Monday, November 9, 2009
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Monday, September 21, 2009
Dell Buying IT Systems Developed by Perot
Link:
(Open link in new tab)
or:
http://www.nytimes.com/aponline/2009/09/21/technology/AP-US-Dell-Perot-Systems.html?ref=business
Summary:
Dell has agreed to buy Perot Systems Corporation, an Information-Technology Services company, for approx. $US 3.9 Billion. The reason is because Dell wants to expand beyond their computers business. Moreover, Dell thinks this decision will help Dell to have more potential customers by expanding their own IT services offerings for businesses. After this decision was made, Dell's share fell by 4.7 % to $15.9 in premarketing trading, while Petrot's stock shot up by 66% to $29.70.
(Dell offers $30/share for Perot's 121 million common shares, which adds up to$ 3.9 Billion)
Topics from Syllabus:
1.7 Growth and Evolution
3.4 Budgeting
Applying Business Theory to the Article:
Evidences in this article showed that Dell is undergoing External (or inorganic) Growth. The type of inorganic growth is acquisitions because Dell bought a lot of Petrot's shares. In this case, Dell acts as the white knight of Petrot because it appears to be a friendly bidder. Dell sells computers products while Petrot sells IT services, which appears that the two companies are not rivalries.
The type of integration that occur in this acquisition is Vertical Integration. Vertical Integration takes place 'between businesses that are different stages of production' (copied from business text book). Dell is the secondary industry by selling computers products while Petrot should be the tertiary industry by providing IT services. This type of strategy benefits Dell from having a greater market power because they have access to better IT service, which satisfies more customers' needs and wants. However, a disadvantage to this decision might be redundancies of staff members. Dell will unemploy some employees and this action will create stress among the employees. Also, Dell might have to reorganize their own organizational and pay structures, which needs extra costs and time.
Guys, thx for reading and feel free to comment.
Have fun
(Open link in new tab)
or:
http://www.nytimes.com/aponline/2009/09/21/technology/AP-US-Dell-Perot-Systems.html?ref=business
Summary:
Dell has agreed to buy Perot Systems Corporation, an Information-Technology Services company, for approx. $US 3.9 Billion. The reason is because Dell wants to expand beyond their computers business. Moreover, Dell thinks this decision will help Dell to have more potential customers by expanding their own IT services offerings for businesses. After this decision was made, Dell's share fell by 4.7 % to $15.9 in premarketing trading, while Petrot's stock shot up by 66% to $29.70.
(Dell offers $30/share for Perot's 121 million common shares, which adds up to$ 3.9 Billion)
Topics from Syllabus:
1.7 Growth and Evolution
3.4 Budgeting
Applying Business Theory to the Article:
Evidences in this article showed that Dell is undergoing External (or inorganic) Growth. The type of inorganic growth is acquisitions because Dell bought a lot of Petrot's shares. In this case, Dell acts as the white knight of Petrot because it appears to be a friendly bidder. Dell sells computers products while Petrot sells IT services, which appears that the two companies are not rivalries.
The type of integration that occur in this acquisition is Vertical Integration. Vertical Integration takes place 'between businesses that are different stages of production' (copied from business text book). Dell is the secondary industry by selling computers products while Petrot should be the tertiary industry by providing IT services. This type of strategy benefits Dell from having a greater market power because they have access to better IT service, which satisfies more customers' needs and wants. However, a disadvantage to this decision might be redundancies of staff members. Dell will unemploy some employees and this action will create stress among the employees. Also, Dell might have to reorganize their own organizational and pay structures, which needs extra costs and time.
Guys, thx for reading and feel free to comment.
Have fun
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