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Southcorp Case Study- Assessment of Takeover

What is your assessment of the takeover of Southcorp by Foster's? What is the strategic logic of this acquisition? Is it likely that Foster's will be a good corporate parent for Southcorp? How will value be added at the corporate level?

Identification of issues
Analysis and assessment
Strategy formulation
Issues in implementation

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Below and attached are the comprehensive answers (same answers in 2 different formats) to your questions Foster's Group's Strategic Takeover of Southcorp Limited as per your instructor's specifications. References and citations are in the Harvard format. I hope this will help you in your studies.

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Foster's Group's Strategic Takeover of Southcorp Limited

Southcorp is a major wine producer that has been in business since 1988 when the company started as a single-business brewer. At that time the company was known as the South Australian Brewing Malting, wine and Spirits Company and it was located in Adelaide, the capital of South Australia. Over the years, and through many acquisitions and divestitures the company grew into a vertically integrated business with brewing interests, wine and spirits wholesaling, retailing interests and hotel operations. In January 2005, Foster's Group, a leading Australian alcoholic beverages company, announced the purchase of an 18.8 per cent interest in Southcorp Limited and declared its intent to launch a hostile takeover bid for the remaining Southcorp shares. The news of the takeover was not entirely unexpected since Southcorp's performance had been lackluster and its share price was tumbling. This paper will evaluate the strategic value of Southcorp to Foster's Group and whether it has been a good corporate parent for Southcorp. To understand Southcorp's strategic value to Fosters Group it is important to first understand the importance of strategic planning and its influence on business success.

The Role of Strategic Planning in the Takeover

Strategic planning is a process whereby the leadership team of an organization envisions the organization's future and develops the necessary practices and procedures to achieve that future vision. The strategic plan sets the framework for creating a marketing plan and a financial plan.

The future vision, called a vision statement, is then written in a future present state but based on a thorough understanding of the organizations' current circumstances. The vision statement communicates how the organization would like its circumstances to be sometime in the future. It will most likely not reflect the current reality for the organization, but rather represent a target future state in which the organization would like to find itself within a stated time limit such as 5 or 10 years.

The mission is the reason why the organization exists in the first place. It is the organization's essential purpose. The mission statement is writing down in very short and concise, yet broad and general terms exactly what the purpose of the organization is. Stated concisely and plainly this is why an organization cannot have a successful strategic plan without a mission and a vision statement: without knowing where the organization is now and where it wants to be in future it is impossible to have a strategic plan for how to get there. It is the same thing as when a person wants to have driving directions to where they are going. No driving directions can be had without knowing first exactly where the person is now and second exactly where the person is going.

Foster Group's vision is to inspire "global enjoyment. Whether through beer, wine, spirits, leisure, or property, Foster's Group's premium products inspire enjoyment around the world. The group's mission is to build premium quality, first-choice brands, deliver service excellence to customers and consumers, generate superior returns for shareholders, create an inspiring workplace, and be welcomed in the communities in which we operate"( Foster's Group Limited n.d.). Foster's Group's commitment to this vision was such that CEO Trevor O'Hoy declared his intent to make the company Australian for "wine", as opposed to the company's commercials which declared Fosters to be Australian for "beer." The group's move to grow its market share in the wine is because its beer brands have little to no room left for growth (Ellis 2005). To achieve this vision and mission and vision Foster's Group needed the strategic planning that included the acquisition of Southcorp Limited. This is because despite its failure to maintain a successful business, Southcorp Limited was in possession of the wine labels that Australian and global customers desired. The group's existing wine brand while good products could not achieve the dominance in the market that the company's mission and vision required.

Strategic planning is especially important to organizations like Foster's Group that choose to merge with or take over troubled businesses such as Southcorp Limited. Financial situations that need urgent and radical action in order to keep the business alive, as well as mergers that may initiate an atmosphere of fear, uncertainty and even mistrust require concerted efforts at strategic planning to ensure success. Unless the organization can successfully plan the management of competing values, perceptions, assumptions, expectations, attitudes and other factors, successful and cohesive company-wide efforts are at risk (Reschke & Aldag, 2000).

The Role of Functions of Management in Strategic Planning

The controlling function of management is a four-step process which establishes performance standards based on the organization's objectives, measures and reports actual performance, compares performance standards and actual performance, and takes corrective or preventive measures as necessary(Erven, nd). This function is vital to strategic planning as it reveals the success or failure of a strategic plan and evaluates the effectiveness of the plan's steps during execution allowing the plan to be adjusted as needed to better meet plan objectives. Foster's Group's strategic takeover of Southcorp Limited can be evaluated by considering how well Foster's executed the controlling function of management before, during and after the takeover.

The planning function of management is process of developing the organization's mission and objectives and deciding how they will be accomplished. Planning encompasses both the broadest view of the business such as its mission and vision which are the foundation of strategic planning and the narrowest view which is designing specific tactics for accomplishing a specific strategic goal (Erven n.d.). Generally the narrowest view is not part of strategic planning and management, because these deal with a broad vision for the company's future.

For example strategic planning for Foster's Group's takeover of Southcorp would take into consideration that in the Australian wine industry it is necessary to continually innovate in order to meet ever changing needs of this lucrative but volatile market. Foster's has responded to this challenge by using up to date technology such as computers, computer software, and communication methods (Customer file success story: Foster's Group n.d.). Foster's has also shown innovation in repackaging its ...

Solution Summary

This solution discusses the Southcorp Case Study in depth, including Identification of issues, Analysis and assessment, Strategy formulation, Issues in implementation and Recommendations.