Monthly Archives: September 2014

Whether it be the retail industry or tech sector, it seems as though many companies these days are stocking up on assets. Softbank in Japan is no exception, as their recent acquisition history paints a vivid picture of the competitive business market . Their recent attempt to buy T-Mobile might have failed but they have now set their eyes onto DreamWorks Animated in a deal rumoured to be worth $3.4 Billion. To provide some context, Softbank is a communications and media company that is looking to diversify it’s portfolio and move into new content.

In the big picture, technological companies have been taking over an increased number of other corporations over recent years. Big players such as Google and Amazon are making new acquisitions and offshore competitors such as Softbank, and probably Alibaba in the near future, are doing the same. It’s an arms race to find growing assets that can add value to the company taking them over. In the case of Softbank, they had $17 billion in cash at the end of June (as mentioned in the article), and decided they wanted to splurge. Can you blame them? If the cash stays stagnant it isn’t making you more money, so why not put it into an acquisition where some fine tweaking of the company to be taken over can provide increased revenue and value to the parent company. It’s a trend that large companies will continue to follow to gain a competitive edge over the rest of the industry.

Watch out Amazon, and Ebay as there is a new e-commerce giant that is actually posting better profits then your 2 companies combined. Alibaba is an e-commerce site similar to Amazon that allows consumers to buy goods online. One major difference, however, is the fact that Alibaba has no actual inventory as it instead connects customers with small businesses. The company opened on the New York Stock Exchange with an 38% increase from their IPO in one day establishing it’s ground in the eyes of investment bankers. Furthermore, their financial statements show an exponential growth pattern with 2012 net income increasing from $1.36 billion to $3.81 billion in 2013. This is in stark contrast with Amazon which posted a loss of $39 million in 2012 and net income of $274 million in 2013. This differential might not only help Alibaba attract investors but also entice some to jump off the Amazon bandwagon looking to instead penetrate the Chinese Market.

With plans to get into the Europe and US market, Alibaba has a large potential to grow and increase revenue while competition such as Amazon try to toil in the smartphone and tablet industry. The only negative for Alibaba is that Yahoo is leaching off their profits.

While companies all over the world struggle to reach the optimum balance of growing profit and increasing corporate social responsibility, Walmart is promising to once again bring work, and capital, back to America. Although an American company, Walmart has been importing more and more goods over the last 30 years and they aren’t helping increase the amount of manufacturing jobs in the United States. From a business ethics point of view, Walmart decided that profits are more important to them then providing employment to Americans, and contributing the regulatory tax dollars to the nation that they were built upon. Milton Friedman would be proud. Walmart’s actions over the past several decades has shown that they either don’t care or choose to ignore the predicament of the U.S economy. If there only mission is to strike a profit for their shareholders, which Milton Freidman states is the only “social responsibility of business”, then they are in a great position.

Even though Walmart is already successful, however, their prosperity in the United States could be in jeopardy if they continue investing in other countries. As Freeman’s stakeholder theory states, for a company to be successful they need to focus on keeping all the involved parties of the business content and refrain from prioritizing one over the another. And with a market cap of over $250 billion, Walmart won’t have a problem going back across the Atlantic, one more time.