Usain Bolt will have a new boss to impersonate now. US billionaire John Malone's cable group, Liberty Global, has agreed to buy the UK's Virgin Media in a cash and stock deal worth $23.3bn (£15bn). The takeover will create the world's largest broadband company (with 25 million customers in 14 countries) and a stronger competitor for BSkyB in the UK which is the clear market leader with over 10 million household subscribers.read more...»
What a powerful but also distressing story this is. The loss of so many lives because of a failed organisational culture at the Mid-Staffordshire NHS Trust.
The news has been packed with reactions to the findings of a public inquiry into the failings of Stafford Hospital. The Francis Report has called for sweeping changes (290 recommendations in total) to the culture and regulation of the NHS in England.
The Mid-Staff scandal illustrates so explicitly the link between organisational culture and leadership - they are two sides of the same coin.
Below are some resources which help students understand the background to the Francis Report and also gather evidence on the reasons for, and effects of the inadequate organisational culture at Mid-Staffs.read more...»
The session programme for the BUSS4 exam coaching & revision workshops during March & April 2013 is described below.
We’ll be working through a great series of case study firms and industries during the day and focusing on the exam skills that you need to master in order to do really well in the challenging BUSS4 exam.
Students attending the workshops will get our resource-packed workshop booklet together with a copy of tutor2u’s latest BUSS4 Revision Guide.
Places at the BUSS4 exam coaching / revision workshops can be arranged by completing this online form.read more...»
A thought-provoking video from CNN here in which the interviewee (Adam Lashinsky from Fortune Magazine) explains how he sees the role of secrecy in the organisational culture of Apple. Of course, we have to take what he says with a pinch of salt - how well-informed is the journalist?read more...»
The research theme for BUSS4 in June 2013 has now been released - it is on organisational culture. The research bullets are provided below. You can also download the research theme from here:
Other key links for you are:read more...»
For students researching BUSS4 the arrival of a new CEO at a large, well-known business is great news!
Whether the candidate is an internal or external appointment (itself an interesting angle), the new CEO will undoubtedly generate lots of coverage in the business media as she/he takes charge. Just as inevitably, the new CEO will instigate a strategic review designed to analyse and evaluate the strategic position of the business and the options for change.read more...»
Here we go. The final step of the A Level Business Studies journey for AQA students.
BUSS4 – the last stop for students who hopped on the A* Express.
A tough, challenging exam – there’s no doubt about that. But, many students also find it by far the most interesting of the four units (BUSS1, BUSS2, BUSS3 and BUSS4) and it provides a unique opportunity for students to focus much of their study and revision on businesses and industries that interest them, not just the examiner!
BUSS4 is a truly synoptic paper and challenges students to write two essays. One essay (Section A) is chosen from two options based on the pre-released research task. The other essay (Section B) is chosen from three options and can be about any aspect of the BUSS4 specification except the topic chosen for the Section A research task.
Two essays. Each worth 40 marks. Sounds straightforward doesn’t it? But, it’s not.
Time and time again students let themselves down in BUSS4 through a combination of poorly-developed exam technique (how many times have you been asked to write a 40 mark essay before reaching this exam) and inadequate research-based evidence. Students who may have done really well in BUSS1, BUSS2 & BUSS3 come unstuck when faced with the challenge of constructing two well-argued, evidenced and focused essays.
So a key strategy for success in BUSS4 for students embarking on the final phase of the course is to take the exam seriously.
Where should you start?read more...»
Global multinationals like Starbucks, Amazon and Google have faced intensive pressure in recent months for their perceived tax avoidance activities. Why has this become such a big issue? What are the implications for those businesses and what should government do?
This boardroom discussion from Reuters is well worth watching to enable students to update their understanding of the commercial, legal and ethical issues raised by corporate tax avoidance.read more...»
Do I sense a few green shoots emerging from Finland - the home of Nokia which recently lost its position as the world's largest maker of mobile phones (a position it had held for 14 years).
Readers of the business blog will be familiar with the story of Nokia in recent times. The arrival of a new CEO Stephen Elop and his famous "burning platform" speech which set out this new strategic direction for Nokia. We've documented the resulting strategy of retrenchment which led to the loss of 000's of jobs at Nokia around the world and Elop's decision to enter into a strategic partnership with Microsoft as he chose Windows 8 as the mobile operating system ("ecosystem") for Nokia's new range of smartphones.
2012 was a pretty bad year for Nokia in total. However, there is is some evidence that the launch of the Lumia smartphones may have heralded a change in fortunes for the business. The Guardian reports here about very strong sales for the Lumia phone over the crucial Christmas trading period. And in the short video interview with Stephen Elop below, you can sense the emergence of a quiet confidence that things might be getting better.read more...»
Sony is one of our favourite case study businesses and fantastic source of research insights for A2 students wanting to improve their understanding of business strategy. So we were pleased to spot this short video from the FT which evaluates the potential success of Sony's new smartphone - a so-called "super smartphone". Given that Sony only has a single digit market share in the smart phone market, can this new product provide Sony with something which will compete with Apple and Samsung?read more...»
Markets for ethical goods and services have remained resilient throughout the economic downturn as a progressive core of retailers and producers continue to factor sustainability such as Fairtrade ingredients into their products and services.
That is the conclusion of The Co-operative’s annual Ethical Consumer Markets Report (pdf) which shows that since the onset of the recession five years ago the total value of ethical markets has gone from £35.5bn to £47.2bn.
Acting as a barometer of green markets since 1999 when annual ethical sales were just £13.5bn, the report analyses sales data for various sectors including food, household goods, eco-travel and ethical finance.
Amongst the biggest growing categories during the recession are sustainable fish up 323 per cent from £69m to £292m, Fairtrade which has increased 176 per cent from £458m to £1,262m and free range eggs sales up 78 per cent from £444m to £792m.
However, sales of organic produce, although now stabilised at £1.5bn, have declined from a high of £1.9bn in 2008.
In 2011, ethical food and drink markets increased 7.8 per cent per cent to reach £6.9bn. Markets for green home products were up 10.6 per cent to £8.4bn and ethical personal products were up 4.3 per cent to £1.8bn
HMV's previous attempt at a strategy of diversification has now ended after it agreed to dispose of its business units involved in live music and entertainment. Lots of evidence in this case study about how risky diversification can be. HMV paid £46m to acquire MAMA Group back in 2010:
Compare and contrast should be the mantra for A2 business students looking for real-life business examples to deepen their understanding. Here are two news stories which related to the broad topic of CSR which provide quite a vivid contrast.read more...»
The Institute of Directors produces a regular magazine for its members, which includes lots of articles and snippets that students might enjoy. Great reading for all students, particularly those taking A2 modules
that require them to get a feel for decision-making, and involved in
that all-important independent research. Just take a look at the items highlighted on the cover of the November edition: Turn Your Business into a Great Brand, The Collaboration Game - are your teamwork skills up to the job?, Setting up in Brazil, Why we need more Engineers in Government, and the key-note article is an interview with Sir Stuart Rose about strategy, self-doubt and why business must embrace change. There are also articles on apprenticeship schemes, the Guardian Small Business Network, the effects of the US election result for business, start-up funding for young entrepreneurs and the secrets of success of winners of the 2012 Directors of the Year, as well as lots of mini interviews and items that give a feel for every aspect of running a business.
Followers of the Business Blog and attendees at our BUSS4 revision workshops will know that we're big fans of Sony as a case study in business strategy. And this resource - an interview by BusinessWeek with Sony's CEO Kazou Hirai - provides another useful addition to the research resources which students ought to use if they want to develop their understanding of the strategic challenges facing Sony and the options Hirai is choosing.read more...»
It sounds like an odd combination - mixing Irn-Bru with Fruit Shoot. But you never know - it might work. Shareholders in the firms that make Irn-Bru (AG Barr) and Fruit Shoot (Britvic) will be hoping that the combination of their respective product portfolios will taste a little better after a £1.5bn merger which has been agreed today.
The merger will be bad news for some employees at the two businesses. As part of the merger plan up to 500 jobs are expected to be lost as the combined business aims to achieve £35m of annual cost-saving by cutting the combined headcount of 4,000 workers by 8-12%.
It is claimed that the aim of the merger is to "create a world-class soft drinks company" and, not surprisingly, the management who will lead the combined firm are pretty positive about the strategic rationale for the merger:
"AG Barr and Britvic are a fantastic fit with complementary strengths and we will benefit from very significant synergies," claims Gerald Corbett, the chairman of Britvic who will continue in the same role at the combined company.
The football business has a history of helping investors to lose money. And now it seems that the shareholders in Nike have been hit hard by an investment that simply hasn't paid off.read more...»
Most businesses aim to grow - but not all succeed - and many are forced to reduce the scale and scope of their business activities as a deliberate act of strategy. This is known as “retrenchment” and A2 students should have an understanding of some examples of retrenchment in action. Which firms / brands were involved? What happened? And why? Here are some suggestions that students could add to their notes:read more...»
Will this prove to be the last takeover of a major care rental firm in the US? After five years of trying, market-leading car rental company Hertz has bought its rival Dollar Thrifty for $2.3bn (£1.5bn). However, as this article in the Guardian explains, this may be the last significant takeover in the car rental sector to be allowed by US competition regulators. Why? Because the market is now dominated by just three firms.read more...»
Back in 2009 by the Competition Commission told BAA that it must reduce its stranglehold on the UK aviation market. Part of the instruction was that BAA must dispose of Gatwick Airport (which it sold in December 2009) and Edinburgh Airport (which was sold by BAA in April 2012). However, BAA has been trying to hang onto Stansted, taking the decision through the courts in a long drawn-out process. Now that process is over - it has to sell the airport.read more...»
This is a good example of significant cost synergies being squeezed from a major takeover. Google, which acquired Motorola Mobility (a manufacturer of mobile phones) for $12.5bn, has decided to make 20% of Motorola’s workforce redundant. That’s around 4,000 employees who will lose their jobs.read more...»
When a global brand is forced to cut the selling price of its flagship product by 50% just three months after launch, you just know something is badly wrong!
That is what Nokia has done in the crucual US smartphone market. The price of the Lumia 900 Windows Phone (first released in April 2012) has been cut from $99 to $49.99.read more...»
We are pleased to announce a new course which is being added to our comprehensive programme of CPD support for colleagues delivering AQA AS/A2 Business Studies. The BUSS4 Section B Briefing has been developed in response to many requests from colleagues for more structured and detailed support on topics which are core to Section B of BUSS4.read more...»
A fascinating article here from Business Week which explains how Sony - struggling to build a tiny market share in smart phones - has used product placement to promote its product range (and block Apple) in the latest Spiderman blockbuster.read more...»
Microsoft’s takeover of AQuantive for $6.3bn in 2007 must now go down as one of the least successful acquisitions in recent history. In its most recent quarterly results, Microsoft has announced that it is “writing down” the value of its investment in AQuantive by $6.2bn (i.e. just about all of it), to reflect the significantly lower value of the business just five years on.read more...»
The allegations of price fixing of Barclay’s LIBOR rates have led to the resignation of The Chairman Marcus Aegis on Sunday night, politicians, and journalists wondered if Bob Diamond, The Chief Executive ought to be on his way out instead.read more...»
News has been released this afternoon that Walgreen, a US company that operates 7,890 pharmacies across the United States, is buying a 45% stake in Boots, which has more than 3,300 health and beauty retail stores in the UK and 11 countries around the world, a strong internet retail presence, a manufacturing facility in Nottingham, as well as a wholesale business which supplies pharmacies and doctors in 21 countries. The deal, which is being reported as a MERGER rather than a takeover, has been under discussion for 18 months, although it still has to be agreed by regulators. Walgreen also have the option to take the remaining 55% of the shares in the next three years.read more...»
The appointment of a new CEO often arises when a business wants and/or needs to achieve a significant change in performance and strategic direction. Students writing about key topics such as leadership, internal causes of change, culture and strategic decision-making need to have some real-life examples in mind when they write their exam answers. This research buster will provide a series of examples of firms which had opted to seek new leadership as part of a strategic change programme. We’ll add additional examples and update relevant resource links as often as we can.read more...»
How and why to plan your essays in BUSS4read more...»
Starbucks has just made its largest-ever acquisition, paying $100m for San Francisco-based Bay Bread. The acquisition is part of Starbuck’s strategy of diversifying its product offering and boosting the importance of food at its 17,400 outlets worldwide.read more...»
A useful piece here in Forbes India Magazine about the impending launch of Starbucks in India. Looks like the first Starbucks outlets will open in Autumn 2012, a little behind schedule - but a significant event nonetheless.
We reported earlier on Starbucks’ chosen method of market entry in India - a joint venture with Tata Beverages.
In January 2012, Starbucks announced its objective to open 50 outlets in India by the end of 2012, through a 50-50 joint venture with Tata Global Beverages. The two partners will initially invest a total of $80million to establish the business.
The Forbes article emphasises the role of choosing the right locations for the first stores. Mumbai looks like the first choice and it sounds like prominent positions in mainly business districts are being sought, as well as in well-established shopping malls, alongside other well-known brands such as Hermes, Calvin Klein and Zara.
A simply fascinating piece of analysis by the respected Asymco website here which breaks down the costs of each individual element of what goes into an iPhone. Has there ever been a better example of added value to show students - though they may be somewhat surprised by how much contribution is made on each iPhone shipped!read more...»
A good article here which analyses the strategic challenges facing Sony and its new CEO Kazou Hirai.
As we’ve reported recently on the Blog, Sony is now undertaking a significant retrenchment strategy, including the loss of over 10,000 jobs (or 6 per cent of its global workforce) over the next 12 months. That sounds a lot, although it ought to be put in some context - Nokia has made over 30,000 job losses since Stephen Elop began his retrenchment strategy!read more...»
Our final business studies revision clinic takes place on Monday evening at 9pm - focusing on AQA BUSS4. Please login using your Facebook or Twitter account to participate. A full transcript of the session will be available on this blog entry once the clinic has finished.read more...»
Students can be forgiven for over-researching takeovers and mergers for Section A - an inevitable response given the nature of pre-release materials. However, it is important to remember that the Section B essay has exactly the same number of marks (40) as Section A. An essay of the same quality is required and it is important that students do it justice. Time management in particular is crucial - the Section B essay mustn’t be rushed.
Arguably, Section B can be harder for students because they are unlikely to have covered the remaining specification (i.e. everything other than M&A) to the same degree and their research evidence for Section B might feel a bit “thinner”!
Question-spotting is never to be recommended. However, for Section B, I do feel that students might usefully focus on a smaller number of core topics which can be relatively easily linked together in a logical chain of argument, and for which relevant research is readily available.read more...»
This streamed revision presentation outlines some evidence of the impact on, and reaction of, stakeholders to takeovers and mergersread more...»
This streamed revision presentation considers the motives for takeovers and mergers and how these link with corporate strategyread more...»
This streamed revision presentation examines the problems of takeovers and mergers including difficulties integrating businesses successfullyread more...»
This streamed revision presentation considers the factors influencing the success of takeovers and mergersread more...»
This streamed revision presentation looks at the impact of takeovers andmergers on the performance of the businesses involved.read more...»
This revision presentation outlines the reasons why governments might support or intervene in takeovers and mergersread more...»
The problems facing Stephen Elop at Nokia just seem to get worse. His retrenchment strategy has been notched up another level with the announcement this morning of 10,000 further job losses (that’s about one fifth of the total at Nokia, excluding those who work at the joint venture with Siemens AG). Will this latest, dramatic move be enough to ensure Nokia’s survival?read more...»
Here is a recent example of a classic horizontal integration. Two UK wholesalers - Booker and Makro are being brought together in a £139.7m takeover. A good example to use to help illustrate the concept of horizontal integration, although it is far to early (obviously) to know whether the combination of these two businesses will deliver shareholder value to the investors in Booker, who will take control of their small rival.read more...»
Back in January 2012, the administrators of Blacks Leisure agreed to sell the remaining 300 stores to JD Sports for around £20million. Blacks Leisure was one of several high profile retail failures at the end of 2011, but JD Sports obviously saw some potential in the takeover. Five months later, it looks like the takeover might be proving to be less attractive than management first thought.read more...»
It is a statistic that is widely supported by research and is also likely to be used by 000’s of students as they write about the likely success or failure of a takeover or merger:
“70% + of takeovers and mergers destroy value…”
In other words – most takeovers and mergers fail. But is this the only way to measure success or failure?read more...»
Students writing essays about takeovers and mergers need to be familiar with some key terminology. Here are some key terms which are worth understanding and using when writing about M&A:read more...»
Takeovers and mergers: Every merger deal that has ever occurred (explained in fewer than 1000 words)
With just two weeks to go before you wrestle with the BUSS4 paper no doubt you will be feeling somewhat saturated by the volume of information you are attempting to absorb as your revision peaks (or starts!)
It is my experience of this time of year that BUSS4 students run the risk of becoming so obsessed with remembering specific content (e.g. data & stats) that they neglect the context, and often very simple underlying principles, that explain the rationale behind business activity. Understanding why businesses choose to merge is vitally important as it is their specific motives which drive the actions that they take and the decisions that they make.
Thus, if you can appreciate the motives behind a merger I believe you are halfway towards making sense of any question that section A throws your way on the day of the exam. Understanding the reasons why businesses make the strategic choice to merge should be the starting point for any answer. Crack this and you have a great chance of picking up the bulk of the marks. “It can’t be that easy I hear you say?” The answer to your question is “yes it is” and I’m about to make it a whole lot easier!read more...»
We produced this sample essay to a exemplar BUSS4 essay on the importance of integration planning in determining the success of a takeover or merger. The essay title was:
“To what extent is integration planning the most important factor determining the success of a takeover or merger?”
The essay is provided below together with the marks and comments from an experienced AQA BUSS4 examinerread more...»
BUSS4 students really need to read this one - it offers good, strong evidence of the problems of takeovers and mergers including difficulties integrating businesses successfully. Last year Hewlett Packard bought Autonomy, a Cambridge software company, for $10bn. This year they have a 31% fall in profits and plan to cut 27,000 jobs (about 8% of their workforce) by end of 2014 in order to reduce costs by up to $3.5bn (£2.2bn) a year. As many business reports say, the move was part of a “productivity initiative designed to simplify business processes” and is down to their inability to keep up with products such as the iPad which eats into HP’s laptop sales.
HP haven’t announced where those staff cuts will be made yet, but a key news announcement yesterday was that Mike Lynch, who founded Autonomy and built it from a small start up founded with a loan of £2,000 from a man in a pub to the UK’s leading technology company, is to be replaced. HP seems to offer a classic case of Charles Handy’s Role culture with layers of bureaucracy which, critics say, has stifled the entrepreneurial spirit of Autonomy’s Power culture which focused on Mike Lynch who was used to making his own decisions and still based on a simple start-up structure. A BBC Business Correspondent reports that
“His drive and entrepreneurial flair was fundamental to the growth of the firm. Although many people found him difficult and demanding to work for, he was held in awe by rank-and-file staff. (compare Steve Jobs - similar comments are made about him.) That’s why Autonomy’s 300 Cambridge staff are worried about the future. One man, who declined to be identified, said: “Without Mike, we have a grim outlook. He was the reason many people work here. A brain drain of senior people is already under way.”
In that brain drain 20% of Autonomy’s staff have recently left including the President and Chief Finance Officer. The Independent reports on the culture clash saying that
“Autonomy hasn’t been performing the way the computer giant had hoped. HP wants big deals, sealed quickly, and the Autonomy style of working just hasn’t fitted in” - this article is really worth reading for its analysis of the problems in this takeover and others in which the entrepreneurial flair which brought small businesses to the attention of large ones has caused difficulties in achieving the business growth and synergies which were dreamed of.
Other useful resources on this story - a BBC video report examining the reasons for HP’s diffuculties and the management style at Autonomy, and a profile of Mike Lynch from The Telegraph. As Lord Sutch would say, business studies gold dust!
A fascinating story has appeared on the BBC News website featuring Jerry (of Ben & Jerry’s) as he explains the extent to which, after being taken over by Unliever in 2000, they have been able to bring their values to the vast conglomerate.read more...»