Explain the case study background , The statement of the problem , research questions and aims and objectives.
Merger & Acquisitions have become one of the popular strategies for companies to expand business and meet other business goals. The popularity of mergers & acquisitions seems to have increased in the past 3 decades with large international companies like Tesco and others resorting to this strategy to expand business. The current study is based on a company named “Namaste Solar” which was founded by an engineer named Jones and his two other partners in 2004 to provide products and services based on solar energy. The company operates on a highly participative leadership style with all decisions being taken together after reaching a consensus. A unique feature of the business model of “Namaste Solar” is that the employees are allowed to buy shares from day one of employment and thus the company is a fully employee owned business. The company has grown significantly since its inception with its revenues having grown by 2250% expect for the 1st year of operation. Currently, “Namaste Solar” is the largest company in the solar energy industry of Colorado. However, the company is recently stuck with a strategic dilemma related to the selling of the business to other private companies. The solar energy market is growing by leaps and bounds in Colorado and this requires “Namaste Solar” to grow in the same fashion however this requires additional investments to expand current operations. The company does not have the required funds for this purpose and inability to grow at par with the industry can threaten the existence of the company. Two private companies are interested in buying the firm but the members of “Namaste Solar” have identified three possible solution to the problem namely Path A – to sell whole business, Path B – to partly sell the business and Path C – to continue with current ownership and organizational structure. However, the members are not able to finalize a particular decision. The current study focuses on examining these options and identify the most appropriate solution for the company.
The current study is divided into five chapters. The first chapter presents a background of the case along with aims, objectives and questions to be answered by the study. The second chapter focuses on critical evaluation of the business case whereas the third chapter is concerned with the tools and concepts to be used to examine the current situation. On the other hand, the fourth chapter involves application of the tools and theories mentioned in chapter three to examine the current situation of “Namaste Solar” and the fifth chapter presents the chosen solution along with recommendations for the company.
The main problem for “Namaste Solar” is maintaining a proper balance between the funding needs and strategic requirements of the company. While funds are required for business expansion but the members of the company are not fully willing to give away with the initial organization structure, culture and values. Selling stakes means dilution of ownership whereas continuing with existing ownership structure & business practice leads to inability to utilize market opportunities.
Qualitative investigation has been followed in the current study along with deductive approach and exploratory design. Three main tools used to examine the current situation are SWOT analysis, Porter‟s five forces model and VRIN analysis. The application of these tools revealed that strong brand image, huge customer base, organizational culture, logo and rich experience of the company in the sector are the main strengths or source of competitive advantage. However, failure to grow in accordance with the industry can threaten the sustainability of “Namaste Solar”.
It is observed that Path B is most suitable for the company as it helps in bringing fresh capital along with retaining a good portion of ownership. It is further advisable for “Namaste Solar” to sell 50% of the stakes to two different firms instead of selling to one single firm and this is termed as Path D.
The current study does not involve any financial analysis and thus the study can be further broadened by including financial analysis and primary data analysis.