Davis Service Group Case Study

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This paper will examine and discuss various aspects of corporate growth. The primary source material for this examination will be the case study of the Davis Service Group published by The Times 100. This case study specifically focuses on corporate growth through international acquisition. It is the goal of this paper is to respond to the questions posed by the case study including providing descriptions and examples of two major ways in which a company can grow, explaining why the acquisition detailed in the case study represented a good business opportunity, and describing how various aspects of the European Union markets have encouraged corporate growth within the Union. Finally this paper will provide observations from the writer regarding…show more content…
Davis’ other two lines of business were actually sold off as a result of the decision to focus on linens and textiles since this line of business was the most successful of the three. Davis’ linens business was called Sunlight. Sunlight operated within the UK only and provided linens and textiles services to other businesses such as providing and laundering linens for hotels or hospitals, and providing worker uniforms and laundering services for businesses that used uniforms. Sunlight was successful in the UK and provided almost half of Davis’ annual revenues, but the UK market was mature, meaning there was little opportunity for substantial organic growth. When Davis’ made the decisions to concentrate on the Sunlight business line and sell of the other two lines of business, it also decided that inorganic growth was the most appropriate way to grow the company. For a company to grow organically it must simply generate more business within its existing framework. This means gaining new customers and generating more sales without doing things like expanding to other areas or buying smaller competing companies. Since the UK market Davis operated Sunlight served was a mature market there was little opportunity…show more content…
It should be noted that even though this case study focuses on international acquisition, inorganic growth could also be achieved by purchasing domestically as well, it does not have to be an international situation. The company Davis identified for acquisition was Berendsen. Berendsen operated in substantially the same business as Sunlight did, linens and textiles services, and had operations spread across Denmark, Sweden, Norway, Austria, the Netherlands, Poland and Germany. Berenden was also similar to Sunlight in that is was a leading provider of these services in its areas of operation. If acquired, Berendsen could provide Sunlight with significant revenues from the outset, it was not a small company that would have to be built up slowly. Another aspect that made Berendsen an attractive target was the fact that, while profitable, its operations were not as efficient as Sunlight’s were, meaning there was room for improving the profitability of the company’s existing operations by applying Sunlights superior management systems and increasing efficiency. With significant management resources already in place at Sunlight there was also the opportunity to cut both operating and fixed costs in the Berendsen.
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