Analysis of the Russian Telecommunication Industry at the Case of Mts Essays

Analysis of the Russian Telecommunication Industry at the Case of Mts Essays Analysis of the Russian Telecommunication Industry at the Case of Mts Essay Analysis of the Russian Telecommunication Industry at the Case of Mts Essay Course: Contemporary Strategic Analysis (fall 2011) Analysis of the Russian telecommunication industry the case of MTS 1. - Speculate on the distinctive features of the telecom industry and define their effect on the company strategy. Historical background To start with, the telecommunication industry for a long time seen as a provider of public goods, next to post service and railway, also involves heavy investments at a steady but relatively small cashflow income. Hence, it was seen that economics of scale are need to lead such a business successfully. Historically this industry was highly regulated in form of monopolistic companies owned by the government. According to Fransmann (2011) in the days of the Old Telecoms Industry the conventional wisdom was that telecoms was an example of ‘natural monopoly’, that is due to increasing returns to scale telecoms services could only be provided efficiently by a monopoly provider. Accordingly, in most industrialized countries was dominated by a monopoly network operator. The situation could be described as closed innovation system, very high entry barriers (in fact impossible to enter), very few innovators, fragmented knowledge base, medium-powered incentives, Slow, sequential, innovation process. Because of missing competition the price-quality relationship of telecom services in most countries was a disaster and companies still didn’t manage to operate profitably. This was the case in almost all countries before the 1980 and 90’s when liberalization made it possible for private â€Å"high-tech† players to enter the market when in the mid-1980s, for different political-economic reasons, Japan, the UK and US decided to end the monopolies of their monopoly network operators. The result was the birth of the original new entrants. The new era From the late-1990s, it was clear that a qualitative change had occurred in the Telecoms Industry in the early-1990s, signifying the birth of the New Telecoms Industry. The most evident sign of qualitative change was the rise of the new new entrants who quickly eclipsed the original new entrants and became the biggest threat to state enterprises. For the new entrants fast growth was needed in order to have economics of scale and cost-efficiency to pay back loans for investments and satisfy shareholders (Fransmann, 2011). With such low technological barriers to entry, the result has been a highly competitive market for network services. However, the contribution of specialist technology suppliers was not confined to the supply of technology. A significant bottleneck is the factor of human resources provided through the operations of the labor market to both the original new entrants and new ones. Moreover, financial markets have a big influence as they, firstly, facilitate the entry and initial growth of new entrants, in particular the new entrants and, secondly, facilitate the ‘re-shuffling of the capital stock’ that has taken place as both network operators and specialist technology suppliers with highly valued shares have used their valuable ‘paper’ (shares) to acquire the complementary knowledge and tangible assets of other companies. By so doing, financial markets have facilitated the process of consolidation in the Telecoms Industry The telecommunications industry nowadays provides a number of services such as data, voice services, graphics, television, and video at increasing speeds and through diverse channels. While landline telephonic communication is still the core service mode, wireless communication, internet, cable and satellite program distribution are increasing their share in overall industry earnings. The industry is experiencing rapid deregulation and technology disruption in service offerings. In many markets across the globe, governments are revoking monopolistic policies, and older players face a new breed of competitors. According to Gupter (2008) The market of this industry includes residential customers, small businesses, and big corporate customers. In the residential customers market, competitors rely heavily on price to increase their customer base. Success depends on branding, reputation, and investment in agile order management and billing solutions. The corporate market has different characteristics as compared to residential customers. Big corporate customers are ready to pay premium for the quality and reliability of their voice services and data delivery. They are less price-sensitive when special services like virtual private network, data security, and videoconferencing come into picture. Telecom operators also provide network connectivity services to other companies that need it. The players with far-reaching networks lend circuits to heavy network users like large corporations and internet services providers (Gupter, 2008). Porter’s five forces analysis In order to analyze the industry we can take Porter’s model and look at the five forces which dominate circumstances. Firstly, looking at the rivalry within the market, we can say that from the former monopolistic industry, as described before, the situation went to fierce competition with high price pressure in most markets. Moreover, technologies are changing very fast and, hence, operators need to constantly adapt and to investment into RD. In addition, there are quite high exit barriers as companies have a lot of technical investments which usually cannot be devested without considerable losses. To sum it up, we can say that this industry compresses a highly competitive and difficult environment. When looking at possible substitutes, we can find that the internet makes a huge competition for classical telecom providers. Especially free-internet call services like Skype offer a very good alternative. Anyway, right now there is no real 100% substitute possibility for mobile phone services which could offer the same satisfaction of needs at reasonable cost. Hence, we can conclude that there is only little till medium competition for telecom providers at the very moment. Speaking of suppliers’ power we can conclude that main actors are technology companies selling equipment plus governmental agencies giving licensees which is done usually only once this is not a constant pressure on telecom enterprises. Moreover, we can state that there is a vast number of technology suppliers which decreases their power. On the other hand, the power of buyers strongly increased during the last years as their choice of providers, fighting each other, grew a lot. In some segments or markets customer power can be lower because of less competition (e. g. France, Germany) whereas in other markets it is huge (e. g. Austria, Estonia). To conclude, we can say that the overall situation in the industry is challenging for telecom providers but, nevertheless, many people keep saying that competition is good for business. One approach to deal with these tricky circumstances within the industry is an extensive expansion strategy, which is discussed consequently by the case of MTS. 2. - Summarize the advantages and disadvantages of the company strategy in Russia and in CIS; think of possible ways of improving it. MTS nowadays is the number telecommunication player in the CIS. During 1993-2001, MTS was developing on the domestic market, increasing its coverage area by regional expansion within Russia. In 2002-2004 the company started its internationalization by expanding to neighboring CIS countries and has used a very aggressive strategy driven by mergers and acquisitions. Starting from its home market, Russia, the operator firstly entered Belarus and, consequently, Ukraine by acquiring and development a big local player. Entering new markets According to Lisitsyn (2008), for any company in the mobile communication sector, entering new markets to extend its network largely through the usage of existing infrastructure in the country of destination. From that point of view, the higher the level of its technological development the more attractive is the target market. This factor also strongly favors acquisitions of existing companies, which operate on the local mobile communications market and have their own infrastructure and subscriber base. In addition to that, a regulatory factor is rather important for mobile communications sector as the state quite often tries to protect it from foreign operators. In general, a combination of technological and regulatory considerations largely predetermines foreign market entry mode for the companies in the sector. Entry modes for MTS were predetermined by technological and regulatory considerations. As for target markets, they largely resulted from historical and cultural traditions, common infrastructure network, similar business practices, and development of re-integration process within the framework of the CIS. As the company started its internationalization already in 2002 by entering several markets in the region, it could gradually increase its experience and build up competence and use its knowledge and existing positions as â€Å"the platform† for future expansion to other CIS countries. Due to various types of similarities between Russia and its neighbors MTS may better understand market environment in the region in comparison with Western counterparts, and therefore use this understanding as its competitive advantage. At the same time, the main threats would most probably come not from national telecom service suppliers, but from large Western telecoms with huge financial recourses. Regarding regulatory issues, it is necessary to mention that without the political will of the national authorities MTS could not get access to their privatization processes. In addition to that, due to the high level of monopolization in most of the countries under review, in order to be successful MTS should establish a good relationship with local anti-monopoly agencies. MTS positions itself as an international company and the leading mobile service provider in Russia and the CIS countries. Hence, in three cases (out of four) it entered foreign countries by purchasing the most successful national mobile companies with prominent market shares. Only in Belarus it partly made greenfield investments and then the company did its best to gain the leading position in the local telecom sector. Drawbacks of the acquisition strategy In order to discuss the disadvantages of MTS’ growth strategy we firstly need to sum up its pluses. As discussed before the advantages of external growth, in our case acquisition of already existing telecom firm in new markets, the growth is not limited by internal resources. This means that the company does not need to invest in building up new infrastructure, getting state licenses and creating a first customer base. Moreover, there is not such an extensive pressure on the working capital for such initial investments– instead the firm just acquires another full-functional company which can be seen in the balance sheets and increases the enterprise value. Another point it, that it may reduce the number of competitors on the market. The acquisition can include the managerial skills, customers, goodwill, patents, and other intangible assets of the acquired business. Also, there may be tax and accounting elements which could be available. Added economies of scale may result from the elimination of duplication in facilities, management personnel, purchasing practices, and improved utilization of fixed assets. Nevertheless, the strategy of growth through acquisition has also its drawbacks. This includes that the company also acquire assets specific to the business, meaning that MTS had to acquire the whole target in one piece even if some business units or assets were completely useless and difficult to resell again. Another point is that there might be creditors or minority shareholders of an acquired business. In the case of MTS there are other shareholder in Georgia, Kirgizstan and Armenia, holding each between 25 and 49 percent of the local company’s stock. Such shareholders not only absorb profits but also can bring in their personal interests which might conflict with the group’s expansion strategy. Moreover, in the course of such an MA expansion strategy the company must go through costly negotiations and the problems of corporate valuation. This risk especially applies to MTS’ situation as it is assumed that the operator paid too much for some of its assets acquired. Prices of stakes are usually not evaluated on an asset-based approach but on the basis of discounted future cashflows. Since this take a look in the future and estimate such cashflows is an impossible task, such evaluations are based on assumptions and personal expectations. Recent outlooks – new product markets entry As MTS managed to capture a huge market within the CIS region, they now focus on extending their business field in those markets. By doing so, they again use the MA strategy by building partnerships and closing mergers with expert companies in order to avoid unnecessary investments in RD and infrastructure which can increase entry barriers which may discourage new competition. According to Andrey Dubovskov, the new MTS Groups’ President and CEO (since 2011), the company the merger with Comstar, the leading fixed broadband and cable television provider in Russia, allowed the company to enter the promising fixed line market. Given the low levels of Internet penetration and positive socio-economic factors, as well as the strong brand and large subscriber base of MTS, they believe in a good chance of capturing significant growth in this market. Following the completion of the merger and the integration of Comstar’s operations, wants to offer their customers a wide range of convergent products with quality customer care. On the operational level, the merger will allow MTS to realize hundreds of millions USD in synergies as they cut on SGA and infrastructure-related expenses. As Andrey Dubovskov says, further mergers are planned to expand in other business of such kind. Conclusions According to Lisitsyn (2008), the growth could be explained by two main reasons: An urgent need for modern communication tools on the one hand, and aggressive marketing campaigns of mobile service providers on the other hand. Of course this kind of aggressive expansion strategy could only be achieved by huge capital investments. This capability is bound to a strong and big home-market (Russian Federation) as well as a big and financially solid owner (Sistema). As those factors are fulfilled MTS’ business expansion and growth strategy is absolutely successful. There were some drawbacks mentioned before among which the problem of corporate evaluation plays an essential role. It can be assumed that MTS paid too high prices for some of its acquisition as expectations at the time of transaction were too optimistic. Anyway, capturing a top market position in markets with high potential growth, at least in the long-term perspective (even Ukraine will recover and become a solid economy one day) will pay off. An alternative and more conservative way of growing would have been to use its own experience in terms of technology and marketing by going for the slower â€Å"green-field† approach and fighting local players directly. This sounds good in theory, but as mentioned before the market conditions in CIS are affected by protectionism, entry-barriers and corruption. Hence, to acquire an already existing successful player avoids a lot of troubles. References Gupta, Aman; BPTrends: ‘Pursuit of the Perfect Order: Telecommunications Industry Perspectives’, November 2008 * Fransman, Martin; Telecoms Policy Magazine: Mapping The Evolving Telecoms Industry: The Uses And Shortcomings of The Layer Model, 2011 * Business Monitor International; Canada Telecommunications Report: Regulatory Environment Industry Developments, Canadian Radio-television and Telecommunications Commission (CRTC), 2010 * Dubovskov, Andrey; Financial times: Company interview: MTS Group (MBT); 2011 * Lisi tsyn et. l, Journal of East-West Business: ‘Russian Telecommunication Company MTS Goes to the CIS’, 2008 * Huyghebaert, Nancy; Universiteit Leuven Academic papers: Determinants of Growth through Mergers and Acquisitions An Empirical Analysis, 2008

Sociological theories of interpersonal violence Essays

Sociological theories of interpersonal violence Essays Sociological theories of interpersonal violence Paper Sociological theories of interpersonal violence Paper Violence can mean many different things to different people. The term violence can be used precisely or vaguely and can take many different forms including physical, sexual, verbal, psychological, emotional, social, spatial and financial abuse. This makes it very difficult to find a definition of violence that works for all situations and at all times. Therefore violence, what is meant by violence, and whether there is a notion of violence at all, are historically, socially and culturally constructed (Hearn 1998: 15). What is named as violent in one situation may not be named as violent in another; therefore violence is both historically and culturally specific. There are many different theories as to why men are more violent than women. These theories include biological theories, which focus on hormonal patterns and aggression; psychological theories, which focus on personality types and disorders; psychoanalysis, which looks at projection and displacement and sociological theories, which focus on concepts grounded in interpersonal, collective, institutional, structural or societal processes (Hearn 1998: 17). Biological theories propose that women are naturally less violent than men. Maccoby and Jacklin (1975) describe how women display aggression and interpersonal responses which are different to that of men, which mean that situations are usually resolved without incurring violent behaviour. Biological theories of how violence naturally occurs rely on explanations of differences between male and female chromosomes, hormones, genetics and territoriality. During research in the 1960s biologists found a number of genetic abnormalities in the cells of humans. As Ainsworth (2000) describes, one of these abnormalities was a condition which was labelled XYY. The name came from the discovery that a small proportion of males had an extra Y chromosome (males normally have one X and one Y chromosome, hence XY). This meant that the men with XYY had double male chromosomes, an abnormality which became nicknamed the supermale syndrome. The syndrome became associated with violent crime as it was claimed that these men were twice as aggressive and violent than the average male (Price et al. 1966 and Jarvik et al. 1973 Cited in Ainsworth 2000). However, later research showed that while XYY males were more likely to be involved with crime they were not necessarily more likely to be involved with specifically violent crimes (Witken at al. 1976 Cited in Ainsworth 2000). Some biologists suggest that human aggression is hereditary. As Ainsworth (2000) describes, one way of examining this claim is through the studies of twins. Identical twins have identical genetic make-up, so if aggression is hereditary then both twins should, in theory, display identical levels of aggression. However from studies carried out of identical twins that are brought up in different environments it has been shown that they often display different levels off aggression and therefore theorists have suggested that levels of aggression are much more closely related to environment rather than genetic make-up. Biological explanations are highly criticised for neglecting ideas of power, cultural and historical relativity and morality. Psychological explanations, on the other hand, locate explanation in mind, mental processs that transcend sex/gender or nature of the male of masculine psyche (Hearn 1998: 20). However, both biological and psychological explanations are criticised because they dont address interrelations of body and society, and of body, mind and society. (Hearn 1998: 20). This leads us to the psychoanalytical explanations of violence which include intrapsychic conflict, personality disorders, denial mechanisms, developmental deficiencies/impaired ego, narcissism, traumatic childhood, machoism (Dankwort 1992-3 cited in Hearn 1998: 21). Through the psychoanalytical perspective it is not violence that is the focus of attention, but instead the dynamics of violence which are more closely considered. Hearn (1998) describes how Freudian and Neo-freudian theorists believe that violence is internally driven, in other words violence is located inside a person. Freud describes how exaggerated masculinities cause men to act violently to compensate for their fears of femininity and of women taking control. Chodorow (1978 cited in Hearn 1998) goes on to explain how the development of a rigid ego is created by men to cope with separation from their mother and the absence of their father. This rigid ego derives from notions of how to be a man which involves the idea of the need to be aggressive in order to show masculinity. However psychoanalytical theories are criticised for placing too much blame on the victim. For example, in the case of domestic violence it is suggested that women let it happen because of treatment they received as children. Because of this psychoanalytical theories are often labelled as not feminist or antiwoman. (Hearn 1998: 21). Despite this, psychoanalytical explanations remain very powerful and influential in the social sciences, although more socially located theories have become increasingly significant. Socially located theories suggest then it is men with social dispositions, not psychological dispositions who are prone to violence (Hearn 1998). There are various socially located theories which include the Social Learning Theory, Socialization and Cognitive-Behavioural Analysis. All of these are based on the same basic idea that mens violence is behaviour which men learn. Although psychoanalytical theories suggest that observing other people committing violence or even expressing ones anger in a non-violent way may actually reduce violence in a person, this is not the case in sociological explanations where it is believed that violence is externally derived. Sociologists argue that violent behaviour can be closely related to an individuals socialization, namely through learning theories. Jones (2000) describes how there is a possibility that the expression of some violent behaviour is causally connected to either observation or experience of aggression. He discusses how human behaviour is based on learned experiences rather than instinct or some other innate characteristic (Jones 2000: 49). One of the best-known sociological theories of socialization is Sutherlands theory of differential association (Sutherland 1947 cited in Jones 2000). He argues that cultural, in this case delinquent, behaviour is learnt through interaction with others. Most people come into contact with both law-breaking people and law-abiding people, but it is when a person has more contact with the law-breakers that they become delinquent. Ray (2000 cited in Hearn 1998) describes how the crisis of masculinity could also be a causal factor of male violence. The crisis of masculinity refers to, amongst other things, increasing unemployment combined with increasing womens equality. Due to unemployment young men or lads begin spending more time on the street, (they dont want to go home as they believe that home is the womans place) and so have more chance to commit crime. Real manhood is based on devotion to group membership, particularly that of street gangs. These gangs or subcultures (Hearn 1998: 30) use violence as a way of confirming status in street culture and so encourage young men to act aggressively and violently. Sutherlands theory of differential association (1947 cited in Jones 2000) becomes clear in Rays (2000 cited in Hearn 1998) connection between real manhood and male violence; a person becomes violent because of stronger exposure to people who commit violence than those who dont, through association with other violent males on the streets. The social learning theory outlines the idea that violence is observed and then reproduced or imitated and focuses on past experiences, especially from childhood (Hearn 1998). According to social learning theorists early experiences in the childhood form a persons personality, basically if a child witnesss a parent being violent they are more likely to be violent themselves, even if it does not become obvious until later in their adult life. However social learning theorists also accept that if children witness violence being used as a punishment then they are less likely to copy, and therefore will be deterred from violence (Bandura 1973; 1977). Children develop learned patterns of violence through intergenerational relations (Hearn 1998; Hoffman et al 1994; Ainsworth 2000). However the exact process of learning violence is often less clear and there is a divide between theorists who believe that individuals learn through cognitive structuring, personality formation, behavioural reinforcement and modelling (Jones 2000; Hearn 1998). Cognitive-behavioural analysis looks at particular forms of learning that have taken place for particular individuals and how reproduction of violence occurs through intergenerational learning and socialization. Goldstein (1989:124 cited in Hearn 1998) identifies the three main areas in which aggression is learned: in the home, school and the mass media. He theorises that learning is either direct through individual practice of aggression or indirect through observation of people being rewarded for aggressive behaviour. Hotaling and Sugarman (1986) suggest that men who are violent to their wives were traumatized as children, either through being abused themselves or through witnessing abuse of their mother by their father, again focusing on the intergenerational production of violence. Bandura (1973; 1977), a major proponent of Social Learning Theory, combined aspects of behaviourism and cognitive psychology. He argued that people learn their behaviours not only through the idea of rewards and punishments achieved through certain types of behaviour but also through observing other peoples actions. By doing this individuals can learn to anticipate the effectiveness of particular courses of action in achieving desired goals (Jones 2000: 51; Hoffman at al 1994). To reinforce his theory Bandura conducted an experiment involving a Bobo doll (Bandura 1973; 1977). In this experiment, he had some children witness an adult aggressively attacking a plastic clown called the Bobo doll. The children watched a video where a model aggressively beat up a doll. In order to frustrate the children, after the video they were placed in a room with attractive toys, but they could not touch them. Then the children who had watched the video and some other children who had not witnessed the violence, were led to another room where there were identical toys to those used in the Bobo video. Bandura found that the children exposed to the aggressive model were more likely to act in physically aggressive ways than those who were not exposed to the aggressive model (Ainsworth 2000; Bandura 1973; Bandura 1977; Hoffman et al 1994; Jones 2000). However there are also many criticisms of these theories as the exact process of how social learning or socialization takes place is often unclear and often represent a very simple explanation of how violence happens and is reproduced. Hearn (1998: 27) also claims that there is an under theorization of gender amongst the socially located theories. Certain questions such as why dont girls copy violence like boys do? and why do boys understand and imitate the violence of men but not the violation of women? are extremely important issues which are not addressed in these explanations of male violence. Another set of theories which attempts to explain why men are more violent than women are reactive theories, which can be either psychological or sociological in focus. Reactive theories are based on the idea that violence is a response to external conditions, men use violence when their goals are blocked and non-violent alternatives are ineffective (Hearn 1998). The stress theory suggests that certain factors such as low income, unemployment, part time employment and a large number of children are more likely to cause stress to men which can make them more prone to violence. Despite this, it would be unfair to isolate stress as a causal factor of violence because it is a constant feature of everyday life which everyone, both men and women, have to deal with. Another criticism of this theory is that if stress is a single causal factor of violence then why is it mainly men and not women whoare violent? (Hearn 1998). Reactive theories also look at the abuse of alcohol as an exernal factor, and how this can cause men to act violently. However as Horsfall (1991) outlines alcohol cannot be seen as a direct cause of violence. She concludes that if alcohol is a causal factor of violence, why do some men react violoently when others do not and why does the social structuring of boys and men bring them up to think that in order to feel like a manyou must drink with the boys, often to excess. The construction of gender is a very useful starting point to understand why men are more violent than women. As Moore (1994) writes, discourses about gender construct women and men as different sorts of persons. Discourse that is used to describe men is active; men are portrayed as aggressive, thrusting and powerful (Moore 1994: 138). Whereas discourse that describes women is usually passive; women are portrayed as essentially powerless, submissive and receptive (Moore 1994: 138). However, these constructions actually only have the most peripheral relation to the behaviours of individual women and men. Moore (1994) goes onto describe how discourses engender women and men as persons who are defined by difference(Moore 1994: 139). They produce discursive effects which produce gender difference, therefore producing symbolic or culturally constructed categories of women and men as different from each other. The discourse used to conceptualize violence is also very important as it often tends to take the focus, blame and responsibility away from the man who commits the violence and pushes it towards the family. Phrases such as domestic violence, conjugal violence, marital violence and family violence are often used and although it is important to acknowledge the relational nature of gender and relational context of violence it is equally important not to reduce violence to the product of the relationship' (Hearn 1998: 28). So far we have identified that, according to socially located theories, violence is produced and reproduced through learning, socialization, modelling and imitation, and this can be conceptualized as producing an environment of violence which operates over time (Hearn 1998: 29), for example intergenerational violence. Cultural theorists go on to discuss how these environments can be thought of as a culture with norms and values, or a system with systematic characteristics. They shift the focus away from the individual to take into consideration social relations and raise important issues such as cycles of violence, whereby the victimiser may once have been the victim themselves (Geffner 1989: 107). Multi causal explanations of violence are very important and claim that violence is a result of not just one individual force, but numerous factors working together. Multi causal theorists bring all, or at least some, of the theories I have already discussed together. Edleson et al (1985) put forward a multicausal explanation where they combine: ideas of violence in the mans family origin from the social learning theory; personal characteristics, such as an individuals attitudes and ideas towards violence taken from the psychoanalytical approach; the use of substances as an external force from the reactive theory; and they also condsider the context of violence by looking at demographic and relationship variables and specific violent events from a mans past.

MW Petroleum Corporation (A) finance case Study

MW Petroleum Corporation (A) finance - Case Study Example Apache on the other hand is seeking to grow. This is a good opportunity for the company to do so. This transaction would be beneficial to Apache the portion of MW Petroleum that Apache is considering is located in the same general area where the company currently operates and so consolidation will further reduce costs. This should allow for increased economies of scale in the form of reduced direct operating costs and even more so overhead costs for Apache. It is cheaper for Apache to buy an existing business as it has been doing rather than carry out exploratory drilling. This acquisition will also allow the company to diversify geographically its portfolio of assets which is important when the riskiness of the operations is considered. This diversification will somewhat help to stabilize Apache’s earnings even though both gas and oil prices are highly volatile. The acquisition of Amoco will also enhance Apache’s standing among US independents and lead to even further acquisition opportunities. The company is considering further growth opportunities in the future and this represents a stepping stone that will allow Apache some amount of bargaining power and would therefore put the company in a better position to compete with other companies. It is reasonable to expect that the MV properties are more valuable to Apache than to Amoco because Apache will benefit from synergies and rationalization of expenses. Table 2 below shows the present value of the aggregate overheads that Apache could reduce substantially if the acquisition takes place. Amoco would be better off if it had cash in hand which the company could invest in more profitable ventures. Currently, the properties are not contributing substantially if any at all to the company’s overheads. Part 1 (b) The sources of value that most plausibly account for the difference between buyer and seller are: The exclusion of fields in Michigan and the Gulf of Mexico; Expected synergies; Other opportunities mentioned; and The beta value that was used. Exclusion of Fields in Michigan and the Gulf of Mexico Apache was only interested in fields containing approximately 78% of MW’s proved developed reserves and 75% of the Proved undeveloped reserves. These account f or approximately $120 million of the difference. No details were given of the percentage of the probable and possible reserves that would be included in the fields in Michigan and the Gulf of Mexico. However, these could be substantial. Assuming that these fields are in the same proportion as the proved undeveloped reserves then the total value would be approximately $906 million. This is 294 million less then the $1.2 billion that Amoco indicated that the properties were worth. See APV Calculations in the Appendix. Table 1 Reserves Total (MMBOE) Proportion included in Purchase Value included in APV Total Value Proved Developed Reserves 155.2 78.22% 121.4 247,750,571.44 316,728,901.87                   Proved Undeveloped Reserves 25.6 75% 19.2 151,257,604.86 201,676,806.48 Sub Total          399,008,176.30 518,405,708.35                   Probable Reserves    75%    145,575,867.21 194,101,156.28                   Possible Reserves    7 5%    145,125,191.13 193,500,254.84                   Total          689,709,234.64 906,007,119.47 Synergies The synergies can be quantified as some overheads would be much reduced as well as some direct operating costs. The table below shows the present value of the projected aggregate overhead expenses. Apache is expected to save a substantial portion of this approximately $201 million. Table 2 Year Aggregate Overheads PV Factor (13%) PV Cash Flow 1 36.6 0.885 32.39 2 38.7