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What stage in the PLC is the internet? Provide a PLC characteristic, product example.

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Please see response for active links and diagram, which is also presented below. I also attached an excellent resource on the history of the Internet. I hope this helps and take care.


Let's take a closer look through discussion, example, research and an article for further research.

1. What stage in the PLC is the Internet? Provide a PLC characteristic, product example.

My understanding of this question is that you are asking about the Internet as the product, and what stage in the PLC is the the product: the Internet. The example would be to provide evidence that it is in that stage of development.

Today, the Internet is a widespread information infrastructure, the initial prototype of what is often called the National (or Global or Galactic) Information Infrastructure. Its history is complex and involves many aspects - technological, organizational, and community. And its influence reaches not only to the technical fields of computer communications but throughout society as we move toward increasing use of online tools to accomplish electronic commerce, information acquisition, and community operations (http://www.isoc.org/internet/history/brief.shtml).

Product Life Cycle (PLC)

In the introductory stage of the PLC, the product is introduced to the target market. Marketing activities may include heavy expenditure in advertising to create an awareness of the brand or product and communicate its benefits. In the growth stage, the brand or product is accepted by a critical mass, and you can concentrate your efforts on maintaining and growing market share as competitors enter the market. In the maturity stage, competition intensifies. The costs associated with acquiring new customers increase so you should focus on maintaining loyalty. The last stage of the PLC is the decline stage. As sales decline, you can either discontinue the product or reinvent it, thereby restarting a new life cycle (http://www.bizassist.co.za/news.asp?Cat=Tech&Ref=746).

Applying PLC to the Internet as a product

The Internet appears to be still in the Growth Stage, showing signs of maturity. The Internet as ...

Solution Summary

This solution explores the stage in the Product Life Cycle (PLC) that the internet is in.

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Financial Appraisal for ABC plc

ABC plc is considering launching a takeover bid for XYZ plc. The two companies are in the industry and have identical cost of equity capital, which is 12% after tax.

Below is an extract of some financial data on both companies:

ABC plc XYZ plc

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Dividend per share (dps) 25 pence 5 pence

Price per share (pps) £9.00 75 pence

Number of shares 5 million 3 million

XYZ plc is expected to produce growth in dividend per share of 5% per annum to infinity with its current strategy and management. However, if ABC plc acquired XYZ plc, the resulting synergy from the acquisition would be such that the growth rate of dividend per share for XYZ plc can be raised to 8%. In addition, ABC plc is also confident that it can bootstrap the earnings of XYZ plc using its own higher P/E after the acquisition of the company.

The transaction costs of the acquisition, which covers payment to the investment banks and accountants advising ABC plc, are estimated to amount to £400,000.

a) Calculate the total value of the synergy that would be created from the combination of ABC plc and XYZ plc:
(i) using constant-growth dividend valuation model
(ii) using Price-earnings multiplier model
b) Comment on the limitations of the valuation models you have used in (a) above in the particular situation of this case scenario.
c) Explain the possible sources of synergy arising from the acquisition of XYZ plc by ABC plc.
d) If ABC plc paid £1.20 cash for each share of XYZ plc, what value of the synergy calculated in (a ii) above would be available to the shareholders of each company?
e) What are the advantages and disadvantages to ABC plc of paying cash to acquire XYZ plc?
f) Using two recent cases, discuss the ways in which UK companies, which have been the subject of unwanted (hostile or unfriendly) takeover bids defended themselves from such bids.

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