CHAPTER 1: Introduction
Acquisition is referred to be a corporate strategy that is usually undertaken by most of the companies to buy the ownership of yet another targeted enterprise with a minimum of 50% possession. This is basically done to enhance the shares and revenues in a marketplace where it can be also done by an organization situated in one market and targeting the company which is settled in another marketplace. For which, various elements are being considered within UK. In this aspect, it has been observed that there exists various UK based organizations that are owned by Pakistani owners with a best instance of one such organization named Bestway which is now also entitled as Well Pharmacy. It has set a record of integrating several UK based businesses operating in different background such as real estate, banking, wholesale and pharmacy, etc.
It is mainly due to its prime assistance in the attainment of profits and revenues by the organization for an easy attainment of its targeted earning (Buckley and Strange, 2015). Likewise, it has together been discovered that Britain is full of such small business ownership of Pakistani owned enterprises that are growing at a very higher pace. UK has thereby carried out a deep investigation of their market where a minimum contribution of near around £200 billion income has been found to be generated every year. Annual contribution of businesses makes high level of profits by an economic prospect. Currently, the aforesaid income is expected to drop down at £180 per year as per the forecast done for the upcoming year of 2018 (Prosser, 2014).
Co-op pharmacy chain in UK is considered to be one of the biggest chain of pharmaceuticals that has been later acquired by Bestway which is together dealing in several other type of businesses. In London, there are various Pharmaceutical companies which are dealing with a team of professionals to serve their Pharmaceutical products and services to the customers (Khan and Khan, 2016). However, on discoursing upon the acquisition of Co- op pharmacy by Bestway, they have been successful in this process that has been done in support of continuous diversification and for which, they are with success operating in various business fields.
It is at the time of acquisition, it is important to integrate with the accepted functions of the targeted organization needed to be undertaken with its various set of responsibilities and other prospective measures helpful to the business acquiring another business. It is however referred to be a sole consideration of the organization undertaking yet another firm by accepting the clause of merger and acquisition. It is however with respect to merge with co-op pharmacy, the UK based organisation named Bestway has targeted to gain an annual growth of near about £3.4 billion with more than 32,600 people (Bestway Cement, 2011). This approximation of human resources has been done after considering the previous personnel resources of Bestway and the manpower resources of the organization targeted for the process of acquisition.
At the initial time, Bestway was only operating in the cement industry of Pakistan and was known to be one of the the biggest manufacturer of cement over there. At this time, the company named Bestway Cement used to earn a profit of Rs 12.64 billion within a period of 9 months. This was together specified to be the amount without any application of taxes in it where later it decided to consolidate with a firm called Pakcem Limited operating into similar industry. It was done with a prime concern of increasing the level of profits by the Bestway Cement organization by together satisfying the rising needs and demands of the users in the domestic set of market.
This reflected to be one of the best decision taken up by the CEO of this company where just after the acquisition of Pakcem Limited, their previously earned profits increased by 49%. After which, they hereby decided to adopt a rigorous strategy of diversification to begin their operations into the international set of markets as well. This resulted into more acquisition of businesses in diversified fields of business that led Bestway to make a rigorous growth in UK. This group also considered relaunching of their products and services to gain high number of profits and revenues in the outer set of markets (Ekpe, Mat and Ekpe, 2015).
It is with the help of this investment program, they intended to get into the business of pharmaceuticals whose products and services were aptly supported by standard quality of goods. After 12 months, the company takes decision to merge with another UK pharmacy business named Co- operative pharmacy which was stated to be a 70 years old brand. This was planned by Bestway to revamp this set up by investing £200 millions where they firstly agreed to brand themselves in the name of Co-operative pharmacy only. The present study has largely focused upon the acquisition of Co- operative pharmacy with that to the Bestway group and sold them due to a state of crisis in their banking division.
Later after the success of this acquisition, they involved into the re-branding of Co- operative pharmacy where it will be later termed as Well. It is where the Co-operative pharmacy with its 780 stores in Britain is referred to employ more than 7000 staff members where they all are a part of this relaunched business called Well. This acquisition is however known to be a series of re branding done by Bestway group till now that reflected a takeover of £620 million. Bestway is basically a family owned business that owes some best convenience stores with a series of shops in UK. A prior aim of Bestway group is to increase the yearly revenue of the undermanned organization named Well from £750 millions to £1 billion by the end of the year 2019.
Wherein, they have also planned to make some additive spending of funds with a targeted stock of £40 millions to recruit new staff members and renovate the drugstore by together enlarging the group into varied other range of services of health industry. This is basically to create an entirely new business of wholesale. Herein, a prime reason behind selling of Co-operative pharmacy is in lieu of the fact where they were hereby going through some major crises in their finances. This resulted in the restructuring of their business entity to get rid of their economic crisis by selling off the business to an entirely new firm. This depicted a strong sense of acquisition that in turn assisted Bestway to show their efficient presence in the marketplace where they are highly focused towards the establishment of Well. As a result to which, Well is intending to reflect as one of the largest independent chain of pharmacy in the nation by distributing 73 million prescriptions on annual basis. Thus, with a foundation period of 72 years, Co- operative Pharmacy is now recognized as Well acquired by Bestway group.
Later, the organization called Well together aimed to assist NHS with its rebranded products and services to improve the health of individuals at a more faster pace (Dewi and Rachmawati, 2014). The acquisition among Bestway and Co- operative included transactions which involves pre-closing, restructuring and aggregation of industrial development. With respect to which, acquisition of Co- operative pharmacy went through the strategy of diversification and where the acquiring firm intended to get into a completely new field of business. It together assisted them to deal with the state of crisis in a successful manner that together indicated a substantial strength to advise them to transact the finances. Beside this, Well after being fully acquired by Bestway is now successfully owning its pharmacy business in UK. Wherein, these strategies are apparent to reduce the debt of Co- operative pharmacy by together focusing upon the extension of their business with planned deliveries to fulfill the priorities of the users. It will in turn strengthen them by assisting to commit in long term ownership of business (Godson, 2014). They are also looking forward to work in teams in the transition period. The present case study has together illustrated the integration of Pakistani owned companies in UK.
This has been done by considering a specific case of Bestway that acquired a pharmacy establishment named Co- operative. This specific case has been considered to understand the success story of the business and at the same time, it has also scrutinized some factual issues that are being faced by the businesses while undertaking the process. Herein, the Bestway opted to integrate with a pharmaceutical business named Co-operative Pharmacy. It has been done by referring to the strategy of conglomerate acquisition that has largely benefited the acquiring company to a large extent and has together been scrutinized in this study.
Conglomerate acquisition seems to be a merger between firms who have unrelated business activities; hence in the present case acquisition has been held in the form of merging with indifferent businesses. In the subsequent case, such type of merger took place which usually helped the company in diversification and expansion procedure. It seems to be beneficial because it helps in overcoming risks and uncertainties that are associated with vulnerable market. When one business entity is declining, other has the opportunity to overcome the unfavorable situation through managing performance and productivity aspects.
It has also helped in gaining synergies through enhancing the performance standards in both the companies. It also aids in amending the revenue ratio of the business through expanding the existing standards. Usually, it involves investment of excess cash which is used in other business activities to manage business funds. Hence, with the help of such merger, business entities have utilized the excess cash in suitable manner. This not only changed resource capability of business; but also it encouraged in reducing business constraints. Similarly, this merger is also proved to be significant for cited business because it has improved the existing customer base. At the same time, it is also useful for the purpose of building customer satisfaction.
Human resources of the organization are the most important possessions which aid the business entity to utilize all organizational aspects in suitable manner. Hence, the merger leads to best utilization of resources which has also contributed in encouraging growth and success facets. Economies of scale is yet another advantage that is being acquired by cited company through this specific merger and acquisition. Business has also spent enough resources in promotional and other activities which has further helped in reducing the production cost. Henceforth, conglomerate merger has rendered many benefits to the subsequent business.
1.2 Rationale of the study
Merger and acquisition is considered to be a foremost aspect behind the success of companies where it helps to secure the growth and development of the business at both national or international level. Businesses also gets a chance to explore themselves in order to increase the customer base and meet the expectations of all their related o rganisational bodies. The study under consideration sheds light on the effectiveness of integration of UK based Pakistani owned businesses that are further referring to incorporate with other similar or distinct set of organisations by adopting the process of merger and acquisition. This is considering the case of Bestway group that has acquired the Co-operative pharmacy The main reason behind carrying out this study is to understand that what kind of strategies are applied by corporation in order to implement the changes and how effectively the firms cope up with the challenges of merger and acquisition. In addition to this, most of the businesses gets fail in the process of merger and acquisition due to the adoption of less suitable strategies. It is followed by the implementation of less effective procedures in implementing the changes and conducting an analysis before implementing the process of acquisition.
Owing to this, both corporation under consideration are proven to face the loss where their enforced strategies related to the initiation of business operation also gets failed. Furthermore, cultural barriers are considered as the most significant factors behind the failure of business. Although, management is required to apply necessary strategies for the identification of barriers affecting the procedure of acquisition and implement the same for its removal. It can be critically evaluated that lack of appropriate information makes this procedure highly typical and affect the overall performance of the businesses to a great extent. However, Pakistani owned businesses has a threat of failure in the process of expansion in overseas markets or other countries due to several internal issues. This require the companies to put extensive efforts for the mitigation of risk to take further initiative related to the enlargement of business all over the globe.
In addition to this, type of strategies required to be implemented in merger and acquisition must be supported by a detailed research and analysis. Along with that, cost structure is also required to be focused by the business in order to ensure a higher rate of return and manage the necessary changes in an effective manner. There are certain factors that affect the business performance to a great extent just because of their non realistic assumptions towards the potential country. It indicates that it is very important for the businesses to carry out a prompt analysis of the country with whose firm it is referring to merge. This aspect proves to be effective for the collection of necessary information and provide the indication related to any other kind of methods that can be applied to cope up with the change. This kind of scenario creates significant number of issues for the businesses to deliver good quality of services to large number of buyers and at the same time, the business might not able to continue with its operation. For this purpose, it is important to shed light on appropriate strategies through which it becomes easy to ensure the success of enforced merger and acquisition.
However, an increasing number of issue in the growth and development of a business after applying the practice of merger and acquisition has given rise to this research work. It is specially to focus upon the barriers that are generally being faced from the application of merger and acquisition in a differently cultured organisation with that to another enterprise with a distinct cultural background. Owing to this, current study is being conducted to assess the effectiveness of integration of UK based Pakistani owned companies with that to another UK based organisation.
1.3 Research aim and objectives
The research aim and objectives of the current study are constructed so that required objectives of the study could be successfully acheived. These are explained as follows-
To analyse the effectiveness of Acquisition of Pakistani Owned enterprise in UK: Case of Bestway acquisition of co-op pharmacy.
- To assess the scenario of Acquisition by Pakistani owned companies in UK
- To evaluate the success of Acquisition made by Pakistani owned companies in UK in past.
- To evaluate the impact of Acquisition on the Employees of the company.
- To recommend the future growth strategies for Bestway.
The above mentioned research objectives are important for the thesis as first of research assess the scenario of Acquisition made by Pakistani owned companies in UK. It would be appropriate to conduct the in-depth analysis by taking the suitable examples of the corporations in into consideration. Furthermore, second objective of the study highlighted about how successfully Pakistani owned companies got success in the acquisition procedure with in UK. The last objective of the study reflects that future strategies of Bestway in order to build competitive edge in the global marketplace so that they can get higher rate of return.
1.4 Research questions
The research questions of the current study are formulated on the basis of research aim. It enables researcher to collect the appropriate information and conduct the entire study effectively so as to present the outcome in a most effective manner. These are stated as follows-
- How Pakistani owned companies are integrated in UK?
- Has it been successful in the past?
- What are the factors effecting merger and acquisition (M&A)?
- What is the impact of M&A on the employees?
- What will be future growth strategies for Bestway?
- Which merger or acquisition strategy was followed by Bestway with what valid reasons?
1.5 Research framework
The research framework is considered as the another most important aspect of the thesis under which different kind of methods are employed by the researcher to produce the valid outcome. The research framework applied under the present study has been explained as follows-
Type of investigation
This is the considered as the most prominent aspect of the study under which researcher explains about the type of investigation selected. There are two types of investigations that are used in the research study and it includes Qualitative and quantitative. In quantitative use of stratification tools for analysis of the collected data is done. In qualitative study understanding of underlying subject is done and it provides deep insight on the subject selected. The type of investigation applied in the current thesis is based on qualitative which demand for in-depth investigation in order to accomplish the study effectively.
It enables researcher to collect the valid information and use the same in order to present the outcome in an effectual manner (Bhattacharyya, 2009). The major reason behind using this approach for investigation to assess the success of the acquisition made by Pakistani owned businesses in UK. It has been done in the light of collection of primary or secondary or both kind of information. On the other hand, quantitative type of investigation has not been applied as demands to use stratification tools for analysis of the collected data. However, the nature of study pertains need of in-depth analysis. Owing to this, qualitative type of investigation has been selected for carrying out the same (Kumar, 2010).
The another important element of research methodology is research approach. It indicates that what pattern of data collection is being adopted by the researcher. The thesis under consideration is based on deductive type of research approach wherein at first generalization is done for the collected data and then researcher moves to be specific one (Crowther and Lancaster, 2012).
Owing to this, specific pattern of data collection is adopted by the scholar whereby it becomes easy to gather the information in a right manner. Thus, selection inductive research proves to be the most effective for extracting valid outcome and reaching at the end results in a right manner. In addition to this, inductive research approach has not been used as specific information is not considered at first and issue of common businesses is highlighted.
Research philosophy is based on set of assumption, belief and values of researcher regarding a particular topic or investigation. This reflects the understanding level and knowledge of scholar regarding study. There are different types of research philosophies such as interpretivism and positivism. The current thesis on analysis of effectiveness of Acquisition made by Pakistani owned businesses in UK, interpretivism research philosophy has been used (Daniel and Sam, 2011). The main reason behind using the same is to use the available knowledge of research on the fact presented for the investigation. The employed research philosophy reflects that particular truth has multiple facet associated with the same. At this juncture, interpretivism research philosophy will be applied for detail analysis of the study. Therefore, use of interpretivism research philosophy would be effective to interpret the collected information and applying the findings of the same to present the outcome in the direction of aim and objectives.
Data collection is the most important procedure in research framework of the study which shows that what kind of data will be collected in the study. There are basically two types of data such as primary and secondary and application of the same is based on requirement of the investigation. Owing to this, present thesis employs both primary and secondary data for offering the effective basis (Fiegen, 2010). The procedures used for collection of primary data are questionnaire, interview and observation etc. On the other hand, secondary data are collected from sources like journals, books and online articles. The main reason behind using both kind of data collection methods is to support the investigation with proper evidence. It would be effective to represent the outcome in an authentic and reliable manner. However, interview method will be used for gathering primary data and using the same to draw valid outcome for the thesis.
Sampling is significant in case study is based on both primary and secondary data. As the current investigation is made by using both kind of data collection, hence appropriate sampling design will be selected. According to the nature of the study respondents of the study will be managers of Bestway : Selected case study of Pakistani Owned company in UK. It is because they must have idea regarding the issues which were faced by the business along with success story of the same (Jackson, 2010). However, the objective of study also shed light on future strategy of the firm. For this purpose, it is important to incorporate managers as the respondents of the study. The suitable sampling design applied for current thesis will be non-probabilistic. Accordingly, purposive sampling has been applied for gathering information from the targeted respondents. In addition to this, specific sampling as purposive one will be used as it defines the target population in accordance with requirement of the study and knowledge of the same for completion of its purpose. In this respect appropriate sampling size has also select through which population can be represented. Moreover, 10 as standard sample has been kept for selection of managers of Bestway.
Data analysis chapter of study is considered as the core portion where collected data are analysed in the light of research aim and objectives. The technique applied for data analysis in the current thesis will be qualitative. This is because such kind of investigation assists scholar to carry out in-depth analysis (Khan, 2011). This proves to be effective to accomplish the aim and objectives in an adequate manner with effective support of primary and secondary information. However, thematic analysis of the selected technique is applied under which information gathered from interview will be analysed. At this juncture, researcher ensures consistency of findings from primary and secondary data. This proves to be effective to accomplishing the research aim and objectives in an effectual manner. Thus, selected method of data analysis is very effective accordingly to its aim. Apart from this, it will also be helpful for proposing the suggestions for the study effectively (Kuada, 2012).
1.6 Structure of the thesis
The structure of any study matters a lot as it indicate readers that what potential aspects will be covered in the study for producing valid outcome. It enables scholar the present the overview of the study that what each chapter will contain. Hence, structure of the current thesis has been presented as follows-
Introduction-The chapter of introduction is considered as the most prominent in the study as it communicates about the purpose and scope of the study. It clarifies that why a particular study is being conducted and potential aim as well as objectives of the same is explained in a clear manner. It consists of rationale of the study, background, and research questions along with aim. In addition to this, detail background of the study is incorporated in the respective chapter only so as to highlight the general or specific information about the topic under investigation. Furthermore, brief explantation of the research framework is also added in the chapter of introduction whereby research ensures that what methodologies and procedures will be use for collection of the information and analysis of the same. In addition to this, information related to specific case study is added through which it becomes easy to understand the case scenario. The thesis under consideration provides the detail of Bestway which is acquired by Co-op pharmacy. This is followed by the rationale that why the investigation on particular topic is being conducted by taking a specific example. In this manner, chapter of introduction is considered as the first and foremost for detail overview about the study to be conducted or being carried out.
Literature review-The completion of introduction chapter give initiations to next one which is of literature review. It is based on specific research aim and objectives and accordingly varied studies are referred. It proves to be effective to create strong base of the study and accordingly extract valid outcome so as to accomplish the research aim and objectives. In the current investigation, chapter of literature review will be completed on the basis of themes which are constructed as per the research aim and objectives. However, the main purpose of researcher to access varied sources of information is to develop in-depth understanding for present the outcome in a right manner. Apart from this, conceptual framework and other related studies are incorporated in the completion of the chapter literature review.
Research methodology-The chapter of research methodology begins at the completion of literature review. This provides the general discussion regarding the methods which can be used in the study. This enables researcher to select the methods used for collection of information and analysis of the same. It covers different topics or aspect selected for the study such as type of investigation, research design, methods and techniques implement the for the purpose of data analysis. However, all these procedures and tools are presented in broad manner so that readers can come to know about availability of varied options. Furthermore, selected method will be explained along with its appropriate justification in the file. It would be effective for scholar to carry out entire study in accordance with provided guidelines. In addition to this, varied studies are referred by the scholar in order to develop the in-depth study effectively.
Data analysis-It is the fourth and foremost chapter of dissertation where collected information and data will be analysed in the line of aim and objectives. At this stage, scholar ensure to carry out the analysis part in accordance with secondary information. It proves to be effective to present the outcome effectively along with its detail discussion. Furthermore, chapter of data analysis is presented in a clear and coherent manner. It will help the readers to know about the findings of the study and its direct impact on the business.
In addition to this, Appropriate methodology is used for conducting the investigation in an effectual manner whereby it becomes easy to propose the suggestions just in the next chapter of the thesis. In this manner, data analysis chapter is more focused and detail for accomplishing the stated aim and objectives. Therefore, data analysis chapter is presented with the help of necessary information and evidence and analysed properly for accomplishing the aim of the study. In this manner, data analysis part is conducted with extensive case with devotion of proper time.
Conclusion & recommendation- The chapter of conclusion and recommendation is the last chapter. This chapter of thesis will be done in accordance with framed research aim and objectives. However, this chapter remains connected with the data analysis so as to make it possible to highlight the findings of the investigation in an effectual manner. Apart from this, recommendations is provided according to the collected information. This will enables researcher to propose the valid outcome and accordingly accomplish the aim and objectives of the study in a right manner. Along with this, the last chapter of the study also provide the recommendation related to potential areas of the research in order to explore more.
1.7 Potential significance and scope of the of the study
The current study is carried to analyze the effectiveness of Pakistani owned businesses in UK where it is considered to be one of the most significant aspect of businesses that tends to acquire another business or vice versa. This is because many organizations often tends to fail in implementing their undertaken strategies of merger and acquisition in an effective manner. Such kind of issues are generally faced due to lack of information related to the factors affecting the business performance. For this purpose, current study will be covering the issues that are often being faced by the firms to implement the strategy of merger and acquisition along with some recommendations of the best possible measures to ensure the success of the incorporated methods. Apart from this, this study is also evident to cover the findings related to the success factors and strategies that contributes in a successful application of merger or acquisition into the business by together focusing upon various cultural or other related barriers. This makes it possible for the businesses to target the expansion of their established venture.
On the other hand, this investigated study is also proven to be helpful for the consultants dealing with the related prospects of merger and acquisition. They will hereby recognise the way in which the businesses are sometimes required to face several cultural issues where some operations are required to be merged by focusing upon a common goal and objective. Moreover, outcome of the current thesis will provide theoretical knowledge to the consultants that how companies of different countries can ensure successful stories of merger and acquisition. At the same time, the associated stakeholders with the business can also refer to the findings of the study for the purpose of meeting their expectations in an effective manner. This is mostly to focus upon some prioritised stakeholders like the investors, creditors and shareholders, etc., to invest in a particular organization which will lastly gives some profitable results to them.
This thesis is also helpful for the students who are considering to conduct an investigation into a similar field. They will get a detailed analysis to discuss upon the businesses which are planning to merge for a successful future of their business ahead. Also, it would be effectively shed light on the success or failure stories of Pakistani owned companies to integrate their UK based business with other business organisations. However, outcomes of the current investigation is proven to be effective for the students to write literature review in their carried studies. In addition to this, they will also get a prompt support to select the most appropriate techniques of research methodologies for conducting their dissertation to reach onto a suitable justification of the same.
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