Doing deals is easy. As mergers hit record levels, now comes the hard part

The merger wave, which in 1998 was a predominantly American affair, is now sweeping over Europe. Cross- border deals such as Daimler- Benz's takeover of Chrysler, accounted for a quarter of mergers in 1998; more are expected as firms go global.

In many cases this consolidation makes sense-at least on paper. But just as certain as the flow of deals is that most will be failures. Study after study of past merger waves has shown that two out of every three deals have not worked.

Success in the future will depend more than ever on the merged companies` ability to create added value. And that will depend mainly on what happens after the deal has been done. Yet many deal makers have neglected this side of the business. Once the merger is done, they simply assume that computer programmers, sales managers and engineers will cut costs and boost revenue according to plan.

Yet, just when post-merger integration has become decisive, it has become harder to pull off. Not only are modern firms complicated global affairs, but executives are putting today’s deals together in a hurry. Few give enough thought to the pitfalls.

One set of obstacles is 'hard' things, such as linking distribution or computer systems. In particular, many recent mergers have been undone by the presumption that information technology is easy to mesh together.

More difficult are the 'soft issues'; and here the same word keeps popping up-culture. People never fit together as easily as flow charts. Culture permeates a company, and differences can poison any collaboration. After one large US merger, the two firms had a row over the annual picnic: employees of one company were accustomed to inviting spouses, the others were totally against the idea. The issue was resolved by inviting spouses only in alternate years.

Two new things have made culture clashes harder to manage. The first is the growing importance of intangible assets. In an advertising agency, for instance, most of the value can walk out of the door if key people leave.

The second new thing is the number of cross-border mergers. In this area DaimlerChrysler may prove to be an interesting case study in differing management cultures. One worry is compensation: Chrysler’s pay levels are much higher than the German company’s. So a US manager posted to Stuttgart may end up reporting to a German manager who is earning half his salary.

Nor is pay the only difference. Chrysler likes to pride itself on its flexible approach, where speed and ingenuity are prized. When designing new models, teams of engineers, designers and marketing people work on each model. Daimler-Benz has a more traditional structure, in which designers and marketing people mix less and engineers are in charge.

Some recent deals will no doubt prove a stunning success. Nevertheless, there are three ominous signs about the current merger boom. First, much of the attention seems to be on the deal itself rather than the integration that must follow. Second, many deals are rushed. And third, mergers have too often become a strategy in their own right.

So the things that are so impressive about today’s mergers – their size, complexity and daring-could count against them if the economy turns down.

 

Answer the following questions:

Why have mergers become so popular?

What do studies of past merger waves show?

What does success of mergers depend on?

Why do deal makers neglect what happens after mergers?

What do they assume?

Why is post- merger integration difficult?

What things make culture clashes harder to manage? Why?

Why is pay level a matter of concern?

What ominous signs are there about mergers?

What things can count against mergers if the economy turns down?

 

Task 6. Say whether the statements are true (T) or false (F) according to the text.

Find the part of the text that gives the correct information.

1. The majority of mergers take place in the USA.

2. Many international mergers are failures.

3. Most attention is concentrated on what to do after the merger is completed.

4. Many mergers are done too quickly.

5. Connecting different computer systems together is not usually a problem.

6. High salaries were given to Chrysler managers as compensation for the merger with Daimler – Benz.

7. Chrysler has won many prizes for its production methods.

8.Engineers have a high status at Daimler – Benz.

 

Task 7. Understanding expressions

Choose the best explanation for each extract from the text.

1. 'the merger wave is now sweeping over Europe'

a) a lot of American companies are merging with European ones

b) there has been a big increase in the number of mergers involving European companies

2. 'success will depend on the merged companies' ability to create added value'

a) they must try to make sure the share price goes up after the merger

b) they must try to reduce costs and increase revenue in the new merged company

3. 'post-merger integration has become decisive'

a) the way merged companies work together as one company is extremely important

b)it is necessary to take quick decisions after the merger is competed

4. 'the growing importance of intangible assets'

a) some assets are carefully protected and cannot be touched

b) people are the most valuable asset in many companies

 

Find in the text equivalent expressions:

в основном; в большей степени;

становиться глобальным;

имеет смысл;

насчитывает, составляет;

пренебрегать, не учитывать;

потерпеть неудачу; не сработать;

снизить затраты;

резко увеличить доходы;

решающий фактор;

добиться успеха;

заключать сделки поспешно;

схемы;

глубоко проникать; пронизывать;

проблема была решена;

конфликты на почве культурных различий;

нематериальные активы;

международные слияния;

вознаграждение, оплата труда;

гибкий подход;

меньше общаться;

ошеломляющий успех;

зловещие предзнаменования;

становятся стратегией ради самой идеи;

обернуться против самых слияний;

когда экономика идет на спад.

 

Speak about the reasons for mergers becoming failures.

Task 8. Read and retell the text about mergers and acquisitions.

Profitable growth constitutes one of the prime objectives of most of the business firms. It can be achieved «internally», either through the process of introducing or developing new products, as well as by expanding the capacity of existing products a firm is engaged in.

Alternatively, growth process can be facilitated «externally», by acquisitions of existing business firms. This acquisition is technically referred to as mergers, acquisitions, amalgamations, takeovers, absorptions, consolidations, etc. Although the legal procedures involved in these terms are different, these terms are often used interchangeably.

It is a finance manager's job to say how large an enterprise should be, how fast it should grow, and how it should grow. If an enterprise grows «internally» it can retain control with itself during expansion and it will be free to choose how to grow. However, internal expansion usually involves a longer implementation period as well as different problems connected with raising the necessary funds. Mergers or acquisitions, in most cases, help to avoid financial problems and expedite the pace of growth, by saving the time otherwise required in building up new facilities from scratch in the case of internal expansion programme.

Mergers are typically classified into horizontal mergers (when two or more corporate firms dealing in similar lines of activity combine together) and vertical mergers, extending to suppliers of raw materials or distributors.

The finance manager's job is to evaluate such merger decisions.

 

 

Unit 13. Marketing(SB, p. 125–133)

Vocabulary Notes

marketing mix (4)P's – структура маркетинга; составляющие маркетинга сочетание аспектов реализации товара;

product –

price – 4 P's

place –

promotion –

to identify consumer needs – определить потребности потребителя;

military metaphor in marketing – военная терминология в маркетинге;

a coup [ku:] – удачный ход;

a raid; n. – рейд, внезапное нападение;

surprise attack – внезапная атака;

to surrender, v. – сдаваться;

to be outgunned – быть вытесненными; не в состоянии противодействовать;

key strongholds – основной оплот; ключевые опорные позиции;

casualties – потери;

to rage on – не утихать; продолжать бушевать;

campaign – военная кампания;

hassle – free, adj. – бесперебойный;

fuel buying – автозаправка;

to test buying habits – исследовать модели поведения покупателей;

to exceed expectations – превзойти ожидания;

desperately seek ways to increase the business – настойчиво/упорно искать пути расширения бизнеса;

to come up with a strategy – придумать, изобрести стратегию;

to put clearly ahead of the competition – явно оставить конкурентов позади;

to differentiate the brand in the eyes of consumers – выделить бренд в глазах потребителей;

a fragmented market – фрагментарный рынок;

cutting edge research – исследование, проведенное новейшими методами;

to be on track to – быть на пути чего-либо;

to deliver a hassle – free fuelling experience – обеспечить бесперебойную и легкую автозаправку;

to deliver through facilities, systems upgrades and new operating practices – предоставить посредством технических возможностей; усовершенствованных систем и новых методов работы;

to form the basis for the new brand initiative – составить основу новой инициативы по созданию брэнда;

a customer segment study – исследование сегмента потребителей;

buying decisions are influenced by other factors – на решение о покупке влияют другие факторы;

full-serve outlets – автозаправки со всем комплексом услуг;

a focus group – группа опрашиваемых;

to create a psychological profile – создать психологический портрет;

to drive up-market cars – водить дорогие автомобили;

go out of their way – специально ищут места;

to eliminate the little hassles – устранить мелкие неудобства;

to be test marketed – проходить маркетинговые испытания;

to introduce a sophisticated measurement system – ввести высоко технологичную систему измерений;

to monitor satisfaction, behaviour and perception of the brand – отслеживать степень удовлетворенности, поведение покупателей и их восприятие нового брэнда;

to be ahead of the game – находиться на передовых позициях.

 

Task 1. Read and translate the text on p.126 and answer the following questions:

What marketing campaign is under way in America?

What project did Shell Oil researchers carry out? Why?

Why did the marketing people from Shell Oil seek new ways to attract customers?

What was their main mission?

What is the aim of their new brand initiative?

How did they start their research?

What things did the customers want from a service station?

What did their buying decisions depend on?

How was the study arranged?

What three groups did they determine?

What are the typical features of each group?

What was the common thread for all three groups?

What innovations did the company introduce following the experiment?

 

Say what you have learned from the text about marketing research carried out by a global company.

Task 2. Translate into English using the vocabulary from the text:

1. На очень конкурентном рынке услуг по автозаправке, очень трудно придумать стратегию маркетинга, которая могла бы вывести компанию далеко вперед от конкурентов.

2. Основной задачей маркетологов является поиск путей расширения бизнеса, часто посредством введения инновации и усовершенствованных подходов к осуществлению маркетинга.

3. Чтобы выделить свой брэнд в глазах потребителей, маркетологи проводят исследования новейшими методами, изучая модели поведения покупателей.

4. Чтобы превзойти ожидания своих клиентов, компания должна обеспечить им бесперебойную и легкую автозаправку посредством новых технических возможностей и усовершенствованных методов работы.

5. Результаты исследований четко показали, что потребители хотят три основных вещи: конкурентную цену, удобное месторасположение и хорошее качество бензина.

6. В течение нескольких лет компания разрабатывала подробную информацию о потребностях своих потребителей и их отношении к брэнду. Эта информация послужила основой для инициативы по созданию нового брэнда.

7. Владельцы дорогих автомобилей, которые свидетельствуют об их высоком статусе, предпочитают высокий класс обслуживания и мощные насосы.

8. Люди, которые стремятся к простоте во всем, обычно удручены житейскими сложностями и хотят простых и легких сделок.

9. Те, кто на первое место ставит безопасность, никогда не отходят далеко от автомобиля. Они специально ищут автозаправки, где им спокойно, и где есть порядок и комфорт.

10. Изучение этих групп потребителей помогло компании объединить силы и определить, как можно устранить мелкие неудобства, с которыми иногда сталкиваются их клиенты.

 

Task 3. Do ex. 3 on p. 128 and answer the following questions:

Why are market researchers asked to compile more detailed profiles of consumer groups?

 

Why aren’t broad classifications sufficient?

How are questionnaires designed?

What are questionnaires planned to establish?

How can advertising campaigns be targeted in this case?

What must marketing people monitor? Why?

Retell the passage using the vocabulary.

Task 4. Give English equivalents for:

Производить продукцию, специально предназначенную для определенных сегментов рынка;

Составить более подробные характеристики потребительских групп;

Общие классификации широкого охвата;

Компании, работающие на высоко конкурентных и фрагментарных рынках;

Подобные классификации не достаточны для определения точных потребностей;

Что влияет на решения о покупке;

Рекламная компания должна быть нацелена на вкусы определенных групп потребителей;

Маркетологи отслеживают успех компании;

Они видоизменяют методы рекламы, если это необходимо;

 

Task 5. Reported speech

Complete the gaps with the correct form of ask, say or tell and give the correct form of the verbs in brackets.

 

As part of our most recent consumer survey, we recently interviewed 50 car drivers about their experience of buying fuel. The first question that they were asked was how often they had visited (visit) a petrol station during the last month. The majority of the people interviewed _______ that they _______ (do) so at least three times to buy either petrol or diesel for their vehicles. We then _____ them if they ________ (can) give us their opinion about the quality of the services that they had found. While most of our sample group ________ that they ________ (be) satisfied with the services provided, several drivers ________ us that they _______ (like) to see improvements in certain areas in the future. When these respondents _______ to elaborate on this, several of them ________ that they _________ (feel) more relaxed if they did not have to do the work of refueling their cars by themselves. Two respondents also _________ us that they __________ (like) to see the introduction of systems which would make it possible for drivers to complete all transactions without leaving the car.

We also _________ everyone in the sample if they _________ (appreciate) some form of automated diagnosis of their vehicle. More than 50 % of those interviewed _________ that they __________ (welcome) this especially if it could provide automated tyre pressure and oil level checks.

In the final question they _________ if they _________(hear)about any of our latest innovations such as ‘the auto pump’ but only one person in the survey had any knowledge of this.

 

Read out the text again and answer the questions:

How many drivers were interviewed?

What was the purpose of the survey?

What did the consumers think of the quality of the services?

What were the respondents asked to elaborate on? Why?

What improvements did they want to be introduced?

How many of them knew about the latest innovations?

 

Speak about the marketing survey described in the text.

Task 6. Translate into English:

1. В ходе последнего опроса потребителей, автолюбителей спрашивали о том, как они покупают горючее.

2. Большинство людей посещают автозаправку по крайней мере трижды в неделю, чтобы купить либо бензин, либо дизельное топливо для своих машин.

3. Многие были вполне удовлетворены качеством предоставляемых услуг, хотя некоторые хотели бы видеть в будущем некоторые усовершенствования.

4. Двое респондентов ответили, что им хотелось бы проходить всю эту процедуру не выходя из автомобиля.

5. Большинство хотели бы, чтобы им самим не нужно было заправлять машину. Им очень понравилась идея автоматической диагностики их автомобилей, особенно если это касается проверки уровня масла и давления шин.

6. Только один человек слышал о последней технической новинке «автонасосе», остальные не имели понятия о том, что это такое.

 

Task 7. Read and translate the text «What is marketing?»

Answer the questions and retell the text.

 

A market can be defined as all the potential customers sharing a particular need or want. Marketing is the process of developing, pricing, distributing and promoting the goods or services that satisfy such needs. Marketing therefore combines market research, new product development, distribution, advertising, promotion, product improvement, and so on. According to this definition, marketing begins and ends with the customer. Truly successful marketing understands the customer so well that the product or service satisfies a need so perfectly that the customer is desperate to buy it. The product almost sells itself. Of course this will only happen if the product or service is better than those of competitors.

Companies are always looking for marketing opportunities – possibilities of filling unsatisfied needs in areas in which they are likely to enjoy a differential advantage, due to their particular competencies. Marketing opportunities are generally isolated by market segmentation – dividing a market into submarkets or segments according to customers` requirements or buying habits. Once a target market has been identified, a company has to decide what goods or services to offer, always remembering the existence of competitors.

Marketers do not only identify consumer needs; they can anticipate them by developing new products. They will then have to design marketing strategies and plan marketing programmes, and then organize, implement, and control the marketing effort. Once the basic offer, for example a product concept, has been established, the company has to think about the marketing mix – the set of all the various elements of a marketing programme, their integration, and the amount of effort that a company can expend on them in order to influence the target market. The best-known classification of these elements is the 4 P`s: Product, Price, Promotion and Place.

Aspects to be considered in marketing a product include its quality, its features, style, brand name, size, packaging, services and guarantee, while price includes consideration of things like the basic list price, discounts, the length of the payment period, and possible credit terms. Place in a marketing mix includes such factors as distribution channels, coverage of the market, locations of points of sale, inventory size, and so on. Promotion groups together advertising, publicity, sales promotion, and personal selling.

The next stage is to create long-term demand, perhaps by modifying particular features of the product to satisfy changes in consumer needs or market conditions.

Marketing can also involve the attempt to influence or change consumers` needs and wants. Companies try to do this in order to sell their products; governments and health authorities sometimes try to change people`s habits for their own good or for the general good. In other words, marketing also involves regulating the level, timing and character of demand.