Palm Inc is one of the leading players in the telecommunication and computing technology market, owned by Hewlett Packard (HP). It provides high-quality phones and touchpad devices with all new technological innovations and emerging features in today’s market. However the financial results of the company consistently declined from the year 2006 to 2009.
Sample Essay
Since our variable cost accounts for 50 percent of the revenues therefore, no significant change can be expected for cost reduction in such a case. So if we increase the sales, variable costs increases, regardless of all the factors involved, in such a case costs cannot be pushed down by a firm to maximize profitability. The above table shows no matter how much increase is made in sales the variable cost will simultaneously increase. This is the weakness of this model where variable cost is directly related to revenues. Keeping in view this limitation, a firm has to control its variable costs to meet its sales objectives.
In the middle of 2010, a long-term strategic plan of Geely group turned to be a success story for the company when it acquired Volvo from Ford Motors (Nicholson, 2010). Geely is the leading automotive Chinese group and currently stands among the top ten Chinese automakers. It is however believed that acquiring Volvo is the biggest overseas acquisition China has so far witnessed in its automotive industry. The motive behind this acquisition is aimed at the fulfillment of Geely’s global strategy.
The acquisition of Volvo was not too simple as a strategy for the Chinese global automotive business. Initially, the deal between Geely and Volvo remained under negotiations for long and then finally approved for an overall acquisition value of $2.7 billion (Flaherty, Webb, 2010). Geely was financially strained during the deal, and the funding for Volvo’s acquisition was backed by Chinese financial institutions and regional authorities. The strategy behind the funding was to collect funds in an integrated way that may not necessarily put pressure on a single source. These sources were Chinese commercial banks and regional bodies, who were asked to fund the deal because Geely itself was financially strained (The Local, 2010).
The acquisition of Volvo was certainly done from a friendly perspective. It was in fact a deal between the two parties. Analysts, media experts, and other connected sources named it a merger. There are many factors that made this deal take place in friendly conditions. From a Chinese perspective, the acquisition was a big deal for its automobile industry.