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Executive Summary: A Taiwanese electronic manufacturer named Foxconn in an attempt to rebrand themselves and venture out into different markets and grow as an organization, acquired the popular Sharp corporation in 2016. While you may not be aware of what Foxconn actively creates, it is the company that assembles iPhones. Foxconns top clients as stated in the Wall Street Journal are Nintendo, Sony, and Apple products (Wall Street Journal, 2017). The buyout of Sharp corporation was done in an attempt to market their own brand of electronics and not just necessarily be an assembler for apple products (although the acquisition of sharp certainly helps this cause). The issue as stated in the Wall Street Journal article is that due to US intellectual property rights and trademarks, Foxconn cannot use the Sharp brand in the United States as a different company owns the rights to Sharp. So the president of Foxconn has undergone a reclamation project of trying to reassemble the Sharp brand to market it in the United States. A Waseda Business School professor stated in regards to televisions, Television sets are no longer a big profit item for electronics companies in general because of heavy penetration by low-cost Chinese makers. Still the TV remains an important marketing tool and companies like the idea of having their brand name right in the center of the living room. When we look at this we can understand why Foxconn is interested in Sharp. The president of Foxconn, Mr. Gou, believes with his companys position and manufacturing he can help Sharp become more competitively priced in the market place. The challenge Foxconn will have would be to promote themselves on a global level to really reach the European and US markets that they ultimately want to accomplish. Background Information: Foxconn as stated in the executive summary is the primary manufacturer of good such as the iPhone. To make the iPhone accessible for the vast majority of Americans, cost had to be cut significantly in order to make the iPhone as accessible as possible. To do this, Apple contracted Foxconn who was able to run on an extraordinarily lean budget. (Mozur, 2016). For people aware of Foxconn, there is an egregiously notorious working condition situation which frequently leads to employee suicides and frequently fatal accidents. (New York Times, 2012). The conditions have gotten so poor that they have installed netting to prevent employees committing suicide. By venturing out to acquire Sharp who auctioned off their intellectual property in an attempt to survive economically, they are taking steps to be more of a household brand much like Sony or Samsung currently are. Foxconn outright bought Sharp back in 2016 for $3.5 billion US dollars (Yamazaki, 2016). What is interesting is that in the negotiating process, Foxconn purchased Sharp for nearly a billion dollars less than it had originally offered, counterintuitive of what a traditional negotiation tactic would be. The decreased offer by Foxconn was based off of contingent liabilities at Sharp being revealed, this forced Foxconn to put a halt in the deal. Ultimately the deal picked up again at the 3.5 billion price as Sharp was desperate to close the deal to Foxconn. So ultimately we will need to ask ourselves why Foxconn decided to suddenly venture out and secure this company for itself. Is there any other reason aside from rebranding that could have led them to acquire Sharp, a company most notable for televisions sets? Analysis: Why did Foxconn purchase Sharp? There are a few different reasons I could think of that would justify this purchase, even considering the financial hole Sharp has found itself in. As stated in the Wall Street journal article, they wanted to diversify their holdings a bit. This relates to the Modern Portfolio Theory we discussed in class. By diversifying from traditional manufacturers of electronic products into a more consumer related world, we are able to find new revenue streams and still have enough synergy with the sharp technology to possibly realize a degree of economies of scale. That is why it is obviously important that Foxconn is able to regain control over the ability to market Sharp Televisions in the United States. An example of this would be as stated in the New York Times article. In this article it states that, The screen is an especially lucrative piece of the smartphone, costing as much as $54 each, according to estimates by the research firm IHS. Sharp provides roughly 25 percent of the iPhone displays, IHS said. So by investing in screen technology which is essentially what televisions are Foxconn is able to control more of the production supply chain and at the same time somewhat diversify themselves. When we look at companies such as Sony and Samsung and even google, we can start to see they have many different product lines. By having many different product lines they create brand awareness and become more easily noticeable. For example in my house not only do we have a Sony blu ray player, but we have a Sony gaming system and a Sony television. Sony has branded themselves as a superior technology company and are able to get away with charging slightly more for the same exact product. If you need an example of this, go into a place that sells TV and look at a Sony or Samsung television, then compare that television to a similar off brand television. There will be a perceived quality difference and an obvious price adjustment. So there are two immediate effects of purchasing Sharp; first they are able to control more of the supply chain and realize more potential profits and secondly they are able to have a brand that is capable of selling direct to consumers and branch from there. So perhaps down the line when brand awareness is created through Sharp they can venture into Sharp Refrigerators or Sharp washing machines, staples of the home. By purchasing Sharp, Foxconn makes it harder for companies such as Apple and Nintendo to get away from them. What I mean by this is that vertical mergers make it easier for Foxconn to keep operating. In the New York Times article To Woo Apple, Mozur says, But Apple has been diversifying its supply chain, giving some production contracts to other assemblers and component makers. And Foxconn is grappling with Chinas rising labor costs and a slowdown in the global smartphone market. By using strategies such as acquiring Sharp, not only is there potential for brand awareness but there is the vertical merger aspect. Acquiring more parts of the supply chain encourages Apple to keep doing business with Foxconn. The most recent data we have available shows to us that Sharp was able to turn a profit in the first year under the control of Foxconn (Apple Insider, 2017). In fact under Foxconn paradigm, Sharp was able to turn 37.14 million in profits. Which is a stark contrast to the $219.5 million lost by Sharp in December 2015. The profit realization displayed by Sharp is mostly due to Foxconn managements extremely frugal and cost efficient business practices. So we can clearly see that even if Foxconn is ultimately unable to acquire the rights to market in the US until sometime in the 2020s, their purchase of Sharp will have ultimately had some initial success.

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