frame of the company should be based on bureaucracy. This is because it requires having a properly and clearly outlined rules and processes to be followed when enacting a change.
Political frame of the company should be looked because it should encompass the needs of the employees and the company as well. This will aid in ensuring that a repeat of what happened when the company tried to acquire another smaller company and all the employees later on walked out including the president of the company.
Current marketing strategies need to be changed. It should encompass trying to create and ensure insistence by the clients. Sales have been decreasing for Oracle since 2005 after it hit the $6.2 billion revenue mark. This can be attributed to increase in competition from Microsoft in database. It can also be attributed to the poor decision to acquire firms that have been long term rivals. It decreases the moral of workers.
In an oligopolistic global market structure, price wars always lead to loss for both companies. Due to price wars with SAP on customers the companies have both experienced losses. They should embrace non price marketing strategies.
The symbolic frame should be established, the company should formulate a culture that will represent their signature products and improve their PR to the public.
Application for SAP
Political frame should be used to ensure that employee’s and company’s needs are all catered for effectively with minimal conflicts.
Human resource frame should be addressed by ensuring there is dynamism. Bureaucracy has held the company back that operations costs dig a deep hole in the revenue (Pahl, 2009). It takes SAP twice the time it takes Oracle Inc to make software. Inefficiencies in the operations and management will lead to losses.
Structural frame should be well established especially on specialization and division of labour which fosters innovation. Currently the company is on the verge of losing $1.6billion to Oracle because they copied their software. Innovation leads to originality and such cases can easily be avoided. Training their employees to know the customers taste and adjust their products to suit them.
Market diversification – just like how Oracle has diversifies from hardware to software, the company should do so as well in order to increase the market and revenue. This also opens new doors to more discoveries. This can be the expected potential changes.
SWOT Analysis
Both companies have strengths and weaknesses that need to be worked on
Strengths
Oracle Inc – efficient production and operational methods that lead to increased and quick changes. The company also deal in both sale and production of software and hardware, venturing into a market of one aids the sale of the other as they go hand in hand.
SAP Inc – more practical and applicable software that are easily used by people. This is due to consistency over the years, simple and efficient improvement are made on the product and increases their efficiencies. This makes it stable.
Weaknesses
Oracle inc- unpredictability of the company due to drastic changes over the years; this has made the company to experience losses. There is also the issue of employees resigning from firms once the company has acquired it. This can be prevented by expansion of the firm by partnership and not acquiring the firms.
SAP Inc – bureaucratic processes in decision making makes the company to be less flexible in a dynamic and ever changing environment (Pahl, 2009). This creates inefficiencies in production and increases both explicit and implicit cost.
Opportunities
Oracle Inc – venturing into the hardware and software markets opens doors to more partnerships with other firms and increase in revenue. The software creates a promotional package for the company’s products and can be used as a marketing strategy.
SAP Inc- specialization in their product has created and established a good clientele base that is at the insistent point (Pahl, 2009). This is a signature move for them and allows the company to become the leader.
4.4 Threats
Oracle Inc- strict competition from other firms like Microsoft and IBM, this has led to decrease in the market share control from 2005. The negative image created by the rivalry has decreased the number of employees willing to work for the company. This was clear from the resignation of directors and managers from an acquired company
SAP Inc- law suit that has led to a claim of $1.6billion dollars from Oracle Inc. This, plus the time used for the trial has decreased performance and production in the firm.
Potential areas of Resistance
Potential area of resistance is usually in the internal part of the firm. This is because with time the firms have formed a work culture that is about to be changed (Samson, 2012). There is also the aspect of different strategies to be used and this will mean that new employees will have to be taken on board.
Another area is the market diversification, this is a costly activity and the business may fear losses that can be experienced. The market may not be receptive of the products due to insistence to substitutes from other firms.
Recommendations
There is need to analyze the firms holistically. It is the only way to be able to solve age old production, marketing, managerial and acquisition problems that lead to inefficiencies in the long run for the companies (Samson, 2012).
Proper projection of the future expectation while using data in the current regime gives a clear and pragmatic outline of the company. This is what is required for both firms.
Timeline of communication
Communication is one of the most important aspect of any company. This is not only because it enhances coordination but because it improves relations (May, 2010). The timeline of communication in the companies was dependent on the following:
The message
If the message to be passed required to be repeated the timeline would be often and would be structured in a way that it would reach all employees.
The audience
The audience would also determine the frequency of the message, for instance a message to all employees would be repeated , however if the message was meant for the board members it would be discussed in a meeting and that would be the final time unless revisited for special reasons.
Type of communication
Verbal communication
This would most of the times be used in meetings and when addressing large number of stakeholders. It was also used when the communication did not require to be referred to in the future.
Written communication
This is in form of contracts, memos and letters written to the different stakeholders of the companies. This would form part of the communication to the media and to stock market to trade shares.
Rationale
Formal communication
This would be done mostly as written communication (May, 2010). This is because it forms part of the data required to analyze the company. When the companies were acquiring the other smaller companies there had to be well spelled out and written documentation to legalize and proof the actions.
Informal communication
This is mostly done i the form of oral communication. Written documentation is not required in this case at all.At least 4 Communication pieces listed on spreadsheet
First communication piece
Topic Venture into a new market
Frequency of Timeline Often
Stakeholder Stakeholders and board members
Purpose Investment
Communicator CEO of company
Message Acquisition of a new company
Author HR director
Delivery method Board Meeting
Measure Willingness to invest
Second communication Piece
Topic New products and methods
Frequency of Timeline Once
Stakeholder Employees
Purpose Employee training
Communicator HR Director
Message Production of hardware and software
Author HR Director
Delivery method General employee meeting
Measure Willingness to learn new methods of production
Third communication piece
Topic Increase in market
Frequency of Timeline Frequently
Stakeholder Customers
Purpose Increase in sales and revenue
Communicator Marketing Director
Message Introduction of new products into the market
Author Marketing team
Delivery method Advertisement
Measure Increases in sales, revenue and market
Fourth communication piece
Topic Acquisition of a firm
Frequency of Timeline Once
Stakeholder Company to be acquired
Purpose Acquisition of a firm
Communicator Assistant CEO and company lawyer
Message Increase in market share control
Author Assistant CEO
Delivery method Meeting with board members of the company to be acquired.
Measure Signing of contact into agreement
Your analysis of the actual communication plan as seen from the “public eye”
Communication is based on the model and structure of a company. When it is well executed the public will hardly hear of any disagreements however when improperly handled there are always public exposés.
The model of communication should be based on the hierarchy pyramid. This means that the junior employees will not know a lot about the company and therefore not much can leak to the public.
During the process of acquisition and mergers, there is usually a lot of speculation and uncertainty, this was a lesson well learnt by Oracle when it acquired a company and almost three quarters of the labour force walked out. This was viewed by the public as a poorly planned step. For this reason the junior employees should be addressed after the finalization of a contract to ensure that they are also on board and that they do not walk out.
Mass media has a very big impact on the performance of any firm. When the PR of a company is tarnished by media it loses market, investors and even partners. This can be losses and can lead to further selective discrimination from the public in terms of purchases and consumption of goods.
References
Ferguson, S. D. (1999). Communication Planning: an Integrated Approach, Cambridge University Press, London
Communication should be a continuous process in any business enterprise. It should be integrated to be able to reach all the targeted audience. Communication of the same message to different people should not be done by embracing a one size fits all. This is because different people in an organization have different reasons for being there.
Harrison, I. M. (2005). Diagnosing Organization: Methods, Models and Processes, MA Harvard University Press
The book looks at the different ways in which an organization can be able to take an analytical look at its operations and pull out the one area that slows them down. According to the book, most of the methods used to diagnose company problems are usually general and they do not narrow down the problem to be exact. This leads to diagnosis of several problems with the same corrective measures that do not work for all of them.
Inc. Kogent Learning Solution. (2011). SAP, Handbook, Columbia Publishers
SAP as a company has a very organized and well structured administration and production process. This is because its products are very unique. For over the years the company has embraced a signature product and worked on it.
Information Week. (May 10, 2010). SAP Buys Sybase for $5.8billion. (Press Release). Retrieved 13 May 2010
Acquisition of Sybase by SAP was a huge step by the company. This is because it brought about major changes in the industry. It increased its own competition advantage and posed as a great threat to the then expanding Oracle Inc.
Levy, A. Merry, U. (1986). Organizational Transformation: Approaches, Strategies and Theories, Aviation Publishers
It is based on the transformations that organizations go through in every stage of expansion and acquisition. The problems and most mistakes made by managers and the diagnosis best suited for most of the errors.
May, G. (2010). Strategic Planning: Fundamentals for Businesses, Macmillan Publishers
Communication in a business is not all about the message; it is also about passing the relevant message to the relevant people in the most convenient way. Poor communication can be also in the feedback mechanism; this is because most businesses do not allocate any channel in which their message can be responded to.
McDonald, K. Wilmsmeier, A. Dixon, C. D. (2006). Mastering the SAP Business Information Warehouse: Leveraging, Grapevine Publishers
SAP is a business enterprise that is predictable and has a linear relationship with all the inputs and output for this reason; it is easy to master the products. SAP has leverage of consistency over the years and this gives it a competitive advantage over the other companies as its products can be easily used by the consumers.
Pahl, N. Richter, A. (2009). SWOT Analysis: Idea, Methodology and a Practical Approach, Bell Publishers
Swot analysis is easier written down than implemented in the daily commercial activities, the book analyzes an applicable look at the internal and external environment and deciding the best moves to make and what to get rid of. In a nutshell SWOT is applied in everyday activities but it is usually not well structured.
Ries, S. (2013). Oracle Database 11g Database Administration, Springer Publishers
Oracle Inc is a dynamic company that easily adapts to new taste and preference of clients. This is the reason as to why11g Database Administration was a major milestone step in the right direction of increasing consumer utility.
Rupp, A.A. Templin, J. Henson, A. R. (2010). Diagnostic Measurement: Theory, Methods and Applications, Oxford University Press, New York
Improvement in performance is relative to the methods used to diagnosis the weaknesses that companies may have. Difference in structure of a company calls for different methods and application in solving similar weaknesses. The applications should at all times be tailored to suit the company.
Samson, D. Daft, L. R. (2012). Management, Random House Publishers
Management should be very influential when it comes to bringing about the necessary change required. This can be by making decisions that will not only allow for change to be adopted in the company but also a change mechanism that ensures there is a smooth transition at all times.
Stone, M. F. (2004). The Oracle of Oracle: The Story of Volatile CEO Larry, Colombia Publishers
It offers the story of the founding father and CEO of the company. The reasons behind every decision made and the lessons learnt from all the mistakes in the past years. The book also focuses on the strategies applied by the company in an effort to keep its commanding position in the industry despite the challenges and increase in competition.
Thomasch, P. (August 20, 2009). Oracle Wins E. U Approval to buy Sun Micro-System, Reuters. Retrieved 2009-08-30
Oracle Inc had been for long trying to get the European Union to agree for the company to finally sign the agreement. However there were several issues when it came to the two companies coming together. The EU thought that it would lead to a monopoly especially given the fact that the two companies commanded substantial market share control. The contract was later allowed to become valid.