Expert answer:Business and finance help needed with Model 5-Dis

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Please read the two passages on Barry Diller/IAC
and Southwest merger.
A road to diversification: Barry Diller/Senior
Executive/IAC
In an interview with Leslie Stahl, Barry Diller, once
Paramount CEO, reflected upon seeing this primitive
interactivity of computers, televisions, and phones and how
it seized his curiosity. Diller saw a future where most
shopping would be done by interacting with a screen. Even
his wife indicated they were intrigued by this entire new
world. She said Barry Diller can see something way before
you can see anything. In the interview, Diller concurs that
most of the public considered him to be losing his mind with
the purchase of QVC and trading the glamour of Hollywood
away. In Westchester, PA, Barry Diller made his first fortune
as his own boss. But, in a string of setbacks, he involved
himself in a bidding war to buy Paramount only to make a
mistake by not making the last bid. Learning from his
mistakes and making other deals, he ended up losing QVC.
Despite this, his gut feeling told him that interactive
commerce would catch on so he purchased QVC’s competitor
HSN. In the interview, Diller confirms that the public’s
perception of his company is correct as a hodge podge but
it’s an interactive conglomerate operating in financial
services and flirt services.
Diller says that the development of his company has been a
journey and they are figuring it out along the way. He says he
knows now that many of his business related to one another
and has united all his brands under one new corporate
headquarters. He wanted to give his company, IAC, the same
cache as other big internet companies. In comparison to
Google, Barry Diller, says that IAC is an endless
multiproduct company and his desire would be like Proctor
and Gamble one day. With a personal fortune of well over a
billion, Diller’s wife says he is driven by the vision. Shown in
business meetings, Diller makes decisions quickly and his
employees say that his ability to grasp new and difficult
concepts is uncanny. With 20,000 employees, Diller runs
intense meetings and he is the ultimate decider who controls
the votes in the company.
Also check out:
http://www.bloomberg.com/video/93257379-diller-s-iac-topinternet-stock-over-google-baidu.html/
http://www.cbsnews.com/news/barry-dillers-third-act/
1.Describe Diller’s corporate-level strategy.
2.What do you think was Diller’s reason to diversify?
3.Is Diller’s approach value-creating diversification? Why or Why not?
4.Explain how IAC businesses and brands are related? Related
diversification?
The Power of a Merger: Southwest
A typical price conscious consumer is the target of the
merger between Southwest and AirTran. AirTran executives
assert that with the merger, the potential exists to spread
discount airfares farther is even greater. Discount carriers
are known for stimulating competition and helping to lower
airfares. Consolidation of major carriers such as United and
Continental airlines brings the number of major carriers in
the U.S. to only four.
In general the average consumer is finding fewer seats and
higher prices and feels the airlines have worked hard to make
flying not fun. Despite not pleasing to the customer, the
industry is making money again with critical profit centers
known as add-on fees. With $25 for a checked bag, $35 for
phone reservations, and up to $300 to change a reservation,
major airlines have made $2.4 billion in profits with $1.3
billion coming from add-on fees with $745 million from
checked bags alone.
Southwest charges no fees for changing flights or for the first
two checked bags and the merger with AirTran may help to
lower ticked prices in the industry. Individuals say that
wherever Southwest goes, they will pressure their
competitors to refrain from excessive fees in the long haul.
Also check out http://www.southwest.com
http://abcnews.go.com/GMA/video/southwest-ceo-garykelly-discusses-airtran-merger-11743399
1.What would make the arrangement between Southwest and AirTran a
merger and not an acquisition?
2.What were the reasons that Southwest and AirTran had for merging?
What approach(es) did they use?
3.What would cause the Southwest/AirTran merger not be successful?
4.What strategies would you recommend to Southwest should it need to
restructure?
AFTER READING THE PASSAGES:
Please answer questions for BARRY DILLER/IAC and
SOUTHWEST MERGER.
…
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