Risk And Uncertainty When Entering A New Market Economics Essay

Risk And Uncertainty When Entering A New Market Economics Essay When entering a foreign market for the first time, a firm will be faced with many unknowns. Distinguish between the concepts of risk and uncertainty when a firm is entering a market of your choice. Give examples of types of risk. INTRODUCTION This paper will examine the concept of foreign market incursion by domestic business entities. It will analyse the risks associated with and probe uncertainties inherent in globalizing the local business. The market of choice used in this paper is the entertainment industry in general and the music industry in particular, with a special focus on the music industry in sub-Saharan Africa. The paper will begin by defining key terms used and then give a broad background of international business and globalisation. The paper will then narrow its focus to the business context within which it will define risks and uncertainties. Each type of risk is expounded upon within the context provided and a conclusion made. DEFINITION OF KEY TERMS Credit Risk: (also called default risk) the risk of non-payment or uncertainty associated with payment of financial obligations when they are due. Foreign Direct Investment (FDI): Any investment abroad in which the company being invested in is controlled by a foreign entity or corporation. Foreign Exchange Risk: The risk of loss or money depreciation through change in currency exchange rates between the host country and country of origin of foreign investment. Interest Rate Risk: Uncertainty associated with changes in interest rates. Location Risk: These are spillover or contamination effects created by challenges or problems specific to the region in which a country is in. Piracy: The act of misuse of other peoples intellectual property. Pirate: Someone who uses anothers intellectual property as if it were his own. Political Risk: Actions by groups of people or governments which have the potential to affect the immediate or long term viability of a firm. Price Risk: Uncertainty associated with potential changes in the price of an asset cause by changes in interest rate levels and rates of return in the economy. Pure Risk: The type of risk which only offers the potential for loss but never results in gains. Risk: The likelihood of an occurrence of an outcome which is disadvantageous or harmful. Sovereign Risk: This is the risk that the government or one of its agencies will refuse to honour agreed terms of a loan agreement whenever the situation makes it arduous or undesirable for it to pay. Speculative Risk: The type of risk which offers both the potential for gain and the potential for loss. Systematic Risk: Risk which influences a large number of assets and which are impossible to prevent such as political events or acts of nature. Also called market risk. Talent: Someone with an exceptional ability. Uncertainty: The quality of human knowledge or information concerning risk. Unsystematic Risk: (Specific Risk): Risk which affects a very small number of assets or which is specific to a company such as a lockout at a recording studio. Visibility: The level of exposure to public scrutiny offered by such factors as a good marketing strategy. INTERNATIONAL BUSINESS AND GLOBALISATION The term international business is concerned with the exchange of goods and services between individuals, groups and organizations in two or more countries. It includes all cross-border transactions between nations with commercial or political value, both by government and by private entities. Although globalisation is a complex construct to measure, it is widely acknowledged that much of the worlds business is either crossing borders and becoming global, uses imports in its manufacturing and/or supply or competing with foreign products in the same industry. Globalisation is a force that simply cannot be ignored. For purposes of clarity and due to differences in academic opinion on the subject, a working definition of globalisation for this paper will be derived from Hamilton and Webster (2009): Globalisation involves the creation of linkages or interconnections between nations. It is usually understood as a process in which barriers (physical, political, economic, cultural) separating different regions of the world as [sic] reduced or removed, thereby stimulating exchanges in goods, services, money, and people (Hamilton Webster 2009, p.5). The concept of globalisation acknowledges a world evolution into a global village where activities in one part influence and have marked significance over those in other parts in a short space of time (Katsioloudes Hadjidakis, 2007 p.366). Rapid technological advancement has undoubtedly improved connections between countries by expanding telecommunications, transportation services, government operations and general enterprise. There are, however, both strengths and weaknesses to be derived from the inexorable advancement of globalisation. Supporters of the concept argue that globalisation has brought about amazing dividends including a sharp fall in poverty; improved global health evidenced by an increased global life expectancy and a drop in infant mortality; a rise in global literacy; and an unprecedented wave of democratization (Ã…slund A Dabrowski M, 2008 p.3). THE CONTEXT THE MUSIC INDUSTRY The music industry is a blend of producers, promoters, talent, the musical art form, the product format and modes of distribution. Unlike in Western nations where big production studios such as SONY BMG, Motown Record Company, and Arista run the industry through music production, record sales, publishing and related merchandise, in many sub-Saharan African countries, the producers are entrepreneurs who more often than not exploit young and inexperienced talent to turn a profit. Returns to the local industry have been handicapped by piracy and the inability or unwillingness of governmental structures to protect intellectual property in itself a reaction to the growing rates of youth and graduate unemployment. The music industry in the region has therefore experience limited growth until recent years. Today, advancement in music production technology, the internet, and the influence of multinational enterprises such as telecommunications giants like AIRTEL and MTN are reshaping the musical culture through intense exposure and multi-faceted advertising campaigns promising to deliver new and exotic musical forms to a global market characterised by quick and ready consumption for innovative and new products. Through this economic globalisation, a new musical culture is emerging, and relatively unexposed classical and contemporary musical art forms in sub-Saharan Africa are beginning to enjoy global exposure. The advantages which the music industry in Africa has to offer are in the uniqueness of the product offering, the vast array of products or individual artistes with individual music and dance styles, and the novelty of the African experience. The Product Life Cycle (PLC) theory explains that the growth stage of international products is characterised by fast growing demand. From an analysis of the music industry in Africa, one could argue that it is rejuvenated into a growth phase in a new product cycle. There is evidence of demand for the new African musical product from such groups as Africans in the diaspora, African Americans, and art lovers from diverse cultural backgrounds. This can be said to be the justification behind the consistent exchange of musical artists between Africa and the West in corporate promotions of international telecommunications giants including Airtel, MTN, Orange and Safaricom in several sub-Saharan African countries. One could similarly argue that since the election victory of Barack Obama, the first US president of African parentage, African American entertainment moguls wishing to identify with the motherland have been creating opportunities for more interaction between Africa and North America in music and film. Film and music festivals such as the Zanzibar International Film Festival (ZIFF), African movie Academy Awards (AMAA), the MTV African Music Awards (the MAMAs), have been consistently attended by American stars of African descent in an effort to increase the involvement and presence of the American entertainment industry (a global leader in the field). Other Awards in the north such as the Music of Black Origin Awards (MOBOs) and the Pan African Film Festival (PAFF) have been striving to acknowledge and recognise African talent in order to spread awareness of the budding industry. One of the reasons why organizations engage in international business is to minimize risk by securing their product in a market with an expanding economy or to counter the strategies of competitors (Daniels, Radebaugh, Sullivan, 2009, p.60). When establishing operations abroad, however, a company also exposes itself to certain types of risk. In making an incursion into a foreign market, music businesses are often faced with several unknowns which are highlighted under types of risk. RISK AND UNCERTAINTY Both risk and uncertainty are factors which inherently influence corporate, strategic and tactical decision making in firms. Risks are calculable or known premises of the probability of having an undesirable outcome. They are a combination of the probability of occurrence of hazards and the magnitude or impact of their likely consequences. People who make decisions always have a certain level of knowledge about risks they take. The music producer, for instance, understands the risk of piracy in his immediate environment and the impact it may have on his ability to turn a profit from the music business, or he may understand the risk taken on investing in and promoting hitherto unproven talents in the industry based on mere intuition. The tolerability of risk is the willingness of a subject to live with a certain level of risk in exchange for some certain benefits. While the risk of competing with pirates who have minimal production and set-up costs may be high, the trade-off is often industry visibility for the product which enables the producer or label to get beneficial contracts for live and sometimes international music events. Further risks faced by the music industry in an effort to globalise are outlined below under risks faced by the industry. Uncertainty, on the other hand, is the situation in which the decision maker has no precise knowledge of the probability of occurrence of different states of outcome. The decision maker, in essence, has no predictive knowledge of the probability of any form of outcome. The music producer may be largely uncertain whether his or her product or talent is suitable for a market which has a different cultural context which may include a language barrier. He will also probably be uncertain about whether there will be a terrorist attack (a political risk) at any one of the shows organised for the benefit of promoting his talents abroad, even though he may be warned in advance of the risk of a cyclone and other forces of nature. TYPES OF RISK Risks may be typified along several different and distinct lines but due to volume restrictions and for the purposes of this paper we shall be examining the typologies listed below: Country risk Political risk Transfer risk Economic risk Foreign exchange risk Location risk 1. Country risk All businesses which transcend borders become exposed to a certain measure of risk which is not present in their domestic activities and transactions and these are known as country risks. In the narrower view of the concept, country risk is defined as à ¢Ã¢â€š ¬Ã‚ ¦ risk that a country will not be able to honour its financial commitments (Katsioloudes Hadjidakis, 2007 p.185-6). In the broader context, however, country risk analyses are general aggregates of sub-risk factors present within the country. They may be calculated and form the basis on which to determine the desirability of choosing a country upon which to invest. For instance, countries which favour external investments and remove restrictive trade barriers are normally considered to be safe ground for foreign direct investment. By and large many third world countries like those of sub-Saharan Africa have not got the best end of the globalisation bargain (Waters, 2001 p.45) Due to usual high levels of uncertainty, country risk is not always easily calculated. However, some practitioners calculate country risk by dividing it up into sub-categories of risk which are then aggregated. These usually include: political risk, economic risk; transfer risk; foreign exchange risk; location risk; sovereign risk. According to current country risk ratings, Norway as the country with the least risk for investment (http://en.wikipedia.org/wiki/Country_risk). 2. Political Risk Political risks include all risks associated with the actions of government especially those to do with the legal dimension, relationships between countries, and security of investments. As with every other facet of business, political risks influence the music industry and the feasibility of globalisation. The African music and entertainment industries desire to move into Asia and North America because of the influence, technology and financial pull of Bollywood in India and Hollywood in the USA. Countries such as Pakistan, Afghanistan, Iraq are not ideal destinations due to political turmoil and the potent risk of loss of life, property or investments there. Other countries with an Eastern or socialist inclination are not attractive to those with capitalist orientations. In order to avoid fallouts of a political nature in investing in a global music enterprise, those in the African music industry simply need to do some country research to acquire relevant information about political stability and diplomatic relations between the country of potential investment and the country of the investors origin. There are a variety of web-based services which offer information on countries via country reports. The probability of travel restrictions barring temporary immigration or work based travel and visa denials due to stringent conditions are also elements of a political nature whose risks need calculation before any major investment can be made. 3. Transfer risk Sometimes the country of an individual who borrows money in an investment restricts the ability of people in that country to buy foreign exchange. The impact of this is that the borrower may not be able to meet his/her obligations to repay in foreign currency the currency of the borrowed amount. The risk of this occurring is normally known as transfer risk and because of the role of government in this type of risk; it is also a type of political risk. This risk is mostly present in countries where democracy is not the system of government. 4. Economic Risk Economic risk in the context of globalisation is the risk that the investment will be economically unsustainable. Variations in different financial inputs and outputs of the enterprise need to add up to ensure that the risk of fallout is checked. In the music industry, when the investment in an artist in terms of publicity and promotion, training and logistical costs are predicted not to be able to be offset by predicted future sales from the work of the artist, then it can be said that the economic risk is too high and it is not a good or advisable investment. 5. Foreign Exchange Risk This is also known as exchange rate risk or currency risk. It is the risk of change of the value of an investment due to fluctuations between exchange rates of the currency of the investor and the currency of the host country for the investment. The possible adverse effect of foreign exchange risk is that the investment may become more expensive as a result of unprecedented changes in currencies which are outside the control of the investor. A music producer who invests in a product for sale in a foreign market will be happy if the value of the foreign currency appreciates against the value of his local currency as that would mean increased profits for him. The foreign exchange market is highly volatile and predicting the direction of foreign exchange movement a guessing game. Many foreign buyers prefer to avoid this risk by trading in their local currency. 6. Location Risk Location risks are risk factors associated with the political neighbours of a country or region. Certain states in North America which border Mexico are affected by illegal immigration and have concerns to do with illegal migrant workers; the political dynamics of such countries as Tunisia affects that of similar or neighbouring countries such as Egypt and Libya as evidenced by the recent revolts (in the first quarter of 2011). RISK RETURN TRADE-OFF The risk-return trade-off principle holds that low risk levels are associated with low potential returns while where high risks exist; the possibility of high returns looms large. This is why even when the country risks are great, firms may decide to take on the challenge of investing nevertheless, often prompted by the need to defend against the prospect of the companys competitors taking the initiative. For example, in the music and entertainment industry, many North American artistes used to shun the Middle East as a suitable showground due to the notion that Middle Eastern ideologies and Islamic values predominant in the culture there were inconsistent with the entertainment requirements of unrestricted freedom of expression. However, in an unprecedented turnaround, Middle Eastern cities such as Dubai are fast becoming a favourite of artistes since big artists like Michael Jackson took the plunge of tapping into the market in the 1990s. OTHER RISKS FACED BY THE INDUSTRY Polycentrism may influence the art form of the music talent. Polycentrism works through the belief of foreign business units of trying to act local. Artists and producers are often strongly influenced by the local culture of the foreign environment of investment by sub-elements of personality including the language, dressing, use of available musical instruments and technology, and the musical art itself. Socialization of this nature may cause irreparable modification to the art they offer and the image they normally portray, a product exported for its original nature. This may later influence the potential of the talent to remain intellectually authentic the musical talent in some instances may be accused of no longer sounding African or of losing authenticity. SUGGESTED STRATEGY OF INCURSION INTO THE FOREIGN MARKET Based on the factors examined it is advisable for investors in the music industry to seek partnerships with foreign counterparts in selling the unique products of African traditional and contemporary musical art in a globalised setting. Just as local food is internationalised by countries such as Italy, Japan and the US in entities such as MacDonalds, single entrepreneurs can expand the musical product in clubs which offer African musical content with renewable, trainable talent acting as the products on offer. The risk from competition, while challenging, helps organizations focus their energies on quality strategies of survival or market expansion. Due to the challenges inherent in integrating into a foreign market, foreign firms must enhance the process of their integration into local markets as a matter of necessity. This can be done by recruiting locals and learning the language and culture (Daniels, Radebaugh, Sullivan, 2009, p.505) among other integration strategies. CONCLUSION The paper has outlined the concepts of risk and uncertainty in the global arena within the context of the incursion of a local business. The sub-Saharan African perspective has been brought to bear on the analysis. The paper highlighted the difference between risk and uncertainty showing their relationship to one another and giving examples on each of the concepts. The paper has also looked at ways in which a firm in the music and entertainment industry may benefit from globalisation. Comparisons were made between the African music industry and other globalised franchises in the world such as MacDonalds in suggesting a useful model which may be simulated.

The Spanish-American War :: American History Essays Spain Papers

Throughout history, there have been many wars that have been caused by many different reasons. Also, the effects of the wars may greatly impact, good or bad, either side of the fight. One great war in history of the United States was the Spanish-American War of 1898. The Spanish-American War was caused by many things. The war has left a lasting effect of both countries involved, the United States and Spain. Both Spain and the United States were greatly impacted by the war. The Spanish-American War was not started by one thing in particular. It was because of a large amount of reasons that built up until it erupted in war. It started with the explosion of the USS Maine. When Spain sent in General â€Å"Butcher† Weyler to stabilize the situation in Cuba, he put the majority of the population into concentration camps. The US sent the Maine to protect its investments there. The USS Maine was on a â€Å"friendly† mission to wait and rescue any US citizens that may be hurt in the conflict. At 4:40 pm on February 15, 1898, the Maine exploded and sank in Havana Harbor. The source of the explosion was not known. Some thought that it may have been from a Spanish mine. Others thought there may have been a spy on board the ship sent to destroy it. Even though the United States said it might have been an accident on board, the US citizens were sent into a frenzy by â€Å"yellow journalism† that was published by men like Pulitzer and Hearst. The information posted by these yellow journalist increased the anti-Spanish feelings and made more and more people favor war. Also, when Congress passed the Fifty Million Dollar bill, which gave the president 50 million dollars to prepare for a war before it is declared, it made people more and more ready for a war and it also made them support it. Many countries in Europe tried to intervene in the situation without actually getting involved into the conflict. Most of Europe expressed sympathy for Spain and tried to talk to the US, but they would not support Spain in the conflict or in the event of a war. Also, Great Britain supported the United States all through the war and gave them advice. The two countries became uneasy as they both began to prepare their army and navy for a war in the sea and on land.

Scots Law of Contract

All of the case studies are concerned with the Law of Contract, specifically the formation of a contract and the differences between an invitation to treat and a contract. We will investigate each consumers’s specific contract or lack thereof individually and advise Bruce on his legal position. A contract is an agreement between two or more parties which in Scotland does not need to take a specific form, as a spoken agreement is still equally as enforceable as a written contract in certain circumstances such as in most social and domestic arrangements.A contract creates a legally binding bond between the parties involved. Contracts are made everyday sometimes without even realising it from buying a coffee to buying a house. A contract is formed bilaterally when an offer has been unconditionally accepted by all parties involved leading to consensus in idem and is not to be confused with a promise which is a unilateral agreement requiring only one party to make the promise. In B ruce’s case some of the customer’s mentioned have not actually entered into a contract but rather have either received an offer or an invitation to treat.An offer unlike a contract is not legally enforceable but rather an invitation to enter into a contract and an invitation to treat is not an offer but rather an invitation to make an offer. In the case of Carlill v Carbolic Smoke Ball Company (1893) The Carbolic Smoke Ball Company released an advertisement stating that a ? 100 reward would be paid to any person who contracted influenza, colds or any disease caused by taking cold, after having used the ball three times daily for two weeks according to the printed directions supplied with each ball.Despite the claims one of the companies customers Mrs Carlill caught the flu and sued the Carbolic Smoke Ball Company for the ? 100 they refused to pay her stating that their advert was in fact a legally binding contract which she had accepted by purchasing the product. The a bove case could be applied to Bruce as his failure to properly state the conditions in his advertisement will result in him having to honor his original promise of selling the â€Å"Slow Patrol† CD to as many customers as ave a flyer at the price stated on the advert. Although most modern adverts are treated as an invitation to treat this particular advert would be considered a unilateral promise as Bruce has promised to sell the CD to anyone who produces the flyer at the price of ? 1. 99. Unlike an offer a promise is the product of one persons intention and no acceptance is needed to create a binding contract where as an offer can be revoked until agreed upon.If Bruce had not put such specific terms in the advert simply offering the product at the wrong price he could have claimed it was an invitation to treat but as it stands Bruce is legally obligated to follow through with his unilateral promise. To quote the court in regards to Hunter v General Accident Fire and Life Ass urance Corporation (1909) â€Å"†¦ when a general offer addressed to the public is appropriated to himself by a distinct acceptance by one person, then it is to be read in exactly the same was as if it had been addressed to the individual originally. In the case of Wolf and Wolf v Forfar Potato Co Ltd (1984) Forfar sent a telefax to Wolf & Wolf offering to sell potatoes at a specific price but the offer was only valid until 5pm the next day Wolf & Wolf replied accepting the offer but with extra conditions to which Forfar did not accept and when Wolf & Wolf later tried to accept the original offer there was no reply by Forfar and the potatoes were not sent. Wolf & Wolf sued arguing that Forfar were in breach of contract.The court held that Wolf & Wolf’s first â€Å"acceptance† was a counter offer and due to the law in Scotland this had rejected Forfar’s offer and put in place a new offer which Forfar had rejected as Forfar’s offer had lapsed upon rej ection Wolf & Wolf’s second attempt at accepting the original offer could not result in a contract being made as it was a new offer which Forfar had chosen not to accept therefore no contract existed between the parties.The area of Law concerned in this case is The Law of Contract specifically relating to the revocation of an offer and counter offers. The case Wolf and Wolf vs Forfar Potato Co Ltd (1984) directly links to the case between Bruce and Ken. As Bruce is once again dealing with the Law of Contract specifically the non-acceptance of an offer, he is under no legal obligation to sell Ken the rare vinyl at the original price of ? 40. When Ken rejected he original offer he created a counter offer which in Scots law is a completely new offer and caused Bruce’s original offer to lapse and was up to Bruce to decide wether or not to accept the new terms, after Bruce rejected the counter offer all offers between Bruce and Ken had lapsed. When Ken came back insisting t hat there was a contract between them and he was entitled to the album Bruce was in fact under no legal requirement to give Ken the vinyl as all offers had lapsed and no contract existed between then.In the case of Fisher v Bell (1961) a shopkeeper had displayed a flick-knife in his window with a price tag next to it but under the restriction of Offensive Weapons Accontents Restriction of Offensive Act (1959) it was illegal to sell hire or offer to sell or hire any knife which had a blade that opened automatically, on December 12 1959 the shopkeeper was brought to trial alleging that the defendant had broken the law by offering to sell the knife in his shop.The shopkeeper was acquitted on the basis that by displaying the knife it was an invitation to treat and not an offer to sell. In regard to Stella we are once again dealing with the Law of Contract specifically relating to an invitation to treat rather than an offer. When Stella was trying to purchase the CD for the advertised pr ice of ? 1. 39 instead of ? 13. 99 she in fact had no legal authority to do so as the price offered was an invitation to treat and not a contract but rather an invitation to enter into one.The contract is not created until a price is agreed and the item has been paid for. Stella is basically making Bruce and offer to pay ? 1. 39 for the CD as that is what it has been advertised as and by Bruce not accepting the offer due to a mislabeling issue a contract has not been formed. As in the case of Fisher v Bell (1961) just because there is a price tag next to an item or on an item the establishment is under no obligation to sell at said price.In conclusion in regard to the first legal question Bruce is legally bound to sell the Album at the price stated in the advert as it was a unilateral promise which is legally binding contract and not able to be revoked like a offer. In regards to Ken after he counter offered Bruce’s original offer to buy the rare vinyl Bruce was no longer und er any legal obligation to sell the rare album to Ken as the offer had lapsed meaning no contract was in place.Finally Stella is unable to take legal action against Bruce and Bruce does not have to sell the CD to Stella at the advertised price and it was an invitation to treat and not an offer and although the two are similar when dealing with an invitation to treat rather than an offer there is no liability to accept. CITATIONS Carlill v Carbolic Smoke Ball Company (1893) Wolf and Wolf v Forfar Potato Co Ltd (1984) Hunter v General Accident Fire and Life Assurance Corporation (1909) Fisher v Bell (1961) BIBLIOGRAPHY Black, G (Editor) – Business Law in Scotland 2nd edition Crossan & Wylie – Introductory Scots Law 2nd edition Scots Law of Contract All of the case studies are concerned with the Law of Contract, specifically the formation of a contract and the differences between an invitation to treat and a contract. We will investigate each consumers’s specific contract or lack thereof individually and advise Bruce on his legal position. A contract is an agreement between two or more parties which in Scotland does not need to take a specific form, as a spoken agreement is still equally as enforceable as a written contract in certain circumstances such as in most social and domestic arrangements.A contract creates a legally binding bond between the parties involved. Contracts are made everyday sometimes without even realising it from buying a coffee to buying a house. A contract is formed bilaterally when an offer has been unconditionally accepted by all parties involved leading to consensus in idem and is not to be confused with a promise which is a unilateral agreement requiring only one party to make the promise. In B ruce’s case some of the customer’s mentioned have not actually entered into a contract but rather have either received an offer or an invitation to treat.An offer unlike a contract is not legally enforceable but rather an invitation to enter into a contract and an invitation to treat is not an offer but rather an invitation to make an offer. In the case of Carlill v Carbolic Smoke Ball Company (1893) The Carbolic Smoke Ball Company released an advertisement stating that a ? 100 reward would be paid to any person who contracted influenza, colds or any disease caused by taking cold, after having used the ball three times daily for two weeks according to the printed directions supplied with each ball.Despite the claims one of the companies customers Mrs Carlill caught the flu and sued the Carbolic Smoke Ball Company for the ? 100 they refused to pay her stating that their advert was in fact a legally binding contract which she had accepted by purchasing the product. The a bove case could be applied to Bruce as his failure to properly state the conditions in his advertisement will result in him having to honor his original promise of selling the â€Å"Slow Patrol† CD to as many customers as ave a flyer at the price stated on the advert. Although most modern adverts are treated as an invitation to treat this particular advert would be considered a unilateral promise as Bruce has promised to sell the CD to anyone who produces the flyer at the price of ? 1. 99. Unlike an offer a promise is the product of one persons intention and no acceptance is needed to create a binding contract where as an offer can be revoked until agreed upon.If Bruce had not put such specific terms in the advert simply offering the product at the wrong price he could have claimed it was an invitation to treat but as it stands Bruce is legally obligated to follow through with his unilateral promise. To quote the court in regards to Hunter v General Accident Fire and Life Ass urance Corporation (1909) â€Å"†¦ when a general offer addressed to the public is appropriated to himself by a distinct acceptance by one person, then it is to be read in exactly the same was as if it had been addressed to the individual originally. In the case of Wolf and Wolf v Forfar Potato Co Ltd (1984) Forfar sent a telefax to Wolf & Wolf offering to sell potatoes at a specific price but the offer was only valid until 5pm the next day Wolf & Wolf replied accepting the offer but with extra conditions to which Forfar did not accept and when Wolf & Wolf later tried to accept the original offer there was no reply by Forfar and the potatoes were not sent. Wolf & Wolf sued arguing that Forfar were in breach of contract.The court held that Wolf & Wolf’s first â€Å"acceptance† was a counter offer and due to the law in Scotland this had rejected Forfar’s offer and put in place a new offer which Forfar had rejected as Forfar’s offer had lapsed upon rej ection Wolf & Wolf’s second attempt at accepting the original offer could not result in a contract being made as it was a new offer which Forfar had chosen not to accept therefore no contract existed between the parties.The area of Law concerned in this case is The Law of Contract specifically relating to the revocation of an offer and counter offers. The case Wolf and Wolf vs Forfar Potato Co Ltd (1984) directly links to the case between Bruce and Ken. As Bruce is once again dealing with the Law of Contract specifically the non-acceptance of an offer, he is under no legal obligation to sell Ken the rare vinyl at the original price of ? 40. When Ken rejected he original offer he created a counter offer which in Scots law is a completely new offer and caused Bruce’s original offer to lapse and was up to Bruce to decide wether or not to accept the new terms, after Bruce rejected the counter offer all offers between Bruce and Ken had lapsed. When Ken came back insisting t hat there was a contract between them and he was entitled to the album Bruce was in fact under no legal requirement to give Ken the vinyl as all offers had lapsed and no contract existed between then.In the case of Fisher v Bell (1961) a shopkeeper had displayed a flick-knife in his window with a price tag next to it but under the restriction of Offensive Weapons Accontents Restriction of Offensive Act (1959) it was illegal to sell hire or offer to sell or hire any knife which had a blade that opened automatically, on December 12 1959 the shopkeeper was brought to trial alleging that the defendant had broken the law by offering to sell the knife in his shop.The shopkeeper was acquitted on the basis that by displaying the knife it was an invitation to treat and not an offer to sell. In regard to Stella we are once again dealing with the Law of Contract specifically relating to an invitation to treat rather than an offer. When Stella was trying to purchase the CD for the advertised pr ice of ? 1. 39 instead of ? 13. 99 she in fact had no legal authority to do so as the price offered was an invitation to treat and not a contract but rather an invitation to enter into one.The contract is not created until a price is agreed and the item has been paid for. Stella is basically making Bruce and offer to pay ? 1. 39 for the CD as that is what it has been advertised as and by Bruce not accepting the offer due to a mislabeling issue a contract has not been formed. As in the case of Fisher v Bell (1961) just because there is a price tag next to an item or on an item the establishment is under no obligation to sell at said price.In conclusion in regard to the first legal question Bruce is legally bound to sell the Album at the price stated in the advert as it was a unilateral promise which is legally binding contract and not able to be revoked like a offer. In regards to Ken after he counter offered Bruce’s original offer to buy the rare vinyl Bruce was no longer und er any legal obligation to sell the rare album to Ken as the offer had lapsed meaning no contract was in place.Finally Stella is unable to take legal action against Bruce and Bruce does not have to sell the CD to Stella at the advertised price and it was an invitation to treat and not an offer and although the two are similar when dealing with an invitation to treat rather than an offer there is no liability to accept. CITATIONS Carlill v Carbolic Smoke Ball Company (1893) Wolf and Wolf v Forfar Potato Co Ltd (1984) Hunter v General Accident Fire and Life Assurance Corporation (1909) Fisher v Bell (1961) BIBLIOGRAPHY Black, G (Editor) – Business Law in Scotland 2nd edition Crossan & Wylie – Introductory Scots Law 2nd edition

Mergers and Acquisition - 939 Words

Currently, in the world of growing economy and globalization, many businesses on both domestic and international marketplaces struggle to achieve the best market share. Every day business people from top to lower management work to achieve a common goal, being the best at what you do, and getting there as fast as possible. As companies work hard to beat their competitors they accept many tactics to do so. As for my assignment, I have chosen to examine why Disney and Pixar merged as a company. A brief definition of an Acquisition and a merger will be given following with the difference between them. I will be discussing if these two companies were a success or a failure and why and which were their reasons behind this statement. A†¦show more content†¦Ã¢â‚¬ ¢The timing was also perfect for Disney, as its own animation films were failing. †¢The deal brought the technology company Apple closer to Disney. †¢The decrease in competition is another motive for Disney. Pixar †¢ For Pixar it was a good move to face competitors like DreamWorks 20th century fox. †¢The deal gave Apple iTunes more video content to offer. †¢ Pixar can focus on its core strengths of producing the computer animation and does not have to invest in production line for making a market and home entertainment. On January 24, 2006, Pixar Animation Studios and The Walt Disney Company entered into a merger agreement. Disney was offering 2.3 shares of its stock for each Pixar share. That’s a 3.8% premium on Pixar’s closing price of $57.57 (2006). The transaction would project Steve Jobs, who was the majority shareholder of Pixar with 51%, to Disney’s largest individual shareholder with 7% and a new seat on its board of directors. The Disney Pixar merger represents a great example of how necessary synergies should be created for success through the right process, even though the two companies had a very different culture. Pixar was a relatively smaller organization with an open culture. Disney on the other hand was a huge corporation, which followed a hierarchical management structure. References †¢Show MoreRelatedMergers : Merger And Acquisitions Essay1023 Words   |  5 PagesMergers and acquisitions have been prevalent amid companies in the United States for decades. Many believed that merger and acquisition strategies played a critical in the rebuilding of companies domestically three to four decades ago and continue to produce the same benefits today. Merger and acquisitions are used by companies to produce greater worth for stockholders and shareholders. Mergers involve a minimum of two establishments partnering together to form a more effective and efficient companyRead MoreMerger And Acquisition Of A Merger1962 Words   |  8 PagesA merger takes place when two companies joint together to form a single company. A merger is alike to a takeover or acquisition, except that in the case of a merger remaining stakeholders of both companies involved retain a shared interest in the new company. By contrast, in an acquisition one company purchases a bulk of a second company’s stock, creating an uneven balance of ownership in the new combined company. Acquisition refers to buying out another company and taking it into the fold of theRead MoreMergers : Mergers And Acquisitions2304 Words   |  10 Pages1. Mergers Acquisitions: Identify some differences between a merger and an acquisition? What are the different types of mergers/acquisitions (for instance, Starbucks purchasing a coffee bean farm would be a what?)? Make sure to provide an example of each type. Identify and explain some defenses to acquisition. What are the financial statement rules with respect to acquisitions? Overview of Mergers and Acquisitions A merger is when two separate companies, Company A and Company B, are joinedRead MoreMerger : Merger Or Acquisition766 Words   |  4 PagesThe present case can be framed such as merger or acquisition. A merger or acquisition is a combination of two companies where one corporation is completely absorbed by another corporation (legal-dictionary, n.d.). There are different types of mergers: †¢ Horizontal merger: when a company takes over another which offers the same or similar service or product. †¢ Vertical merger: it is the combination of two companies which are in the same value chain of producing the same good and service, but inRead MoreMergers and Acquisitions1068 Words   |  5 PagesMergers and Acquisitions Tasha Powers Dr. Michael Laverty Business 508 – Contemporary Business November 17, 2014 A merger or acquisition is a combination of two companies where one corporation is completely absorbed by another corporation. The less essential company loses its identity and becomes part of the more imperative corporation, which retains its identity. A merger extinguishes the merged corporation, and the surviving corporationRead MoreMergers and Acquisition4148 Words   |  17 PagesDo Mergers and Acquisitions always bring desired results? Individual Assignment [pic] [pic] [pic] Student Name: Mandeep Kaur (10211855) Module Leader: Simeon Scott Course: MA- IBM Introduction: For my research topic I have chosen this topic to analyse and to investigate about the mergers and acquisitions of organisations. Do these mergers and acquisitionsRead MoreMergers and Acquisitions2638 Words   |  11 PagesWhen we talk about acquisitions or takeovers, we are talking about a number of different transactions. These transactions can range from one firm merging with another firm to create a new firm to managers of a firm acquiring the firm from its stockholders and creating a private firm. We begin this section by looking at the different forms taken by takeovers. 1. TAKEOVER A corporate action where an acquiring company makes a bid for an acquire. If the target company is publicly traded, the acquiringRead MoreThe Year Of The Mergers And Acquisition Essay1500 Words   |  6 Pagesthe year of the mergers and acquisition. In order for organization’s to continue to compete in the global economy, combining organizations provides a deeper market penetration. Within hours of a merger announcement stocks tend to soar through the roof, serving as proof that Wall Street investors like mergers and acquisition. However, the decision of making investors happy can result in a pitfall for many organizations. A recent study conducted by KPMG revealed that 83% of mergers fail. For instanceRead MoreNotes On Mergers And Acquisitions1705 Words   |  7 Pagessummary of mergers and acquisitions activities in Malaysia for the year of 2011 and 2012. Based on the table, there is an increment of transaction value (in US$m) for both announced and completed mergers and acquisitions in Malaysia. The value of announced mergers and acquisition increase 20.14% from year 2011 to 2012. While the value of completed mergers and acquisitions in Malaysia increase about 48% from year 2011 to 2012. Based on table 1-1, although not all the announced mergers and acquisitionsRead MoreMergers And Acquisitions Essay1088 Words   |  5 PagesMergers and Acquisitions Acquisitions are the absorption of a smaller firm by a larger firm, while a merger is the combination of two firms to form a single entity. In a merger, there is often an exchange of stock between the companies where one company issues shares to the shareholders of the other company at a certain ratio. The firm whose shares continue to exist is generally referred to as the acquiring firm while the other is the target firm. Except for synergies, the post-merger value of