Using Barney, J. (2002). Gaining and Sustaining Competitive Advantage. New Jersey: Prentice Hall as textbook.

What is your opinion concerning this article bases on Mergers and acquisitions, International Strategies.

Facebook, Instagram and the Disciplines of Mergers and Acquisitions

By Robert Teitelman

For years, it’s been a popular pastime to decry the use of mergers and acquisitions (M&A) as a colossal, ego-inflating, comp-expanding, waste-of-shareholder-money exercise. Most of these charges are either wildly exaggerated or absurdly simplistic. M&A is a necessary means for companies to grow, particularly in a world so driven by change. Failures are unavoidable — it’s not easy — although measuring what’s exactly a failure or a success given the complexities of large corporations is pretty difficult. But it’s very true that in overheating markets, when currency in the form of shares is highly inflated, lots of lousy, value-destroying deals can get hatched. This is particularly the case in intensely competitive technology industries, where the value creation of a given deal may lie not in the current organization but in a technique, a process, a piece of intellectual property still undergoing gestation: that is, in an opaque future. Thus the truism beloved of Warren Buffett: In M&A, there’s nothing riskier than tech deals.

And then there’s Facebook and Instagram. Facebook is famously paying a cool billion dollars for the two-year-old app-based photo service. Instagram has 13 employees, 30 million users and no revenues. Facebook’s Mark Zuckerberg decided the social media giant absolutely had to have the startup, and took a year’s worth of cash flow and offered it up, about twice Instagram’s recently closed Series B venture round valuing the company at $500 million. There was no indication of other bidders, though everyone seems convinced that a Google or an Apple was lurking out there ready to make its own pre-emptive bid. In the developing meme about the Instagram deal, Zuckerberg didn’t have a choice: He had to strike. It was eat or be eaten. The sheer uncertainty of the social media landscape can’t tolerate hesitation; it demanded action. In California, venture capitalists, investment bankers and analysts can’t praise the deal highly enough (of course, they all profit from the resulting euphoria). Zuckerberg showed brilliance, they said, by recognizing Instagram’s potential and making the bid — despite the fact that this will further complicate Facebook’s enormous and much-hyped IPO in a month or so.

That alone should cause one to pause along with the profound faith in a young CEO who hasn’t done much dealmaking. The issue here is not that Zuckerberg made a good decision or not. We’ll find out in time whether Instagram is a PayPal or a Skype (both eBay acquisitions: the former, as The New York Times lays out today, a big success, the latter, a big loser) or a Flickr (a Yahoo! bomb) or a Flip (which Cisco, a regular and expert user of M&A, shut down last year). Instagram most closely resembles some of the giant telecom deals from before the bubble burst in 2001, particularly in the size of the deal and the tiny number of employees. Billions of dollars in those deals were written off when the market collapsed. And let us not wallow in AOL-Time Warner again.

No, the issue with these sorts of deals is how any investor can make a rational judgment about a) whether this deal makes strategic sense, or b) whether the price makes any sense at all. The two are related, of course. The view from Silicon Valley seems to be that Facebook had the money so why not spend it. Cutting-edge tech companies need to bet big and make “strategic deals,” that is, deals that can’t be be valued — the feeling is that Zuckerberg is a genius and if he doesn’t know what Facebook needs, then nobody does. Facebook isn’t even public so Zuckerberg can spend his money any way he wants and the reaction of users and the tech community seems to be so positive it can’t go wrong. Well, of course, it can go wrong. Crowds change their minds, and Instagram’s users in the Twittersphere don’t seem to want to be enveloped into Facebook world, though this is about as scientific as a finger in the breeze. Apps (and social media sites) come and go. Instagram has very few employees, all of whom are now loaded with dough. They may stay and develop the product — though no one seems to know how it’ll make money — or they may drift off to start new companies or go into politics or try venture capital. There seems to be few barriers to entry in the app world, and it’s hard to imagine that Instagram, as nifty as it is, is unassailable. Moreover, it’s unclear whether Instagram boasts the kind of network effects that makes PayPal, YouTube, Google, Microsoft, Apple and Facebook so formidable. Remarkably, few seem to be asking.

Again, this could turn out to be a fabulous deal. But this is the kind of deal that gives M&A a bad name. The notion that Zuckerberg can spend “his” money any way he wants is not only wrong — it’s not really his — but about to become a real problem when public investors buy shares. (Substitute, say, Bank of America for Facebook and see how that works.) A billion dollars remains a big number, no matter the market cap. Moreover, it’s pretty clear, as the Financial Times‘ Lex column pointed out Tuesday, that despite Zuckerberg’s statement that this is a one-off deal, what it really suggests — and that the tech crowd confirms in its comments — is that there could well be other Instagrams to be scooped up. Facebook is implicitly admitting that in a burgeoning and remarkably fluid app world, it can’t really go it alone: It needs to buy and buy and buy. Again, that’s not a shock (Google has been a busy buyer) — though Zuckerberg, prepping for public company status, should be more careful with statements about one-offs he may have to take back, and that will hurt him with investors once he goes public.

Will this deal hurt Facebook if it never works out? Not really. It’s just a write-off, which Facebook can shrug off. By then there will be new hot apps, racking up millions of grazing users. But what this deal tells us most clearly is just how risky the Facebook enterprise is. For Zuckerberg to make a pre-emptive bid that’s twice the venture valuation from two weeks ago — and one a month before a public offering — suggests two things: either he’s undisciplined with all that money (were there negotiations or due diligence? what’s the breakdown of cash and shares?) or that the powerful network effects that keep users coming back to Facebook may not be as strong as a relatively obscure two-year-old startup’s app.

Is this a sign of a bubble? I don’t believe that, unless you define bubble in a very narrow sense. Social media is clearly heating up, but for rational reasons: new devices, new services, new apps, an exploding audience. Instagram might look like an old dot-com — lots of users that may come or go, no viable revenue model — but Facebook does not: Like Google, it has found a way to make a lot of money. But you don’t have to have a full-blown bubble to lose your discipline as a buyer. You just need the sudden appearance of a lot of cash. Which is how M&A gets a bad name.

This isn't a homework but since I can't seem to find any answers for it, I would like to receive some insights from you experts! So, I heard that UK has official left the European Union on Jan 31st (aka Brexit). Are there any trade deals that have been signed? or any negotiations that has been reached? please provide me with some updates I can't seem to find any info on which trade deals were signed and etc.

thanks!

p.s provide me with a link would be great as well. would love to read through in details

a) Explain a foreign currency futures contract and outline the differences between futures and forwards. b) The Chicago Mercantile Exchange (CME) and the New York Board of Trade (NBOT) operate futures markets in currencies in the following pairs US$/pounds and US Dollar/Pound. The value standardize size of a sterling futures contract is 6,500 pounds. Describe how a UK company that expects to received US$800,000 in three months time can use a futures contract to hedge transaction exposure if the following apply i) Currency spot rate US$ 1.64/pounds - US$1.68pounds ii) Sterling futures price US$1.64/Pounds

On November 1, 2014, the Yankee Corporation, a U.S. corporation, purchased and received an extruding machine from Wales Corporation, a UK company. The purchase price was $10,000 (U.S. dollars) and Yankee agreed to pay in pounds on February 1, 2015. Both corporations are on a calendar year accounting period. Assume that the spot rates for the British pound on November 1, 2014, December 31, 2014, and February 1, 2015, are $1.60, $1.62, and $1.66, respectively.

Required:

Record the November 1, December 31, and February 1 transactions in the General Journals of Yankee Corporation and Wales Corporation. If no entry is required on a particular date, indicate "No entry" in the General Journal.

A block with a mass of 2.5kg lies on a surface that is inclined at an angle of, θ=22 , with the horizontal. The coefficient of friction between the block and the surface of the incline is, uk=0.20.

a) Apply Newton’s 2nd Law to determine the acceleration of the block as it slides down the surface.

b) Determine the magnitude of the velocity of the block at the base of the inclined surface if the block starts from rest and moves through a distance of 3.41m from its initial position to the base of the incline.

c) Apply the Work/Energy Theorem to determine the velocity of the block at the base of the inclined surface if the block starts from rest and moves through a distance of 3.41m from its initial position to the base of the incline

Consider the flow of a liquid metal past a flat plate (Pr << 1). We have shown that for a constant wall teemperature, T_o, the Nusselt number is given by Nu = 0.564*(Re^1/2)*(Pr^1/2). Show that if the surface is not a constant temperature, but is instead providing a constant heat flux, that the Nusselt number becomes Nu = 0.886*(Re^1/2)*(Pr^1/2). Start with the following expression for the temperature profile within a semi-infinite body with a constant heat flux boundary condition T - T_o = (q_s / k)[ ((4*alpha*t) / pi)^1/2 * exp(-x^2 / (4*alpha*t)) - x*erfc( x / (4*alpha*t)^1/2 ) ].

A plane wall has thickness of 5 cm, thermal conductivity of 2 W/mK and generates heat. The left face of the wall (x=0) has a surface temp. of 80C and has air at 20C flowing past it with a heat transfer coefficient of 50 W/m^2K. If the right face is insulated then the temperature distribution through the wall has a general format T(x)=A+B*x+C*x^2

(a) Draw a properly labeled diagram (including a representative temperature distribution), state all assumptions and calculate the volumetric energy generation in the wall.

(b) Apply appropriate boundary conditions to determine the coefficients A, B, and C for the temperature distribution through the wall.

(c) Where will the maximum temperature be located in the wall?

1. A company that makes language learning software wants to determine which of two approaches (Method A or Method B) to learning vocabulary would lead to the largest number of recalled words. The company wishes to evaluate the methods on 7 different languages (since languages differ in difficulty). Seven individuals, one per language, were recruited to learn words using Method A, and 7 individuals, one per language, were recruited to learn words using Method B.
   
   Suppose the company wishes to test whether there is a difference in the two methods at the 0.05 level. Which of the following value(s) would correctly mark the boundary of the rejection region? Select all that apply!

   		1.895
   		-2.447
   		2.447
   		-1.96
   		1.96
   		2.365

A company that makes language learning software wants to determine which of two approaches (Method A or Method B) to learning vocabulary would lead to the largest number of recalled words. The company wishes to evaluate the methods on 7 different languages (since languages differ in difficulty). Seven individuals, one per language, were recruited to learn words using Method A, and 7 individuals, one per language, were recruited to learn words using Method B.

Suppose the company wishes to test whether there is a difference in the two methods at the 0.05 level. Which of the following value(s) would correctly mark the boundary of the rejection region? Select all that apply!