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CASE : General Mills’ Acquisition of

Pillsbury from Diageo PLC

MGMG687 - Enterprise Risk Management

PRESENT TO

Aj. Ati Atikul

BY

Kasamol Navaklao G5449169

Treepol Piyaritthipong G5449175

Yupawon Vorapongsukonth G5449177

Radeerut Sakulpongpaisal G5449241

SEMESTER 3, ACADEMIC YEAR 2012

COLLEGE OF MANAGEMENT, MAHIDOL UNIVERSITY

1. What are General Mills’ motives for this deal? Please estimate the present value of the expected cost savings.

General Mills’ Motives

• New Market

General Mills is motivated to acquire Pillsbury because they want to grow and expand their business and also to remain a market leader and survive against the competitive situation. By combine both company together, General Mills will have more product line and can reach more customers in more markets. Because Pillsbury has a strong presence in frozen food industry, which is unlike General Mills’ products. This can make General Mills get benefit from new customer segments and increase distributor power. And also obtain knowledge and expertise in the frozen business.

• Growth

The acquisition gives General Mills the opportunity to increase the size of their business. By this, it makes General Mills becomes more powerful in the market and General Mills also can use their expert in product development to develop the product of Pillsbury to match with the changing consumer preferences and also create new product line to expand their business.

About the sales and profit, the acquisition between both companies will accelerate earnings more quickly than if General Mills remains smaller and continues to focus solely on their own products. And when the acquisition happens, General Mills will be able to combine the capital, resources and technology with the Pillsbury. It will make efficiency to the production which bring to the lower in production cost and get...