Question

Please include a word count of your post (excluding citations and references), no matter whether it is an initial post or a reply.

Find a company that has recently acquired a company from a different industry. Look at the justifications in the press release (or other documentation). Describe both businesses briefly (the one that was doing the acquiring, and the one that was being acquired). Does this appear to be related diversification, or unrelated diversification? What benefits do they hope to achieve with this action (correlate this benefit with one of the “standard” benefits discussed in the text).

Answer 1

Let me tell you about both the companies :-

1st company which is doing acquiring :- Aircraft Engines which is into Business to business collections, which collects money from the customers, as they have given their product to them on credit basis ...i'e' Aircraft engines, radar lights & propellers.

2nd Company which is getting acquired :- Plastics business...which is also business to business collections process, which collects money from the customers, as they have given them plastic sheets, plastic rollers and plastic tubes.on credit basis.

As both of them are totally from different industry, however the work they both are doing is the same and is has related diversification. Aircraft engines company works on the very large scale as the product they are selling is really very expensive, but the plastics company works on small scale as compared to the Aircraft engines. Hence the profit margin is very high for Aircraft engines company. This Aircraft company also has the perfect profit making calculation as they work on 80-20 rule or theory. They majorly targets the TOP 20 customers who are having high amount Past due, and as soon the huge money comes in while doing collections, they maintain a proper dashboard and track each and every thing and invest the collected huge money into future production. As early they collect, as early they invest.

Hence, they will apply the same theory in the business which is getting acquired and follow the same principal, so that profit can be earned. Also, daily, weekly & monthly revenue or collections tracking should be done so that we can see proper forecasting for month end, and basis on the forecasting, the company can do their future production accordingly.

Thanks,