Economics of

Strategy
Assignment Examples
Group 4 Section B
Aashis R 300
Numrata N
320
Praveen Pillai 326
Rishit Mehta 333
Shorya C 344

1.

NourishCo
Beverages
Limited

Make or Buy

Background

50-50 JV between Tata Global Beverages &

Pepsi Co
Initial Investment-Rs.50Cr
Focus on delivering healthy ready to drink
beverages
Product Line

Background

Products primarily targeted for rural areas

Tata would be in-charge of Product
Development
The products would be outsourced to a 3rd
party Bottling plant\
Make or Buy Decision
Set-up a last mile distribution network
Tie-up/outsource the distribution to 3rd party

Overview
Why Pepsi?
Well entrenched
distribution network
Competition
Management
Valuable experience
Consumer Insights
Management of
Bottlers
Marketing of Soft
drink beverages

Why Tata?
Opportunity to
expand portfolio to
non-carbonated
drinks without
dilution of Pepsi
Brand
Trust brought in by
the Tata brand

Issue Tree Framework

Use the
market
YES

YES
Existing
suppliers -With
economies of
scale?

Relationship
Specific Assets,
Coordination
Problems?

YES
Infeasibility of
detailed
contracting

NO

NO

NO

YES
Is common
ownership
required?

NO
YES
Would
intermediate
arrangements
suffice?

Vertical
integration

Alliances, joint
ventures, nonownership
arrangements

NO
Vertical
integration

Evaluation of Alliance

Evaluation of Alliance
Synergies

The product is made by

the TGB and sold through
PepsiCos distribution
network

Resources

Redundant Resources

Distribution Network-Soft
Resources High

Redundant Resources
include the Product
development and Product
Manufacturing team

Market Uncertainty

Competition

Well established
beverage Marekt

TGB can also collaborate

with Tata Chemicals for
Last Mile Distribution

2.

Dell EMC2
Acquisition

Dell EMC $67 Billion Deal

On October 12, 2015, Dell announced its intent to acquire the enterprise
software and storage company EMC Corporation
Highlights of the deal
Its the largest take-private in the history of buy outs & largest
technology acquisition
EMC stockholders to receive approximately $33.15 per share
Cash as well as tracking stock in the VMware business
VMware to remain an independent, publicly-traded company

The expected revenue synergies of our

combination are three times the cost
synergies. This union is all about
opportunity, growth and innovation for
us and for you. We will be positioned to
meet our obligations and continue to
invest for the long term success of your
organization
- Michael S. Dell

Combined Entity
Dell
Went Public in 1988
In 2013 went private with
Silver Lake Partners and
MSD Capital financing

Revenue Share

EMC
Founded in 1979
A global leader in storage,
security, virtualization, and cloud
computing solutions to the
enterprise

Dell EMC Alliance

2001

Dell would resell EMC's volume storage CLARiiON line

EMC is to remainthe exclusive supplier of storage area network hardware to
Dell until at least 2008.

2006

Five-year extension of their global alliance

2011

Dell EMC End Storage Reseller Partnership Two Years Early

EMC garnered 8% to 9% of its revenue For Dell 50% of its storage revenue

Partnership Fallout Reasons

Dell moved to upscale storage to the market, EMC moved downstream with its own products
Dell offer to buy 3PAR, a high-end storage company and a direct competitor to EMC
Dell acquisition of EqualLogic Compellent making reselling redundant .

Type of Synergies
Complementary Products
EMC's Virtustream, an enterprise computing cloud services provider
join Dell's Enstratius cloud management offering
Pivotal Data Analytics in Dells end-to-end enterprise architecture
Dell security offering in client market and EMCs focus on enterprise
Federation structure

Sequential Synergy
Strategy: Equity Alliance

Nature of Resources
The combined company to have strong enterprise salesforce covering
all the segments
Enterprise- and cloud computing-savvy sales force hard to find; merged
company will have 38,000 go-to market people
Dell in selling to small and medium sized businesses and hospitals,
whereas EMC specializes in selling to giant corporations
Complementary product portfolio

Medium
Strategy: Acquisition

Extend of Redundant Resources

Storage: EMC has its VMAX enterprise storage and VNX midrange storage
lines, Dell's Compellent, EqualLogic and PowerVault storage lines
Backup Software: Dell has AppAssure, NetVault Backup and vRanger
compared to EMCs Networker, Spanning, and Mozy
Object Storage: Dell resells Scalitys RING software while EMC has Atmos,
ECS and ViPRs object services
Deduplication: Dells Ocarina technology while EMC has Data Domain

High
Strategy: Acquisition

Degree of Market Uncertainty

Application Development is moving to the cloud
Client infrastructure Decisions are moving to the cloud
Rapidly changing market conditions, including the advance of disruptive
technologies making new options available to Dell and EMC customers

High
Strategy: Equity Alliance

Level of Competition
Only a handful of traditional IT companies have the size to consider an
acquisition of EMC
Cisco, IBM, Microsoft, Oracle in addition to HP and Lenovo
Cisco had once already stated it wasnt interested
Private equity buyer for EMC is unlikely due to the size of the deal and lack
of cost and revenue synergies as a stand-alone acquisition

Low
Strategy: Equity Alliance

Level of Competition
Only a handful of traditional IT companies have the size to consider an
acquisition of EMC
Cisco, IBM, Microsoft, Oracle in addition to HP and Lenovo
Cisco had once already stated it wasnt interested
Private equity buyer for EMC is unlikely due to the size of the deal and lack
of cost and revenue synergies as a stand-alone acquisition

Low
Strategy: No Equity Alliance

Alliance or Acquire ?
Alliance

Low suitor in the market

Sequential synergy
Market Uncertainty

Concerns to Acquisition

The Dell / EMC Partnership Has Already Failed Once

The Combined Dell / EMC Entity will be Severely Leveraged
The Pending Dell / EMC Culture Clash

Bibliography
Tata Global Beverages:

http://
www.tataglobalbeverages.com/investors/investor-rela
tions/jvs-associates

NourishCo

http://nourishco.com/media_release/TWP_AP.pdf

Tata

http://www.tata.com/article/inside/pXsr3IRDdZA=/
TLYVr3YPkMU
=
http://nourishco.com/media_release/PepsiCo-TataTea-release.pdf

MoneyControl

http://www.moneycontrol.com/news-topic/nourishco/