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Transcription of this question: 4.Walgreens—Alliance BootsWalgæens, a public limited company, is the biggest chain Of drug stores in the United States (US).It has made an Offer for a 45% stake in Alliance Boots, the biggest chain Of drug stores in theUnited Kingdom (IJK). Walgreens has 8000 stores in the US, Alliance Boots has more than 3000stores in Europe and beyond. The combined sales of both companies is USSI 12 billion. A proposedmerger between the two companies would create the world’s largest chain Of drug stores.Walgæens’ market share has fallen due to increased competition from online drug retailers andsupermarkets that can provide similar products at a lower price. There have also been some concernsover customer service in Walgæens’ stores.In contrast, Alliance Boots has a strong brand image, based on its quality own-brand products andexcellent customer service with trained staff, who can provide medical advice for some illnesses.The merger would have the following positive outcomes:• increased internal economies Of scale• a world-leading chain Of drug stores would be created• there would be enough finance for an Alliance Boots expansion into China and South AmericaAlliance Boots would be provided with immediate access to the US marketWalgreens would be given access to Alliance Boots’ research and manufacturing expertise• a strategic move would be provided for both companies to survive economic problems.The new combined Walgreens—Alliance Boots may also raise issues over control, strategic directionand decision making.Walgæens’ shareholders were not happy about the proposed merger. Walgreens shares fell by 60/0.Analysts believed that this strategy was not right for Walgreens, whose sales fell by 10% in thelast year. Walgreens would be merging with a business that is exposed to the economic downturn inEurope. Alliance Boots’ shareholders were also worried. They feared that its reputable brand imagecould be eroded, especially if stores were created all over the world.(a)(b)(c)(d)(e)Define the term public limited company.Describe the method Of growth used by the proposed merger.Explain the changes to two Of Porter’s five forces resulting from the proposedmerger.Examine the claim that the merger would result in “increased internal economiesof scale”.Discuss whether the proposed merger Of Walgreens with Alliance Boots willresult in the positive outcomes stated (apart from economies Of scale).[2 marks][2 marks][6 marks][6 marks][9 marks]

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