srideb saha- merjer and acquisition

8/3/2019 Srideb Saha- Merjer and Acquisition

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1) According to you what were the critical success factors required in order to survive in this

industry?

IN 21st century china is the largest toy manufacturing destination in the world and 80 percent

American toys are manufactures in china because of cheaper Labour rates and low cost of raw

material. But in future this industry can be facing a big problem and it can be shut down because

of suppliers greediness and over looked by govts some serious issues. SO according my point of

view this industry needs look very important critical factors which will be help for survived in

china

Like- 1) procet Labour rightsA) to provide minimum working hours-exp-minimum 8 hrs job,

worker must be granted one holiday every week, also get minimum overtime wages

B) To provide minimum physical safety the worker- exp- govts

should take care suppliers cannot be force for excessive works to the factories workers,

Supplier must be provided free medical treatment to factory workers and if possible give some

compassion if worker will be hurt during working time in the factory, govt must be take care no

manufacturer cannot disobey article 72 according china Labour lawevery employer should be

provided insurance coverage to its workers for during certain contingenceslike illness,

diseases, injuries, provided minimum good quality of food to the workers in a cafeteria with

cheap prices,

C)to provided minimum wages- exp-according Chinese Labour law

govts should take care suppliers must be pay minimum 39 cent/ hour as per normal labor

status, and worker must get minimum 36 hours /months and should not be excess

44hours/week according 36th clause in china Labour law

D) Chinese govt must make a law for factory working policy because

suppliers or manufactures are not make any policy which will be deprive the poor workers

E) Chinese govt must me make a law on method of wage payment

and nation wise accepted because suppliers cannot be chited poor Labour and also government

F) Chinese govt should be provided a minimum level of life style to

the factory workers and their family and made a cheap and good quality of middle class family

apartment for factor workers families.

IF Chinese government should take care of those things and must be control be

strictly then Chinese toy industry can be survive for long time.


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5) Describe the porters five forces model with respect to this industry?

Now through porters five forces model we can analysis Chinese toy industry very clearly and we

can understand the principal competitive pressure in this market.

1) Rivalry among competing farms in industry- kai long, jie ling, guo ling, wai Wang

2) Threat of new entrant- a) government policy- In china government policy is not so strong so if

any people have money to and he /she will be interested to enter Chinese toy industry then it

easy to go and another reason is here Labour cost and Raw material cost is very cheap. The

Taxation section details all kinds of taxation that are specific, or particularly important to

this industry, including taxation concessions.

b) Capital requirement- In toy manufacturing industry didnt need heavy investment and

according my point of view Chinese have versatile tenchelogy in manufacturing sector so any

new farm can come in this market and with medium investment they can run this business)

switching cost- in this industry switching cost very high so new farm must be very care full

before entering in this market in china) product different ion in Chinese toy industry have

versatile toy segment so here product different ion is very high so if any new company will be

enter then they must have new ideas and new tenchelogy both. Capital and Labor Intensity

section provides a guide to the amount of capital used in production/providing a service

compared to the amount of labor in the total mix of inputs

3)Bargaining power of suppliers- 1) here bargain power of supplier is very high because almost 11

manufacturer are in this industry at present and all are big and medium manufacturer and also new

farms also coming in this market.2) so here huge substitute of products are abaviablelike-

dolls,eletronice toys,stffed toys, toys for adult etc.


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3) And so many segment in Chinese toy industry.4) suppliers products have high switching

cost

4) Bargaining power of buyers- 1) here bargaining power of buyers is also very high. 80

percent of toys are sold in usa market .so it can easily understand bargain power of buyer

are so much and lots of competition in this sector . 2) In china produced those product is

very low price in the us market so buyer are sold those product in USA very high price and

earn more profit.

5)Threat of substitute- computer games, electronic shopping

(Objective question)

1. What are sweatshops? Enumerate the factors that are responsible for the worldwide growth

of sweatshops.

Sweat shops- Sweatshops are commonly characterized by low pay, poor working conditions,

safety violations, and generally inhumane treatment of employees.

Several factors are responsible for the worldwide growth of sweatshops-

1) Over population Asian countries

2) Globalization and liberalization across the world

3) Limited education and high employment growth

4) Increase child labour developed and un developing countries like- india, china, Kenya5) For government negligence like- china, Bangladesh

6) Market volatility

7) Privatization

8) Scarcity of skilled and high skilled labour in different countries

9) Increase poverty and over flow of human resource

10)Increase profit oriented MNCS companies

11)Corruption increase across the globlike- corporate ethics dilemma

12) Drawback of law of different countries like- Bangladesh, india, china, Mexico

13) Increase women workers specially in developing countries and sexual harassment in different

industry sector

14)Due to economic condition- like- ression, depression15)Capitalization or control by capitalist in different countries

(Subjective question)


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4) Sketch the picture of labour exploitation in the Chinese toy industry?

The International Labor Organization (ILO) has estimated that of the 250 million children between the

ages of five and fourteen work in developing countries, 61 percent are in Asia. Although we live in an

extremely modern age, there is, in fact, child slave labor present in China.The exact number of child

labors working in China is still unknown. China's repressive political system does not allow thisinformation acquired directly from China, there are no Chinese non-governmental organizations (NGOs)

active in this area, and foreign NGOs do not have access. Therefore, it is impossible to judge how strictly

the Chinese Government enforces child labor laws or to determine the efforts of non-governmental

organizations to address child labor in China. so anybody can be a easily understand how much child

labour and also labour exploitation in china. Now I was describe a picture labour exploitation in Chinese

toy industry-

A) China is an over populated country and in here government control according their rules so in

toy industry have heavy labour exploitation and another reason was cheap labour rate and low

cost of raw material.

An investigation held by China Labor Watch (CLW), revealed the extent of labour exploitation and

violation of the countrys labour laws in the top eleven toy manufacturing units in China. According to

the 36thclause of the Chinese labour law, no worker should work more than 8 hours a day, which meant

that the average working hour in a week should not exceed 44 hours but to the utter dismay of

researchers, it was found that these clauses were totally disobeyed in the factories. On a monthly basis.

The usual overtime hours in these factories stretched more than 142% per month The workers were

forced to work excessively and up to late hours making overtime a regular phenomenon round the year.

It was found that the workers crossed the permissible overtime limits by nearly 106 hours when

calculated.

B) Workers are working excessive time so they are affected by occupational deasies because of the

workers were bound to work for more than 1216 hours on a daily basis extending up to 20

hours at the time of peak demand These facts were supported by the estimates revealed by the

Peoples Republic of China, according to which overwork was the main cause leading to the

death of 60008000 workers on an annual basis in the toy industry


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C). In most of the factories, workers were not provided any type of insurance even after working for

several years But according to the Article 72 of the China Labour law, every employer had to provide

insurance coverage to its workers to render additional support to them during certain contingencies, such

as illnesses, diseases, injuries, retirement and maternity related issues.

C) Despite working under such strenuous and miserable conditions with overloaded work

schedules, the workers were not paid even the minimum wage of 39 cents/hour as per the

labour statutes of the country. They were usually paid between 1323 cents/hour both for their

regular and overtime hours. The factories ignored the concept of paid overtime, framed by the

countrys labour law.

D) Though all the factories provided dormitories for their workers, they were very ill maintained. It

was not a compulsion on the part of the workers to live in the dormitories built within the

factory premises, but most of the workers preferred to stay in these dormitories to save costs as

the cost of renting a flat outside the factory premise was higher.

E) According to the Chinese labour law, each factory was bound to maintain a cafeteria within the

factory premises offering standardized meal at cheap rates. But it was found that even though

most of the Chinese toy factories had set up cafeteria, they offered below standard poor quality

meals lacking in taste and nutrients. In some of the factories, a portion of the wages were

deducted from the workers regular wage every month as a charge for using the cafeteria,

irrespective of the fact that whether a worker used it or not

F) Workers faced enormous problems while voluntarily quitting their job. They were generally

instructed to earn a clearance certificate from a list of managers and supervisors, failing which

they were deprived of their last months wage. But if they were fired on the grounds of indisciplinary actions, they were granted their last months wage after deducting a ransom of 200

Yuan for committing such offence. The workers, therefore, preferred to get fired rather than

quitting their job willingly.

2) How the Chinese toy manufacturers were manipulating the wage and bonus payment? Whatare the remedies available for the labors in this regard?

Method of manipulating wage and bonus payment-

The methods of wage payment in these factories differed largely with no uniformity in standards.

Majority of these factories had adopted three methods of disbursing wages primarily concentrating on

time-rate (in hours) and piece-rate of payment or framing a unique wage standard by mixing the two


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methods of payment. It had been found that majority of these factories adopted time-rate of payment for

unproductive work, such as packaging. On the other hand, the piece-rate system was used to pay the

handcraft laborers, who performed their entire work with the help of their hands without using any type

of machines. Moreover, wages were cheated by deliberately counting less number of pieces than the

actual number of units produced. This clearly signified that the wage structure in these factories was

designed to deprive the workers of their actual pay. Moreover, the piece-rate workers were not giventheir basic wages and were only paid on the basis of the number of units produced by them, totally a

manipulated figure concealing the actual number of units produced, in any given hour.

Deductions and Fines from Wages Imposed on the Workers

Reasons Fines Imposed

Late by 10 minutes 2 Yuan

Forgot Factory ID 5 Yuan

Absent for one day 20 Yuan

Smoking on the Shop Floor 200 Yuan

Fighting on work 200 Yuan

Unclean Room 5 Yuan

Excessive Use of Water and Electricity 30 Yuan

Dormitory Cleaning 1 Yuan

Remedies are availed for Chinese workers regarding manipulating wages and bonus payment-

1) Wages theft prevention act

2) Minimum wages act 1948 ministry of labour



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3) How were the US companies responsible for the increasing growth of sweatshops in the Chinese

toy industry?

In 21st centaury china is the world largest toy manufactures destination in the world. The

Chinese toy industry mainly acted as the supplier for some of the leading American toy

manufacturing companies like Wal-Mart and Mattel. 80 percent American toys are

manufacturing in china so anybody can easily understand why sweatshop increase in china toy

industry. There are several reasons like-

A) American companies continually demand lower prices from their Chinese

suppliers, allowing American consumers to enjoy inexpensive toys.

B) U.S. price pressure creates a powerful incentive to cheat on labor standards that

American companies promote as a badge of responsible capitalism.

C) Most Chinese toy manufactures are owned by a foreign companies like- usa

D) Normally Chinese toy manufactures companies are purchased raw material from

usa so their charges of raw material is very high so factory owners are try to

make a profit to abused own countries labor and ignorance

Own countries labor policy.

E) China has cheap labour so mainly us toy companies are liked to prefer

purchasing toys from Chinese factories so pressure of Chinese factory workers

are very high and some us base toy manufacturing companies are entering inchina toy manufacturing market and they are try to disobey the Chinese labour

law.

F) From various us base company also like Nike, coca cola and other companies

are coming g in the Chinese manufacturing industries so these MNCs companies

are are mainly profit driven companies indirectly they are also responsible to

increase sweatshop in china industry.

G) hidden cost most popular in case of Chinese toy industry specially like world-

famous toysharry porter, star wars,pokemon

H) in us based fast food companies like Mack Donald they are try to abusing they

corporation power and it will be directly affected Chinese toy industry and also

increase sweatshop.

I) Us base big retail chain like- wall- mart, k-mart , target are try to pressure on

chines toy manufactories to provide more and more good and cheap quality of

toys . so sweatshop is more increase Chinese toys industry.


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3) What are the basic reasons behind the consolidation drive in this industry?

The twenty-first century, China emerged as the largest toy manufacturing destination in the world.

However, labour exploitation continued to remain an indispensable characteristic of the industry. The

Chinese toy industry mainly acted as the supplier for some of the leading American toy manufacturing

companies like Wal-Mart and Mattel. 80% of the American toys were manufactured in China. The leading

American manufacturing giants outsourced the entire toy manufacturing process to China as the

production costs in the country were significantly lower than the west. In Chinese toy industry have lots

of trouble and but still it was growing year by year and give tough competition to the other countries toy

industry .so inside this industry have some basic reason thats why industry still grow.

1) Chinese toy industry basically very much sophisticated and high tech industry.

2) Over population and huge human resource are availed.

3) Very cheap labour and raw material cost.

4) This industry mainly controls by manufactures and govt dos not interfere their work.

5) Biggest toy manufacturing companies are already settling in this country like- Mattel, Hasbro,

Bandai etchant other local chines manufacturing toys company like-kai long, jie ling, guie ling

6) In Chinese toy market versatile toy segments like- Dolls, electronic toy, plastic toy, puzzle and

building sets, stuffed toy, toys for adult and transport toy.

7) Consumer segment is very much versatile like- girls, boys, children and adults also because china

has huge population and this toy industry mainly boys driven so market is huge and popular.

8) According age comparison Chinese toy manufactures are basically making toys for 1 year old

baby to 25 years old adult.9) Chinese toy industry also based on tenchelogy and here every time new technology will come so

it will be biggest benefitted Chinese toy manufactories.

10) Huge local and international market.

11) Also this Chinese toy industry drive other factors like- product innovation, marketing innovation

and exists major toy manufacturing farms.

12) In is Chinese toy segment consumer price index is reasonable and global cultural influence.

13) Chinese government not interferes in this industry and they are giving huge power to the chines

local manufacturer and other MNCs companies.

14) Huge demand in us market.

(Objective question)


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3) List down the major mergers and acquisitions in the industry?

1) In 1980, Chantex merged with Earl Takefman's Randim Marketing, Inc., a school

supply manufacturer and wholesaler to become Charan Industries Inc.

(MARVEL)

2) In 1990, Toy Biz was acquired by independent investor Isaac Pearlmutter

3) In May 1999, at the height of thedot-com bubble, Mattel acquiredThe Learning

Companyfor $3.5 billion in stock[13]or 4.5 times annual sales

4) In 1986, Hasbro acquiredPlayskool

2) Describe the competitive scenario of this Chinese toy industry?The twenty-first century, China emerged as the largest toy manufacturing destination in the world.However, labour exploitation continued to remain an indispensable characteristic of the industry. TheChinese toy industry mainly acted as the supplier for some of the leading American toy manufacturing

companies like Wal-Mart and Mattel. 80% of the American toys were manufactured in China.ThroughOut the last decade china has also evolved into the factory of the world, as many large corporations outsource theirproduction in an effort to cut cost through cheaper capital and labour alternatives china provides Mattel for example,closed in last U.S factory in 2002 and now produced 65 percent of its products in china.

1) Chinese toy industry is oligopoly- means small number of farms can be purchased from

many sellers.2) In china especially in toy industry labour and raw material cost is very cheap more than

other US and European toy manufacturing companies.3) Chinese toy market have versatile product- like- stuff toy, plastic toy, adult toy, transport toy

and others so competition is very high between toy manufacturing companies.4) So many us and European base toy manufacturing companies were coming in china and

settle their manufacturing unit. So competition is increase day by day.5) In case of toy manufacturing Chinese toy industry capture 5.8 percentage market shares.6) Chinese manufacturers are having been innovative and specialized novelty items.7) Chinese hipper market and supermarket are centralized purchasing.8) In 2008 Chinese toy market are more expand because of in this market demand more- pr-

school, educational, action toys and video games software. So manufactures are producedvariety of toys and expand market segment also.

9) Chinese toy market is highly competitive because of strong distribution networkand heavy advertising and huge loyalty Chinese consumer.

10) Other this are also Chinese market so much competitive because-a) large scale ofoperation, catalytic role of FDI,export industries subsides, superior infrastructureboth general and toy sector.

( objective question)
http://en.wikipedia.org/wiki/Dot-com_bubblehttp://en.wikipedia.org/wiki/Dot-com_bubblehttp://en.wikipedia.org/wiki/Dot-com_bubblehttp://en.wikipedia.org/wiki/The_Learning_Companyhttp://en.wikipedia.org/wiki/The_Learning_Companyhttp://en.wikipedia.org/wiki/The_Learning_Companyhttp://en.wikipedia.org/wiki/The_Learning_Companyhttp://en.wikipedia.org/wiki/Mattel#cite_note-autogenerated3-12http://en.wikipedia.org/wiki/Mattel#cite_note-autogenerated3-12http://en.wikipedia.org/wiki/Mattel#cite_note-autogenerated3-12http://en.wikipedia.org/wiki/Playskoolhttp://en.wikipedia.org/wiki/Playskoolhttp://en.wikipedia.org/wiki/Playskoolhttp://en.wikipedia.org/wiki/Playskoolhttp://en.wikipedia.org/wiki/Mattel#cite_note-autogenerated3-12http://en.wikipedia.org/wiki/The_Learning_Companyhttp://en.wikipedia.org/wiki/The_Learning_Companyhttp://en.wikipedia.org/wiki/Dot-com_bubble


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2) Highlight the industries and economics where the growth of sweetshop has become rampant?

Highlight the industries point of view-

1) When industry will be oligopoly in a particular country. Like- Chinese toy industry.

2) When a particular country will be over populated then their industrial sector increase

sweetshop. Like- India, china.

3) When MNCs are more actively work in particular industry then sweetshop will be increase. Like-

USA, UK, India.

4) When in a particular country labour law didnt imply by government properly there industrial

sector sweet shop will be increase. Like- Bangladesh, china, Africa.

5) When capitalism is stronger than democracy in particular country then sweetshop can be

increased it can be happen developed, underdeveloped and developing countries industrial

sector-like- USA, UK, SOUTH KOREA, INDIA, MAXICO.

6) When a particular industry depended on UN skilled / semi skilled labour like- toy, cloth, plastic

industries.

7) When a particular industry very much capital and labour intrinsic- like- construction industry

8) In case of non cyclical industry much effect during increase of sweetshop- likes- agriculture

(third world country- India).

9) When in a particular country didnt have proper industrial infrastructure and didnt have not

much more natural resource then the particular country industrial sector have increase

sweetshop. Like- Kenya

10)When a particular industry highly raw material intensive then there sweetshop will be increase-

like- alcoholic manufacturing industries.

Highlight the economic point of view-

1) When recession and depression will come in an economy in a particular country.

2) When a particular country more import raw materials from other countries.

(Subjective)

SUBJECT- MERJER AND ACQUISITION

NAME- SRIDEB SAHASECTATION- FIN/ SP/ 2010-12

ROLL- 29

srideb saha- merjer and acquisition

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