Business merger Essay
General motors and Ford Corporation are among the largest automakers in the world. General Motors Company was founded on September 16, in 1908. It was incorporated in the United States, flint, Michigan. The company has changed names, and been purchased by other companies through acquisition deals. In the recent past, it was purchased by NGMCO incl. , a new entity in July 2009. The purchasing company later changed its name to General Motors Company (GMC) (GM general motors history, nd). This brought re-organization of the company in all its subsidiary branches.
This company has branches all over the world with most of them being joint ventures with the local companies. In Africa, General Motors have penetrated the market especially in South African countries. For example, in South Africa, it has acquired Delta Motor Corporation and is now a fully owned subsidiary (NCCC in the United States of America, 1972). In East Africa, the company has established its operations as General Motor East Africa. In Asia, the company has not recorded any excellent growth especially Southeast Asia is still promising.
Ford motor company was established in 1903 by Henry Ford in Detroit, Michigan. The company is known on its reputation, the largest and
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In other continents like Asia especially in Middle East, it has faced stiff challenge in market penetration due to the traditional boycotts by Arabs, where companies trading with Israel were regarded as enemies to Arabs (Ford history, n. d). Both companies are found in the United States, Michigan and have recorded tremendous growth, but have faced challenges penetrating Asian markets. These two companies concentrate on manufacturing trucks and heavy bodied vehicles. In East Africa, the ready market for small cars like salon cars is undertaken by Toyota group.
Although marketing is undergoing in these regions, still they are facing stiff competition from China and Japan motor groups, especially Toyota group from Japan. Thus they should have a plan to expand their market share on small cars market segment. To penetrate markets and grow their operations in Asia and East Africa, these companies can opt to engage in a merger deal. This means they can work as joint ventures with one corporate name and produce salon cars which are fuel efficient and are up to standard. Merger is a situation where two companies become one and the decisions are made by both firms.
Two companies offering stocks (securities) in exchange, where one offers securities of its shareholders to acquire a company and the other surrender their stocks to form one company (Brendan McGuigan, 12 July 2010). New company is created through a merger but still means pooling of interest by dissolving the original companies especially subsidiary or branches. Mergers are done in case of financial distress by the companies or by having potential key objectives e. g. increasing market share amongst the mergers (Brendan McGuigan, 12 July 2010).
The type of merger that general motors and Ford Company can enter into is where they make a new company in East Africa and Asia to produce one product and create a market share. In this case, producing salon cars which are fuel efficient and up to international standards will boost their market growth. The merger can be best done by buying a company with assets utilized to make cars. In the United States for example, Toyota car had a significant market share, keeping in mind this is a Ford and General Motors dominated market.
The following graph can exhibit how Toyota is expanding globally than other car manufacturers especially than Ford. U. S Car market share Year ended December 31 2009 2008 2007 2006 Ford 5. 5% 5% 4. 6% 5. 8% General motors 9. 1 10 9. 8 10 Chrysler 2. 5 3. 6 4. 2 4. 1 Toyota 10.
0 10 9. 2 8. 6 Honda 6. 5 6. 6 5. 3 4. 9 Nissan 4. 8 4. 4 3. 8 3. 2 Others 14. 1 12. 7 11. 3 10. 6 Total in U. S car deliveries 52. 5 52. 3 48. 2% 47. 2% Source: http://online. wsj. com/mdc/public/page/2_3022-autosales. html#autosalesE: Wall street journal.
This gives evidence that Toyota cars’ market is expanding tremendously. Having a market share increasing moderately in the U. S means that even in global market, it is still expanding. General motors’ share is still high but not stagnant. Ford share is very low and incase of a merger with general motors, their market can expand locally and globally. Motor dealers like Honda have been fetching profits in these two regions and even if Toyota motor corporation made loss in the last year’s fourth quarter, no other company had more than Toyota’s sales in Eastern Africa and South Asia (Jack W.
Plunkett, 2007) Conclusion Car market in Asia and in Africa especially East Africa is expanding rapidly. General Motors and Ford are still lagging behind other dealers in this segment. Thus, efforts should be put in place to protect their market share and expand growth. In the recent past, Toyota and Honda has reported excellent improvement in sales in these regions although Toyota has started decreasing its sales. Through merger, General Motors and Ford will preserve their status world wide and expand growth in East Africa and Asian markets.
The results depicted in the table give outline of the entire world. Toyota is expanding moderately while others are still low in market share, and especially Ford Corporation. Reference Brendan McGuigan. (2010). What is a Merger? Retrieved on July 21, 2010 from http://www. wisegeek. com/what-is-a-merger. htm? Ford Motor Company. (2003). Ford history retrieved on July 21, 2010 from http://www. wordiq. com/definition/Ford_Motor_Company GM General Motors History. (n. d). retrieved on July 21, 2010 from: http://www. gm. com/corporate/about/. Plunkett, J W. , (2007).
Plunkett’s Advertising & Branding Industry Almanac: Advertising & Branding Industry Market Research, Statistics, Trends & Leading Companies. Houston, Texas: Plunkett Research, Ltd. National Council of the Churches of Christ (NCCC) in the United States of America (1972). Corporate Information Center. General Motors: apartheid and business in South Africa. The Wall Street Journal. Digital Net Work. Retrieved from. http://online. wsj. com/mdc/public/page/2_3022-autosales. html#autosalesE on 21 July 2010. University of Michigan. (2009). Motor world wholesale. Pennsylvania: Chilton Company.