Research Topics: Deutsche Bank

Case study questions for Deutsche Bank

1.      What was the strategic and economic rationale for the acquisition in the case? Deutsche Bank’s acquisition of Bankers Trust was implemented due to internal and external drivers or forces that influenced each firm to consider the merger.  Merger is defined as the consolidation of two organizations into a single organization. It is said that both partners pursue a “strategic fit” or the similarity between organizational strategies (Shelton, 1988) or complementary organizational strategies setting the stage for potential strategic synergy. Hence, it can be said that one of the internal drivers of this merger to establish a strategic management system by integrating the business strategy of Deutsche Bank and Bankers Trust into one and unique strategic management for Deutsche Bank.             Deutsche Bank and Bankers Trust are global companies, which mean that these companies must be able to use strategic management to ensure that it will survive in the stiff competition in the global arena.  As part of its business strategies, Deutsche Bank used the concept of acquisition.  The main motivation behind the acquisition was to form a financial industry that will be able to adapt to globalization trends in financial and economic aspects.  In addition, the internal driver was to improve the profitability of Deutsche Bank by merging with Bankers Trust’s products, markets, customer base, efficiencies, assets, and facilities, or by simply eliminating some of the competition. The hope is that the combination of the firms will improve the operating efficiency and profitability of the companies involved.             Another internal factor that can be considered why Deutsche Bank acquired Bankers Trust is to be able to establish a competitive position or advantage in the global market environment. Through the acquisition Deutsche Bank may expand its business portfolio to be offered to a vast number of consumers. Since both banks merged together, Deutsche Bank is now able to offer more innovative banking services which may help the company gain competitive advantage for other competitors.             On the other hand, the acquisition was also initiated due to some external factors in the current banking market, which include globalization and customization, information technology, and increased customer sophistication, all of which have wrought massive changes in the competitive environment of banks. When Deutsche Bank announced its acquisition of Bankers Trust in 1998, it was clear that this was not supposed to be a cost-driven deal, but rather a revenue-driven transaction. With relatively limited overlap in activities and markets, there was less duplication and, as a result, less cost takeouts that were likely to occur. Indeed, the management of Deutsche Bank and Bankers Trust did not emphasize cost cutting in their 1998 announcement of the transaction. They planned on boosting their share of wallet through cross-selling between their millions of clients. Analysts estimated that the greatest advantage in cross-selling would go to Deutsche Bank, which would integrate customers’ account information, including insurance, banking, and credit cards, onto one statement. Facing incompatible IT configurations and the mandate to generate new revenue streams through cross-selling, Deutsche Bank and Bankers Trust decided not to follow the traditional absorption approach, but rather to keep their IT systems decentralized to promote the advantage of specialized configurations. 2.      What strengths of Bankers Trust were the most valuable for Deutsche Bank?              In merging two companies, there are many consequences that should be looked upon to.  It’s up to the companies if the merging will create a new response from the market.  They’ll be the one to make their new company a success of a failure.  There are so many ways for two companies to merge, and one of which is takeover. Takeover of one company to another is one business gets ownership without cooperation from the other.  Often the corporation that continues to function makes an outright purchase of the property and stock of the others; exchange of bonds, options, and other agreements are also employed by the corporations involved.             According to Morrison and Floyd (2000), it can be easily said that corporate takeover is a means of survival for companies. Morrison and Floyd (2000) continued that in this new environment, ownership matters, and managerial control stems from equity position rather than relational ties.  The strengths of Bankers Trust will be the focus of this section. According to Rhodes (2002) merger and acquisition will immediately impact the company with changes in ownership, in ideology, and eventually in practice.  In order to have a more successful expansion, Bankers Trust should provide some marketing strategy for the company in which Deutsche Bank has been able to consider. Hence, one of the strengths of Bankers Trust is its diversification strategy that was imposed by Deutsche Bank right after the acquisition has been done.  Furthermore, there are three criteria of core competencies which can also be considered as the strength of Bankers Trust. These core competencies include superior customer value, business similar in way related to core competency and difficult to imitate or find substitutes for. It seems that the expansion of Deutsche Bank through its acquisition of Bankers Trust has achieved to a certain extend the above criteria in a way that it did provide something different and it was one of the first bank in the States providing insurance service to clients. Also, different businesses in the firm like credit cards, mortgage, insurance, private banking are similar in way related to core competency. Corporations can also achieve synergy by sharing tangible and value-creating activities across their business units. Deutsche Bank’s acquisition of Bankers Trust has already created billions of dollars by corporate restructuring, portfolio management. In particular, as a result of the acquisition, Deutsche Bank was able to centralize computer systems, finance, human resource, project management, and procurement. The company estimates that this effort saved as much as 1 billion. In addition, one of the strengths of Bankers Trust is its ability to strengthen the competitiveness of its operations. Strategic alliances through acquisition present an especially attractive avenue for the financial industry since the multinationals will be able to integrate different communications segments quickly, capture a developed customer base, consolidate smaller niches, remove a rival and prevent competition from doing so, and accelerate the implementation of new technologies with combined resources. 3.      What were the major challenges for Deutsche in this acquisition? There were times after the acquisition when Deutsche Bank experienced lowered employee commitment and productivity, increased dissatisfaction, high turnover, leadership and power struggles, and a general rise in dysfunctional behaviors such as sabotage. In addition, another challenge that the acquisition brought within Deutsche Bank was the tendency for the company to not give enough focus or attention to its banking services because of the many banking services that it offered in the market.  In this manner, the company did not have that assurance of sustaining the competitiveness of other banking services. Another challenge can be attributed to the cultural context. The consequences of culture became particularly apparent in Deutsche Bank’s acquisition of Bankers Trust, where not only different organizational cultures but also organizational cultures rooted in different national cultures meet (Very, Lubatkin & Calori, 1996; Schneider and DeMeyer, 1991).  Because the organizational members from diverse cultures like that of Deutsche Bank and Bankers Trust interacted and, especially, when one culture was required to adopt the methods and practices of the other culture, disruptive tensions emerged.  4.      What were the major potential synergies from the deal? Were they realized? Acquisition became the dominant methods of consolidation and the primary potential synergy was to control assets, and the best way to control assets was to own them (Freidheim, 1998). Deutsche Bank’s acquisition of Bankers Trust enabled the former to combine assets and activities, substantially lower costs, and become a strong competitor, by closing branches, moving down the scale-economies curve, combining facilities, increasing scale economies, and spreading the cost of R&D over volume. Deutsche Bank’s acquisition of Bankers Trust also enabled the former to improve its economics of the supply chain-and in all cases, integration of physical assets was vital in achieving the economic objectives of the acquisition. Acquisition has been recognized to be one of the strategic ways in business operation growth and expansion.  In line with the strategy of Deutsche Bank, it can be said that its acquisition of Bankers Trust have been able to provide the company a more comprehensive, efficient and effective ways to have a sustainable company growth. It has allowed Deutsche Bank to grow both internally and externally because through the acquisition the family of the company has increased, not only in its local operation but also in global environment. Further, through the effective acquisition, Deutsche Bank is able to gain competitive advantage among its rival companies. The more competitors stake their strategic thinking upon being the lowest price producer or delivering the highest quality, the more they start to look alike in their marketplace, thus losing their competitive edge over one another.  In meaning, competitive advantage arises out of a meaningful differentiation from one other player in the market.  It is better to understand that developing a successful strategy in standard cycle market proves to be relatively simple for other companies. However, if looked at too simply, a company will choose a strategy that is too narrow or too broad based on the other factors of choosing a strategy. Determining which customer needs to satisfy is an area where choosing the incorrect strategy can result in a decreased competitive advantage. Hence, with Deutsche Bank’s acquisition of Bankers Trust the company has been able to produce unique banking services in line with financial and insurance services that suit the needs and demands of their respective consumers.   Moreover, through acquisition, the company had been able to gain a competitive advantage by making their banking services readily available in different parts of the world and always unique compared to other financial and insurance services. 5.      Give a short update on the case In Deutsche Bank’s acquisition of Bankers Trust, the advantages brought by its implementation include: 1) established a base for Deutsche Bank and obtained a going concern in a particular location.  2) established a niche because of the expansion of banking services offered in terms of financial and insurance services. 3) Increased productivity and profitability, increased output with unchanged fixed costs, yielding higher profit and 4) Expanded geographic coverage. Through the acquisition Deutsche Bank has been able to establish a competitive position not only in the local market but also in the global environment. On the other hand, Deutsche Bank’s acquisition of Bankers Trust offered the above advantages and additional ones, such as: 1) Succession planning, which is a way to secure retirement through new ownership. 2) Reduced work level: a way to share responsibility among more people and 3) Security of a larger organization. Through this, Deutsche Bank is able to cope with larger competitors. The acquisition created or enhanced the bank’s strategic assets as well as distinctive capabilities. Since Deutsche Bank gained different ideas on different kinds of financial and insurance services demanded by their customers, the company had also been able to diversify established better banking services. It can be said that effective acquisition is the key factor for the success of Deutsche Bank.  The company’s acquisition strategy allows the whole organization to perform better in the banking industry. Current Ratings Deutsche Bank is rated by the leading independent rating agencies. It has favorable ratings as shown below. Ratings of Deutsche Bank Short term rating Long term rating Outlook Individual rating Standard & Poor’s A-1+ AA- positive n.a. Moody’s Investors Service P-1 Aa3 stable B- Fitch Ratings F1+ AA- stable B Dividend The annual dividend is paid on each ordinary share normally one business day after the annual general meeting. Deutsche Bank has consistently increased the annual dividend over the past 10 years as can be deducted from the table below: Dividend  YEAR DIVIDEND DIVIDEND PAYMENT 2005 EUR 2.50/ USD 3.20 June 2, 2006 2004 EUR 1.70/ USD 2.15 May 19, 2005 2003 EUR 1.50/ USD 1.83 June 3, 2004 2002 EUR 1.30/ USD 1.52 June 11, 2003 2001 EUR 1.30/ USD 1.20 May 23, 2002 2000 EUR 1.30 May 18, 2001 CONCLUSION The results of the analysis carried out on Deutsche Bank’s acquisition of Bankers Trust indicated very significant effects, even amidst the threats of unrest. Therefore, we could conclude that the operations of Deutsche Bank could still be expected to improve faster than average. The review of Deutsche Bank’s capabilities and resources revealed very little inconsistencies regarding its acquisition strategies. This is coherent with their traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now for Deutsche Bank. The analysis among the banking environment as well as the implications of Deutsche Bank’s acquisition of Bankers Trust revealed certain gaps, most of which are biased towards the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the competitiveness of Deutsche Bank. Also, Deutsche Bank has to find a balance between adherence to internal forces within the management and to the changing forces of the environment in order to implement such strategic options.  REFERENCES Freidheim, C. (1998). The Trillion-Dollar Enterprise: How the Alliance Revolution Will Transform Global Business. Perseus Books, Reading, MA. Morrison, J. and Floyd, D. (2000). Merger activity: solutions to Japan’s economic downturn? Management Decision, 38(4); pp.263-271 Rhodes, K. (2002). ‘Making Mergers a Growth Strategy’, Root Strategic Assets, Spring. Schneider, S.C., and A. De Meyer. 1991. “Interpreting and Responding to Strategic Issues: The Impact of National Culture.” Strategic Management Journal 12(4): 307-320. Shelton, L. M. (1988). “Strategic Fits and Corporate Acquisition: Empirical evidence, Strategic Management Journal, 9: 278 – 287. www.db.com. Retrieved March 28, 2007 Credit:ivythesis.typepad.com

Case study questions for Deutsche Bank

1. What was the strategic and economic rationale for the acquisition in the case? Deutsche Bank’s acquisition of Bankers Trust wa...

Why is the Disease Model of Alcoholism/Addiction Controversial?

Why is the disease model of alcoholism/addiction controversial? BACKGROUND             The disease model of alcoholism has a history dating back more than two hundred years, and is considered by many to be the dominant paradigm guiding scientific inquiry and treatment approaches for much of the 20th century (Bride & Nackurd, 2002). An early proponent was the physician Benjamin Rush in 1795. The concept gained popularity through its promotion by Alcoholics Anonymous (A.A.) founded in 1935. It received additional popularity following a 1946 study by E. M. Jellinek (Heath, 1995).             The disease model of alcohol dependence, or “alcoholism”, remains the dominant conceptual model or paradigm of both alcohol and drug treatment, especially in the USA. However, this situation is changing in response to empirical evidence, managed care cost containment policies and greater pressures to demonstrate treatment efficacy and effectiveness Heather, 2004). As articulated by Jellinek, the new paradigm of alcoholism posited a sharp distinction between “normal” drinkers and “alcoholics,” whose addiction was evinced by an intense craving for drink and a complete loss of control over drinking. Alcohol, that is, was seen to be addictive only for a certain group: those who developed an increased tolerance, who experienced withdrawal symptoms if they tried to quit drinking, and who exhibited bodily deterioration as a result of heavy and habitual consumption. The “disease” of alcoholism was thought to be progressive (it moved from psychological to physiological dependence) and irreversible (the alcoholic could never safely return to normal drinking). The only effective treatment, according to the Alcoholism Movement, was lifelong abstinence (Crowley, 1994).             This disease concept has continued to compete with moralistic characterizations that maintain that chronic drunkenness is sinful and can only be corrected by the individual through an act of personal willpower (Wilcox, 1998). The disease model of alcoholism views craving as a result of acute withdrawal or an internal physiological need for alcohol (Heather, 2004).             An important motive in promoting the idea of alcoholism as a disease was to decriminalize alcoholic behavior and increase the probability that alcohol abusers would seek help. Alcoholics would be seen as victims of a disease rather than individuals with a bad habit, weak willpower, or a moral failing. Another motive was to make treatment eligible for financial support through medical insurance. Society is generally willing to help people with a disease (which is “not their fault”), whereas those with a bad habit, weak will, or a moral failing are expected to accept responsibility for their behavior and to fend for themselves (Heath, 1995).             Today, a treatment industry based on the disease theory generates more than billion a year in revenues, and both supports and serves hundreds of thousands of individuals who have an emotional commitment (in the case of alcoholics) or an economic commitment (on the part of treatment providers) to the medical model of alcoholism (Heath, 1995). MAIN SUPPORT FOR THE DISEASE MODEL             Jellinek is generally credited with the development of a disease model of alcoholism that was sufficiently rigorous to stimulate intensive scientific work based on the model, and many researchers have carefully investigated his various hypotheses and made necessary refinements to the disease concept of alcoholism. Much of the work in alcohol studies over the past 35 years has been specifically addressed to whether or not alcoholism can be considered a disease (Wilcox, 1998).             Jellinek, in summarizing his own research, indicated that the three most commonly occurring behaviors that characterized “alcohol addiction” are blackouts, loss of control, and benders. Blackouts are given additional importance because in the “great majority” of “alcohol addicts,” they mark the initial phase, occurring prior to loss of control and benders by many months or years.             Jellinek’s model has made important contributions both in terms of its acceptance and influence in the literature and its acceptance by practitioners working with individuals who have drinking problems. “Virtually every book or pamphlet, lay or professional, published in the last 25 years on the manifestations of alcoholism has presented the Jellinekian phases as unchallenged fact”. Some authors like Pattison, Lender, Pokorny and Kanas view Jellinek’s phase model and disease definitions of alcoholism as the most profound influence on the alcoholism field to date. Another author regards the phase model as “the most comprehensive and clear-cut ordering of characteristic experiences of alcoholics” (Rudy, 1986). STRENGTHS OF THE MODEL             Clearly, a strictly medical model is not sufficient to explain the multivariate, behavioral manifestations of alcoholism. Some of the appeal of the disease model is that it accommodates well the observations that drug abuse is not normal that it is a special type of behavior that does not seem to follow normal rules. Because it is a disease state, the usual rules that govern behavior do not apply to the behavior of addicts, at least as far as their use of drugs is concerned.             The disease model also fits well with the observation that some people become addicted and others do not in the same way that a disease may strike only some. Thinking about drug abuse as a disease also has profound implications for therapy. At the heart of the issue is whether the addict really has any control over drug taking. If the abuse of drugs can be considered a sickness rather than an immoral or criminal activity, it is therefore beyond the control of the abuser, who then requires treatment rather than punishment. Furthermore, there are numerous examples that show “how the beliefs of people about alcohol and alcohol consumers influence the assumptions about etiology.” Most studies now recognize the “bio-psycho-social” complexity of alcoholism, and although the disease concept that Jellinek described has been amended, it is still one of the most important considerations in any discussion of alcoholism. His ideas that alcoholism was characterized by a loss of control, and a progressive nature have been refined, but they are still regarded as essentially productive (Wilcox, 1998). ALCOHOLICS ANONYMOUS AND THE DISEASE MODEL             Alcoholics Anonymous (A.A.) has been in existence since the 1960s, it is an institution that deals with education, prevention and treatment of alcohol and drug abuse. Jellinek’s phase model of alcoholism and the A.A. model of alcoholism are one and the same and that they are constructions or reifications of A.A. values (Rudy, 1986).             Jellinek’s model of alcoholism “has been the standard textbook description of the alcoholism process. It has essentially gone unchallenged until recently”. Jellinek’s model and his other writings on alcoholism, specifically The Disease Concept of Alcoholism, have highly influenced most conceptualizations of alcoholism and its treatment within the past several decades. The phase model reflects Jellinek’s assessment and interpretation of data collected by the Grapevine, the official organ of A.A. The initial study was based on ninety-eight usable questionnaires from a “sample” of more than sixteen hundred A.A. members (Rudy, 1986).             The phase model characterizes the “alcoholic” as generally passing through four phases. These include the prealcoholic symptomatic phase, the prodromal phase, the crucial phase, and the chronic phase. Within these four phases, Jellinek described a list of forty three behaviors that occur in a somewhat determinant sequence.             Members of A.A. believe alcoholism to be a progressive and eventually fatal disease that follows a progressive series of stages that lead to institutionalization in a mental hospital, jail, or death. While cultural variations (as well as the assumption that “alcoholism” is a social construction that emerged during a specific historical period) should be acknowledged, it should also be pointed out that the “disease” model of AA has been applied cross-culturally. One might argue that the “disease” model must have some material validity for so many members in so many different cultures to find it descriptive of their own experiences (Jensen, 2000). CRITICISMS TO THE DISEASE MODEL Although most alcoholism counselors argue that it is a disease, alcoholism is clearly unlike other known diseases. There is no alcoholism virus, fungus, or germ. It is not caused by parasites. It is not caused by any physical accident or injury. Even those who support the theory cannot explain what causes the alleged disease, how it operates, or where it is located in the body (Heath, 1995).             As early as the 1960s, the disease model came under attack due to the emergence of unusual scientific and clinical findings. Outside of the United States, the disease model is considered by many to have been discredited, and has long been abandoned in favor of alternative models (Bride & Nackurd, 2002).             Several studies disputed the position by Jellinek that blackouts are the major symptom of alcoholism. Of the one hundred hospitalized “alcoholics” in their research, one third never experienced a blackout. Additionally, among those who reported blackouts, these generally occurred “well along in the course of alcoholism rather than at an early stage”, and they occurred after heavy drinking–”frequently after several days.” Other aspects criticized involve the ambiguous nature of the research questioning concerning blackouts as well as the occurrence of benders, tremulousness, and severe repercussions from drinking prior to the occurrence of blackouts (Rudy, 1986). If alcohol abuse isn’t a disease, what is it? According to them, it is a habit, a learned behavior that is frequently repeated. In psychological terms it is a pattern of excessive alcohol consumption which produces maladaptive behavioral changes in which drinking can become the central activity in an individual’s life, usually after many years of heavy consumption (Kishline, 1996).             According to the criticisms, perhaps the most persistent anomaly of the disease paradigm is the repeated finding, in violation of the entrenched expectations of irreversibility and loss of control, that persons diagnosed as alcoholic can sometimes return to normal, controlled patterns of drinking (Bride & Nackurd, 2002).             Other authors, while still somewhat supportive, have questioned various aspects of the Jellinekian model. Some authors view Jellinek, A.A., and the National Council of Alcoholism (NCA) as cornerstones of a traditional model of alcoholism that is factually inaccurate but ideologically powerful. Noticeably more critical is the following attack by Cahalan: “Despite Jellinek’s regard for the right of the individual drinker, his conceptions appear to have been subtly influenced by the Protestant ethic. His phases of alcohol addiction, with its orderly–and, inferentially, irreversible–progression of malign symptoms, through the prealcoholic phase, the prodromal phase, the crucial phase, and finally the chronic stage is of a piece with Hogarth’s famous illustration of a drunkard’s progress on the downward path to perdition. While Jellinek does not say that the phases of alcohol addiction always occur in the same order, his vivid descriptions of the progress of alcoholism are so well attuned to the values of the middle-class Western physician and welfare worker that his cautions are largely overlooked by those who apply his conceptions and by the many writers who repeat his early concepts.”             Much of the speculation that alcoholism could be explained by biochemical disorders involving hypoglycemia, vitamin deficiencies, metabolic pathways, or an allergy to alcohol were quickly put to rest. Nor, despite intensive efforts, has any single allele been discovered as an alcoholism gene. Numerous studies strongly support the hypothesis that some individuals are genetically predisposed to alcoholism, but these studies can only account for a small proportion of alcoholism in the general population (Wilcox, 1998). Such evidence does not address many etiological questions regarding the disease concept of alcoholism. Naturally, the excessive use of alcohol can cause a broad range of diseases, but heavy drinking results from learning rather than from disease. People must voluntarily consume alcohol before they can abuse it and have drinking problems. These and other obvious inadequacies of the disease model have led increasingly in recent years to statements that the “disease” of alcoholism is a myth (Heath, 1995). STANTON PEELE’S VIEWS ON DISEASE MODEL             Dr. Stanton Peele, author of The Truth About Addiction and Recovery and a leading expert in the field of addiction, agrees that “Every major tenet of the `disease’ view of addiction is refuted by both research and everyday observation” (Kishline, 1996). “There’s no such thing as a genetic cause of alcoholism,” announces Stanton Peele said. “The best predictors of alcoholism are all psychosocial factors–who you hang out with, whether you have a job. The whole genetic argument is misguided and unjustified.” According to Peele, the genetic-based argument makes people victims and gives them an excuse for self-destructive behavior. He believes that moderating drinking is the wave of the future for treatment (Judge, 1997). Peele argues that AA and for-profit alcohol treatment centers promote the “myth” of alcoholism as a lifelong disease. He contends that the disease concept “excuses alcoholics for their past, present, and future irresponsibility” and points out that most people can overcome addiction on their own. He concludes that the only effective response to alcoholism and other addictions is “to recreate living communities that nurture the human capacity to lead constructive lives. CONCLUSION AND SUMMARIZATION             The disease model of Jellenik views the problem of alcoholism as a disease with aberrant behaviors and physical symptoms. The basis for his conclusions about the disease model is his researches. In the disease model, the alcoholic is not seen as morally weak but rather viewed as sick and the victim of a disease – that of alcoholism. The disease model has its share of supports and strengths. There are some problems with the disease model though. The disease model of alcoholism is controversial and not without critics. Many authors dispute the disease model of alcoholism. One of the most well-known author who disputed the disease model is Peele. The main reason for the controversy is that the nature of the disease has never been identified. There have been a number of attempts to explain the use and abuse of specific drugs in terms of a disease process but such attempts have been limited to a specific drug only and have never been thoroughly convincing that alcoholism in itself is a disease. Credit:ivythesis.typepad.com

Why is the Disease Model of Alcoholism/Addiction Controversial?

Why is the disease model of alcoholism/addiction controversial? BACKGROUND The disease model of alcoholism has a history ...

Sample Essay Bankers Trust was Emplemeted due to Internal and External Driversor Forces that Ifluenced each firm to consider the merger

Case study questions for Deutsche Bank:   1.      What was the strategic and economic rationale for the acquisition in the case?   Deutsche Bank’s acquisition of Bankers Trust was implemented due to internal and external drivers or forces that influenced each firm to consider the merger.  Merger is defined as the consolidation of two organizations into a single organization. It is said that both partners pursue a “strategic fit” or the similarity between organizational strategies (Shelton, 1988) or complementary organizational strategies setting the stage for potential strategic synergy. Hence, it can be said that one of the internal drivers of this merger to establish a strategic management system by integrating the business strategy of Deutsche Bank and Bankers Trust into one and unique strategic management for Deutsche Bank.             Deutsche Bank and Bankers Trust are global companies, which mean that these companies must be able to use strategic management to ensure that it will survive in the stiff competition in the global arena.  As part of its business strategies, Deutsche Bank used the concept of acquisition.  The main motivation behind the acquisition was to form a financial industry that will be able to adapt to globalization trends in financial and economic aspects.    In addition, the internal driver was to improve the profitability of Deutsche Bank by merging with Bankers Trust’s products, markets, customer base, efficiencies, assets, and facilities, or by simply eliminating some of the competition. The hope is that the combination of the firms will improve the operating efficiency and profitability of the companies involved.               Another internal factor that can be considered why Deutsche Bank acquired Bankers Trust is to be able to establish a competitive position or advantage in the global market environment. Through the acquisition Deutsche Bank may expand its business portfolio to be offered to a vast number of consumers. Since both banks merged together, Deutsche Bank is now able to offer more innovative banking services which may help the company gain competitive advantage for other competitors.               On the other hand, the acquisition was also initiated due to some external factors in the current banking market, which include globalization and customization, information technology, and increased customer sophistication, all of which have wrought massive changes in the competitive environment of banks.   When Deutsche Bank announced its acquisition of Bankers Trust in 1998, it was clear that this was not supposed to be a cost-driven deal, but rather a revenue-driven transaction. With relatively limited overlap in activities and markets, there was less duplication and, as a result, less cost takeouts that were likely to occur. Indeed, the management of Deutsche Bank and Bankers Trust did not emphasize cost cutting in their 1998 announcement of the transaction. They planned on boosting their share of wallet through cross-selling between their millions of clients. Analysts estimated that the greatest advantage in cross-selling would go to Deutsche Bank, which would integrate customers’ account information, including insurance, banking, and credit cards, onto one statement. Facing incompatible IT configurations and the mandate to generate new revenue streams through cross-selling, Deutsche Bank and Bankers Trust decided not to follow the traditional absorption approach, but rather to keep their IT systems decentralized to promote the advantage of specialized configurations. 2.      What strengths of Bankers Trust were the most valuable for Deutsche Bank?             In merging two companies, there are many consequences that should be looked upon to.  It’s up to the companies if the merging will create a new response from the market.  They’ll be the one to make their new company a success of a failure.  There are so many ways for two companies to merge, and one of which is takeover. Takeover of one company to another is one business gets ownership without cooperation from the other.  Often the corporation that continues to function makes an outright purchase of the property and stock of the others; exchange of bonds, options, and other agreements are also employed by the corporations involved.               According to Morrison and Floyd (2000), it can be easily said that corporate takeover is a means of survival for companies. Morrison and Floyd (2000) continued that in this new environment, ownership matters, and managerial control stems from equity position rather than relational ties.  The strengths of Bankers Trust will be the focus of this section.   According to Rhodes (2002) merger and acquisition will immediately impact the company with changes in ownership, in ideology, and eventually in practice.  In order to have a more successful expansion, Bankers Trust should provide some marketing strategy for the company in which Deutsche Bank has been able to consider. Hence, one of the strengths of Bankers Trust is its diversification strategy that was imposed by Deutsche Bank right after the acquisition has been done.    Furthermore, there are three criteria of core competencies which can also be considered as the strength of Bankers Trust. These core competencies include superior customer value, business similar in way related to core competency and difficult to imitate or find substitutes for. It seems that the expansion of Deutsche Bank through its acquisition of Bankers Trust has achieved to a certain extend the above criteria in a way that it did provide something different and it was one of the first bank in the States providing insurance service to clients. Also, different businesses in the firm like credit cards, mortgage, insurance, private banking are similar in way related to core competency. Corporations can also achieve synergy by sharing tangible and value-creating activities across their business units.   Deutsche Bank’s acquisition of Bankers Trust has already created billions of dollars by corporate restructuring, portfolio management. In particular, as a result of the acquisition, Deutsche Bank was able to centralize computer systems, finance, human resource, project management, and procurement. The company estimates that this effort saved as much as 1 billion.   In addition, one of the strengths of Bankers Trust is its ability to strengthen the competitiveness of its operations.  Strategic alliances through acquisition present an especially attractive avenue for the financial industry since the multinationals will be able to integrate different communications segments quickly, capture a developed customer base, consolidate smaller niches, remove a rival and prevent competition from doing so, and accelerate the implementation of new technologies with combined resources.     3.      What were the major challenges for Deutsche in this acquisition?   There were times after the acquisition when Deutsche Bank experienced lowered employee commitment and productivity, increased dissatisfaction, high turnover, leadership and power struggles, and a general rise in dysfunctional behaviors such as sabotage. In addition, another challenge that the acquisition brought within Deutsche Bank was the tendency for the company to not give enough focus or attention to its banking services because of the many banking services that it offered in the market.  In this manner, the company did not have that assurance of sustaining the competitiveness of other banking services.   Another challenge can be attributed to the cultural context. The consequences of culture became particularly apparent in Deutsche Bank’s acquisition of Bankers Trust, where not only different organizational cultures but also organizational cultures rooted in different national cultures meet (1996; 1991).  Because the organizational members from diverse cultures like that of Deutsche Bank and Bankers Trust interacted and, especially, when one culture was required to adopt the methods and practices of the other culture, disruptive tensions emerged.      4.      What were the major potential synergies from the deal? Were they realized? Acquisition became the dominant methods of consolidation and the primary potential synergy was to control assets, and the best way to control assets was to own them (1998).   Deutsche Bank’s acquisition of Bankers Trust enabled the former to combine assets and activities, substantially lower costs, and become a strong competitor, by closing branches, moving down the scale-economies curve, combining facilities, increasing scale economies, and spreading the cost of R&D over volume. Deutsche Bank’s acquisition of Bankers Trust also enabled the former to improve its economics of the supply chain-and in all cases, integration of physical assets was vital in achieving the economic objectives of the acquisition. Acquisition has been recognized to be one of the strategic ways in business operation growth and expansion.  In line with the strategy of Deutsche Bank, it can be said that its acquisition of Bankers Trust have been able to provide the company a more comprehensive, efficient and effective ways to have a sustainable company growth. It has allowed Deutsche Bank to grow both internally and externally because through the acquisition the family of the company has increased, not only in its local operation but also in global environment.   Further, through the effective acquisition, Deutsche Bank is able to gain competitive advantage among its rival companies. The more competitors stake their strategic thinking upon being the lowest price producer or delivering the highest quality, the more they start to look alike in their marketplace, thus losing their competitive edge over one another.  In meaning, competitive advantage arises out of a meaningful differentiation from one other player in the market.  It is better to understand that developing a successful strategy in standard cycle market proves to be relatively simple for other companies.   However, if looked at too simply, a company will choose a strategy that is too narrow or too broad based on the other factors of choosing a strategy. Determining which customer needs to satisfy is an area where choosing the incorrect strategy can result in a decreased competitive advantage. Hence, with Deutsche Bank’s acquisition of Bankers Trust the company has been able to produce unique banking services in line with financial and insurance services that suit the needs and demands of their respective consumers.   Moreover, through acquisition, the company had been able to gain a competitive advantage by making their banking services readily available in different parts of the world and always unique compared to other financial and insurance services.   5.      Give a short update on the case   In Deutsche Bank’s acquisition of Bankers Trust, the advantages brought by its implementation include: 1) established a base for Deutsche Bank and obtained a going concern in a particular location.  2) established a niche because of the expansion of banking services offered in terms of financial and insurance services. 3) Increased productivity and profitability, increased output with unchanged fixed costs, yielding higher profit and 4) Expanded geographic coverage. Through the acquisition Deutsche Bank has been able to establish a competitive position not only in the local market but also in the global environment. On the other hand, Deutsche Bank’s acquisition of Bankers Trust offered the above advantages and additional ones, such as: 1) Succession planning, which is a way to secure retirement through new ownership. 2) Reduced work level: a way to share responsibility among more people and 3) Security of a larger organization. Through this, Deutsche Bank is able to cope with larger competitors. The acquisition created or enhanced the bank’s strategic assets as well as distinctive capabilities. Since Deutsche Bank gained different ideas on different kinds of financial and insurance services demanded by their customers, the company had also been able to diversify established better banking services. It can be said that effective acquisition is the key factor for the success of Deutsche Bank.  The company’s acquisition strategy allows the whole organization to perform better in the banking industry. CONCLUSION The results of the analysis carried out on Deutsche Bank’s acquisition of Bankers Trust indicated very significant effects, even amidst the threats of unrest. Therefore, we could conclude that the operations of Deutsche Bank could still be expected to improve faster than average. The review of Deutsche Bank’s capabilities and resources revealed very little inconsistencies regarding its acquisition strategies. This is coherent with their traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now for Deutsche Bank. The analysis among the banking environment as well as the implications of Deutsche Bank’s acquisition of Bankers Trust revealed certain gaps, most of which are biased towards the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the competitiveness of Deutsche Bank. Also, Deutsche Bank has to find a balance between adherence to internal forces within the management and to the changing forces of the environment in order to implement such strategic options. Credit:ivythesis.typepad.com

Sample Essay Bankers Trust was Emplemeted due to Internal and External Driversor Forces that Ifluenced each firm to consider the merger

Case study questions for Deutsche Bank: 1. What was the strategic and economic rationale for the acquisition in the case? Deut...

Sample Essay Bankers Trust was Emplemeted due to Internal and External Driversor Forces that Ifluenced each firm to consider the merger

Sample Essay Bankers Trust was Emplemeted due to Internal and External Driversor Forces that Ifluenced each firm to consider the merger

Case study questions for Deutsche Bank: 1. What was the strategic and economic rationale for the acquisition in the case? Deut...