Free Essay

Cooper Analysis

In: Business and Management

Submitted By manolorc
Words 628
Pages 3
Cooper Industry Case Analysis

Cooper Industry is an engines and compressors maker with a history more than 150 years. It had been a small company but with good reputation until 1960. In 1960, Cooper expanded its business by acquiring other manufacturing company. It had a famous process call “cooperization” which brought up with many highly efficient, profitable, and competitive businesses. In 1989, Cooper was considering more acquisitions. It first won the bidding with a $21-a-share tender offer and purchased the Champion. It also considered a $700 million bid for Cameron Iron Works. The strategic issue in this case would be whether or not Cooper should complete the purchasing even with a high financial risk and profound operational and organizational ramification.
Fist let’s use Porter’s Five Forces to analyze Cooper Industry.
 Bargaining power of new entrants Level: Medium
Cooper tried to fulfill their goals of growth and diversification through acquisitions, and they did success. The diversification allowed Cooper to do the business in many different industries. For example, Cooper began the diversification in 1967 when it acquired the Lufkin Rule Company- a hand tool business. After that, it acquired two more hand tool business companies in 1968 and 1970. Although there were competitors in all the industries that Cooper diversified into, the operation strategy makes Cooper have a stable market shares in different industries.
 Bargaining power of substitutes. Level: Medium Low
Cooper actually had a pretty wide range of product market, which is the result of their acquisition. There will be even less substitution if Cooper focus on their business of making engines and compressors to propel natural gas through pipelines. Later, with a wider products market, Cooper can definitely decrease the power of their substitutes.
 Bargaining power of supplier Level: Medium
The process of acquisition made Cooper a partly self-supply business. For example, Cooper bought Colorado Fuel& Iron, to become a specialty supplier to Lufkin. Lufkin would have only one supplier when CF&L stopped production. And Cooper bought their equipment and moved the operations to a newly acquired plant.
 Bargaining power of buyer Level: Low
Cooper has become a broadly diversified manufacturer of electrical and general industrial products, and energy related machinery and equipment in 1988. We can say that Cooper had a dominated place in 3 distinct businesses. Therefore, the buyers had low bargaining power since there is high product differentiation cost. It is also hard to force up the price since there is not many competitors who can challenge Cooper.
 Intensity of rivalry among competitors Level: Low
Cooper had diversified into businesses of electrical and electronic, commercial and industrial, compression, drilling and energy equipment. It had revenue of $4.3 million and over 46,000 employees. The domination of market makes the intensity of rivalry among competitors relatively low.
Recommendation: Cooper has enough experience in acquiring other business. Although Champion was suffering a loss in 1988, the fail was all due to the wrong strategy. Champion has a worldwide brand name and was market leader in spark plugs and wipers, it is important that 35% of their sales were overseas, while 85% of sales of Cooper were in North America. I’ll recommend that there will be more benefit if Cooper acquires the Champion.
Action: The most risk of acquiring Champion and Cameron Iron Works would be the financial issue. Champion would still have an operation margin in its Asian-Africa and European divisions. After acquisition, Cooper should first make sure that Champion’s oversea market would not be affected. Then a accounting system should be invented to adjust the book of Champion in North America. At the same time, start focus on manufacturing spark plugs and wipers, because in which Champion had good reputation and also it is the main revenue source.

Similar Documents

Premium Essay

Cooper Analysis

...Cooper Industries’ Corporate Strategy I. Situation of the company Cooper Industries was the manufacturing company have the three group of business. The three group business are Electrical & Electronic, commercial & industrial, and compression & drilling. All this group had created growth in term of revenue by doing acquisition. Initially, Cooper was the recognized leader in pipeline compression equipment. However, the company had developed production expertise and had built a reputation for customer service in the natural gas industry as well as extracted gas from underground wells. Electrical and Electronic. The E & E segment was Cooper’s largest in 1988, generating one-half of corporate sales and 57% of operating profits. Cooper had entered this segment with the 1981 purchase of Crouse-hinds. By 1988, E&E had four sub-segments, each representing quite diverse business, but all focused on the mature North American market that accounted for over 90 percent of segment sales. Commercial and industrial. In the commercial and industrial segmen Cooper participated in the non-powered handtool and window treatment business, and in the automotive aftermarket. In the Tool group, consolidation of acquisitions was completed and new manufacturing of acquisitions was completed and new manufacturing facilities constructed by 1988, and the company held the preeminent market position in most of its tool lines. Compression, drilling and energy equipment Compression and......

Words: 1247 - Pages: 5

Premium Essay

Cooper Industry Analysis

...Cooper Industries Corporate Strategy * Reputable maker of engines and compressors to propel natural gas. * More than 150 years of Business duration. * Cooper Industries acquired more than 60 manufacturing companies in 30 yrs. Q1. What is Cooper’s corporate strategy * Cooper Industries’ main corporate strategy is broad diversification through M&A. * Cooper Industries acquired firms in order to lessen its dependence on cyclical natural gas industry and to exhibit stable earnings. * Cooper Industries acquired firms that had stable earning, a broad customer base and proven manufacturing operations using well-known technologies. * Cooper Industries had a good corporate level strategy of diversification. * Copper Industries acquired both related and non-related businesses. * As a result, Cooper Industries could exhibit stable earnings. * Reasons for Cooper’s diversification * Threats of its original industry : * Low growth level * Unstable market(cyclic) * Technology Issues * Expensive labor and high costs. * Cooper’s strengths : * Skilled labor and high technology that could be used in other businesses * Financially abundant. * In order to refrain from possible threats and maximize its strengths, Cooper chose to diversify its business both in size and scope. * By diversification, Cooper could achieve, * Update of processes and......

Words: 854 - Pages: 4

Premium Essay

Cooper Industries Inc

...Cooper Industries Inc. Based on the given information in the case study regarding the acquisition of Nicholson File Company by Cooper Industries, there is no question that Cooper should try to gain control of Nicholson. This decision is based on an analysis of the bargaining positions of each group of Nicholson stockholders which have disparate goals and needs that need to be met. In addition, an appropriate payment method and specific dollar value based on a competitor's offer and Cooper financial data was decided. The remainder of this paper will provide the analysis and rationale for this determination. Should Cooper Industries Acquire Nicholson File Company? Cooper Industries has been expanding through diversification since 1996. Cooper's requirements to acquire a company has three major components. The target company must be: 1. In an industry in which Cooper could become a major player 2. In an industry that is fairly stable, with a broad market for the products and a product line of ‘small ticket' items; and 3. A leader in its market segment. When looking at the criteria that Cizik's company (Cooper Industries), set forth relative to acquisitions, the acquisition of Nicholson meets all three objectives plus has significant potential short and long-term potential. Cooper management feels that by eliminating redundancy and streamlining Nicholson's operations this potential can be realized. Currently, Nicholson's financial history boasts a 2% increase in......

Words: 270 - Pages: 2

Free Essay

Cooper Industries’ Corporate Strategy (a)

...Re: Cooper Industries’ Corporate Strategy (A) Diagnosis: Cooper Industries’ growth depends on its widely diversification. From 1960 to the following 30 years, the company purchased about 60 manufacturing companies that increased the size and scope of Cooper Industries. With its experience and strength in “Cooperization”, it has been able to digest the companies it purchased and welded the company into a highly efficient, profitable, competitive business. But they acquired too much debt due to it diversified its business too quickly. It leads whether or not acquires Champion and Cameron Iron Works became to the biggest problem when the case was written, which would raise the debt-to-capital ratio to 55% to 60%. If they leave the problem unaddressed, they might risk bankruptcy in the future. Analysis: Both of Champion and Cameron Iron Works were in related industries, automotive and petroleum equipment, which were profitable businesses. Cooper Industries was already doing those two businesses. For the opportunities identified in the case have to do with the purchase of Champion and Cameron Iron Works, both of them have a strategic fit with Cooper Industries’ long-term plans. For example, Champion has a poor management, old technology, and failures at diversification. But Cooper Industries is good at this field. Cameron Iron Works had a biggest Compression and Energy Business Segment until 1981. But it was the smallest segment of Cooper Industries. Moreover, Cameron Iron......

Words: 647 - Pages: 3

Premium Essay

Business

...Cooper Industries Inc. Based on the given information in the case study regarding the acquisition of Nicholson File Company by Cooper Industries, there is no question that Cooper should try to gain control of Nicholson. This decision is based on an analysis of the bargaining positions of each group of Nicholson stockholders which have disparate goals and needs that need to be met. In addition, an appropriate payment method and specific dollar value based on a competitor's offer and Cooper financial data was decided. The remainder of this paper will provide the analysis and rationale for this determination. Should Cooper Industries Acquire Nicholson File Company? Cooper Industries has been expanding through diversification since 1996. Cooper's requirements to acquire a company has three major components. The target company must be: 1. In an industry in which Cooper could become a major player 2. In an industry that is fairly stable, with a broad market for the products and a product line of ‘small ticket' items; and 3. A leader in its market segment. When looking at the criteria that Cizik's company (Cooper Industries), set forth relative to acquisitions, the acquisition of Nicholson meets all three objectives plus has significant potential short and long-term potential. Cooper management feels that by eliminating redundancy and streamlining Nicholson's operations this potential can be realized. Currently, Nicholson's financial history boasts a 2% increase in profit......

Words: 284 - Pages: 2

Free Essay

Happiness Express

...Budgie Crashes, Dudley is a Dud In the spring of 1995, shortly before the close of Happiness Express’s 1995 fiscal year, a Wall Street investment firm projected a “precipitous” drop in the company’s earnings during fiscal 1996. The firm predicted that declining interest in the Mighty Morphin Power Rangers television program would quickly translate into falling sales of licensed merchandise featuring those characters, Joseph Sutton responded to that grim prediction by referring to another earnings forecast for Happiness Express released at approximately the same time by Donaldson, Lufkin & Jenrette (DLJ), a major investment banking firm. This latter forecast a sizeable increase in revenues and profits for Happiness Express during fiscal 1996. To support this second forecast, Sutton revealed that his firm’s backlog of toy orders in the spring of 1995 was nearly three times larger than the company’s backlog 12 month earlier. While admitting that sales of Power Rangers merchandise would likely decline in fiscal 1996, Sutton insisted that the company’s new product would more than make up for those lost sales. Bolstering Sutton’s point of view regarding his company’s future were the record operating results that Happiness Express reported in the late spring for fiscal 1995 of $7.5million was nearly double the figure reported the previous year, while its 1995 revenues rose to $60million, a 50% increase over the previous 12 months. Approximately one-half of the latter......

Words: 5098 - Pages: 21

Premium Essay

Tire Manufacturer

...For the exclusive use of C. SULLIVAN Harvard Business School 9-391-095 Rev. April 18, 1995 Cooper Industries’ Corporate Strategy (A) The business of Cooper is value-added manufacturing. – Cooper Industries’ management philosophy Manufacturing may not be glamorous, but we know a lot about it. – Robert Cizik, Chairman, President and CEO Cooper Industries, a company more than 150 years old, spent most of its history as a small but reputable maker of engines and compressors to propel natural gas through pipelines. In the 1960s, the firm’s leaders decided to expand the company to lessen its dependence on the capital expenditures of the cyclical natural gas business. During the next 30 years, the company acquired more than 60 manufacturing companies that dramatically increased the size and scope of Cooper Industries (Exhibits 1 and 2). Through a process that both insiders and outsiders called “Cooperization,” the company welded a group of “independent, over-the-hill companies into a highly efficient, profitable, competitive business.”1 By 1988, the diversified industrial products company derived $4.3 billion in annual revenues from manufacturing 2 million items. Cooper’s products ranged from 10¢ fuses to $3 million turbine compressor sets marketed under an array of brand names, the most famous of which was Crescent wrenches. “We decided a long time ago,” said Robert Cizik, chairman, president, and CEO, “that if we could do an outstanding job at the unglamorous part by making......

Words: 12792 - Pages: 52

Premium Essay

Cooper Acquires Nicholson: a Financial Analysis

...would have on Cooper Inc. Cooper wants to acquire Nicholson while allowing them to retain control and management independence of the company. However for Cooper to be able to realize the benefits of such a deal they would need to increase the efficiency of the business through refining their product offering through cutting certain product lines and reducing employees who’s tasks have become redundant due to the merger as well as combining the two companies’ distribution networks. This will likely result in the retention of the Nicholson family’s shares since Cooper will probably not allow complete management independence. To take control of Nicholson, Cooper needs to obtain 265,000 more shares but if the Nicholson management does not accept Cooper’s terms then the 247,000 shares that are held by speculators and uncommitted shareholders will not be sufficient. This leaves them with the option of striking an agreement with H.K. Porter. Since Porter now has 177,000 shares that will be converted to VLN preferred shares if Nicholson accepts their offer, it would be beneficial for them to come to an agreement with Cooper since their preferred shares are a more attractive option. Porter’s position may leave room for negotiation, Cooper may be able to bring down their asking price of a tax free $50 per share. Besides the current issue of Cooper being able to acquire Nicholson, they may have to consider some other problems they may encounter post merger. Assuming the Cooper......

Words: 620 - Pages: 3

Premium Essay

Swott

...S Strategic Plan II: SWOTT Analysis Annette Bauer BUS/475 Heike Soeffker-Culicerto August 29, 2011 A SWOTT analysis a tool used to measure the Tiny-Tots Daycare Center’s strengths, weakness, opportunities, threats and trends. By doing a SWOTT analysis the daycare can become a better and more efficient center. Strengths for a daycare center is a positive quality, they can be the training of the staff, financial stability, and a modern facility. Weaknesses are aspects that need to be improved like low cliental, untrained staff, and out dated equipment or facility. Opportunities are things that help the make a future for the center like growth in the number of children attending or more grant money. Threats can lead in the drop of business or loss of efficiency, these threats could come from the loss of employment within the community and parents may not be able to afford daycare (Cooper). For the Tiny-Tots Daycare Center to conduct a SWOTT analysis, the company will need to answer some questions about their strengths; what advantages do they have, what are their resources, what do they do better than their competitors. Once they have company views their strengths, they will need to see both the external and internal viewpoints, and then make sure they evaluate the customer’s views, as well as the competitor’s views. Once this is done they then need to view their weaknesses, and ask questions like what can be done to improve and avoid these weaknesses. ...

Words: 1558 - Pages: 7

Free Essay

Adecco Group

...Adecco Group Adecco Group became a multinational corporation via a merger of Adia and Ecco in 1996; the company is one of several Fortune Global 500 companies, and the world's leading staffing agency that offer clients worldwide Human Resource solutions (Adecco Group, 2014). Adecco Group is headquartered in Zurich-Glattbrugg, Switzerland and operates in over 60 countries and regions; providing employment solutions by staffing individuals in organizations as: temporary or permanent employees (Adecco Group, 2013). The company also helps clients and employees with career changes and talent growth and advancement, as well and outsourcing and consulting services to some of the most well-known large corporations (Adecco, Group, 2013). According to the company’s 2013 financial report, their revenue declined 5% to 19,503 EUR and decreased by 2% in constant currency due to a decline in temporary staffing volume (Adecco, 2014, p. 47). The temporary staffing decline also led to gross profits to decrease by 3% of all 13 segments. Operation strategies are actions that the corporate set to remain competitive in the industry and build brand equity; therefore, Adecco Group’s strategy wants to work alongside associates and clients through every phase of the life cycle. In addition, the Adecco Group conduct audits to make sure each segment are operating efficiently to remain on track through all growth segments and markets while practicing s stringent cost management technique, the......

Words: 1443 - Pages: 6

Premium Essay

Res341 Week 5 Team Paper

...opportunity, or problem facing an organization. Our team chose to conduct business research in the food service industry at which a high rate of employee turnover occurs. Using the methods learned throughout this course our team has selected the instruments we found to be the most useful in collecting data to develop appropriate research questions, hypothesis, research design, and result reporting. This paper will discuss and describe the following elements: 0. Research problem and purpose 0. Significance, scope, magnitude, and feasibility of finding a solution to the issue, opportunity, or problem 0. Research question, hypothesis, and variables 0. Research design 0. Instrument you developed or selected 0. Sampling method 0. Overall data analysis approach 0. Result reporting 0. Ethical considerations Preparing to Conduct Business Research: Part 3 Employees enter and leave companies all the time. For some industries, the rate at which this occurs is higher. One particular industry is the food service industry. Within the food service industry, the employee turnover rate is considerately higher when compared to the arts and entertainment industry which carried a voluntary turnover rate of 28.7% as of August 2006 (Retention Management and Metrics, 2000-2011). In fact, it was reported that a high voluntary employee turnover rate lies in the food service industry at a staggering 47% turnover rate (Linda, 2011). To tackle this problem......

Words: 1682 - Pages: 7

Free Essay

Literature Review

...The Journal of School Nursing http://jsn.sagepub.com/ Literature Reviews as a Research Strategy Julia Muennich Cowell The Journal of School Nursing 2012 28: 326 DOI: 10.1177/1059840512458666 The online version of this article can be found at: http://jsn.sagepub.com/content/28/5/326 Published by: http://www.sagepublications.com On behalf of: National Association of School Nurses Additional services and information for The Journal of School Nursing can be found at: Email Alerts: http://jsn.sagepub.com/cgi/alerts Subscriptions: http://jsn.sagepub.com/subscriptions Reprints: http://www.sagepub.com/journalsReprints.nav Permissions: http://www.sagepub.com/journalsPermissions.nav >> Version of Record - Sep 25, 2012 What is This? Downloaded from jsn.sagepub.com by guest on August 26, 2013 Editorial The Journal of School Nursing 28(5) 326-327 ª The Author(s) 2012 Reprints and permission: sagepub.com/journalsPermissions.nav DOI: 10.1177/1059840512458666 http://jsn.sagepub.com Literature Reviews as a Research Strategy Literature reviews have long been important strategies to assess the state of the science. As early as 1993, Broome (1993) recommended literature reviews as a strategy to assist in the development of concepts. Many graduate students in nursing and other sciences learn about synthesizing literature throughout their academic programs using a variety of guides including Cooper’s (1998) Synthesizing Research: A Guide for Literature Reviews as a......

Words: 1365 - Pages: 6

Free Essay

Employee Reward

...Concerning as one of the most salient issues amongst organizations is performance management issue. Increasingly, researches have indicated that many problems have triggered whilst the systems are implemented. The noticeable performance reward issue is the recognition fairness of the performance reward systems. According to CIPD Employee Outlook Survey (2013), employees are experiencing the unfairness every day in the workplace and 20 per cent of this perception emerged from problems related pay which was ranked the first in the survey. The state of feeling of being treated unfairly is corresponding to lowered job performance, withdrawal behaviors, decreased co-operation with co-workers, and reduced work quality (Cropanzano and Greenberg 1997; Folger and Cropanzano 1998). A voluminous body of literature suggests that the perception of fairness, integrity and sensitivity will respond with high engagement, and a increase in productivity (CIPD, 2013). Since 1990s, the recognition of fairness has been brought to the attention of managers and deeply discussed then. Adding value to this concept is the study of Dr.Koonmee, which was conducted in two Thailand parliament secretariat offices in 2011. Notwithstanding its undeniable advantages, the research hardy avoided limitations and drawbacks. Thus, this review will briefly examine and discuss the article from diverse perspectives to gain the whole picture of fairness influencing on incentive satisfaction. Despite to what......

Words: 1385 - Pages: 6

Premium Essay

Test

...Banks and Bank Systems, Volume 5, Issue 1, 2010 Lalith Seelanatha (Australia) Market structure, efficiency and performance of banking industry in Sri Lanka Abstract During the period of 1977-2005, reforms in the financial-services sector, development in information and communication technologies (ICT) and globalization of the industry have drastically changed the market structure of banking industry in Sri Lanka. Financial reforms commenced in late 1970s were the main driving force of those changes. The reforms aimed to enhance both the productivity and efficiency and the degree of competition of banking market as a way of improving overall operational performance of the financial services sector in Sri Lanka. This paper reviewed how the banks’ efficiency and market structure affect the overall performance of the banking firms measured in terms of profitability and net interest margin using structure conduct performance literature. The study findings suggest that traditional structure conduct performance argument is not held in the banking industry in Sri Lanka and the banks performance does not depend on either market concentration or market power of individual firms but on the level of efficiency of the banking units. Keywords: efficiency, market structure, performance, banking. JEL Classification: G20, G21, N20. Introduction © During the last three decades, banking industry in Sri Lanka has experienced a transition period as a consequence of deregulation of......

Words: 8694 - Pages: 35

Premium Essay

Qnt561 Course Design

...trademarks or registered trademarks of their respective companies. Use of these marks is not intended to imply endorsement, sponsorship, or affiliation. Edited in accordance with University of Phoenix® editorial standards and practices. Course Description This course prepares graduate students to apply statistics and probability concepts to business decisions in organizations that focus on process improvement. Students learn criteria for developing effective research questions, including the creation of appropriate sampling populations and instruments. Other topics include descriptive statistics, probability concepts, confidence intervals, sampling designs, data collection, and data analysis—including parametric and nonparametric tests of hypothesis and regression analysis. Policies Students/learners will be held responsible for understanding and adhering to all policies contained within the following document: University policies: You must be logged into the student website to view this document. University policies are subject to change. Be sure to read the policies at the beginning of each class. Policies may be slightly different depending on the modality in which you attend class. If you have recently changed modalities, read...

Words: 2122 - Pages: 9