Introduction to Vauxhall Company Motors

British vehicle manufacturer Vauxhall Motors is a division of General Motors. The corporation is headquartered in Luton, United Kingdom. Alexander Wilson founded the business in 1857, and it began producing vehicles formally in 1903. After being purchased by General Motor in 1925, it rose to become the second-largest automobile manufacturer in the UK for more than three decades. Nearly 80% of the company's output, which includes well-known automobile models including the Vauxhall Agila, Vauxhall Ampera, and Vauxhall Astra, is exported. Vauxhall as a company it had a mission and vision of making cars since 1903, and it has constantly sustained the ambition for over 100 years. Vauxhall being an automotive sand limited company it registered a total of 4700 employees by 2009. The company has two major manufacturing units in Luton and Ellesmere Port with the Luton plant producing commercial vehicles while the Ellesmere Port plant produces passenger cars. Vauxhall Motor Company went under acquisition by General Motors Company in 1925. Almost 80% of the company’s production is exported in the global market. However, the majority of Vauxhall branded cars sold in the United Kingdom are manufactured by Opel in Germany.In the 1970s the major competitors of Vauxhall Motors Company were Ford and British Leyland. Since the fall of British Leyland Vauxhall became the second largest company in the UK. All was going well until March 2017 when General Motor announced that they had had a deal with Group PSA in the acquisition of the Vauxhall and the Opel Marques.

Mission Statements

Some of the mission statements of the company are;

To build the business through the core values of honesty, integrity, and professionalism.

To do all the things to their level best and accurately and take responsibility for their deeds.

To create an outstanding relationship with the clients, colleagues, and suppliers.

Vision

The vision of the company is to grow a maximum profitable automotive business with long term customer loyalty and committed passionate staff.

Companies Philosophies

The philosophy of Vauxhall Motors is forward thinking. The philosophy is the main driving energy of the company, and it fully defines Vauxhall Motors as a company currently. The company maintained its focus on the future and the security of their clients. For decades now Vauxhall Motors have always been on toes trying to develop an environment-friendly automotive car. However, Vauxhall as a forward thinking company illustrates the philosophy with four qualities which include the passion, innovation, quality, and responsibility. The company makes sure that the product is of much benefit to the customer.

Product market characteristic

In 2010 Vauxhall became the number one fleet manufacturer and managers in the UK hence creating a brand for itself. The company goes through thick and thin to ensure that the product they manufacture is of quality and best to for use by the customer. Vauxhall Company has always been striving to provide the best support network in the industry with outstanding sales services and after sales services. With the ecoFLEX philosophy of the company, it mirrors a desire to address the environmental challenges that come with the manufacturing of cars, their designs, built and operated in the world. Therefore Vauxhall Motors put their focus on the sustainability, recyclability, bespoke fuel saving technology, and reduction of the carbon dioxide emission to the lowest level possible (Church 2014, 36).

The paper discusses and expounds on the effect of the predatory takeover of companies with the case study being Vauxhall Motors Company.















Predatory Takeover

When talking about predatory takeover one has to consider the consolidation of two companies which simply means merging and acquisition. In this case, the predator company has more financial power over the company it consolidates. Therefore to understand the term predatory takeover we have to understand the meaning of Predator Company and the term Takeover. Predator Company in mergers and acquisition is that company with financial prowess, and it can easily bear the risk that comes with the acquisition of another company. The company with the weak financial ability is the prey, and the larger companies can snatch them (Bessler and Schneck 2016, 325). Takeover in the business environment simply means the change of control of a company. In the case of a hostile takeover, there is a total overhaul of the management of the company as well as the board of directors of the predator company accruing all the benefits (Kinsella 2016, 6). However, in a friendly takeover, the management of the company in most cases is maintained, and the target company is the beneficiary in such a case. As seen from the two definitions then it follows that predatory takeover can also be called hostile takeover in some other times. Hence hostile acquisition is the takeover of a company by a predatory company when the target business is not in a position to sell its shares (Kinsella 2016, 8).

Effects of Predatory takeover on companies

Positive Effects

For the target corporation in a hostile takeover, the shareholders receive and immediate benefit. Despite the fact that most of the time when a hostile takeover occurs people expect only negative impact there are also some effects that are positive. Some of the positive effects of a predatory takeover are;

It eradicates managerial inefficiency

Despite the fact that the managerial inefficiency is supposed to be corrected by the internal control system of any organization takeovers help to change completely remove the managerial problems that a company is facing (Cen et al. 2015, 2821). The predatory takeover is efficient when the mechanism of controlling the organization by the shareholders fail to control the incompetence and dishonest managers. The control system cannot be perfectly controlled until all the entire managerial team is replaced (Cen et al. 2015, 2821 ).

Improves target performance

A hostile takeover in some circumstances will improve the performance of the managerial team. In most cases where a predator company acquires a target company, the managerial team is always overhauled but since the managers don’t want to lose their jobs and compensation. Hence hostile takeover is considered as a wake-up call for all inefficient managers to analyze firm strategies and correct where they are not doing right. On the other hand, the managers will be doing the best they can to avoid a hostile takeover by improving target performance and obtain and increase in the total share value of the company (Ashfaq et al., 2014).

Encourage the distribution of cash flow

The predatory takeover encourages the distribution of the free cash that the company keeps in excess that is required to invest in important projects that produce positive results. Hostile takeover help manages the free cash in the company by investing in projects that can be advantageous to the business and the stakeholders as a whole. The threat of a predatory takeover act as a changing mechanism to inefficient managers who will have to work even much harder to satisfy the stakeholders by investing the free flow cash in the projects that will drop some cash back to the shareholder's pockets. For the case of the target company, the managers tend to convince the shareholders not to sell their shares to the predator bidders by offering them a strategy that will ensure and increase profits (Ashfaq et al 2014, 13).

Leads to an improvement in reporting and information flow

The threat of a hostile takeover acts as a wake-up call to the non-performing managers to improve the company’s performance if they want to retain their jobs in the company. Besides the increase performance of the managers, the predatory takeover helps boost the relationship between the managers and the shareholders (Ashfaq et al 2014, 13). The managers while trying to help themselves from a sorry situation they will improve their communication with the shareholders so that they can convince them not to sell their shares to the bidding company. The best way to eradicating the threat of predatory takeover is to reduce the information asymmetry between the manager and the shareholders. The manager is expected to increase the information and reporting of the company’s progress to the shareholders so that the shareholders are kept in the loop and become aware of the actual value of their investment (Ashfaq et al 2014, 13).

Negative effects

The acquiring company incurs debts from buying the target company way above the market prices and premium cost. Furthermore, the shareholders of the predator company will face losses since the shares of the predator company will depreciate as a result. In most cases of a hostile takeover always fails and as a result has adverse effects on the economy of a nation. It is because the management could not be in a position of understanding the new technology required to run the new company (Talbot 2014, 187). The other negative effect of consolidation it always leads to loss of jobs or simply layoffs since the debts generated by the takeover slow the growth of the company. It discourages managers to focus on long-term missions and vision of the company and concentrate on short term targets only. Finally, the cost of predatory consolidation is the money and effort that companies put in so as to prevent a scenario of a hostile takeover which as a result slows growth limits innovation as well as creating fear in the employee for fear of losing their(Bessler and Schneck 2016, 325).

















Competitors of Vauxhall Motor Company



Jaguar-Land Rover Company (Ford Company)

Jaguar Land Rover company is the largest multinational automotive company in the United Kingdom with their headquarters in Whitley in Coventry. The Jaguar Land Rover Company is a competitor to the Vauxhall Motor Company since its main activities include the designing, developing, manufacturing, and sales of vehicles. The company was only venturing in the sales of the Jaguar, Land Rover, and Range Rover marquees. However, the company was bought in 2008 by Tata Motors, and it has been a subsidiary of the Indian based company since then. The company was bought from Ford. Ford sold the company at a price of 1.16 billion sterling pounds (Pathak 2016 15).

What the company did

After the 2008 financial meltdown the Ford Company was going bankrupt and could not maintain all the companies hence, it decided to sell the Jaguar Land Rover Company of the UK. The move to sell the two luxury brands in the UK was because the Jaguar and the Land Rover had become a drag in cash. Jaguar was draining more money from Ford after it has invested $ 2.5 billion in buying it. Besides the amount of money used to buy the Jaguar brand they also used a total of close to $ 10 billion while trying to revive the brand that was sinking. Hence the main purpose of taking the deal was to save the company from closing down. For TATA all was well since Jaguar Land Rover Company became their largest seller (Pathak 2016, 18).

Positive Effects

For such a case both the predator company and the target company benefited. The target company which was Jaguar Land Rover Company was saved from going bankrupt. The predator company benefited by;

Had a strategy of acquiring the iconic brands with a great heritage and global presence

Distribution of accrued funds

Increased company business diversity across the global market and segments of the products.

Negative Effects

The main negative effects that came with the deal would have been (Fich et al. 2016, 1),

Funding Risk

Currency risk

The Commercial Slowdown in the European and American Markets.

Unemployment risk to the workers



British Leyland Limited

The British Leyland Company was first formed in the 1890s with a different brand name of Lancashire Steam Motors Company. The company was created with the intention of manufacturing Steam powered transport vehicles. However, the company was named Leyland motors in 1907. Since 1907 till the fall of the company, it was a major competitor of Vauxhall Motors Company. Over the years Leyland Company was developed several manufacturing groups. The manufacturing groups included Leyland Vehicle Limited which has the truck, tractors and buses, Alvis Limited, Coventry Climax Limited, Self-Changing Gear Limited, and the BLCV and the Land Rover group that merged to form the Land Rover Leyland (Donnelly 2017, 56).

What the Company Did

The British Leyland changed into the Rovers Group after the Jaguar cars becoming independent after selling their shares publicly in 1984. In 1988 the manager of the Leyland bus group decided to sell the company to the bus-truck division of the Volvo. While in 1988 the remaining bit of the company was sold to the BMW Company by the British government.

Positive Effects

After the British Leyland Motor companies were sold in a bit, there were little benefits to the target companies with the predator companies benefiting alone. The predator companies benefitted by acquiring the brand name of the Leyland which was widely known in Britain after they produced widely used trucks during the war period.

Negative Effects

When the company underwent a predatory takeover, it lost its base in the UK, and most of the predator companies were international companies. The period after the company was bought most of its production plants were closed down (Dessaint 2017, 1). The adverse impacts were

Risk of an Employment

The takeover had a drastic effect on the British economy



Bentley Motors Limited

The Bentley Motors Limited is a British automotive manufacturing company that deals with luxury cars and SUVs. W.O. Bentley founded the corporation in 1919.The company is a subsidiary of the Volkswagen AG from 1998 after a majority of its shares were bought. However, before Volkswagen acquired the company it was purchased by Rolls Royce in 1931 by the time it was under receivership. However, the Rolls-Royce was sold to Volkswagen together with the Bentleys name and Logo. The Bentley has been considered as the competitor of Vauxhall Motors because they both manufacture a variety of sports cars (Church 2014, 36).

What the company did

The company joined and separated with the Rolls Royce’s in a series of mergers and acquisitions. The company went into receivership with the Rolls-Royce. However, after the UK government forcing the Rolls Royce under receivership then later nationalizing it, the Bentley was taken in the mix. It was the government that sold the right of the Bentley to Volkswagen AG.

Positive Effects

The predator company for this case the Volkswagen benefited in such a way that it acquired the Bentley brand that had made its name in the sports car category. More so the UK government benefited from the funds used to buy the company. The economy of the country was not affected since the companies production was maintained with little to no changes being made (Church 2014, 36).

Negative Effects

The acquisition of the Bentley Motors Limited by Volkswagen had some dire consequences which were,

Some of the workers lost their jobs

Funding Risks

Plummeting of stock prices











Best Companies in the Market



Audi AG

Audi AG is an automobile company that manufactures luxury vehicles. The company was acquired from Daimler-Benz by Volkswagen in 1960. Over the years the business has proven itself as one of the best-selling luxury automobile brands alongside Mercedes and BMW. The logo of the Audi brand has four rings that symbolize the merger of the four original companies (Prange 2016, 1).

Vision

Audi the premium brand is the vision of the company which emphasizes on the core Audi brand.

Mission Statements

We delight customers worldwide is set as the mission statement.The companies strategize in provision of the customer delight by taking four key actions as follows;

We define innovation

We live responsibly

We create experience

We shape Audi

Objectives of the company

There is four main objectives that drives the Audi AG towards being the best-selling luxurious company in the world.

Continuous growth

Superior financial growth

Global image leader

Attractive employer worldwide.

Competitors

The main competitors are BMW and Mercedes







Toyota Motor Corporation



The Toyota Motor Company is the world’s second leading manufacturer of automobiles. The company is the world’s largest manufacturer of automobiles regarding sales volume. It has approximately 316,000 employees around the world. The company focusses only on automobile business and financial business (Elnaga and Imran 2014, 14 ). It provides all range of vehicles from mini cars to huge trucks. In later 1989 Toyota company started its production in Europe by opening two large branches in the UK.

Toyota Philosophy

Toyota has four main slogans that it operates on.

Long-term thinking as the ground for management decision

Problem-solving process

Development of the people hence adding value to the organization

Continuously solving root problems drives organizational learning.

Product Development

The company marked its place in the global market by producing world class products. They employed a strategy of manufacturing better products at the appropriate time so as to outdo their competitors in the global market. They emphasized manufacturing innovative products and using technology. Toyota was the first to produce hybrid cars which focus on low carbon emission. The company uses the technology such as vehicle stability control and the emergency response technology (Elnaga and Imran 2014, 14 ).

Competitors

Toyotas main competitors are Ford, Volkswagen, and General Motors











Volkswagen AG



The company operates in the world’s automotive industry as a manufacturer and distributor. The Volkswagen groups of companies are Europe’s number one automobile manufacturer with a variety of products ranging from the Volkswagen passenger, Audi, Lamborghini, Skoda, SEAT, Bugatti and Bentley vehicles (Whittall et al. 2015, 71).

Objectives of the Company

The company aims to;

Increase the focus on business

Reduce production cost

Enhance profitability

Mission Statements

To provide a quality product

Create a safe environment

Eco-friendliness

To enhance productivities

Competitors

The main competitors are Ford, Toyota, Mercedes, and General Motors



















Recommendation for Vauxhall Motor Company



Look for a White Knight

When all goes south for the Vauxhall management and the hostile bidder is determinant enough to force their way through all the defense wall of the target company the only possible solution that is remaining is the white knight. It recommended that the Vauxhall managers look for a strategic partner who will merge with them so as to add value to them as well as increasing market capitalization. For this case, the mergers reduce the force of the predator company, and as a result, the shareholders of the target corporation will benefit from the consolidation for a short term for a case the terms of the merger are favorable (Haberly 2014, 294). However, they can end up benefiting for a longer period as long as the terms and conditions of the merger are good and strategically fit. Despite the fact that the White Knight is considered to be beneficial to the stakeholders this is not the case always for the merge price may be low or the synergies and the efficiencies through which the organizations consolidated do not materialize (Haberly 2014, 294).



Executing theVoting Rights Plan

Vauxhall being the target company it is recommended for the managers to implement the voting rights plan. The plan separates specific stakeholders from their full powers of voting at a predetermined point. For example, stakeholders who own more that 20 percent of the companies shares are sidelined and therefore lose the ability to vote for issues like the approval or refusal of a takeover bid (Heron 2015, 2 87). More so the presence of corporate predators may also enforce a super majority voting whereby it is a requirement that a total of 80 percent of shareholders approves the merger as opposed to a mere 51 percent majority. Such requirements make the predator company go through hell to acquire the target company. However, such a decision of adding the clause will come with results of the company's drop in the stock price since it is very difficult to convince the stakeholders that the right voting clause benefits them (Caiazza et al. 2017, 243).





Improve communication amongst the managers and the stakeholders

A predatory takeover happens majorly due to the opposition and misunderstanding of the managers and the shareholders. Therefore communication during the cause of a hostile takeover threat is so important than the normal times, and it is the backbone of both the International Relations and Public Relations. The opposition inbuilt in a predatory merger and acquisition generates a challenge as well as an opportunity. The managers of the target company have to rethink how and what they communicate with their stakeholders (Bates et al. 2017, 839). From the targets company point of view, the stakeholders are messaging needs to address the terms of the offer that are related to the company’s standalone plans and perspective. However from the predator company point of view the messaging need to enlist the support of the targets shareholders without sidelining its shareholders (Hopt 2014, 1).

For Vauxhall Company that is undergoing a predatory takeover threat. The managers of the company should maintain a fluid communication amongst them and the shareholders. The communication needs to remain flexible and genuine throughout the entire period. For the managers to be in a position to efficiently and adequately respond to an offer, they must understand the expectation of the shareholders regarding the company’s long term and short term shareholder value proposition. Therefore the managers of the Vauxhall Motors Company have to increase the fluidity of their communication to the stakeholders so that they will have a clear picture of the decision to make that is accepting or rejecting a proposal.

















Making an Acquisition

The managers should advise the stadholders that it is beneficial for the company to make an acquisition, relatively through a stock swap or the combination of the stock and the debt. As a result of the acquisition will dilute and reduce the predator's ownership percentage and thus making the takeover significantly expensive. However, if this move may be taken the stock prices will reduce upon the acquisition of the target company by a third party the move can benefit the shareholders in the longer term from the operational efficiencies and the increased revenues (Bates et al. 2017, 850).









Conclusion

For a predatory takeover most of the times the consequences are usually hostile to both the predator and the target companies. The target company is always put on the spot if they try to resist an unwanted yet tempting high bid from the predator company. The managers of Vauxhall Motors have to be doing something to face the hostile takeover threat that is facing them after the announcement by General Motors that it has agreed to sell both Opel and Vauxhall Motor Company. Nonetheless, in most of the time, a hostile takeover is successful the consequences are always dire to the target company since the employees are at greater risk of losing their jobs. More so the effects may ripple to the economy of the target country. The negative effect of a predatory takeover outweighs the positive one while considering the target company point of view. For the predatory company, the effect may go either way depending on how successful is the takeover, for instance, the acquisition of Jaguar LandRover Limited by TATA Motors was beneficial to them since they ended up making tremendous profits.

























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