Essay About Begas Board Members And Point Of View Bega

Principles of Strategic Management
Benefits: Diversification- The acquisition provides an opportunity for Bega as it needs to expand from dairy operations, which have narrow development openings. Likewise, multinational companies are downsizing local producing activities and concentrating on global brands instead.Economic of scope- Mondelēz and Bega have similar business practices, therefore allowing shared supply chains that make the simultaneous manufacturing of different products more cost-effective than manufacturing them on their own. Similar business- From an Operationally point of view Bega knows how to take forward Mondelēz after acquisition, as it lines up with their current activities. Bega additionally has a solid advantage as it has worked with a significant number of similar retailers and this acquisition would create a pathway to bring more products to the customers table.Acquiring Vegemite’s strong product development and marketing skills can be used across Bega’s portfolio of products- One of Begas goal was to execute its development strategy, to gain acquisition opportunities aligned within their core abilities. This acquisition will give Bega a broad range of brand understanding and information, which they can use over various products to develop new ones. Potential revenue- Mondelēz has a history of stable income and money streams. Therefore, if the acquisition is to occur before the end of June 2017, the determined deal would produce A$310 million and EBITDA of A$40– A$45 million in financial year 2018Problems:The acquisition does not align with Bega’s objectives- Begas Strategic Plan for 2020 included three key goals, which are not lined up with Mondelēz. Consequently, this acquisition will result in Bega require changing their plan of action and strategic thinking and develop new aptitudes, and new procedure to have an effective acquisition.Financial challenge- While putting a cost towards the acquisition, there were various financial difficulties that were addressed. Among them was the amount they should offer Mondelēz for the business, because this was an agreed arrangement between Mondelēz and Bega.Valuation analysis for prospects of growth – Begas board members were worried about Vegemites prospect for development. As 98% of the product sales happened in Australia, despite having been in presence for more than 90 years.Concerned board members- Begas board members voiced their concerns as this deal is one of Begas biggest acquisition. Thus, resulting in a debt up to A$500 million in the short term. Which makes board members question how rapidly Bega could repay or refinance the acquisition debt.[pic 1]                 Framework: Hambrick Strategy ModelSolutions:The acquisition does not align with Bega’s objectives: It is highly recommended for Bega to make a collaborative shared objective, that might gain a competitive edge over others. By having shared objectives, Bega can create a pathway to extend their footprints in a new market where the acquisition organization as of now has a solid presence. Nevertheless, Bega and Mondelēz objectives arent aligned, the organizations operate similarly.Financial challenge and Concerned board members: It is recommended for managers and board members to propose an acquisition price of A$400– A$500 million. Despite the fact that, it is one of Begas biggest acquisition, it is ensured to gain profits based on few factors, such as, nostalgic benefit of bringing Vegemite back home and steady revenue and profits produced by Mondelēz, where the acquiring brand is forecasted to generate sales worth generate sales of A$310 million and EBITDA of A$40– A$45 million in fiscal year 2018. Valuation analysis for prospects of growth:  It is recommended for Bega to focus on local development, as Vegemite is an iconic Australian brand and most loved spread, hence home to local ownership. Therefore, local development will profit the organization by producing occupations within the manufacturing Industry. Thus, guaranteeing the manufacturing Industry remains viable and sustainable in Australia creating home made products for Australian house hold. At the end of the day, the blend of Australias favorite food brand with Bega Cheeses item portfolio creates an opportunity for the consolidated organizations.