CROSS BORDER

Question 1

Factors that determine success/failure

Answer 1

• Cultural compatibility
• Communication compatibility
• Due diligence
• Legal and regulatory considerations
• Market conditions
• Adaptability of firms involved

Question 2

Sony and Columbia Pictures Case

Answer 2

• Cultural Differences (US vs Japan), communication barriers, working differences
• Heavy financial losses for Sony ($3.2 billion)
• Lack of understanding from management about the acquired business and lack of control
• Lack of integration efforts and no realised synergy creation
• Legal problems under the hiring of managers at Columbia

Question 3

Firestone and Bridgestone Case

Answer 3

• Delayed integration efforts of 5 years
• Financial losses of 1 billion
• Attempted investment from Bridge into FIre of 1.5 billion to expand shows lack of planning
• Common strikes by Fire employees, shows lack of integration
• Questions about the strategic fit arise past the initial thought of expanding market share in different country.
• Paid premium of 158%
• Merger has gained long term success through investment of 1.5 after a rocky start

Question 4

European Directive - basic principles

Answer 4

• Any EU cross border deals should be governed by the domestic laws already in place for domestic mergers

Question 5

European Directive - Implications

Answer 5

• Means no EU member can solely govern their domestic mergers and therefore privatise everything in their nation and cut off from the rest of the continent
• Potential conflict as no one law governs all thus there cam be conflicts between individual member state laws
• Coordination of domestic laws may be required by an overarching body
• the Directive does apply specific cases where it does not apply, showing it does have limitations.