Merger & Acquisition-Euro Sports Global Limited and Auto Inc. private limited

This report evaluates the merger of Euro Sports Global Limited and Auto Inc. Private limited in 2014. It uses various strategic frameworks like PESTLE, Porter 5 forces, SWOT and TOWS to evaluate the strategic undertaking of the company. The report further delves into identifying the organizational problems due to the merger and recommendation to move the business towards business sustainability.

Running Head: International Business
International Business
Merger & Acquisition-Euro Sports Global Limited and Auto Inc. private limited

International Business P a g e | 1
Table Of Contents
Brief Background..............................................................................................................................2
Evaluation of Strategic Undertaking.................................................................................................3
Suitability.........................................................................................................................................3
PESTLE Analysis..................................................................................................................................3
Porter 5 Forces..................................................................................................................................4
SWOT Analysis...................................................................................................................................6
TOWS Matrix.....................................................................................................................................6
Feasibility.........................................................................................................................................8
Acceptability...................................................................................................................................10
Stakeholders....................................................................................................................................10
Stakeholder Mapping......................................................................................................................12
Rationale & Motivation..................................................................................................................12
Motives for M&A –Eurosports Global & Auto Inc............................................................................13
Ansoff Matrix...................................................................................................................................14
Potential Organizational Problems.................................................................................................14
Recommendations..........................................................................................................................15
Conclusion......................................................................................................................................17
References......................................................................................................................................18

International Business P a g e | 2
Brief Background
This report examines the merger of two companies in Singapore – Euro Sports Global
Limited and Auto Inc. Private limited in 2014. Euro Sports Global limited (listed on
SGX), is a luxury automobiles distributor who bought over 60 per cent stake in Auto Inc.
Sports, Auto Inc. lifestyle and Birel Singapore. This 1.5million Singapore dollar was paid
for the stake of Auto Inc. Sports, an automobile broker specialising in sports cars and
luxury cars, while Auto Inc Lifestyle offers a range of car care services. Birel Singapore
sells go-karts and provides maintenance and storage services for go-karts. The company
was renamed to Auto Inc Euro Sports Private Limited. AutoInc EuroSports is a broker
and detailing studio specializing in high performance, luxury and classic automobiles.
The vision of the company is pivotal in its growth strategy; the vision of the company is
to revolutionize the supercar industry by creating and delivering superior cars with
added differentiation and advanced features.
The merger presented an opportunity to sell more cars, not just new luxury cars but
also pre-owned luxury ones along with the introduction of a differentiated or unique
product, Zymol, under the car care services to a similar customer base and to tap into a
new base of customers. Products and markets are well known and recognised hence
this provided the best scope and strategy for leveraging on existing skills and assets and
new ones which complement the existing ones.
The purpose of the assignment here is to evaluate the strategic undertaking of the
company by using various strategic frameworks like PESTLE, Porter 5 forces, SWOT and
TOWS. The evaluation has to be done on the basis of four parameters namely suitability,
feasibility, acceptability, rationale and motivation. The report will further delve into

International Business P a g e | 3
identifying the organizational problems due to the merger and recommendation to
move the business towards business sustainability.
Evaluation of Strategic Undertaking
The underlying purpose of conducting this exercise is to examine the environment of
AutoInc and conduct an internal and external environmental analysis. A number of
micro and macro environmental models will be used for this purpose which is based on
the four pillars of:
Suitability
Feasibility
Acceptability
Rationale and Motivation
Suitability
PESTLE Analysis
PESTLE analysis is a fundamental strategic framework which is used to assess the
external environment of the industry in accordance with political, economic, socio-
cultural, technological, legal and environmental factors (Marttunen, Lienert & Belton,
2017).
PESTLE Facts Implication Outcome
 Political  The political
stability in
most part of
the world
and
emergence
of Singapore
as a
business
friendly
country is a
win-win for
 Stable
outlook
leads to no
or less
complication
 Peaceful
business
and less
governmen
tal
regulation.

International Business P a g e | 4
the
company
and the
industry(Ca
rson, 2017)
 Economical  The
economic
conditions
are far
better since
2014.
 Opportunity
for growth
and more
merger and
acquisition
 Discussion
on future
takeovers.
 Socio-cultural  People are
more
focussed on
the
differentiate
d products
which give a
boast to
their
lifestyle and
provides
satisfaction
 Plethora of
people
getting
involved in
luxury
vehicles to
boast their
social status
 Growing
interest on
the luxury
cars
 Technological  The broking
firm
believes in
high
technologica
l
enhanceme
nt in its
super cars
to better
suit the
present and
future need
of the
customers
 High
technology
laced cars,
catering to
the niche
audience
 More and
more
technologic
al
innovations
 Legal  Compliance
with the
emission
laws,
trading,
import and
export laws
 Ensuring
legal
compliances
ensure a
smooth run
for the
company in
the territory
 Zero
tolerance
policy
 Environmental  Revised
taxation on
luxury cars
 Increasing
taxes due to
carbon
 More
environme
ntal

International Business P a g e | 5
emission and
changes in
the prices of
the cars in
the segment
friendly
supercars.
Porter 5 Forces
Porter 5 force is another strategic model which helps in identifying the market
attractiveness of the industry in terms of profitability. Michael Porter in the year 1979
came with this model, which is of much use in every industry in the present day
(Nguyen, 2017).
Porter Forces Fact Implications Outcome
 Competitive
Rivalry
 Many rival
companies
offering
similar
services
(pre-owned
car business)
 But Autoinc
have value
added
products,
unique
models and
car care
services
(apart from
pre-owned
luxury cars )
which
complements
sustainable
competitive
advantage
 Highly
competitive
market
 advertising
expense
 High
Competitio
n (Strong
force)
 Bargaining
Power of
suppliers
 Pre-owned
cars-
Strength of
distribution
channel and
Switching
costs
 Car care
services –
 Trade-ins
from within
company and
costs of
trade-ins
managed
within.
 Low Power.

International Business P a g e | 6
unique
product with
not many
suppliers
around
 Bargaining
Power of
customers
 Highly
competitive
market lots
of choice for
customer
however,
value added
product
offering of
car care
services may
lend an
advantage
over rivals
when
packaged
together
 Customers
have more
information
available on
different
products and
more choice
to choose
from.
 -Price
sensitivity
 -Differential
advantage.
Uniqueness
of product
offering
 Moderate
Force
 Threat of
Substitute
Product
 Public
Transport
 People might
move to
public
transport
 Medium
Force
(Because of
utility of
car other
than
transportat
ion)
 Threat of new
entrant
 Substantial
capital
requirement
is required
for start-up /
Customer
loyalty to
established
brand /
Special
licensing and
permits
 Not easy to
set up
company.
 Good
relationship
with
customers
and suppliers
 Low Force

International Business P a g e | 7
SWOT Analysis
TOWS Matrix
A TOWS matrix involves the identification of organizational SWOT and offers a strong
criticism of SWOT analysis which fails to show the relationship between different
factors and categories (Kapoor & Kaur, 2017).
External Opportunity External Threats
 Internal Strength  SO
 Use existing client
base to offer and sell
differentiated /
unique products and
services
 ST
 Use recognized
brand equity and
good quality of
unique product and
good services to
Strength
Strong Brand equity
Financial and cash resources
Diversified customer base
Reputation in the industry
Unique product offering (Zymol,Car Care
products)
Weakness
Increasing cost and shrinking margins
Slow adoption to changing environment
Dependency on fewer markets
Less innovation
Opportunty
Grwoth in economy leading to growing
demand.
Differentiated offering gives a good
opportunty for the company
Increase in COE and Taxes will result in
people buying pre-owned cars
Growing social status will lead to people
looking for luxury cars
Threat
Economic recession can reduce the
disposable income of people.
High competetive rivalry
More choices for consumers.
Customers have an option of chosing public
transport
SWOT

International Business P a g e | 8
 Take advantage of a
healthier economy
whereby there is an
increase in spending
to tap on new
database hence
increase promoting
and selling of
company’s
differential, unique
product. This will
help increase lead
generation and
boost company sales
turnover and
revenue
 Using the marketing
channels to promote
the product offering
and spread the word
on differentiated
services
compete with rivals
to retain existing
customers in
competitive market.
 Use good financial
and cash resources
to expand business
into non-luxury car
segment.
 Leverage the
reputation in
industry to increase
brand loyalty and
build customer
relationship.
 Internal Weakness  WO
 Look into moving
into new markets.
 Usage of the
changing
environment to
better adapt to the
changing
circumstances.
 WT
 Be fast moving and
quick to change
where necessary to
keep up to speed
with new companies
 Be quick to innovate
new ideas to upsell
thus creating value
and keep
competition at bay.
 Get into newer
markets with stable
economic conditions
The above analysis of the company and the industry by strategic tools point out largely
in the favour of the company. The strategic position of the company is well placed
according to the business environment and using the TOWS matrix company can further
step deeper in the market and beat any existing competition.

International Business P a g e | 9
Feasibility
The underlying purpose of the feasibility conduct on the organization is to evaluate if
the strategy can be supported financially, and by the use of physical, intellectual, human
and stakeholder resource analysis. It further delves deep into the skill assessment and
the resources required for fulfilment of the strategic objectives (Song, Kim & Lee, 2017).
Resources Particulars/Items Feasibility/
Availability/Recommendation
Financial  The net cash flow
statement of the
Parent company is
extremely positive
in comparison to
the previous year
results. The
company earned
net cash flow from
its operating
activities to the
tune of 15,611,000
USD (2017). Net
cash flow from the
investing activities
stand at (1.024,
000) USD in 2017.
Net cash flow from
the financing
activities stand at
(16,187,000) USD
in 2017.
 Below is attached the
Financial report of the
company of the
present year. The
report further
mentions that the
company is well
funded and hence it
can go further with
any of the financing
activities for the
business development
activities.
 Recommendation for
the financial resources
is to plough back the
profits into increasing
the business
momentum
Physical  Physical resources
include
Infrastructure, the
space on lease or
rental, warehouse
for the vehicles,
servicing plant,
showrooms, and
vehicles.
 Yes, this is already in
place. However, can
still re-look at options
to consolidate
operating costs
further. Options are
like sharing of
warehouse space to
store cars, moving
showrooms to be in
same vicinity as this
can leverage on
reducing costs and
helping to capture
customer focus.
Customer can view all

International Business P a g e | 10
products and services
in one place. Another
thing which can be
done as optimum
utilization of physical
resources is usage of 6
sigma operational
procedure to better
manage the process.
 Intellectual  This consists of
Patent, Brands,
Business systems,
customer
databases,
goodwill, training
website and
product
knowledge.
 Intellectual resource is
very critical for any
organization. Apart
from Training website
and product
knowledge the
company has all the
intellectual resources.
 In order to create
training website for its
employee support the
company has to tie up
with some automobile
industry expert and IT
company to develop an
intranet site exclusive
for the employees to
homer their skill sets
and expertise.
 As a part of product
knowledge the
company has to bring
in big industry names
and people from the
partner companies to
provide valuable
insight on the new
tech and innovation in
the automobile sector.
Human  Human resources
is undoubtedly one
of the pivotal
resource of any
organization, hence
special attention
has to be given on
optimum
utilization of the
human resource
and also to reduce
 Not available.
 In order to merge the
department, the sales
and marketing to be
clubbed together.
 Legal, finance and
accounting to be
merged.

International Business P a g e | 11
the cost in human
resources.
 In this merger, it is
advised that
company work on
reducing the
manpower
resource by
clubbing the
departments for
optimum
utilization of
resources.
 Servicing, customer
service and on-site
support and the tech
team to merge
together.
Stakeholders  Customers &
Investors
 Customers are in sync
with the merger,
because the direct
benefits are extended
to them in the form of
value addition and
better pricing strategy.
 Investors are in
resonance with the
decision because they
agreed to the merger
and the financial books
shows positive return,
implying the consent
with the merger.
The feasibility analysis mostly point towards the deal and see it as highly feasible
ensuring business sustainability. The different resources such as Financial, human,
stakeholders, intellectual and physical resources have to be utilized in an optimum
manner for the attainment of the strategic objectives.
Acceptability
Acceptability here in the case is concerned with whether the expected performance
outcomes of the proposed strategy meet the expectation of the stakeholders.
Stakeholders are extremely critical to the organization, thus it becomes extremely
important to take good care of the interest of stakeholders (Ismailova, 2017).
Acceptability is guided by three key aspects:

International Business P a g e | 12
Risk-Implication of risk is the extent to which the outcome of the strategy can be
predicted, the same can be assessed using Break even analysis and financial ratios.
Return –Returns are the financial benefits which the stakeholders expect from the
organization’s strategic move.
Reaction-Stakeholder mapping can be used to assess the reaction of the stakeholders
and also helps in understanding political correctness (Lacono & Levinson, 2017).
Stakeholders
Who Key Concerns
Returns/Risk/Reactions
Acceptability (Yes/No)
Employees
(Finance/Marketing/Huma
n Resource/Service
Tech/Sales )
Change is always
associated with some level
of risk, which creates fear
in the organization. Picking
up on the fear, the
employees might fear their
job security. A new merger
might pull a new team
altogether and break the
existing team.
Return can be seen as the
new employee policy,
increment or incentive
policy.
Corporate restructuring-
Proper communication to
fall in line to communicate
the rationale for the
merger.
Redundant Roles-HR to
identify the existing roles
of the employees and free
them with useless job
responsibilities and assign
new task responsibility
With just three years to
merger, it is extremely
uncertain to have an
understanding on the
acceptability. Turnover
rate and employee
satisfaction index can be
used to find out the
acceptability in the
coming years.
Board of Directors Board of director is the top
management which took
the decision of merger for
the growth of Business.
Focus on the cash flow
activities, and creating cash
generating activities.
It seems that the board
of directors are in much
better agreement and in
alignment with the
merger, as the merger
helps in acquiring a
bigger target market and
combining the synergies

International Business P a g e | 13
Long term business plans
to maintain the momentum
of business and co-creation
in new markets.
Reviewing existing market
and competitive analysis
Might have a possibility of
instability in the company
due to cost implications
of two companies.
Customers Customers of the company
can be classified into:
Sports enthusiasts
Luxury car drivers
Big business tycoons.
Car enthusiasts
People looking for high
customization in cars.
Affluent class
Likely to be in agreement
because more product
offering for customers,
value added service,
better pricing and more
options to choose from is
a win –win for the
customer and company.
Suppliers OEM are the major
suppliers which help the
company to procure parts
and modify them for high
functioning capabilities
In agreement as the
suppliers get more
business and a chance to
expand their horizon in
business
Stakeholder Mapping
Stakeholder mapping also known as the Power/Interest matrix is a matrix which plots
stakeholders according to level of interest and Power. The mapping is highly useful in
determining which stakeholders needs have to be most considered and if the strategy is
acceptable or not to the stakeholders, also helps in identifying the key blockers and
facilitators of the strategy (Raum, 2018).
Low High
Level of
Interest

International Business P a g e | 14
Rationale & Motivation
As the name suggests rationale and motivation is the underlying purpose of the merger
and acquisition. It helps in understanding in depth the motivation and rationale behind
the merger by categorising the same on three parameters; Expectation, environment
and the capabilities.
Strategic Motives for M&A
Categorised in three ways:
 Extension-Extension of scope in terms of geography, products and markets.
 Consolidation-Increasing scale, efficiency and market power(Greve & ManZhang,
2017)
 Capabilities-enhancing the competencies and the know-how.
Minimal
Efforts
Suppliers,
GSX
Keep
Informed
Bankers &
Shareholders
Keep
Satisfied
Customers
Key Players
Board of
directors and
Employees
Low
High
Power

International Business P a g e | 15
Financial Motives for M&A
Categorised in three ways
 Financial efficiency
 Tax efficiency
 Asset stripping or unbundling
Managerial motives for M&A
Categorised in two ways
 Personal ambition
 Bandwagon effects
Motives for M&A –Eurosports Global & Auto Inc
Environment- The market for luxury and sports cars is on a high spree. High purchasing power parity
of people is an indication of the increasing demand of the high performance, luxury and classic
automobiles. High competition is driving the market along with unsatiated needs of the customers.
The financial implication which resulted out of this 1.5 million dollar deal is huge. The company aims
to keep its stakeholders satisfied by giving them good dividends and return on investment.
Capabilities-Auto-Inc Euro motors jointly use the capabilities of both of its companies. Euro motors is
one of the biggest brokers and detailing studio specialized in high performance, luxury and classic
automobiles. Auto-inc was in the business of providing high quality car services. Both the units
together provide quality solutions to the customers. The companies individually were not in a
position to provide comprehensive solution. Thus the merger helped in addressing the lack of
resources and competencies. Accentuated learning and exchange of the technical know-how are
also part of capabilities of the organization.
Expectations- The expectation from the merged entity was growth in the market share and the
profits. The senior managers and the boards expect to see strong brand equity and strong customer
relationships. Expectation to book strong profit and a positive customer advocacy.

International Business P a g e | 16
Ansoff Matrix
In order to further understand the rationale and motive behind the merger, Ansoff Matrix is of great
utility. The matrix lays down four different strategies for Product and services with markets.
Here, the merger is in accordance with Product development and forming a conglomerate. The
merger with Auto Inc for Euro motors will lead to increase of economies of scale and will aide to
cater the servicing needs of the high end luxury cars with never to be seen or heard off services like
Zymol. Ansoff Matrix thus helps in giving the rationale behind the merger of the two companies.
Potential Organizational Problems
Euro sports bought a 60% stake in Auto Inc to increase the scope of its product and services to the
existing customers. It is a stated observation that Merger and Acquisition is not easy and is followed
by a number of problems. Some of the potential problems which can arise in the organization are:
Different Organization culture- Both the companies have been operating in two different directions.
One has been into the broking business of cars and the other has been into the car care business. It
is nothing but obvious that the human resources of both the companies would be entirely different,
one would be highly polished, other would be highly skilled. The merger can potentially be lethal to
the employees of both the company as the result of organizational culture. Employees might not be
able to adapt or evolve and end up leaving or losing their jobs due to the difference in organizational
culture.

International Business P a g e | 17
Lack of Post-acquisition planning- It is often seen that companies get so busy in acquiring the
company; they completely lose the focus on what’s next. This is one of the major problems why
mergers and acquisitions fail most of the times. The inability to keep the focus on post-acquisition
planning leads to bigger problems in the future of the merged organization, the new organization
and its employees. Hence, a team has to be created which works specially on the post-merger
planning for better and timely utilization of the resources.
Skill Transfer Problem- Both the companies have different skill sets, one is engaged in selling of cars,
the other in servicing. Euro motors employees are highly polished and work on building strong
customer focussed relationship, the skill set of the Auto Inc employees is giving quality services to
the customers. Now, with the merger, employees of both the companies have to get into a skill
transfer program in order to merge the existing synergies of the companies and create a new found
synergy leveraging the best of both worlds. Skill transfer in most of the cases in reality is far difficult
than what is actually seems.
Recommendations
The recommendations have to be in accordance to bringing improvement in environment,
capabilities and expectation in the industry and the newly found organization.
Leverage the existing environment
Singapore market is gaining huge popularity in the luxury car segment, growing purchasing power of
people and rapid globalization are the contributing factors for the surge in demand of luxury cars
with great car care services. Auto Inc Euro Sports fits perfectly in the existing ecosystem. The
company has to take leverage of the fast moving market and earn a reputation for itself. It is often
said that companies should rather focus on creating a sustained strategy for themselves and not
focus on competitor strategy, Auto Inc Euro sports has to craft a successful strategy on the
foundation of excellent product quality with delightful customer service. The company also has a
great chance of boasting its profits, the merger by Euro sports can help in diversifying its business
and focus on its core service, whilst keeping the other unit independent. This strategy can potentially
be of great help as both the companies are still focussed on the core product and additionally they
can use the resources of the companies as augmented product. This will definitely help Auto Inc
Euro sports to cater not only to its existing market, but to tap the new market as well.
Increasing the capabilities and competencies

International Business P a g e | 18
The core competency of Euro Sports is providing high end luxury and sports car to the customers,
and Auto Inc is in the business of giving excellent car care facilities, which are one of its kinds in the
Singapore market. The new management have to ensure that resource of both the companies are
merged together and put to optimum utilization. Another thing which one can easily see from the
merger is poor marketing and promotional activities. There have been very little or low promotions
about the merger and the new product offering in the market. The news has not been either in the
print or on digital media platforms. In the present era, where marketing is everything and has the
potential to build or destroy a company, this certainly is a very big disadvantage for the company.
The website looks shabby and poorly created. Hence, the implication is to re-build the website with
lower loading time and sufficient content and good images to engage the customers on the website.
The company besides building its website also has to focus on digital marketing, they have to ensure
they convey information to its existing customers through newsletter or e-marketing campaigns in
order to keep them updated on the latest development. Eventually move to consumer profiling and
targeting to the new and existing customers through social media channels and affiliate marketing.
All these steps will ensure the new company increases its capabilities and ads on new capabilities.
Keeping the expectation of the Stakeholders in well-defined limits
It is often seen that business organization tends to focus on short term benefits after spending a
huge sum of money in merger. This is an extremely wrong strategy, short term gains often lead to
long term failures. Thus, the company has to ensure that it keeps all its stakeholders in line and
focussed on the long term objectives. Keeping a long term vision rather than having focus on short
term gains will take the company to envisioned heights. The first and the foremost aim of the new
company has to penetrate the market by its new product and service offering, delight by serving its
existing or new customers and push the envelope of customer services. The customers will
eventually become promoters of the company and spread positive word of mouth about it, thus the
revenue will start coming in the organization. It is rightly said, “If you take care of your customers,
they will take care of the remaining stakeholders of the organization”. Thus, keeping the expectation
well in limits will help the company to strengthen its situation in the market without feeling the heat
of its shareholders.
Conclusion
Auto Inc Euro Sports is a merger between Euro Sports Global and Auto Inc which happened in the
year 2014. The rationale behind the merger is to combine the synergies of both the companies and

International Business P a g e | 19
create a much bigger company serving more clients. The strategic situational analysis reveals a
favourable situation for the company on the basis of the strategic models based on the pillars of
Suitability, accessibility, feasibility and acceptability. It is highly advised that the new company
focuses on enhancing the experience of its existing consumer’s base and penetrating the market
with new offering. The joint entity is sure to create stir in the market and push the benchmark of
quality product and service of luxury and sports cars in the Singapore market.
References
Carson, A.S., 2017. The Role of the Private Sector in Canadian Healthcare: Accountability, Strategic
Alliances, and Governance.
Managing a Canadian Healthcare Strategy, p.49.
Greve, H.R. and Man Zhang, C., 2017. Institutional logics and power sources: Merger and acquisition
decisions.
Academy of Management Journal,
60(2), pp.671-694.
Iacono, M. and Levinson, D., 2017. Accessibility dynamics and location premia: Do land values follow
accessibility changes?.
Urban Studies,
54(2), pp.364-381.
Ismailova, R., 2017. Web site accessibility, usability and security: a survey of government web sites in
Kyrgyz Republic.
Universal Access in the Information Society,
16(1), pp.257-264.

International Business P a g e | 20
Kapoor, S. and Kaur, M., 2017. Basel III Norms: A SWOT and TOWS Approach.
Vision,
21(3), pp.250-
258.
Marttunen, M., Lienert, J. and Belton, V., 2017. Structuring problems for Multi-Criteria Decision
Analysis in practice: A literature review of method combinations.
European Journal of Operational
Research,
263(1), pp.1-17.
Nguyen, T.T., 2017. Management education as an industry and MBA as a product: revisiting joint
MBA programs using Porters five forces model.
Global Business and Economics Review,
19(3),
pp.356-377.
Raum, S., 2018. A framework for integrating systematic stakeholder analysis in ecosystem services
research: Stakeholder mapping for forest ecosystem services in the UK.
Ecosystem Services,
29,
pp.170-184.
Song, K., Kim, K.S. and Lee, S., 2017. Discovering new technology opportunities based on patents:
Text-mining and F-term analysis.
Technovation,
60, pp.1-14.