ISM INTERNATIONAL ACADEMY

HOMEWORKS
(Business & Management)

Martin Zurita
1bach B
24/06/15

Questions
Sony Ericsson
a. Define the terms Joint Venture and profits as started in the case
study above.
Joint Venture is when two or more business decide to split the cost,
risks, control and rewards of s business project as Sony Ericsson
made, where they agree to set up a new legal entry. Also between
the firms will involve Sony Ericsson has been very successful in
reducing the market share of more established mobile
manufactured.
b. Explain the reasons why a merger between the two companies
may not be appropriate.
Because when a business decide this method of growth they allow
organize to enjoy some of the benefits of merger of acquisitions
such as higher scale and market share but without having to lose
their corporate identity in other words, lose, divide the profit.
c. Examine the benefits of the joint venture to Sony Ericsson.
Talents and resources of the firms in collaboration should create
synergy, spreading of cost and risk on this organizations, entry to
foreign markets, relatively cheap, have a competitive advantages,
have an exploration of local knowledge, and also have a high
success rate. These are all the benefits of the joint venture to
Sonny Ericsson

Questions
Disneys Takeover of Pixar

Explain two benefits to Disney in acquiring Pixar.

The benefits are:
Have a greater market share because had more power
and larger customers base. Created better animation
films.
Disney and Pixar got economies of scale in the production
of the animation films.
This two business have synergy because Disney have the
part of the film either in the creation, ideas and Pixar had
the technology in the animation films, and with this they
have a great film.
Diversification because each business have different
ideas.
Examine two potential problems for business during a takeover
Loss of control because Disney possible have their own
managers or their own technology and also Pixar have the
same.
Redundancies this business have a lot of jobs may be
duplicated and this produced the same ideas and the
production wouldnt be better.
Discuss the benefits for a business such as Disney in acquiring
other firm
Less competency because Pixar and its ideas become part
of Disney where they produce better films with a good
technology.
Distribution of the work so there will be less work

Questions
Pizza Hut
a. Explain the reasons for Pizza Huts decision to use franchising
as its much form of growth.
Franchising allows a business to have a national or
international presence, reputation without the relatively

higher costs of organic growth or mergers and

acquisitions this help to finance the expansion
This used form economies of scale
This is a fast way to growth
Franchising can be less risky than organic growth
Because the franchisors receive a royalty payment
Their idea can improve and earn more money
b. Examine the potential problems of Pizza Huts growth strategy
It is difficult to control the activities of franchises because dont
have the same equality of standards. Franchisors take a huge
risks because other people take the name and maybe they can
gave a bad reputation interesting in the growth strategy.

Review Questions:
1. Outline four ways in which the size of a market can be
measured.
The sales revenue (sales turnover), market share the sales
revenue of the nosiness as a percentage of industrys scales,
capital employed, the number of employees hired by the
business).
2. Why do business seek to grow in size?
Because to reap the benefits of larger scale production know as
economic of scale, to gain a larger market share in other to gain
better markets and industries.
3. Using examples explain economies of scale
Refers to the lower average costs of production as a firm
operates on a larger scale due to an improvement in productive
efficiency.
For example, the Airbus 300 Hyper Jumbo is reported to have
351 more seats than the Boeing 747 jumbo jet but burns it less
fuel per seat.
4. Distinguish between internal and external economies of
scale.
The internal are within the organizations control and the
external occur within the industry that the business operates
and are largely beyond the control of the business.
5. What is meant by the optimize size of a business?
Depend on its internal structure, its costs and the size of the
market the most appropriate size for a business also depends
on its aims and objectives.
6. Distinguish between internal and external growth.
Internal growth occurs when a business grows internally, using
its own resources to increase the scale of its operations and

sales revenue is typically financed through merger and

acquisitions known as amalgamation or inorganic growth.
7. Distinguish between Joint Venture and Strategic Alliances
Joint Venture occurs when two business creates a new company
to have benefits so strategic alliances is like the same but
without creating any other company.
8. What are the benefits of mergers and takeovers as a form of
external growth?
The benefits are: greater market share, larger scale operations
help to lower the unit costs of production, exist synergy,
survival he merged firms is in a much stronger position to
complete diversity their product mix.
9. What are the advantages of franchising as a method of growth?
The advantage: there is relatively low risks since the franchisor
has a listed and festered formula to the chances of business
success are rough. Disadvantages: they money needed to buy a
franchise to buy a franchise can be very expensive