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How to Manage or Supervise Strategically - Case Study Example

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The case study "How to Manage or Supervise Strategically" states that two major American companies, one being a multi-national company, and another being a local company operating within the United States. The companies identified are American Airline Group and the Johnsonville foods…
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How to Manage or Supervise Strategically
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Introduction: This paper identifies two major American companies, one being a multi-national company, and another being a local company operating within United States. The companies identified are American Airline Group, which is a multi-national company, and the Johnsonville foods which is a local American company. This paper talks about the business and the corporate level strategy of the American Airline Group., and the strategies in which the companies forming the American Airline Group used to merge. This paper also contains information about a possible company that can form a good merger with the Johnsonville Foods. The company under consideration is the Burger King. It also identifies a possible business level and corporate level strategies for the organization. American Airlines Group: The American Airline Group is a company that is publicly traded and has its headquarters in Texas. This company was formed on the 9th of December 2013, with a merger between the United States Airways Group, and the AMR Corporation. These two airline companies merged to form the largest airline company all over the world. The American Airline Group operates not less than 6,700 daily flights to different locations in the world. This covers about 56 countries, and more than 336 locations found in these 56 countries (Agyenim, 2014). The American airline group has operating revenue of about 40 billion American dollars, and boasts of a workforce of over 100,000 employees. The company plans to introduce an additional 607 aircrafts, and this includes 90 wide body airplanes, and 517 narrow body airplanes. The full merger of this company, resulting to the use of a single operating certificate is expected to be complete in the later periods of 2015 (Agyenim, 2014). Strategy of the Merger: The merger of the two airline companies was necessitated by the bankruptcy of AMR group. The strategy used in creating this merger is referred to as the stock-swap strategy/merger. Under this strategy, the shareholders of the US Airways received 28% of the shares of the new company. The creditors of AMR, and other equity holders were to receive the remaining 72% of the shares of the new company. This process was to take two years, upon which the company will pay the creditors of AMR their interests, and other stakeholders of the company a share of the company equity (Agyenim, 2014). This is a rare occurrence in bankruptcy cases where creditors usually receive cents, on a dollar they claim. On the other hand common stakeholders of the company are always wiped out, without receiving any benefits from the company. Common shareholders of the AMR group received one share of the American Airline Group, out of the every 15 shares they held at AMR. This was a representation of 3.5% of the share value of the new company (Agyenim, 2014). Under this deal, the other provision was that if the share price of the new company does not fall within the next 120 days, then holders of AMR shares would own a third of the new company. This represented approximately 5 billion dollars worth of shares. Under this deal, the new combine will have the branding and the name of the American Airline, with the holding company having the name of the American Airlines Group. The management team of the United States Airways will continue holding their positions, with the headquarters of the company being at Fortworth, Texas (Kwoka, 2014). This merger by the two airline companies is very good for the companies, because it will help to increase their market shares. This is because the two companies will enjoy the benefits of scale, and inherit each other market, as well as acquire new markets because of their large size. The companies will also benefit from an additional member of staff, who came with new skills which might not be under the possession of the company. International Business Level Strategy: In seeking to increase the organizations market share, the American Line Group will develop policies aimed at improving the performances of the airline company in the Asian Pacific Market, and the European Market. To achieve growth in these areas, the company seeks to introduce a new fleet of airplanes. This will ensure that the company has enough resources for purposes of catering for the needs of its customers. The organization also seeks to use technology for purposes of improving the quality of its services. An example is the jet stream program with is a technological innovation aimed at improving the manner in which the organization collects its revenues, and manages its customers relations. The organization also seeks to embark on an aggressive marketing, through the use of the social media, the internet and other channels of communication. This will help the company retain its market share, as well as acquire new markets for its products. International corporate-level strategy: On a corporate level strategy, the company seeks to engage in strategic alliances with other airline alliances such as the one world alliance. This will help the airline to acquire some lucrative markets, such as that of Japan and of Asian Pacific nations. For purposes of improving its brand name, the organization seeks to embark on environmental conservation measures. This is by developing policies aimed at preserving the environment. It is important to denote that the American Airline Group is still a new business venture, just formed some three months ago, and hence it hasn’t developed a well defined strategy for promoting its activities in the international arena. Recommendations of Improving the Strategies: For purposes of improving the organization business level strategy, it is important for the company to diversify the kind of services it offers. This also requires a diversification of skills. That is insisting of different types of skills amongst its workforce. The company should not only engage in the offering air line services, but it should also engage in offering services that are related to air line transportation (Huffmire and Holmes, 2006). This includes operating airline fuel stations, promoting tourism, etc. This will help to increase the revenue stream of American Airlines, making it profitable. On a corporate level strategy, there isn’t much to write about. This is because the company is only three months old, and they do not have a clear corporate strategy aimed at promoting their growth in the international market. However, the company should develop a corporate strategy aimed at satisfying the various needs of its customers, countering the strategies of its rivals, and satisfying the requirements of the various governments in areas where the company operates. Johnsonville Foods: Johnsonville Foods is a local American company that deals with the production of sausages. The company was founded in 1945 by the Stayer family, notably Ralph and Alice Stayer (Aubrey, 2010). The headquarters of the company is in Wisconsin, and the products of the company are sold in various nationwide groceries and retailing units such as Giant Food, Safeway, Bi-Lo, Albertsons, Wal-Mart, and in the 16 stadiums that host the NFL league. This company is the largest sausage brand in terms of revenue, and it has the capacity of slaughtering more than 3240 pigs on a daily basis. Suitable Candidate for Merger: The suitable candidate for merger with Johnsonville foods is Burger King. Burger King is a multi-national company that operates in the fast food industry. The most dominant products of Burger King are hamburgers which are produced by a variety of meat products. Burger King was formed in 1953 with a brand name of Insta Burger King. However, in 1954, Insta Burger was renamed Burger King after it was acquired by its two Miami based franchises (Aubrey, 2010). Burger King is a Franchise, and it operates in more than 79 countries, with more than 13,000 franchises. This company has passed through a series of mergers and acquisitions, with the latest being in 2010 by a Brazilian company called 3G capital. 3G capital initiated a series of operational changes within the company, for purposes of making the company to be profitable (Lynch, 2012). A merger between Johnsonville and Burger King will be beneficial for both the companies. In this association, Johnsonville will have the responsibility of supplying pork products to Burger King. Johnsonville is most likely to benefit from the international market those Burger King commands, giving it an opportunity to expand the organizations business to an international market (Aubrey, 2010). It is important to denote that Burger King usually supplies to its franchises the raw materials and resources needed for producing hamburgers. This merger is beneficial Burger King in the sense that it may manage to acquire meat products, especially pork at an affordable price. This will in return reduce the operational costs of the organization. On this basis, a merger between Johnsonville and Burger King is beneficial for both the organizations. Proposed Business Strategy Level for Johnsonville Foods: One business level strategy proposed for Johnsonville Foods is the cost reduction strategy. It is important to denote that the prices of a product play a great role in determining the growth and the market share of the organization under consideration. The price of a product is always based on the internal efficiency of the organization to reduce the costs of producing the product under consideration (Huffmire and Holmes, 2006). The reduced costs will be reflected on the kind of price that the company sales its products. The cost reduction strategy of Johnsonville will work well when the food products of the company are of high quality, and offered at an acceptable price, that is affordable to the organizations customers. In order to lower the cost of production, Johnsonville Foods should strive to do the following; Build a state of the art facility that makes it impossible for the organizations competitors to imitate. Maintaining a tight control on overhead and production costs. Minimizing the R&D costs, and that of sales. Proposed Corporate Level Strategy One proposed corporate level strategy is diversification and transfer of skills. The company should diversify its products, and venture into other areas that are also related to food production. This might include rearing of animals, so that it does not depend on farmers solely for supplies. The company can also seek to support research in areas dealing with the improvement of food production (Huffmire and Holmes, 2006). Diversification is a very important strategy that the organization should follow, and this is because the company will manage to increase its revenue base. In case one area of the company does not perform well, the other area of the company will manage to bring revenues to the organization. For diversification to effectively occur, the organization needs to have highly skilled employees who can operate in different sectors of the company. Conclusion: In conclusion, a merger is a very important aspect in a business. This is because companies can achieve numerous growth and a higher sense of profitability if they join forces, to form a single company, pursuing a single interest. However, mergers can be disastrous in case the companies under consideration want to pursue different objectives, and the terms of the merger are not clear. On this basis, for a merger to be successful, there is a need of thorough negotiations between the companies involved. This would ensure that the merger, or acquisition is successful. References: Agyenim, B. (2014). Cross-border mergers and acquisitions: uk dimensions.. S.l.: Routledge. Aubrey, S. B. (2010). The profitable hobby farm: how to build a sustainable local foods business. Hoboken, N.J.: Wiley. Huffmire, D. W., & Holmes, J. D. (2006). Handbook of effective management: how to manage or supervise strategically. Westport, Conn.: Praeger Publishers. Foods. (n.d.). Home - Johnsonville.com. Home - Johnsonville.com. Retrieved February 20, 2014, from http://www.johnsonville.com/home.html;jsessionid=B16ED001008DB953E68F23A8938 2660D Kwoka, J. E. (2014). The antitrust revolution: economics, competition, and policy (Sixth ed.). New York: Longhorn. Lynch, R. L. (2012). Strategic management (6th ed.). Harlow, England: Pearson. Read More
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