The Significance of Mergers and Acquisition in India

The Significance of Mergers and Acquisition in India The term mergers and acquisition refers to the facet of corporate finance, strategy and management dealing with buying and selling or amalgamating different companies that can help in financial aid or help in increasing the market share and growth without creating another business entity. Important terms used in the world of mergers acquisition, their brief explanation: Merger: is defined as the combination of two or more companies into a single company where one survives and the other loses its corporate existence. The survivor acquires the assets as well as liabilities of the merged company or companies. Amalgamation: Halsburys Laws of England describe amalgamation as a blending of two or more existing undertakings onto one undertaking, the shareholders of each blending company becoming substantially the share holders in the company which is to carry on the blended undertaking. Section 2 (a) of Income Tax Act defines: Amalgamation in relation to companies means the merger of two or more companies to form one company in such a manner that: All the properties of the amalgamating company or companies just before the amalgamated company by virtue of amalgamation become the properties of amalgamation. All the liabilities of the amalgamating company or companies just before the amalgamation become the liabilities of the amalgamation; become the liabilities of the amalgamated company by virtue of amalgamation. Shareholders holding not less than three-fourth in value of shares in the amalgamating company or companies becomes the shareholders of the amalgamated company by virtue of amalgamation. Consolidation: is the fusion of two existing companies into a new company in which both the existing companies extinguish. The small difference between consolidation and merger is that in merger one of the two or more merging companies retains its identity while in consolidation all the consolidating companies extinguish and an entirely new company is born. Acquisitions/Takeovers: This refers to purchase of majority stake (controlling interest) in the share capital of an existing company by another company. It may be noted that in the case of takeover although there is change in management, both the companies retain their separate legal identity. Leveraged Buyouts: It means any takeover which is routed through a high degree of borrowings. In simple words a takeover with the help of debt. Management Buyouts: It refers to the purchase of the corporation part or whole of shareholding of the controlling / dominant group of shareholders by the existing mangers of the company. Sell Off: General Term for divestiture of part or whole of the firm by any one or number of means: i.e. sale, spin off, split up etc. Spin Off: A transaction in which a company distributes all the shares it owns in a subsidiary to its own shareholders on pro-rata basis then creates a new company with the same proportional shareholding pattern as in the parent company. Split Off: A transaction in which some, but not all, shareholders of the parent company receive shares in a subsidiary, for relinquishing their parent company shares. Split Up: A transaction in which a company spins off, all of its subsidiaries to it shareholders and ceases to exist. Equity Carve Out: A transaction in which a parent company offers some common stock of one of its subsidiaries to the general public, so as to bring in a cash infusion to the parent company without losing the control. TYPES OF MERGERS AND ACQUISITIONS Mergers can be classified into three categories: On the basis of movement in the industries Horizontal Mergers These involves merger of two firms operating and competing in the same line of business activity. It is performed with a view to form a larger firm, which may have economies of scale in production by eliminating duplication of competitions, increase in market segments and exercise of better control over the market. It also helps firms in industries like pharmaceuticals, automobiles where huge amount is spent on RD to achieve a critical mass and reduce unit development costs. Example: India cements acquiring Raasi Cement. Vertical Mergers These take place between two or more firms engaged in different stages of production. The main reason for vertical merger is to ensure ready take off of the materials, gain control over scarce raw materials, gain control over product specifications, increase in profitability by eliminating the margins of the previous supplier/ distributor and in some cases to avoid sales tax. Example: Tea Estate Ltd merging with Brooke Bond Ltd. Conglomerate Mergers Conglomerate merger refers to the merger of two or more firms engaged in unrelated line of business activity. Example: GNFC acquiring Gujarat Scooters. Two important characteristics of conglomerate mergers are: A conglomerate firm controls a range of activities in various industries that require different skills in the specific managerial functions of research, applied engineering, production and marketing. The diversification is achieved mainly by external acquisitions and mergers and not by internal development. Consolidation Mergers This involves a merger of a subsidiary company with parent company. The reasons behind such mergers are to stabilize cash flows and to make funds available for the subsidiary. In consolidation mergers, economic gains are not readily apparent as merging firms are under the same management. Still, Flow of funds between parent and the subsidiary is obstructed by other consideration of laws such as taxation laws, Companies Act etc. Therefore, consolidation can make it easier for to infuse funds for revival of subsidiaries. One the basis of method or approach Leveraged buyouts Management buyouts Takeover by workers On the basis of response/relation Friendly Takeovers Hostile Takeovers Acquisition is buying of Target Company by another. It may be friendly or aggressive. In friendly acquisitions the companies cooperate and negotiate with each other whereas in aggressive the target company is not willing to be sold but it is with no prior knowledge. The word acquisition is used when a large company overtakes small but when the small overtakes large it is called reverse takeover or merger. MERGER MOTIVES The merger motives are as follows: Growth Advantage / Combination Benefits: The companies would always like to grow and best way to grow without much loss of time and resources is too inorganically by acquisition and mergers. Example: Merger of SCICI with ICICI ITC Classic with ICICI Acquisition of Raasi cement by India cement Dharani Cement and Digvijay cement by Grasim Modi cement by Gujarat Ambuja. Diversification: The companies could diversify into different product lines by acquiring companies with diverse products. The purpose is to diversify business risk by avoiding putting all eggs into one basket. Example: All Multi-product companies Synergy: When the companies combine their operations and realize results greater in value than mere additions of their assets, the synergy is said to have been resulted. Example: Merger of Ranbaxy and Crossland Laboratories. Market Dominance / Market Share/ Beat Competition: The predominant market share or market dominance has always driven the executives to look for acquiring competitive companies and create a huge market empire. Example: Acquisition of Tomco by Hindustan Lever Computer Associates International Acquired around twenty software companies. Consolidation in cement industry Nicholas Piramal Ltd. has merged into itself. Technological Considerations: It refers to enhancing production capacities to derive economies of scale. Example: Acquisition of Corus by Tata. Taxation Benefits / Revival Of Sick Units: Section 72 A provides for revival of sick units by allowing accumulated losses of the sick unit to be absorbed by the healthy units subject to compliances to the conditions of the provisions. Acquiring Platform: When a company would like to expand beyond geographical limits and acquire platform in the new place the best way would be to acquire the companies. Example: Acquisition of Parle by Coke. METHODOLOGY ANALYSIS Objective: To inspect and analyze the trends and progress of MA in Indian market and corporation. To analyze year-wise trends with the variance. Hypotheses: With the above objective in mind certain hypotheses are: No major difference in the amount and number of deals in MA between the industries and between the years No major changes between service and manufacturing sector in MA growth The table 1 shows the trends of MAs in India from the year 2000 to 2007. Food Beverages India is the second largest producer of food Beverages, first being China. The food market is expected to be USD 182 billion and it is two thirds of the total retail market in India. The carbonated drinks market is worth USD 1.5 billion whereas the market for juice is worth USD 0.25 billion. The market for fruit drinks is growing at 25%. The major reasons for MA concept commenced in this industry are deregulation, restructuring of parent companies, disinvestments and existing foreign players. Textile Industry The Indian textile industry was unorganized until liberalization of economy of India. After that there was an astounding growth in this industry and it is one of the largest in the world. 27% of foreign exchange is from textile exports. This industry is 3% of GDP and it involves 21% of the total employment in the country. The major reasons for growth of MA are the growth of handlooms, closure of mills etc. Chemicals, Drugs and Pharmaceuticals This sector accounts for 70% of the demands for drugs, formulations, tablets, chemicals etc. There are almost 250 large and 8000 small manufacturers and suppliers in Pharma sector. The growth rate of this industry is almost 14%. The reason for the growth of MA in this sector is due to the fundamental changes in this sector and the emergence of WTO Non-Metallic Mineral Products The major reasons for the growth of MA in this sector are mainly because the Indian economy has slowed down, SME are finding difficult to raise the funds and are not able to handle the pressure from global market. Information Technology and Telecom The factors for the growth of MA are up-gradation and expansion of the telecom industry, services and networks. Automobiles and Ancillaries Globalization is approaching and pushing foreign players merge and upgrade the technology and infrastructure, increase the product range and cut costs. Also there is huge competitive pressure due to the existing foreign players leading to growth in MA. The pie chart (Figure 2) gives the sector-wise division in 2007 Figure 2: Sector-wise division Analysis of MA in manufacturing and service sectors Table1 shows the Trends and progress in terms of number of deals and Table 2 in terms of value of deals. Table1: Industry-wise Trends Growth of MAs in India (Number of deals) Table2: Progress and Trends in MA in number of deals (as calculated from Table1) Table 3: Industry-wise Trends Growth of MAs in India (in Rs. Cr.) Table 4: Progress and Trends in MA in value of deals (as calculated form Table 2) Number of Deals Value of deals: The progress and trends of MA considered in number and value of deals in manufacturing and services sectors have been calculated by using t-test and ANOVA analysis. On the basis of Table 2 and Table 4 the number of deals in service sector is lower in the first 4 years but reverses in the last 3 years. So there is no major association between these two sectors Table5: Two-way ANOVA- Sector-wise Number of Deals (as calculated from Table 1) Table6: Two-way ANOVA-Sector-wise Value of Deals (as calculated from Table 3) ANALYSIS OF THE SURVEY DATA RESEARCH AND FINDINGS From the calculations done above, it is observed that the number of deals has decreased from 1300 to 1007 i.e. almost 18%. There can be various reasons for this decrease, some are as follows: The slowdown of the economy With no prior knowledge management makes a choice of MA leading to decrease in profits Economic crisis in the period of 2004-2007 Dropping market capitalizations and uncertainty in the economy From the above analysis it is concluded that: Total amount of deals increased by 613% In manufacturing sector the value of deals increased by 273% whereas it increased by 1217% in service sector Total number of deals decreased by 18.5% i.e. from 1322 to 1075 In manufacturing sector the number of deals decreased by 844 to 440 i.e. 47.2% decrease whereas in service sector deals increased from 480 to 636 i.e. 33% increase. THEORIES OF MERGER The phenomenon of merger and acquisitions has been explained by different theories as under: Efficiency Theories Differential Efficiency: If the management of firm A is more efficient than the management of firm B and if after firm A acquires firm B, the efficiency of firm B is brought up to the level of efficiency of firm A, efficiency is increased by merger. Features: There would be social gain as well as private gain. This may also be called managerial synergy hypothesis. Limitations: If carried to its logical extreme, it would result in only one firm in the economy, the firm with greatest managerial efficiency. Inefficient / underperforming firms could improve performance by employing additional managerial input through direct employment / contracting. Inefficient Management: Inefficient Management refers to non performance up to its potential level. It may be managed by another group more efficiently. Features: Inefficient Management represents management which is inept in absolute sense. Differential management theory is more likely to be basis for horizontal merger; inefficient management theory could be basis for mergers between firms of unrelated business. Limitations: Difficult to differentiate differential management theory from inefficient theory. The theory suggests replacement of inefficient management. However empirical evidence does not support this. Operating Synergy: Operating synergy or operating economies may be achieved in horizontal, vertical and even conglomerate mergers. Features: Theory is based on the assumption that economies of scale do exist in this industry and prior to merger, firms are operating at the levels of activity that fall short of achieving the potential for economies of scale. Economies of scale arise because of indivisibilities such as people, equipment overhead which provide increasing returns if spread over a large number of units of output. Pure Diversification: Diversification of the firm can provide the managers and employees with job security and opportunity for promotion and other things being equal, results in lower costs. Even for owner manager diversification is valuable as risk premium for undiversified firm is higher. Diversification has value for many reasons: Demand for diversification by managers, other employees Preservation of organizational and reputation capital Financial and tax advantages Diversification helps preserving reputational capital of the firm, which will be lost if firm is liquidated. Strategic Realignment to Changing Environment: Strategic planning is concerned with firms environment and constituencies, not just operating decisions. The speed of adjustment through merger would be quicker than internal development. Features: Strategic planning approach to mergers implies either the possibilities of economies of scale or tapping an underused capacity in the firms present managerial capabilities. By external diversification the firm acquires management skills for augmentation of its present capabilities. A competitive market for acquisitions implies that the net present value from merger and acquisition investment is likely to be small. Nonetheless if synergy can be used as a base for still additional investments with positive net present values, the strategy may succeed. Agency problems Agency problem arises when a manager owns a fraction of ownership shares of the firm. This partial ownership may cause managers to work less vigorously than other wise and / or consume more perquisites, (luxurious offices, company cars, membership of clubs) because majority owners bear most of the cost. Agency costs include: Cost of structuring a set of contracts Cost of monitoring and controlling the behavior of agents by principals. Cost of bonding to guarantee that agents will make optimal decisions or principles will be compensated for consequences of sub-optimal decisions. Residual loss: i.e. welfare loss experienced, by the principals arising from the divergence between agents decisions and decisions to maximize principals warfare. This residual loss can arise because the cost of full enforcement of contracts exceeds the benefits. Takeover as solution to Agency Problems: Agency problems can be controlled by organizational or market mechanism: A number of compensation arrangements and market for managers may mitigate agency problems. Stock market gives rise to external monitoring device, because stock prices summaries the implications of decisions made by managers. Low stock prices exert pressure on managers to change their behavior and to stay in line with interest of shareholders. When these mechanisms are not sufficient, market for takeover provides an external control device of last resort. A takeover through a tender offer or proxy fight enables outside managers to gain control of decision process of Target Company, while circumventing the existing managers and Board of Directors. Free Cash flow hypothesis Pay out of free cash flow can play an important role in dealing with conflict between managers and shareholders. Payout of free cash flow reduces the amount under control of managers and reduces their power. Further they are subject to monitoring in capital market when they seek to finance additional investment with new capital. A free cash flow must be paid out to shareholders if firm is to be efficient and to maximize share price. Further they are subject to monitoring in capital market when they seek to finance additional investment with new capital. Managers arrange cash flows also by issuing debts / leveraging. In leveraged buyouts, increased debt increases risk of bankruptcy cost in addition and agency costs. Optimum debt / Equity Ratio will be where the marginal cost of debt equals marginal benefit of debt. Market Power Mergers increase a firms market share. It is argued that larger volume of operations through Mergers and Acquisitions result in economies of scale. But it is not clear whether this price required by the selling firm will really make acquisition route more economical method of expanding a firms capacity either horizontally or vertically. An objection often raised against permitting a firm to increase its market share by merger is that it will result into undue concentration in the industry. Value increase by Redistribution Value increases under merger on account of redistribution among the stake holders of the firm. Shifts are from the Bond holders to stock holders and from labor to stock holders and / or consumers. DE-MERGER AND REVERSE MERGER DE-MERGER De-merger essentially means bonafide separation of the key business assets and reorganizing the business in such a manner that though there is separation in favor of another company, atleast 50% of the equity stake in two companies continues to be common. Section 2 (19AA) was introduced by Finance Act of 1999 defining De-Merger Examples: Sterlite Industries and Sterlite Optical Sterlite which was a diversified company with presence both in non-ferrous metal as well as Telecom cables decided to de-merge both the business into separate companies. The spin off was done in the ratio of 1:1. Raymonds Ltd: Raymonds sold of Cement and Steel business to become one again, a purely fabric and garment company. The whole exercise fetched Raymonds Rs. 1140 crores. This enabled it to reduce high cost debts as well as buyback its own shares. Thus financially as well as in terms of shareholder value it was a correct step. REVERSE MERGER Reverse merger takes place when a healthy company merges into a financially weak company. Under the Companies Act there is no difference between regular merger and reverse merger. It is like any other amalgamation. On Amalgamation merger automatically makes the transferee company entitled to the benefits of carry forward and set off of loss and unabsorbed depreciation of the transferor company. There is no need to comply with Section 72 of Income Tax Act. On amalgamation being effective, the weak companys name may be changed into that of a healthy company. Example: Case Study- Kirloskar Oil Engines merging into Prashant Khosla Pneumatics Ltd In April, 1994, Kirloskar Oil Engines Ltd. (KOEL) took over the management control of Prashant Khosla Pneumatics Ltd. (PKPL) a Delhi Based Company having its works at Nasik. PKPL became a sick unit as on 31st March, 1994 and went into BIFR in June 1994. ICICI was appointed as Operating Agency who invited bids for PKPL for revival. KOEL made a bid although PKPL was already under its control. KOELs bid was accepted and confirmed by BIFR. Main objective in the takeover was to make use of PKPLs engine plant for KOELs large engine activity. PKPL take over added to KOELs assets, two plants located at MIDC, Nasik on MIDC leased land of 80,000 sq. mtrs. A scheme for revival of PKPL through reverse merger of KOEL with PKPL was submitted to BIFR and was sanctioned in February 1996. Accordingly, KOEL merged in PKPL, and name of PKPL stood changed KOEL on 1st March, 1996 which was the effective date of amalgamation. Again of merged company for 1994-95 was held in April 1996 and consolidated accounts for the year ended 31st March, 1995 were adopted. Delay of 7 months for holding AGM was condoned by BIFR. This merger did not affect in any way KOEL shareholders. PKPL capital of Rs. 218 lakhs was reduced by 95% to 11 lakhs and KOEL shares were exchanged for PKPL shares in the merged company in the ratio of 1 for 20. PKPL shareholders were paid 5% dividend for 1994-95 and full dividend for 1995-96. 56% of PKPLs capital held by its holding company was transferred at agreed price of Rs. 75 lakhs to KOEL associate company which subsequently got shares in the merged company. The scheme provided for certain matters without going through the formalities under companys Act, under powers of BIFR such as Change of name of Transferee Company from PKPL to KOEL. Memorandum of association (MOA), articles of association (AOA) of Transferor Company becomes MOA and AOA of Transferee Company. Auditors of Transferee Company to automatically cease to hold office and auditors of the transferor company to become auditors of the transferee company. MD and ED of Transferor Company to continue as such in Transferee Company without reappointment and without break. Authorized capital of Transferee Company to stand increased from Rs. 5 crores to Rs. 27 crores. Transferee Company to allot to shareholders of Transferor Company, shares in Transferee Company. Share certificates of Transferor Company not to be called back and replaced by new certificates. ICICI to be issued 4,75,000 equity shares in transferee company without complying with Section 81 (1A) and SEBI guidelines on preferential issue. Stamp duty on transfer of property and share certificates was saved. Premium payable to MIDC saved only loans for fee paid. PKPL revival resulted into both the plants being operative- Direct employment to more than 300 people working. POST MERGER SCENARIO Key steps to successful Post Acquisition Management (Figure 3) Figure 3: Steps for Successful Acquisition Success constitutes two important factors: Meeting the objectives Enhanced shareholder value Short lived mergers: Some Examples Merger of ICICI and Anagram: When employees of Anagram Finance heard that ailing firm was to be merged with ICICI there was a sigh of relief. But two months later, reality was bitter. Out of 450 staff only 140 were repaired and all others were given pink slips with 3 months severance pay. Takeover of Merind by Wockhardt: There was exodus of top management team of Merind. CIBA and Sandoz merged to form Novartis: 115 out of 120 managers of new corporate office were Sandoz people with Sandoz Indias erstwhile MD John Simon ailing the shareholders. POST MERGER INTEGRATION SEVEN RULES BY MAX HABECK- FRITZ MICHAEL TRAM Vision Guide post merger Integration with a clear and realistic vision derived from through business due diligence. Research Findings: 78% of mergers are mistakenly driven by fit, and not vision. Around 58% of mergers fail. Examples: M A Cases That Have Failed On Account Of Lack of Vision or Unrealistic Vision AT T and NCR: In the late 1980s American Telephone and Telegraph still had assets such as Bell Labs to go with long distance telephone services it kept after the 1984 anti-trust break up. The company had a grand vision of a technological synergy between its expertise in telecommunications and NCRs expertise in computer technology. After years of intense searching, hampered by management changes as well as cultural frictions, no synergies were found. The presumed fit between telecommunication equipment and computer hardware failed to turn up. AT T spun off the remains of NCR around five years later at a loss of around $ 3.5 billion, nearly half of what it initially paid. Sony Pictures: Sony acquired Columbia Pictures in 1989 for $ 5 billion. However, Columbia had difficulties in generating the successful software to begin with. Rapidly rising salaries of stars and lack of success at box office culminated in Sony making operating loss of around $ 500 million. The company wrote off $ 2.7 billion. The losses were attributed to abandonment of large number of projects and settlement of outstanding lawsuits. However, instead of divesting the unit, Sony made management changes and imposed stricter controls. Columbia is now a part of Sony Pictures Entertainment, which represented just fewer than 10% of Sony Groups Worldwide Sales of around $ 50 billion. Examples of Successful cases of M A driven by Vision: Acquisition of Salomon Inc. by Citigroup Ford Motor Acquisition of AB Volvo. Leadership- Its Critical Establish It Quickly Research Findings: Leaderships urgency is often neglected. Some 39% of all companies faced a leadership vacuum because they failed to make the establishment of leadership a priority. A merger without strong leadership in place from its early days will drift quickly and drift is deadly. Growth- Merge to Grow, Focus On added Value not on Efficiency Synergies Research Findings: 76% of the companies surveyed focused too heavily on efficiency synergies. 30% of the companies virtually ignored attractive growth opportunities such as cross selling possibilities or knowledge sharing in research and development. Most Successful Growth through Mergers: Cisco Systems: This fortune 500 company has grown since its founding in 1984, thanks to a combination of organic growth and successful integration of 25 acquisitions. Cisco has almost quadrupled its revenue since 1995 to $ 8.5 billion and its net income tripled to $ 1.3 billion. It holds a market share of around 80% routers and switches which form the internet infra structure. Making mergers is and will continue to be absolutely essential for Cisco to maintain its rapid growth and enhance its competitive advantages. CONCLUSION The practice of Mergers and Acquisitions and restructuring of business entities has achieved a lot of importance and significance in todays corporate world. Due to the cut-throat competition in the global market pushed Indian companies to opt for this strategic option in order to sustain in the marketplace. There are various factors for making MA deals constructive in India such as Government policies are dynamic, stability in the economy, ready-to-experiment approach of the firms etc. Some additional and recent facts about MA: The value of MA is increasing every year in India; it almost increased seven fold to USD 4.2 billion in August 2010 from USD 629 billion in 2009 The number of deals (outbound) increased to USD 3.35 billion in 2010 from USD 60 million The number of domestic deals increased from 20 to 27 but the value of deals decreased from USD 521 million to USD 364 million in2010. From the study it is observed that companies get involved in MAs to increase the shareholders earnings by increasing the revenue or decreasing the cost. It also increases the market share provided if management is careful about the MA and has a prior knowledge of it. Synergy should be achieved with MA but at times it does not happens so the companies need to work to control the synergy and allow new company to go ahead and look for new business growth possibilities.

International Joint Ventures Essay

The objective of this paper is to highlight some of the important issues that must be considered prior to forming an international joint venture. Why is this topic important? The following quote summarizes the main reason: â€Å"Cross-border M&As, JVs and alliances seem to share at least two characteristics with marriage trends of the post World War II â€Å"Baby Boomers† generation: They have grown explosively during the 1980s and through the 1990s but – less fortunately – they fail about half the time.†[1] With this in mind, it is very likely that sooner or later you will be involved in an international joint venture, either in the process of forming one, dissolving one or working for one. The more you know about international joint ventures, the better prepared you will be to understand and contribute to the solution for the challenges they present. Most companies begin their expansion to overseas markets by exporting their products or services. Exporting products has minimal risk involved, especially if the proper steps are followed. However, in some instances exporting is difficult or expensive and companies use other methods to penetrate international markets. Forming an international joint venture with a foreign firm in the target market is, in some cases, the only avenue to accomplish the goal. An international joint venture is usually a progression in the investment level that companies are willing to commit prior to fully investing in a foreign subsidiary. What is the main difference between opening a subsidiary and forming a joint venture? According to Andrew Inkpen, a joint venture occurs when â€Å"two or more legally distinct firms (the parents) pool a portion of their resources within a jointly owned legal organization†[2] â€Å"The distribution of equity among the parent companies can take different forms, ranging from 50/50 IJVs between two companies, to reduced minority or dominant majority stakes.†[3] In contrast, only one company owns a subsidiary. Even though companies perceive IJV as less risky than opening their own subsidiaries, forming inadequate joint ventures can be risky and expensive. If managers are not careful in their analysis and are not aware of the potential pitfalls of international joint ventures then they can face some serious trouble. So far we have learned that culture plays a major role in business culture. Hence, culture will ultimately have a major impact in the international joint venture. Piero Morosini, one of the leading researchers in international joint ventures, explains the role culture plays in international joint ventures as follows: â€Å"Empirical evidence suggests that technical issues are less likely to lead to conflicting situations compared to relationship problems during the implementation of international JVs and alliances. Throughout this phase, too much emphasis is usually placed on setting strategic objectives at the cost of ignoring personal interaction aspects involving people from different national cultures. This has been cited as the most critical factor leading to unresolved conflicts and outright failure of an international JV or alliance.†[4] Companies some times enter into joint ventures with objectives other than to gain rapid access into the market. Some companies want to learn from other companies or like to combine resources in order to make a stronger company. â€Å"The need to combine strategic resource contributions and foster functional co-operation and co-ordination between the partners to create mutual advantages is at the heart of both IJVs and global alliances.†[5] As you read this paper, you will learn that most of the failures in joint ventures occurs due to the misunderstanding in the goals and the definition of the goals. Finnie Williams states that â€Å"half of all partnerships don’t work. Those that are successful share three characteristics with successful marriages: †¢ The actual and perceived potential benefits must be large for both parties. †¢ The partners must share a common set of values †¢ The key people must be committed to success.†[6] It seems that the most important aspect when speaking of international joint ventures, is that partners must share a common set of values. This is very unlikely to happen. The main reasons cultures are different is because they have different sets of values. For instance, some companies define success in terms of return on investment, others use market share, yet others define it in terms of customer satisfaction. These differences are critical and must be discussed early in the planning stage in order to lay a solid foundation for the partnership. It is important to keep in mind that even companies from the same cultural and business background have different plans to achieve their goals. Therefore, whenever we mix companies with different cultural backgrounds, the complexity level increases. People from different cultures perceive business in different ways. The rest of this paper provides examples of international joint ventures in different countries and examines some of the general observations related to such ventures and countries. China â€Å"Foreign investment in 1995 was $US38 billion (China Statistical Press 1996). International Joint ventures (IJVs) between overseas companies and domestic state-owned enterprises (SOEs) have been the dominant mode of entry. However, many JV investments have been less than successful.†[7] China â€Å"is now the world’s most active joint venture market.† [8] These facts are not surprising as â€Å"China is home to 25 percent of the world’s population and many western firms view the country as a prime target market.†[9] However, as we will discuss, not everyone venturing in China has been successful. For instance, a group of French investors dissolved their joint venture in China after 12 years of investment. The agreement was primarily between Peugeot and Guangzhou Automotive Manufacturing (GAM). It took four years of negotiations between French and Chinese investors to form the joint venture Guangzhou Peugeot Automobile Corporation (GPAC) in 1985 . Following are some of the major problems that Peugeot mentioned as key elements to the failure of their venture in China: †¢ The labor force from the Chinese partner had inadequate skills, which resulted in more time and money spent in training. †¢ Lack of suppliers in the Guangzhou area that could provide quality parts. As a consequence many of the parts had to be imported which raised the cost of the vehicles as compared to the competition. †¢ Guangzhou officials would not allow the plant to purchase parts from suppliers from other regions in China. Competitors who were located in other Chinese regions had access to quality Chinese parts and were able to build vehicles at lower prices. There is another side to this story, analysts believe that: †¢ Peugeot chose the Guangzhou area because the central government had little influence over the local government and there would be more management freedom. However, this backfired on Peugeot as the distance from Beijing acted as a barrier to access suppliers from other regions. †¢ Peugeot did not act fast enough to form a joint venture with a supplier in the Guangzhou region. Their competitors had formed such partnerships with their suppliers. †¢ Peugeot repatriated most of its profits and made few changes to their vehicles. Their competitors instead, reinvested most of the profits in the venture and to improve the vehicles. [10] I think there are several lessons to be learned from this example. One is that it takes a long time to agree on the terms of the agreement. Second is that even though both partners had agreed on the goals, unexpected deficiencies (labor and parts) put the company at a disadvantage with its competitors. It is amazing that after four years of negotiations, nobody checked if the skill sets were compatible and if the local suppliers could provide quality parts. Third is that even when companies believe that they are making the correct strategic move they could be doing the opposite due to lack of knowledge of the local culture. In this case, Peugeot was under the impression that distance from Beijing would be positive and in fact it turned out negative. Finally, companies that want to use joint ventures as means to have a quick entry into the market can get hurt. In this case, Peugeot was not committed to re-investing capital in the joint venture, which at the end made them completely uncompetitive in the market. You might be wondering who was the competitor to Peugeot that was being so successful in China. That competitor was also a joint venture. This time it was between a German company, Volkswagen AG, and a Chinese partner in the Shanghai area. As mentioned before, Shanghai Volkswagen was quick to form partnerships with suppliers to increase the content of Chinese parts in their vehicles and reduce the number of imported parts. Another important aspect is the fact that Shanghai Volkswagen was reinvesting their profits in order to improve their vehicles. Such improvements plus their commitment to the Chinese economy, allowed Shanghai Volkswagen to earn a better reputation among customers.[11] Another major corporation that has been successful in forming joint ventures in China is United Parcel Service. â€Å"UPS has been aggressively expanding its operations there. On Jan. 21 1999, the company announced an agreement with Chinese airline Sinotrans to expand UPS-branded operations to 18 additional cities in China, bringing the total to 21. The two carriers signed a memorandum of understanding that includes new investments to develop dedicated operations and more joint training and management efforts. In 1994, UPS opened representative offices in Shanghai, Guangzhou and Beijing, and by 1996 established a joint venture with Sinotrans in Beijing. Efforts to establish joint ventures in Shanghai and Guangzhou were temporarily put on hold with a change in government leadership.†[12] These examples provide us with some useful information regarding joint ventures in China. However, there are some other facts that you must know: †¢ Laws governing international joint ventures in China are different than the laws for Chinese firms. †¢ Laws may also be different depending on whether the Chinese partner is a state business, village or township enterprise. †¢ China’s legal system consists of guidelines for businesses and individual judges have enough leeway to determine what is right and what is wrong. †¢ Provincial regions can prohibit the sale of goods not produced on its own region. (this was the case with Peugeot suppliers). †¢ The need for government support is greater when the output of the joint venture is sold within China †¢ The local partner is critical when the output must be sold to the government instead of the general public. [13] A survey of 125 randomly chosen Sino-Western joint ventures, each with a minimum of 50 employees, and each in business for over one year, were surveyed in Shanghai. They surveyed mangers from both parent companies in order to compare results and the results were as follows: †¢ The goal emphasis of the two groups was substantially different. †¢ Chinese managers focused on things that they had not yet mastered such as technology, management skills, and capital understanding. †¢ Western managers focused on their own things to be mastered such as understanding the local market, government policy and the political system. [14] Japan The situation in Japan is mixed. While some researchers point that there are some major problems in forming international joint ventures, large multinationals have formed very successful joint ventures and the announcements of more and more joint ventures being formed continues. On one hand is the view that international joint ventures between Japanese and North American firms in the automotive industry have encountered many problems. Most of the problems are related to cultural differences and management styles. â€Å"Although it is overly simplistic to describe Japanese management as long-term oriented and American management as short-term oriented, the Japanese partner firms in this study appeared to focus on customer satisfaction and product quality rather than profit based performance. Japanese firms seemed less constrained by issues of share price and impatient board of directors than their American counterparts.†[15] On the other hand is the trend of new joint ventures being formed or existing ones being expanded, â€Å"Goodyear Tire & Rubber Co. and Sumitomo Rubber Industries announced the formation of four joint venture operating companies. The units will be based in North America, Europe, and Japan. Two U.S.-based service joint ventures will also be formed, one for global purchasing and one for sharing tire technology.†[16] This agreement between Goodyear and Sumitomo reflects some experience in forming joint ventures as they have clearly defined the goals of the different joint ventures. This joint venture seems to be headed in the right direction, it will be interesting to follow up in a few years to see if they actually become successful. â€Å"Dainippon Ink and Chemicals (DIC) and Eastman Kodak say they will combine portions of their Japanese graphic arts businesses in April to make a Japanese unit for their existing JV, Kodak Polychrome Graphics (Norwalk, CT). The combination will increase the JVs sales from $1.5 billion last year to $2 billion in 1999, Kodak says.†[17] Kodak seems to be having success in their joint ventures with Japanese companies as they are expanding their current joint venture. Dupont and Teijin announced that they will form a 50-50 joint venture to manufacture polyester films. The joint venture is expected to generate sales of $1.4 billion and represent 25% of the market. â€Å"Both companies say the venture will allow for the free flow of technology and will combine DuPont’s strengths in the U.S., Europe, and China with Teijin’s strengths in Japan and Southeast Asia.† [18] Once again, it seems that companies that invest time and effort analyzing and understanding the challenges of joint ventures get on the right track from the start. Companies that just want to do business as usual (the case in the automotive industry) will have a hard time making the joint venture successful. SPAIN Spain has seen less activity in terms of joint ventures than Japan and China. It seems that Spain is not perceived as â€Å"risky† country and most companies might be willing to spring into fully owned subsidiaries in Spain. Also, the barrier to enter the market might not be as high as in the case of the Japanese market. However, in some industries, such as the financial services industry, there is a need for joint ventures to penetrate the market. Spanish people look for names of familiar companies to invest their money. According to a London fund manager interested in the Spanish market, â€Å"The easiest way to break into the market is through joint ventures with local banks but there are not many suitable partners. We have looked around a few banks but we haven’t been able to come up with a deal we like the look of.†[19] There is one company that has formed a joint venture with a Fibanc in Barcelona, Lazard Unit Trust Managers. Although, the majority of the investment firms have decided to just open their own branches in Spain. Fidelity’s managing director for central Europe believes that â€Å"Spain has a big population, around 40 million so in terms of sheer size it is very attractive. It’s one of the markets we have to be in. Fidelity opened its office in Madrid this year and has put a sales team in place. We are aiming at creating our own distribution channel rather than any other form of strategic alliance or joint venture†[20] It will be interesting to observe which of the two firms becomes more successful given the different approaches to penetrate the Spanish market. Another recent joint venture in Spain is Spanair. Formed between Scandinavian Airlines (49%) and Viajes Marsan (51%). Due to the recent deregulation of the European airline industry, the two companies were able to establish the airline as a joint venture. Spanair is flying direct from Madrid to Washington D.C. and it is increasing the number of intra-Europe flights. Spanair is now trying to form alliances with United Airlines to gain market recognition in the United States. Spanair has a different approach to marketing, they consider themselves an â€Å"airline with humor†, in fact, they gave away 266 round trip tickets to the first 266 people to arrive at the airport wearing some type of costume resembling some aspect of the Spanish culture.[21] Although, it seems that this airline has had a great start, it will be interesting to find out how they do in the future, as the Spanish culture seems to be playing a mayor role in the way the airline is run. I think that if Scandinavian Airlines is fully aware of the differences in management style between them and their Spanish partners, this joint venture should successful. Russia Prior to 1987, Russia had major restrictions in the formation of joint ventures. Only Eastern Block countries were allowed to form joint ventures with Russian partners. However, after 1987 the opportunity for joint ventures with Russian companies opened up and the result was a flood of joint ventures along with problems, risks, frustrations, opportunities and rewards.[22] The following quote summarizes the joint venture situation in Russia: â€Å"Although more than 10,000 international joint ventures have been registered in Russia since 1987, only about one-fifth of those have actually begun operations. Historically, many Russian-foreign joint ventures fail in the first year of operation, with an average survival rate of about 2.5 years.† [23] Richard Reece has identified some myths about Russians, which he believes are key elements in the failure track of international joint ventures in Russia. Following is a summary of these myths and his observations regarding the myths and suggestions to consider when forming a joint venture in Russia. 1. Russian workers are alcoholics and have an inferior work ethic. Alcoholic consumption might be higher, there is no certainty in this remark, however, Russian workers are used to longer vacations in the summer time and this can create the impression that Russians are lazy. His suggestion is to learn more about the Russian habits and styles prior to committing to a joint venture and have unrealistic expectations. 2. Russians are ignorant, incompetent managers. It is important to remember that Russians are learning about the market economy. For many years they have not been exposed to open markets, so they are less familiar with issues such as pricing, receivables, cost analysis, financing, cash flow, and marketing. It is important to remember that this is one of the major reasons why Russians are looking for partnerships with western companies. Russians are eager to learn more about the western style economics. The best way to find out the knowledge level is trough interviews with potential partners. 3. Russian managers lack business savvy. This myth has some truth in it, however, the fact that the Russian economy is unstable, has given managers the ability to react quickly to changes and adapt to the conditions of the new environment. In fact it is important to understand that not all western style solutions will work in Russia and Russian manager are more familiar with the details on how to get things done in Russia. Richard Reece makes particular emphasis in communication as a key ingredient to a successful joint venture in Russia. If potential partners do not learn about each other, how can they expect the venture to be successful. General Guidelines to Select a Partner. In general regardless of the countries involved, William Myers offers the following guidelines to select an adequate business partner: †¢ Is your prospective partner a known entity? †¢ Have you worked with the group before? †¢ Do the organization’s culture and values match yours? †¢ Does your prospective partner understand how associations work? †¢ Will the organization be flexible in crafting workable deals? †¢ Can your prospective partner clearly define success in the joint venture? †¢ Does your prospective partner have a reputation for honesty, and will the organization define working agreements in writing? [24] Answers to these questions will give you a general idea on whether to proceed with the venture, do more in depth analysis or simply not go through with the process. Conclusion This paper presented examples of successful and unsuccessful joint ventures. It also highlighted important information regarding key aspects of joint ventures in different countries. Joint ventures are still popular and international companies are creating more every day. Therefore, the knowledge from this paper should assist you to better understand the challenges associated with most joint ventures. A topic that was consistent throughout the literature on joint ventures is the importance of cultural differences, patience and the comparison of joint ventures to marriage. Therefore, if you have been married for a while, you might be better prepared for a joint venture than you think. Another interesting observation is that joint ventures seem to be preferred when there are market barriers, such as the case with Japan, or when the perceived risk level is relatively high, such as Russia and China. The fact that there was scarce information on joint ventures between companies of developed nations indicates that joint ventures are not the main avenue of expansion for most firms. This does not imply that they do not happen or that are not recommended, it simply states that they are far less popular. Companies are more willing to establish their own subsidiaries or branches since the risk level is lower. If you are involved in a joint venture, use the guidelines presented in this paper. The authors who recommend them have been studying international joint ventures for several years and have learned a lot from them. ———————– [1] Morosini, Piero.1998. Managing Cultural Differences, Pergamon Great Britain. [2] Inkpen, Andrew. 1995. The management of international joint ventures, Routledge London and New York. [3] Morosini, Piero.1998. Managing Cultural Differences, Pergamon Great Britain. [4] Morosini, Piero.1998. Managing Cultural Differences, Pergamon Great Britain. [5] Morosini, Piero.1998. Managing Cultural Differences, Pergamon Great Britain [6] Finnie, William C. 1998. Strategic partnering: Three case studies. Strategy and leadership, 26 (4): 18-22. [7] O Connor, Neal; & Chalos, Peter. 1999. The challenge for successful joint venture management in China: Lessons from a failed joint venture Multinational Business Review, 7 (1): 50-61. [8] Si, Steven & Bruton, Gary. 1999. Knowledge transfer in international joint ventures in transitional economies: The China experience. Academy of Management Executive, 13 (1): 83-90. [9] Si, Steven & Bruton, Gary. 1999. Knowledge transfer in international joint ventures in transitional economies: The China experience. Academy of Management Executive, 13 (1): 83-90. [10] Harwit, Eric. 1997. Guangzhou Peugeot: Portrait of a commercial divorce. China Business Review, 24(6): 10-11. [11] Harwit, Eric. 1997. Guangzhou Peugeot: Portrait of a commercial divorce. China Business Review, 24(6): 10-11 [12] Traffic World 1999 UPS’s big stake in China talks. Feb 8: 37. [13] Si, Steven & Bruton, Gary. 1999. Knowledge transfer in international joint ventures in transitional economies: The China experience. Academy of Management Executive, 13 (1): 83-90. [14] Si, Steven & Bruton, Gary. 1999. Knowledge transfer in international joint ventures in transitional economies: The China experience. Academy of Management Executive, 13 (1): 83-90. [15] Inkpen, Andrew. 1995. The management of international joint ventures, Routledge London and New York. [16] Fleet owner. 1999. Goodyear, Sumitomo deal. March: 16. [17] Moore, Samuel K. 1999. Kodak and DIC develop another JV. Chemical Week, 161 (8): 22. [18] Westerlvelt, Robert. 1999. Dupont and Teijin take a joint role in films. Chemical Week, 161 (6): 19. [19] Marshall, Julian. 1998 / 1999. Retail Pioneers will gain in Spain. 118: 56. [20] Marshall, Julian. 1998 / 1999. Retail Pioneers will gain in Spain. 118: 56. [21] Guttman, Robert J. 1998. Spanair: The sky’s the limit. Europe, 380:16-17. [22] Reece, Richard. 1998. Successful joint ventures in Russia. World Trade, 11 (8): 42-44. [23] Reece, Richard. 1998. Successful joint ventures in Russia. World Trade, 11 (8): 42-44. [24] Myers, William. 1998. Picking your partners wisely. Association Management, 50 (10): 31.

Less Talk, More Work Essay

Have you ever thought that there is a greater need to work constantly on a daily basis than to catch up on your social life with family and friends? Work addiction is a growing problem today. Most workaholics seem to put work, a main priority, before anything else such as time spent with others. The obsession with work is due to many reasons. For some people, work is needed to earn money to pay for necessary expenses such as food and bills. However, too much of a workload affects a person mentally, physically, or even both. Stress is one of the many reactions when it comes to constant hours or days spent at work. In â€Å"The Company Man,† written by Ellen Goodman, the main character Phil shows how chaotic he is with himself and with his work that eventually leads to his tragic farewell. The lifestyle of working excessively is common. The idea of becoming a workaholic is to strive for a certain value or feeling for oneself. Goodman’s story of The Company Man illustrates a vivid example of a common workaholic. If a workaholic is spotted, the image is depicted as â€Å"anxious, guilt-ridden, insecure, or self-righteous about †¦work†¦ a slave to a set schedule, merciless in his demands upon himself for peak performance †¦compulsively overcommitted† (Marlowitz 7). This workaholic image illustrates Phil. In Phil’s world, everything he does is directed towards work. As an addict living with a wife and three children, he works nearly every day as well as many nights (Goodman 61). He works for an important company, serving as a vice president (Goodman 60-61). Having a high-level position makes him feel important because he â€Å"worked like the Important People† (Goodman 61). Based on his high position, Goodman hints at Phil’ s pride, a powerful factor influencing his motivation and duty to work. While Phil is driven mainly by pride there are many other reasons why he works too hard. These reasons include his identity, self-respect, self-esteem, self-doubts, pressure from family expectations, perfectionism, a coping mechanism for his negative emotions, and his obsessive-compulsive behavior. Some of the key components of workaholism include intensity, energy, competition, and motivation (Machlowitz 26). Workaholism also includes three other main components such as enjoyment, drive, and work involvement (McMillan). When it comes to workaholic men like Phil, they view themselves as the family caretaker and feel completely responsible for taking care of all the family needs (Killinger 139). This viewpoint brings pressure on workaholic men because they feel that they are expected to ensure that there is both financial protection and emotional well-being in the family (Killinger 139). They must be independent especially with earning money. Money attracts power, freedom, and independence (Schaef 120). Chasing after the goal of money-making is a way for workaholics to ga in achievement, which sets off a powerful drive (Schaef 120). Not only do pressures from the family increase this drive, but the work addict himself plays a factor as well. A workaholic is able to enjoy and love a job if he is fairly good at it. His self-esteem increases with the thought of being good at something. Therefore, he would feel even better and take even greater pride in what he knows and what he is capable of doing. This pride takes over and motivates him to excel and become a perfectionist. However, there comes a moment when perfection gets out of hand and he develops an obsession. A psychological dependence grows out of the addictive behavior from workaholism (McMillan). Work becomes central and all other aspects of life are forgotten (Schaef 119). As compulsive workers, they become obsessed with work and cannot stop (Shimazu). Their drive is ongoing with the thought of taking charge and taking control over everything and everyone (Shimazu). Fears, doubts, and insecurities start to develop inside, which pushes their mindset to work to the full extent. Aside from these feelings, workaholics hold ambitions, enabling them to be superior and competitive at all times, which can bring an overload of stress (Machlowitz 43). Working hard appears to be the only solution to overcome and avoid negative emotions such as anxiety and to gain respect and approval from others (Machlowitz 43). Other reasons for Phil’s obsession with work include his Type A personality and fears of laziness, failure, and loss of control, and. Phil is motivated to work long and hard because he cannot bear the thought of failing. Failure portrays the end of the world to workaholics like Phil; therefore, they must succeed (Machlowitz 41). Another fear is laziness. Ironically, workaholics hold a strange belief that they are naturally lazy (Machlowitz 42). As a result, they drive themselves even harder to avoid falling behind in work. Some, but not all, workaholics develop a Type A personality. This personality consists of negative traits such as impatience, aggressiveness, and competitive impulses (Machlowitz 44). A Type A also includes the need to rush, to work rapidly, and to set aside feelings such as fatigue during working hours (Machlowitz 44). Workaholics hold an illusion over the loss of control (Machlowitz 45). Because of their obsession, they are made to believe they are given all the respect and hold all the power if everything is done only their way and no one else’s (Killinger 8). Work has the ability to consume selfish and demanding feelings in an addict (Killinger 9). Being a workaholic can significantly affect both psychological and physiological health. According to Barbara Killinger, workaholics are at a loss because they suffer through many mixed emotions. Workaholics experience confusion and pressure from their families, doctors, or colleagues which causes them to reduce the amount of hours they work (133). Severe fatigue and exhaustion also occur (133). When they decide to slack off and the work starts piling up, they are at a loss of control, becoming stressed, overwhelmed, and panicky, and experience claustrophobic moments (134). Some, but not all, may feel empty and at a loss for sense of direction (134). They may also become overly sensitive, restless, and easily annoyed (134). They then go into frenzy, taking all things personally (134). Workaholics have a problem with the need to regain control in order to feel satisfied after (134). They know they cannot accept failure and so, the goal is to succeed fully, otherwise, they turn irate and feel worthless (134). However, the more adrenalin they build up into their system, the more constant fatigue they will most likely experience after (134). Barbara Killinger also mentions fatigue as a leading cause of a number of conditions in behavior (134). A pattern of eating and sleeping changes, sexual desires increase or decrease, inability to concentrate, and lack of motivation in work or play. Other signs include isolation from family and friends, memory loss, mental, physical and emotional exhaustion, unreasonable frustration or mistrust, and lack of care and need to distance oneself from a problem (134). In addition to these signs of depression are the harmful responses from anxiety and workaholism. Such responses can include inability to keep calm, nervousness, dizziness, abnormal blood pressure, heart problems, difficulty breathing, and other physiological symptoms (135). As for the psychological responses, these include an increase in stress and defense responses. Once they experience extreme anxiety they may cope by resorting to fantasy and exaggeration (135). Excessive worry and sense of sudden danger occur as well (135). Once workaholics become paranoid, they also experience high levels of doubt. They feel anxious and worry that bad things are about to occur (135). Going back to Phil, he most likely could have experienced one or more of these kinds of signs or symptoms. As the passage states, â€Å"Phil was overweight and nervous and worked too hard. If he wasn’t at the office, he was worried about it. Phil was a Type A, a heart-attack natural.† (Goodman 62). Therefore, he did have three symptoms: nervousness, worry, and heart problems. These symptoms did some serious harm to him. It is no surprise that Phil passed away because of a coronary thrombosis (Goodman 60). Workaholism also affects those around the workaholic. Very often, workaholics do not consider how their behavior affects others, particularly family members. Consider Phil from The Company Man as an example. Work interference puts the role of parenting in jeopardy. Work serves as the main priority. Because Phil works so much, this interferes with his ability to be a good parent (Killinger 159). There are three types of fathers: authoritarian father, indulgent father, and negligent father (Killinger 147). All three types affect children in negative ways (Killinger 147). Phil is the negligent father type. He is oblivious to the needs of his family and engages solely in work (Killinger 147). A lack of communication exists between Phil and his twenty-four-year-old daughter. They have nothing to say to one another (Goodman 61). A lack of interaction also occurs between Phil and his twenty-year-old son who graduated from high school and works various jobs to support himself for food (Goodman 61). Phil is impressed by his son’s good actions of earning money and the son is Phil’s favorite. However, Phil’s absence and his unavailability is such a disappointment, especially for his son. Phil’s son tries so hard to reach out and grab his attention and approval (Killinger 161-62). Although Phil shows little affection by staying up many nights in excessive worry for his son, it is still not enough to say that there is interaction or love between the two because there is none. Sons of missing fathers think as if they don’t belong in society and feel like outsiders (Killinger 162). As a result, these negative thoughts and feelings cause them to turn to drugs and crime or drop out of school (Killinger 162). From the money Phil’s son earns, he uses it to buy â€Å"grass† or drugs (Goodman 61). His action portrays how badly affected he is for the lack of acceptance, personal warmth, and value he desperately needs from his father (Killinger 162). The negative affection is the same for Phil’s forty-eight-year-old wife Helen (Goodman 61). Phil’s constant absences emotionally harm her the most. As a spouse, it is hard to maintain an intimate, loving relationship if the significant other happens to be a work addict (McMillan). Maintaining such a need leads to a bad outcome. Since there is no emotional attachment, care, and intimacy presented, the relationship is put at risk due to work interference (McMillan). In addition, the family is left in dissatisfaction and distress. Phil chooses to give up his social life, an essential value, instead of his work obsession, what he believes to be most important than anything else (McMillan). Having to continue putting up with Phil’s behavior, Helen is left with no choice but to give up trying to fix the problem of keeping everyone united together when the real problem is Phil and his lack of presence and his role as the father. Emotional damage is not just in family members but in coworkers as well. Coworkers have to deal with the complaints and demands from workaholics (Machlowitz 52). In addition, they are given all the blame and criticism, especially if tasks are not done perfectly (Machlowitz 54). Some workaholics tend to do more than what is expected of them, making everyone else’s hard work seem very little as if they have not done enough (Shimazu). Recognized as aggressive individuals, workaholics put a great amount of pressure and verbal harassment on coworkers (Machlowitz 44). Because of this negative abuse, coworkers may feel easily annoyed or put down too much, which can affect their work performance (Shimazu 156). According to Marilyn Machlowitz, there are actually four types of work addicts (32). Knowing for a fact that there is more than one type is unusual for one may assume all workaholics are the same based on the one activity they have in common: work obsession. However, this assumption is not true. The four types of work addicts are the dedicated workaholic, the integrated workaholic, the diffuse workaholic, and the intense workaholic (33). Phil is a dedicated workaholic because this type of workaholic has no outside activities or hobbies (33). If anything, their relationship with their job serves as the only activity they will ever have because it is their only prime focus. Consider the line of the white rabbit in Alice in Wonderland, â€Å"I’m late, I’m late, for a very important date. No time to say hello, goodbye, I’m late, I’m late, I’m late!† (Killinger 132). Every second is precious because time is a major necessity that cannot afford to go to waste (Machlowitz 31). Impatience is presented but a strong dedication is shown as well. Workaholism works the same way. Like the white rabbit, Phil shows a strong commitment to work and to act on it fully. Studies have shown how badly workaholics put themselves in with themselves and their lives. Studies also show the negative health effects on workaholics more than non-workaholics such as sleeping problems, depression, and dissatisfaction with the balance between work and life, and constant worry over lack of quality time with family and friends (Keown). For example, 56% admit being unable to make time for leisure and making plans to change all that (Keown). Another example declared that one-third prefers to be more isolated (Keown). These studies show how much of a huge impact work has on their identity (Keown). Although they accept the consequences they must bear and the sacrifices they must cope with, workaholism does not eliminate the outcome of having poor detrimental health. Everyone has their own excuses, reasons, and values to workaholism. Their compulsive attitude and behavior gives the impression that nothing gets in the way of work, the â€Å"only† priority in life. However, workaholism puts one’s health, whether mental or physical, at high risk. Emotional and physical harm is targeted not just towards the workaholic but towards his or her family members and coworkers too. The Company Man depicts Phil’s workaholism displaying a serious effect on his wife and children. His work obsession also illustrates the loss of his social life with his family and his coworkers.

Differences Between Centipedes and Millipedes

Centipedes and millipedes  seem to get lumped together in a miscellaneous group, simply, the critters that are not  insects or arachnids. Most people have difficulties telling the two apart. Both centipedes and millipedes belong to the subgroup of multilegged creatures called myriapods. Centipedes Within the myriapods, the centipedes belong to their own class, called chilopods. There are 8,000 species.  The class name originates from the Greek cheilos, meaning lip, and poda, meaning foot. The word centipede comes from the  Latin  prefix  centi-, meaning hundred, and  pedis, meaning foot. Despite the name, centipedes can have a varying number of legs, ranging from 30 to 354. Centipedes always have an odd number of pairs of legs, which means no species has only 100 legs as the name suggests.   Millipedes Millipedes belong to a separate class of diplopods. There are about 12,000 species of millipedes.  The class name is also from the Greek, diplopoda which means double foot.  Although the word millipede derives from the  Latin  for thousand feet, no known species has 1,000 feet, the record holds at 750 legs.   Differences Between Centipedes and Millipedes Besides the number of legs, there are a number of characteristics that set centipedes and millipedes apart.   Characteristic Centipede Millipede Antennae Long Short Number of legs One pair per body segment Two pairs per body segment, except for the first three segments, which have one pair each Appearance of legs Visibly extend from sides of body; trail backward behind body Do not visibly extend from body; rear leg pairs in line with body Movement Fast runners Slow walkers Bite Can bite Do not bite Feeding habits Mostly predatory Mostly scavengers Defensive mechanism Use their fast moves to escape predators, injects venom to paralyze prey and can squeeze prey with back legs. Curls body into tight spirals to protect their soft undersides, head, and legs. They can burrow easily. Many species discharge a smelly and disgusting-tasting liquid that drives off many predators. Ways That Centipedes and Millipedes Are Alike Although they vary in a lot of ways, there are some similarities between centipedes and millipedes like belonging to the largest phylum in the animal kingdom, Arthropoda. Body Similarities Besides both having antennae and many legs, they also breathe through little holes or spiracles on the sides of their bodies. They both have poor vision. They both grow by shedding their external skeletons, and when they are young, grow new segments to their bodies and new legs each time they molt. Habitat Preferences Both centipedes and millipedes are found throughout the world but are most abundant in the tropics. They require a moist environment and are most active at night. Meet the Species The giant Sonoran centipede,  Scolopendra heros, which is native to Texas in the U.S., can reach 6 inches in length and has sizeable jaws that pack quite a punch. The venom can cause enough pain and swelling to land you in the hospital and can be very dangerous to small children or  individuals that are sensitive to insect toxins. The giant African millipede,  Archispirostreptus  gigas, is one of the largest millipedes, growing up to 15 inches in length. It has approximately 256 legs. It is native to Africa but rarely lives in high altitudes. It prefers forest. It is black in color, is harmless and is often kept as a pet. Generally, giant millipedes have a life expectancy of up to seven years.