Management Assignment

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  Disney-Pixar   Mickey and Nemo. Pinocchio and “Toy Story.” Cinderella and “Cars.” The merger of legendary Walt Disney and everything -we-create-kids-adore Pixar was a match made in cartoon heaven. Disney had released all of Pixar’s movies before, but with their contract about to run out after the release of “Cars,” the merger made perfect sense. With the merger, the two companies could collaborate freely and easily. Did the merger work? Well, take a look at the successful movies that Disney and Pixar have  put out since: “WALL - E,” “Up,” and “Bolt.” Pixar has plans for twice-yearly films, unthinkable before the merger, and has certainly gained the expert advice from Disney when it comes to advertising, marketing plugs, and merchandising. When it comes to marketing to children, no one does it better than Disney. Even pre- merger cartoon “Cars” got the Disney treatment and remains a top seller in merchandising amongst 4 year old boys (just ask my nephew). Sirius/XM radio merger  On July 29, 2008, satellite radio officially had one provider when Sirius Satellite Radio joined forces with rival XM Satellite Radio. The merger was officially announced over a year before, in February 2007, but the actual merger was delayed due to one tiny problem  –   when satellite radio first began in 1997, the FCC granted only two licenses under one condition: that either of the holders would not acquire control of the other. Oops. So Sirius and XM filed the proper paperwork with the FCC, allowed the FCC to investigate the merger, and waited patiently for the approval they needed. And although time will tell if the new Sirius XM company will succeed in the long-run, I consider this merger a success due to the number of big names recently added to their roster (Oprah, Howard Stern, Martha Stewart), as well having the foresight to combine forces in a down market. Exxon-Mobil    Big oil got even bigger in 1999, when Exxon and Mobil signed a $81  billion agreement to merge and form Exxon Mobil. Not only did Exxon Mobil become the largest company in the world, it reunited its 19th century former selves, John D. Rockefeller’s Standard Oil Company of New Jersey (Exxon) and Standard Oil Company of New York (Mobil). The merger was so big, in fact, that the FTC required a massive restructuring of many of Exxon & Mobil’s gas stations, in order to avoid outright monopolization (despite the FTC’s 4 -0 approval of the merger). ExxonMobil remains the strongest leader in the oil market, with a huge hold on the international market and dramatic earnings. In 2008, ExxonMobil occupied all ten spots in the “Top Ten Corporate Quarterly Earnings” (earning more than $11 billion in one quarter) and it remains one of the world’s largest publicly held company (second only to Walmart). I think it’s safe to say that the me rger was a success. Failed Mergers: (The Bad…)   New York Central and Pennsylvania Railroad   Merger failures didn’t exist in just the past few decades. In 1968, the  New York Central and Pennsylvania railroads merged to become to  the 6th largest corporation (at the time) in America, Penn Central. Yet two years later, they filed for bankruptcy protection . The merger seemed right on paper, but these railroads were actually century-old rivals, desperately trying to avoid the trend towards cars and airplanes and away from trains. But these trends continuing anyways and the railroads found themselves unable to keep up with the rising costs of employees, government regulations, and facing major cost-cutting. Others also claim a lack of long-term planning, culture clashes between the two railroads, and poor management. Sometimes, rivals just can’t get along, even in the face of mutual crisis. Daimler Benz/Chrysler ($37B)  In 1998, Mercedes-Benz manufacturer Daimler Benz merged with U.S. auto maker Chrysler to create Daimler Chrysler for $37 billion. The logic was obvious: create a trans-Atlantic car-making  powerhouse that would dominate the markets. But by 2007, Daimler Benz sold Chrysler to the Cerberus Capital Management firm, which specializes in restructuring troubled companies, for a mere $7 billion. What happened? It may be another case of corporate culture clash. Chrysler was nowhere near the league of high-end Daimler Benz, and many felt that Daimler strutted in and tried to tell the Chrysler side how things are done. Such clashes always work to undermine the new alliance; combine that with dragging sales and a recession, and you have a recipe for corporate divorce. Mattel/The Learning Company ($3.5B)  Mattel has remained a childhood staple for decades, and in 1999, it attempted to tap into the educational software market by scooping up almost-bankrupt The Learning Company (creators of great learning-is-fun games like Carmen Sandiego & Myst). Less than a year later, The Learning Company lost $206 million, taking down Mattel’s profit with it. By 2000, Mattel was losing $1.5 million a day and its stock  prices kept dropping. The Learning Company was sold by the end of  2000, but Mattel was forced to lay off 10% of its employees in order to cut costs. Sears / Kmart  Towards the end of the twentieth century, department store legend Sears found itself slowly failing, stuck in between the success of low-end big-box stores like Target and Walmart, and high-end department stores like Saks Fifth Avenue. Hedge-fund investor Eddie Lampert  purchased both a failing Sears and Kmart in 2005, and merged them to become Sears Holdings. However, Sears Holdings continued the downward spiral of both companies. Some blame their focus on “soft goods” (clothes and home goods) rather than hard goods (Kenmore appliances and tools). Others think Sears tried to compete with mega giant Walmart with a variety of stores - Sears Essentials, for instance  –   that were utter failures. In any case, by 2007, Lampert was named the America’s Worst CE O, and Sears Holdings remains on the brink of utter failure, especially in light of the recent recession. Utter Failures (…And the Ugly…)   Sprint/Nextel  
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