Rayon’s market

Britton to acquire American Fiber commercialise consists of Rayon, Nylon and Cotton. Rayons market share was more and more rapid until 1959 but started to fall by year 1960. Nylon was introduced in 1955 and was shoot up the market for Rayon. It has achieved a good increase in market share every year.1 . 3rd largest producer of rayon in the SSI . Increased earning difficulties 2. $ momma liquid assets 2. Rayon industry was declining 3. No short or long-term debt 3. instauration of brand-new vulcanized roughage products 4. Modern central manufacturing facility l. Problem institutional Should MR., Inc. Acquire American Rayon Inc. (AR) ? OperationalIs Marcs anxiety control system well fit to handle AR? II. Objectives 1. To find out viability of MRS. encyclopaedism of AR. 2. To find out how overmuch should MR. pay for the AIR encyclopedism. 3. To find the Net Present Value of AR. embodied Objective 1. Growth is the explicit objective of the acquisition program 2. And shoot efficiency Areas of Consideration 1. SOOT STRENGTHS AIR is the 3rd largest producer or Rayon Strengthen liquidity AIR had over $20 million in liquid assets that were not needed for operations No short or long term debt They had a modern manufacturing facility, their facilities can be retrofitted for ewe technology. MR. has a long history of successful acquisitions with its diversification campaign (therefore they have enough experience in handling risks and problems connected to acquisitions. James Clinton, president of AR, had expressed willingness to stay and offer his services even after the acquisition for two years. WEAKNESSES MR. has a weak R & D MR. maxed out recognize benefits From 1955, rayon began to falter AIR faced earning difficulties with a shrinking industry MR. man boardment lacked the technical know-how to contribute o ARIAS profitability OPPORTUNITIES upcoming innovation (polyester) in the fiber industry.THREATS The egression of Rayon has been falling which w as closely to become obsolete. Introduction of new raw materials in the beat cord business- Acquiring AIR world indicator entangle MR. in a dying business Competitors in the fiber industry 2. Macro economical Indicators Political Political climate in varied countries producing and buying automobiles regarding policies on import, export and manufacture of automobiles and automobile comp acenessnts. This will alike include policies on allowing setting up of manufacturing plants by foreign companies. constancy of governments. This may affect the afterlife conditions in a country. Taxation policies. scotch Recession Demand for motorcars, during the period, would issue to decline as a aftermath of higher take aims of unemployment, lower purchasing power and the payoffing postponement of new car purchases, decline in per capita automobile travel and volatile fuel prices. Reductions in per capita automobile travel directly impacted demand for tires and thereby tire cord in the replacement market. Debt Crisis . Credit restrictions as a result of austerity measures implemented by debt ridden governments, consumer indecisiveness, weakening consumer confidence as a result f periodic flaring up the regions financial problems, would result in slowing down auto sales Level of economic activity that affects need for commercial use of automobiles Exchange rate, interest rate, GAP, ostentation & other economic indicators Demographic The population figures and automobile buying capacity of people. The aging baby boomer population and their proximity to retirement age is increasing annually while the number of young drivers in the 16 to 29 year age bracket is increasing at the lazy pace. The discrepancy between the growing number of retirees and the educed number of young drivers is saltation to manifest itself by way of reduced growth in the fomite buying population. Socio-cultural Lifestyle and preferences of people that has an impact on their choice of typ es of automobiles. cordial norms that impact the decision to own and use automobiles versus other means of transport.Market indite and Outlook There is significant uncertainty since MR. is uncertain about the future of the rayon business. There are different perceptions about whether the potential of the AIR acquisition is big, but in new unfamiliar area such as rayon market the information is not enough. There are huge questions environ the potential of this business. Questions like how the market may evolve, considering the fact that the rayon industry had enjoyed one of the most spectacular successes in the history of tire manufacturing and at one point, the rayon industry started to decline.On another note, AIR is also expected to pick up and gain market share as smaller companies vertical and running(a) integration taking the fact that MR. already has strengths in the manufacturing of power pasture brake systems, industrial furnaces and etc. The acquisition may be able as sistance MR. to enter the new market of rayon production and also use rayon to get deeper into tire manufacturing. Competition Different synthetic fibers compete for shares of the total fiber market principally on the basis of relative prices and relative timbre characteristics.Diversification program created significant strains on the Companys organization structure and financial position. Since go along rapid diversification was considered imperative, Companys highly- centralized decision-making processes had shifted to a highly decentralized oversight structure, which transferred substantial decision- making power to division managers. In 1961, there were septet divisions. All marketing, purchasing, manufacturing, research and development, personnel matters, and accounting were handled at the division level.Each division has its own manager (usually a Vice-President) and had responsibility for the growth and profitability of his division. A division manager could get stock o ptions and earn an annual reward of up to 60% of his base salary depending on the earnings and growth of his division. Divisional sales and earnings goals. Divisional sales and earnings conjecture by each general manager and submitted each November to the head point for review by Mr.. Britton and the Corporate Staff. The corporate staff provided legal, administrative, and financial harbor to the divisions and handled external affairs, financing and acquisitions as well.The staff, including corporate officers, consisted of fewer than 60 people, about half of whom would be classified as secretarial and clerical. With this, Mr.. Britton has the capacity to custom adequate to exercise control over the decentralized organization through its power to hire and fire at the division manager level and important, through control of the elaborate capital budgeting yester. s product lines were power brake systems for trucks, buses, and automobiles industrial furnaces and heat-treating equip ment and automobile, truck, and bus frames.