Brand Equity Effect on Spin-Offs Performance - Dissertation Example

Download file to see previous pages Since the 1980s’, many large corporations in the US had been successfully restructured. Restructuring made many companies in traditional industries survive crises. Enterprises thus regained the momentum of growth and rebuilt competitive advantage. Therefore, corporate restructuring was one of the most important sources that made the US firms’ competitiveness remount the top in the world. Because of this, the US corporate restructuring practice had become the model to follow by European and Japanese companies and developed into a wave across Eurasia and even the whole world. It had become one of the most significant challenges in international management in the 1990s.

Typically, large transactions and corporate decisions will be front-page news and very controversial topic. One of the recent year big issues is Kraft’s split.

Only 18 months after the significant hostile takeover of the UK-listed chocolate manufacturer Cadbury in September 2009Kraft made another relatively important announcement that within the next 12 months, the $48bn conglomerate will be split into two publicly traded companies, creating a global snacks business with revenues of $32bn and a $16bn North America focused grocery business. The goal is to create a global powerhouse in snacks, confectionery, and quick meals, with an exceptional portfolio of leading brands around the world. With Cadbury’s leading positions and significant scale in key developing countries such as India and Mexico as well as Europe, it becomes much easier for Kraft to split (Rappeport, 2011).

This research is motivated by the case of Kraft’s strategic buy-to-split, aiming to use a number of methodologies to find out the relationship between brand equity and conglomerate spin-off. It starts with the motives, and value effects of corporate spin-offs, combing the brand equity effect and analyzing spin-offs’ performance related to the brand and not related to the brand.

Section 2 will review the literature about brand equity, brand equity measurement, and its prime importance in some corporate activities. It will also provide a review of existing research on the topic of spin-offs, and list them in order to have a clear observation of the spin-off performance of both short-term and long-term tested by various methods in different research.

Section 3 is about data collection, which includes85large spin-offs in different fields worldwide in the past two decades. By analyzing the transactions, two streams will be formed: one contains spin-offs that are related to brand equity; the other is for those transactions, not brand equity related. This section contains explanations of the rationale used to decide is a spin office or not suitable for the final sample to test.

Section 4 will focus on using the methodology to test spin-off performance from the sample on the announcement day and long-term stock performance; in order to find out if brand equity-based spin-offs could generate more benefit than non-brand equity strategic spin-offs. The method will be selected from previous research. The results will be delivered in the following section, showing aggregate values and indications. Analysis and discussion of the result and assumption will be included in the sixth section.
Section 7 of this research is the conclusion and the limitation of this research. Appendixes and bibliography will come up at the end of this paper. ...Download file to see next pages Read More