Running Head: ANALYSIS OF DELL’S $67B INVESTMENT 1
ANALYSIS OF DELL’S $67B INVESTMENT 5
Analysis of Dell’s $67b Investment
Analysis of Dell’s $67B Investment
The major focus of this research is to analyze how Dell invested $67 billion on EMC. The two are computer companies and Dell recently acquired EMC. This article answers questions that will be raised about the move by Dell and ways forward for sustenance. The considerations that they will take in order to make the best out of their buying of the assets of EMC in a merger are also looked into.
EMC is a digital company that is specialized in data storage, cloud computing and other huge data services. Dell on the other hand is involved in developing of computers, repairs and selling to support computer related activities. The two companies are based in the United States of America and work beyond the borders with entries to other countries.
Recently the two companies came into an agreement to merge with a $67 billion fund from Dell. The planned exit of a co-owner created a gap in the production of their products, an opportunity that Dell grabbed. With expectations of an increase in productions investors are focused in observing the trends. This article will outline some of the ways in which former attempts by other companies had gotten into similar businesses and their performances.
This paper focuses on cost accounting analysis and answers some questions: what cost behaviors and allocations will the company? What components of production will be most demanding? Are there constant costs and variables? How will fluctuating market be tackled? How are the costs estimated? What will be the advantages and disadvantages of this merger? These questions will determine an approach that can be used in relation to Engineering Cost Accounting Principles. This method is best at estimations and focuses in analyzing the alternative actions that the management can use to plan.
The acquisition of shares has been spread out between the shareholders, EMC and Dell. The share value will be $24 instead of a study that yielded $33 and also giving original shareholders a stock tracking that are in consonance with the policies of VMware. Advantage of this is maintaining them in order to employ the same tactics they used before in management. This is the cost behavior that they employed to ensure they do not give priority to non-important issues.
The major component of production is capital. EMC had sought the hand of Dell in terms of capital and costs of production long before this merger (Mearian, 2002). It had later taken several years before it was fully taken. Dell evaluated all the avenues for long and later invested more than 60 billion to acquire the company. Besides there will be components that vary and those that are constant within the company. They will have to handle the costs of shares in the daily market and keep them stable.
Last hurdle to tackle is the nature of the products in the market. EMC had a fall of their share values in the market. When it is realized by customers that the company is not performing as per the required standards then they will develop a negative attitude in buying their products. This will have to be reversed for performance to increase. They have to estimate costs carefully to make profits in operations. Lastly they will design how to deal with the consequences of their decision. These findings are very essential for the company to help in fostering the ways forward. This is the most critical part of cost accounting that if messed will kill all the steps taken by Dell.
From the findings above Dell’s move can be understood differently. First is the way they will use their money in stock acquisition. Their rates were lower than what the studies had suggested of approximately $33. This was a move that helped them acquire more in the stock market to meet the financial requirements. Besides they had put into considerations that the tax values that were claimed will extract $9 billion from their capital (Maan &Tharakan, 2015). Their argument on the tax values was that it would be tracked back in the previous transactions. Keeping the shareholders of the company with them was to their advantage as they will help in decision making and advising the business on the ways forward.
After facing financial crisis EMC sort assistance from Dell and decided how to use finances. With the marketing strategies also pending they had to refocus on building it and restoring what they had lost at first. This will increase the customer number and greater returns on sales. With the best approximations of costs too they will prosper in this undertaking.
The research questions were answered. Dell used little capital to expand their market and acquire the stock. Most businesses accept this type of merger when they are close to liquidation or bankruptcy like EMC. Their capital ability met the costs of production, capital, which was the major one. They had also to lure customers who were lost during the hard times by EMC. The only thing remaining is to make this stable when they gain a good ground a reputation. The unstable market and competitions will also be tackled. With well estimated costs of productions and operations they will need to add skills that can foster these ideas forward. Last they will involve experts to move this forward for better gains.
Mearian L. (nd). EMC seeks Dell’s aid on production costs. Retrieved from: http://www.computerworld.com/article/2588033/data-center/emc-seeks-dell-s-aid-on-production- costs.html
Maan, L., & Tharakan, A. G. (2015, November 10). Dell-EMC deal threatened by possible $9 billion tax bill. Reuters. Retrieved from http://www.reuters.com/article/2015/11/10/us-emc-us-m-a-dell- idUSKCN0SZ25420151110#i6OsTC8vlIQB1Ydf.97