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In September 2009, Deutsche Telekom (DT) and France Telecom (FT) were
agreed to merge their UK operators T-Mobile and Orange. It is worth £3.5 billion and
would become a largest mobile communication operator in the UK. At the present
time of this literature review, the proposed merger is not completed yet due to the
proposed merger is to find out the fundamental theories behind merging process and
Summary
strategy (how companies merge), their branding strategy (same brand or new brand
after merging), how the new brand would affect the market and also marketing
strategy for new brand. This is the synthesis of theories and practical situations to
Only strategic analysis and strategic planning can lead a business to its target.
It is obvious that Strategic Business Analysis (SBA) is the most primitive planning
tool for the future direction and scope of a business organization. Strategic analysis is
TARGET
ACHIEVEMENT
STRATEGIC
OPERATION
STRATEGIC PLANING
STRATEGIC ANALYSIS
The figure above shows that how strategic analysis is related to planning and
There are several definitions can be found in general, but in order to define the
capabilities and external environment equally influence each other which is still
value for customers, positive and negative forces at work, critical issues to be
managed, visions for the future, and other vital elements. It is also the ideal way to get
The first mobile communication service was launched in 1985. The overall
UK mobile phone market is dominated by four major operators O2, Vodafone, Orange
and T-Mobile. The UK mobile market is one of the competitive markets in Europe.
During the past twenty five years, mobile communication industry in UK has growth
rapidly.
50 countries and generated €32.1 billion in revenue in the first half of 2009. France
Telecom (FT) has a customer base of nearly 129 million mobile subscribers in 32
countries and revenue for the first nine months of the year 2009 is €38.1 billion. 2
UK operations of T-Mobile and Orange into a joint venture company. T-mobile and
1
www.planningskill.com
2
http://www.telecomtv.com/
Orange has 12 million and 16.4 million subscribers each before the merger. After
combining two companies, there are 28.4 million customers in total and will have
revenues of approximately £7.7 billion. It will lead the UK market with around 37
per cent of total UK mobile subscribers. The new formed T-Orange will over take
At the present time of this literature review, merger proposal has been delayed
by the office of fair trading. Richard Wray reported that: “UK competition authorities
have asked the European Union for the permission to investigate the proposed merger
themselves under Article 9 of the EU merger regulations, because it was a deal that
affected UK consumers. If the request is granted, the Office of Fair Trading would
conduct its own analysis of the situation before deciding whether to refer the tie-up to
the Competition Commission for a detailed investigation that could last as long as six
This is a section to describe how the business is analysed. Due to the nature of
different forms of techniques in this project. They are SWOT and PEST analysis.
looking at the strengths and weaknesses of your business' capabilities, and any
in first place as it covers every aspect of the business including finance and revenue,
service delivery, skill level, client base, market condition, competitors’ activity and
business. It is used within a SWOT analysis in this project. There are different factors
• Political factors are tax policy, labour law, environmental law, trade
• Economic factors are GDP, GNP, per capita income, interest rate, exchange
rates and the inflation rate. These factors have major impacts on how
growth rate, life expectancy, career attitudes and emphasis on health and
safety.
3
Models for your strategic analysis, www.busimesslink.gov.uk
• Technological factors include ecological and environmental aspects, such as
change.
There are different names and types of business combination method. The
2. Take over
3. Joint venture
4. Strategic alliance
techniques after the first merger wave since the depression of 1883. After a century,
M&A of this time (the fifth wave) emphasized longer term business strategies and are
6.1.1 Mergers
completely new company. All assets, liabilities and the stock of one company stand
3. Cash,
4. A mix of the all above modes.
obtained when two firms are combined. The followings are the most typical basis of
merger,
share and therefore make more profit. Increasing market share may be
• Economies of scale: A merger can enable greater efficiency because the larger
firms can share fixed costs. This is important for industries with high fixed
costs.
• Profit for research and development: A merger enables a firm to make more
of strategic analysis.
direct competition and share the same product lines and markets. E.g. T-
4
http://www.investopedia.com/
• Vertical merger: The consolidation of firms that have potential or actual
buyer-seller relationships.
From the point of how the merger is financed there are two types of merger,
6.2 Acquisition
may be affected by
When two companies join to form one new firm by force is “take over”. A
takeover is acquisition and both the terms are used interchangeably. It differs from
This is the most important point in the whole analysing program. The
Mergers can fail for many reasons including a lack of management foresight,
the inability to overcome practical challenges and loss of revenue momentum from a
8. Conclusion
Although there are some delays and objections, the merger is expected to be
complete in July 2010. There are enough evidences to prove that this is going to be a
5
Source from http://www.thompsondunn.com
6
http://www.investopedia.com/
successful merger, when the deal is approved. Although problems like job cuts and
some shortages are expected but there are more significant advantages for mother
merger for the lower prices, improved network connection and better service.
9. References
Associates Inc.
http://media.wiley.com/product_data/excerpt/79/04714143/0471414379.pdf
[Accessed 20/02/2010]
[Accessed 20/02/2010]
6. Martyn Warwick (2010), “UK merger of T-Mobile and Orange gets the
[Assessed 27/02/2010]