Company overview
Hire Intelligence International Company is a company based in Australia with five outlets in Sydney, London, Perth, and Melbourne. It also has franchised outlets in Australia, Ireland, New Zealand and the United Kingdom. The company is dealing with short term computer rentals and its main clients include the government, small to medium enterprises, and the corporate sectors among others. They are short contracts rental of computers ranging from one day to four years. It’s a rapidly growing company which has expanded its operations to include IT and Audio visual machines, videoconferencing services and servicing rooms with the required machines to be used in training. It’s a listed company in the Australian stock Exchanges.
Economic analysis
Interest rates affect the company’s financial position. When the interest rates are high the company’s borrowings will be reduced since it will be very expensive to repay. Hence the company will not depend on borrowings in its investments. Since the company also depends on other companies in their nature of business which are also affected with interest rates, will have to reduce their spending hence HII will not get adequate clients to hire their computers and utilize other services. This limits the company’s financial position necessary for expansion and generation of more income. Interest rate is inversely proportion to investments as shown in the diagram below.
The exchange rate affects the rate of return to the company. If the company’s valuation is done using the Australian dollars, the diagram below shows that the rate of return to the company decreases from A to B as the exchange rate of the dollar depreciates or becomes weak as its moves from E’ to E” compared to the pound which is appreciating. This implies that the investment in the company will be minimal as compared to companies in Britain. If the exchange rate appreciates, the rate of return will also increase (Mankiw 412).
The Australian demography is of great importance in the creation of the market of its rental computers. The population has been growing steadily over the years and has expanded the market share of the company. The demands of the population also increase as their number increases hence the company increases its services provisions accordingly. The HII has introduced its other services like the video conferencing among others.
The global economic conditions affect the performance of the company both domestically and internationally. This is because its clients are mainly the corporate, government, and business which are affected directly by the economic conditions. Economic conditions will lead to companies reduce their operational cost as a way of cost cutting measures and hiring computers may be one of them hence affecting the business of HII.
Strategies of the company
The company’s mission is to be well established and be the market leader in the services provision and the short term rental of the computers. The business systems that the company uses are a success in the company’s management. The company has employed the issues of penetrating prices which makes them competitive in the market both locally and internationally. HII is the leading company in the market in provision of technology solutions in its area across all the industries (Hitt and Duane 129).
The quality of its products outshines that of its competitors hence its market share has been expanding and defeating its competitors. The company’s customer base is very wide of over 26000 businesses. The key performance indicators (KPI) used are very effective and offers a monitoring which enables the company to be able to identify its weakness early and solves them, besides working hard on its strengths so as to achieve better results. The company’s objective is providing guidance to the customers so as to enable them meet their demands within the shortest time possible with respect to their equipments.
The right acquirer
The best acquirer is the Thorn Business solutions company. One of the main reasons for this is that HII will expand its products services such as the radio rentals and rentlo store network. Their revenue has been increasing steadily with 2009 increase being 9% hence there is more of the revenue being achieved from the acquisition. Its operating cash flows are positive making it a stable company that will uplift the activities of the HII. Thorn Business has shown a significant way of managing its borrowing in relation to the shareholders equity while the HII has a zero debt to settle.
This is indicated by the 8.7% debt to equity ratio of the thorn company. Its prices also are penetrating in the market hence will be a great company to acquire HII. The company’s capital base is strong and the profit of the company has been increasing for the last three years. The dividends available to be paid to the shareholders have been increasing as well. In order for HII to be the leading company in the technology business in the market, it’s important for the company to be acquired with Thorn Company since it has improved technology and the products it deals with falls under the same industry.
Synergy benefits
The acquisition of HII by the Thorn Company will result in enhancement of cost efficiencies in the new established company which leads to improvement of revenue. The synergy to the acquisition enables the company to improve on its revenue and cut down costs. The company also will enjoy economies of scale. The size of the company will grow hence when placing orders on corporate IT systems, there will be a lot of costs being saved. There is an increased ability by the company to negotiate prices with the suppliers hence the equipments to be purchased by the company will be cheaper than before. The market share will also increase significantly and there are gains derived from tax (Parthasarthy 86).
There will be improvement in the technology and the skills of the human capital. The administrative benefits are achieved in the acquisition of the companies. The company will expand its market share to the current clients of the Thorn Company which really boost the revenues of HII. The is also the benefits of improving on the prices of the company’s products due to the acquisitions hence competitive prices will be experienced in the market. This provides a base of controlling the market since they are now well equipped with vast capital base.
Works cited
Hitt, Michael, and Duane, Ireland. Strategic management: competitiveness and Globalization: concepts & cases. Cengage Learning, 2008.
Mankiw, Gregory. Principles of Economics. Cengage Learning, 2008.
Parthasarthy, Raghavan. Fundamentals of Strategic Management. Wiley India Pvt. Ltd., 2008.