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The choice of Manley , Johnson Acquires Dabao. Di Wang MGT 540 MI004 Professor: Arthur Annechino 20th March 2013 Desk of Items Executive Summary3 Introduction4 The causes of decision6 Decision making style7 The problem in decision making process8 Recommendations9 Conclusion11 Reference12 Business Summary This kind of paper is talking about the Johnson , Johnson Receives Dabao. That starts with assessment the two companies’ history, then shows the situation of them ahead of acquiring.
Further analysis of Manley , Johnson’s decision while using problems that in their decision making method and also the decision making style that may be found in the acquisition. At last, give a lot of recommendations to JNJ and the conclusion with this whole daily news. Introduction Meeks , Johnson (NYSE: JNJ) is an American multinational medical devices, pharmaceutical drug and client packaged merchandise manufacturer founded in 1886. Its prevalent stock can be described as component of the Dow Jones Industrial Average plus the company shows up among the Bundle of money 500.
Meeks , Manley is located in New Brunswick, Nj with the customer division being located in Skillman, New Jersey. The corporation includes a lot of 250 part companies with operations in over 57 countries and products sold in over 175 countries. Meeks , Meeks had worldwide pharmaceutical product sales of $65 billion for the calendar year of 2011. Among JNJ’s well-known buyer products would be the Band-Aid Company line of bandages, Tylenol medicines, Johnson’s baby products, Neutrogena skin and beauty products, Clean , Crystal clear facial clean and Acuvue contact lenses.
Manley , Meeks came to China in 85, but up to now, in majority of the China people’s hearts, it continue to stay in the newborn care products. In fact , Johnson , Johnson brand in the United States recieve more than a 100 years history, is definitely the products dealer with current and the many diverse medical and health care products and consumer treatment in the world. The strong spectacular international performance did not make Johnson , Johnson obtain the comprehensive progress a step in Chinese suppliers.
Especially in consumer and personal maintenance systems, Johnson , Johnson features Johnson , Johnson’s Baby, Clean , Clear, Neutrogena and other brands. These brands almost cover each segment of the makeup products industry. But in each market segment, the marketplace share of Johnson , Johnson’s product did not reach the top five. Johnson , Johnson seems to be considered as a distinct segment brand, that makes JNJ incredibly depressed. In Johnson , Johnson’s view, in order to meet up with other multinationals in Cina, the best and quickest method is to acquire a local manufacturer and increase its own manufacturer extension and channel insurance coverage.
Dabao is undoubtedly the best choice to accomplish this strategic aim for Johnson , Johnson. Beijing Dabao Cosmetics Co., Ltd. the predecessor manufacturer is Beijing Sanlu Factory, is a point out welfare companies established by the Beijing Government for the employment with the disabled. And with as many as 35% with the disabled employees. The company started in 1958, 1985 transforming cosmetics builds up, produces, provides, and exports herbal cosmetic products in Chinese suppliers and internationally. It offers numerous varieties of cosmetic, hair care, splendor care, cologne, and medical series items.
The company’s items include weight reduction creams, breast configuring lotions, hair busters, senile fleck dispeller lotions, eye-bag products, anti-wrinkle products, ginseng shampoos and air con, and ginseng both lotions. Its most well-known product is “Dabao SOD cream. It markets its products through department stores and shops. The business exports usana products to the Usa, Switzerland, Laxa, sweden, Greece, Tunisia, Bangladesh, and Cyprus. From in 97, Dabao won the shining of the home sales of skin care products for eight consecutive years. In 2003, market share of Dabao in the cosmetic industry was 17. 9%, much higher compared to the other rivals. Dabao was trying to get rid of the low-end positioning, but the market performance is far from satisfactory. It would appear that Dabao would never enter the high end market on the market. In 2004, its brand market share of negative expansion, accompanied by declining net revenue. Industrial result value and tax revenue revenue declined slightly. The total profits and taxes inside the decline level, indicating that there was fierce competition in the market during those times, Dabao company was facing the increase impact of international brands, value wars, increased costs, and many other heavy pressure.
On Feb 27th, 2007, Dabao list to start the transfer of 100% value at a price of 2. 3 billion yuan in the China and tiawan Beijing Fairness Exchange. Its transfer kind is collateral overall transfer. Listing period, Johnson , Johnson (China) Investment Co., Ltd., Unilever (China) Expenditure Co., Limited., Kao Company and other intercontinental well-known makeup products companies to visit counseling and due diligence. Meeks , Manley and Unilever are interested transferee. The Unilever offer only 1. 7 billion dollars yuan, much lower than the real estate price. Finally JNJ received at the cost of 2. a few billion, the equity copy agreement signed on April 18, 2008.
July 40, Johnson , Johnson accomplished the acquisition of Dabao transactions from Beijing Sanlu Manufacturing plant and the Dabao employee share holding committee. Acquired the 83. 42% of state-owned shares and 16. 58% of staff shares from both of them. The causes of decision There are 3 main reason so why Johnson , Johnson make the acquire decision. Firstly, in order to catch up with additional multinationals in China, the best and quickest way is always to acquire a local brand and expand its own brand expansion and funnel coverage. Dabao is undoubtedly your best option to achieve this proper goal pertaining to Johnson , Johnson.
Johnson , Johnson can usage of the business creation department directly, gain enough time advantage to prevent time holdups hindrances impediments in grow construction. Subsequently, Reduce a competitor, and directly acquire its position in the marketplace. Thirdly, get the use of cardio market pushes. The two business uniform value policy, profits higher than the revenue they will gained if they were take on each other. For example , a large number of info resources will be available for disclosure. Such as accounting income info can be used to demonstrate the profitability from the enterprise, lso can be used to evaluate the changes of industry success.
Also can completing gaps for Johnson , Johnson in the field of low-end mass cosmetics market. Share the Dabao expansion experience may reduce the learning cost of built up experience for Johnson , Johnson. And save the enterprise development expenses. Low-end cosmetics is extremely easy to research and development, but to progress a mature fatal need to spend more time. So get Dabao certainly go a shortcut for Johnson , Johnson. Nevertheless original goal is to eliminate the barriers to enter the industry plus the market to get top priority in China.
From Dabao’s view, Dabao acquired by simply Johnson , Johnson who may be more efficient as well as the replacement of managers has become unavoidable, management efficiencies will brought new opportunities to Dabao in the future development. Making decisions style Intended for the decision making style inside the decision making method, first I found the overestimation bias. “Overestimation occurs when folks overestimate their very own performance, likelihood of success or perhaps control of the situation” (Bazerman , Moore, 2009, l. 91). JNJ has full confidence intended for acquiring Dabao company plus they believe they may gain the majority of the market share once they acquiring Dabao.
So they give a high price to acquire Dabao organization, at the price of 0. 6 billion dollars yuan a lot more than their competitor Unilever. In fact, Dabao was facing various problems at that time and even can not survival on the market. So JNJ should would more research for the background of Dabao, and consider that significantly then give the right selling price to keep more choice of its do it yourself to the additional development. Another bias I found is the Motivated Optimism bias. The Determined Optimism tendency is the tendency to feel positively in regards to a situation turning out well despite proof that proves otherwise.
This bias was reflected in the staffs’ position plan that accepted simply by JNJ. JNJ was efficiently about offering the eliminate employees continue working in Dabao even thought JNJ knew that is one of the suggest reasons that caused Dabao developed gradually. I as well tell the cultural bias from this issue. First you will find culture dissimilarities between the ALL OF US and Cina in doing business. And the two companies possess totally different ethnical with each other. Dabao is a condition welfare company. So there must have many tradition issues that JNJ can not steer clear of.
It seems JNJ never generate any prepares for that and acquired Dabao in a hurry. The situation in decision making process As the purchase price failed to reach an agreement, the talks had reached an impasse after created an fairness transfer purpose agreement. Dabao listed selling price 23 mil yuan is definitely five times the net property, 3. 4x sales. Dabao audited total assets of 6. forty-five billion yuan, net assets of 495 million yuan. In 2006, the primary business income of 676 million yuan, net revenue of forty one million. In line with the 2006 examination report, the whole assets of Dabao can be 2 . twenty six billion yuan, liabilities of 295 mil yuan, who owns the value of 2. 241 billion yuan. The data shows that Dabao shown price of 23 million audited features five times as net possessions of 459 million yuan, which is not an affordable price. The reasonable selling price should be about 1 . 5 billion yuan. In the others’ eyes, the retail price is debatable, but JNJ still purchase of Dabao with all the price ahead of the competition’s price of six hundred million yuan. Another problem is the staff resettlement problem. Dabao has a attribute, Dabao is a state wellbeing enterprises with as many as 35% of the incapable workers.
And according to Chinese regulation, employees with disabilities have not been laid off, which is a primary reason that makes Dabao development difficult. The staff position problem hindered the acquisition process for a time. Therefore , inside the acquisition, keeping of workers end up being the most central issues furthermore to cost issue. After negotiated for most times, employees placement prepare has come to a consensus. After the buy the Dabao employees nevertheless be the employees in Dabao’s initial parent company: Beijing Sanlu Factory, is constantly on the serve Dabao brand.
The employees who have not get the new careers or do not accept the roles of the new company’s is going to continue since employees in Sanlu Factory. Recommendations In my opinion, I disapprove Johnson , Johnson’s decision of attaining Dabao. Prior to a company the decision to obtain another firm, two key issues must be taken into consideration: to recover the cost of investment in a short time of time, another is able to think of yourself as00 complement and enhance their individual original manufacturer. Before the acquisition, the two businesses are in the decline stage.
Acquired Dabao firm for Johnson , Johnson is a certain risk, in the event Dabao extended its down trend following your acquisition, then it will certainly contrary to the original objective of Meeks , Manley to obtained Dabao. That wont only exacerbate the problem of Johnson , Johnson’s goods market placing in China, and it will likewise affect the overall development of Johnson , Meeks. If Dabao can not become a listed company, Johnson , Johnson will probably be difficult to restore the dollar 23 billion investment price for purchase Dabao. Also the difficulty of integration will be to some extent avoid the development of Manley , Meeks.
The huge capital injection and Dabao keeping of workers trouble will increase the issue of the Johnson , Manley Development. National circumstances and foreign expenditure risk would have been a severe test. The products from the two firms does not match, the future creation challenges than opportunities. After the acquisition, the largest problem is in the event that JNJ could make good usage of the Dabao’s channel methods, after all, you will discover too many differences and even conflicts of the managing style between multinationals and native companies.
JNJ valued Dabao’s channel methods, however , these are not the hardware methods, if JNJ could not make good make use of these channel resources, that may cause the channels unrest as well as loss of dealer. And so i believe JNJ should maintain the independence of Dabao, make Dabao like the other subsidiaries in the world, became a separate enterprise, independent procedure. And obtain the integration of sales and channel. Dabao has weak research and development capacity, so JNJ retain Dabao’s original range topping product and at the same time research and development of recent products, to be able to seize the market.
Johnson , Johnson ought to change a senior managing team intended for Dabao. Summary In order to meet up with other multinationals in China, Johnson , Johnson accomplished the purchase of Dabao, a situation welfare company has many route resources nevertheless also has develop issues. During the decision making method, Johnson , Johnson met many complications such as the selling price issue, employees settling issue. Johnson , Johnson offered a high price and accepted the employees settling strategy that came up by Dabao.
I do not think that is a good decision to get Johnson , Johnson to get Dabao since it is difficult to recover the cost of expense in a short time of time plus the development will probably be affected by the problems appeared in the decision making process in the future. Likewise for the further expansion I supply the recommendations of make great use of these types of channel solutions, maintain the self-reliance of Dabao, retain Dabao’s original range topping product and at the same time research and development of new products, and alter a older management crew for Dabao.
References: analyzing the reason of johnson , johnson obtained dabao. (2008, August 06). Retrieved from http://bbs. 55bbs. com/thread-1836669-1-1. code Beijing dabao cosmetics company., ltd.. (n. d. ). Retrieved coming from http://www. dabao. com/ Organization merger case analysis of johnson, johnson acquired dabao. (2012, September 09). Recovered from http://wenku. baidu. com/view/af14c431a32d7375a4178039. html Johnson, johnson. (n. d. ). Retrieved coming from http://www. jnj. om/connect/ Johnson , meeks purchase dabao a sudden enhancements made on the situation. (2011, May 27). Retrieved by http://wenku. baidu. com/view/763309976bec0975f465e271. html Johnson , johnson rates high no . one particular in national corporate reputation survey for seventh progressive, gradual year. (2005, December 07). Retrieved coming from http://www. harrisinteractive. com/news/allnewsbydate. or net? NewsID=999 Klovee. (2008, February 02). [Web record message]. Gathered from http://johnsonjohnsonblog. blogspot. com/2008/02/introduction. html
