Mergers and Acquisitions in Australia Free Essays

string(41) " the country that are performing better\." A merger is one of the forms of business combination. A merger is the joining together of two or more companies for a common goal (Schencke, 2007). It can be in the form of vertical integration, Horizontal integration or diversification. We will write a custom essay sample on Mergers and Acquisitions in Australia or any similar topic only for you Order Now Consider the case of manufactured food (bread) company: we have the flour  Ã‚   company, the bakery and a butter company. If the bread company acquires the flour company that would be vertical integration; this may be more comprehensive and risky . The management is highly involved because of the procedures involved and consequences too. This is a backward integration because it will be merging with the supply source. It might lead to restricted supply of raw materials hence inflexibility. If the bread company starts producing cakes that would be horizontal integration; this might be considered necessary in order to have a more product line whereby their consumers will now be able to enjoy more quality products from the same company. This will enable a particular bread company deal with its competitors because a variety of commodities will be available to them. The company will also command a more market share because most of its products will dominate the market. High market share determines profitability because the Total sales figure has a factor of units and sales are directly proportional to the profit margin. The particular bread company therefore becomes a market leader and enjoys all the economies of scale. High volumes can be produced at low costs and therefore the company becomes a market leader in the industry. The company can now have efficient pricing policies for the different commodities that it is offering in the market. If the bread company starts producing butter to match with its quality of bread then that would be market diversification; This results in increased market capitalization which is very healthy for a company in the industry. This kind of expanded production line may be risky and uncertain because very little is known about that particular product line. This may call for comprehensive research, which might be costly for the holding company. Demand and supply factors of that particular company need to be understood and analyzed keenly to determine the future of such an operation and how relevant it might because this is a complimentary commodity. Merger or an acquisition leads to lack of competitiveness and would have a high Herfindahl index. Industry concentration is also affected. In the case study above, one has reduced players in the industry due to mergers. Therefore we find that there’s no competition due to acquiring of a supply chain, producing related commodities or even engaging in the production of complementary goods. Market diversification results to company being able to control its prices for the different products it has with changing the profit. This shows that market forces do not determine prices and completion is at different levels. Some companies also become market leaders and may decide to lower its prices in the market at the expense of other companies. The fact that a company can acquire a supply chain is harmful because this may limit resources/raw materials to other companies with in the industry or supply at inflated cost. A prices control board should therefore establish to deal with this. Some companies may be forced to quit production and this may lead to monopolies in the industry, which may not be healthy. Motives for mergers include: Synergy; The expected synergy determines the purchase price for the acquiree. Synergy is the combined power of a group of companies when they are working together which is greater than the total power achieved by each working separately. Synergy can be operating synergy or financial synergy. Operating synergy includes economies of scale and economies of scope, by merging firms are able to receive huge discounts due to high volumes of production and this results in high profits, this means high price of shares and high market capitalization. Owning of supply channels means constant supply of raw materials without delays and control over the prices. This indicates low cost of production and increased profits. Being a market leader may result into a monopoly and this means enormous profits. Discounts can be offered to customers and result in high sales due to high volumes. All these work to the advantage of the acquirer. More shareholders due to improved earnings per share lead to more funding and adequate cash flows are available. Synergy can’t be compared to international expansion, which is slow. Merging is with firms already operating and with the required recourses so no lag periods experienced which might hinder the growth and development of a company, which negates the image to the shareholders and other interested parties. There might be need to expand to another geographical location. The acquiring firm will look for firms in operation at that location to merge with in order to fasten the catch period which normally due to lack of knowledge of business operations at that particular area and business smartness required. Horizontal integration in this case will be necessary. This might be after researching and identifying a possible business location. Suppliers will also be considered in this case. Financial synergy is however more questionable due to the uncertainty of business operations. Merging may be for the need to grow and develop. This can be internal or external.. Internal growth can be slow and uncertain because the company doesn’t have past business experience on a particular field. Outside expansion leads to diversification and market capitalization is improved. Growth of a company in the industry tracts more shareholders to the company and therefore funds for financing business operations are adequate. This leads to market leading and high volumes are sold bringing about high profit margin. Merging may be due to the pride of the management team of the bidder company. The management may want to associated with all players in the country that are performing better. You read "Mergers and Acquisitions in Australia" in category "Essay examples" This will be a way for the management to market itself and therefore the same directors can be restored at the next annual general meeting. The management might have been watching the firm to be acquired and may have an idea of corrections to be made in order to increase perfection. They may w ant to acquire a firm that is just about due to liquidity issues, restore its operations and hence cash flows. They therefore be associated with the recovery of the dieing company and hence improve their employment opportunities with other companies. They may also look for promotions and being part of the recovery team may a good ground for such. They management may also want to part of the management of a market leader in the company and this calls for all necessary strategies possible including mergers and acquisitions(Schlossberg, 2007). Horizontal integration whereby a company starts producing related products leads to increased market share due to increased sales out of the high volumes of sales. This may result in very radical transactions, which might be risky. In business yield comes together with risk taking. Vertical integration in this case is considered most because its more risky but the gains might be more than the costs. Diversification into another line of production may be a motivating factor. The company may have identified another variety of related products, which might be profitable and may want to be part of that industry. Therefore the best way to go may be the merger in order to pump in capital into the other company, which is facing liquidity issues, and hence have a major share of the profits. Horizontal integration is always considered best because it involves dealing with the same kind of business, which has a better track record (Schlossberg, 2007). In Australia the following steps are necessary in merging: Research should be first done to determine possible candidate. This needs the help of experts in the research work so that all necessary data and information is available to the management of the acquiring firm The motive to merge should be first understood and the angle to be taken determined. Synergy should be well understood and illustrated. Evaluation should be done on the acquiring firm. The firms’ business strategy should be understood in order to determine the degree of compatibility and the other aspects of business mergers. This also helps in justifying the acquisition. Immediately after the merger, Profits go down first due to the expenses incurred in research and implementation costs. Diversifications are normally expensive and gains can’t be realized immediately. Profits are normally derived at by; Sales-cost of goods sold –expenses. The cost of goods sold=opening stock + purchases-closing stock. High cost of goods immediately after the merger can be due to high opening stock, high purchases and low closing stock. This will therefore result in low profits. In the long run profits are supposed to increase due to; Economies of scale and scope, due to merging with supply and distribution channels, discounts will be given to the entity and this results to low operational costs. Large volume sales enable customers to get discounts and volume of sales is increased. This other unnecessary costs are avoided leading to maximization of profits. Diversification to another line of business; this means exploring of virgin grounds and operation benefits are taken advantage of. This means that sources of gained are increased and the total volume of profits is increased. Increase in market value; High market value is due to being a market leader and commands a greater share of the demand in the market. High volumes are sold and the sales figure is high. Sales are considered to be directly related to the profit volumes. The risk taken at first yields benefits; Diversification may be risky therefore benefits may not be realized fast. Benefits can only after recovery and it will be to the enforceable future. Geographical advantages are realized. The merged entity need time to get used to the business environment and therefore gains take time to be realized (Bruner, 2007). Merging is better than internal expansion. Merging may be a little bit fast to pick up because acquired firms have existing resources and personnel. This reduces time spend in staff professional development and growth. A troubled company needs to merge as near bankruptcy workout situation. This helps in maximizing the value of the company where such companies are considered to be damaged goods. Shareholders, Board of Directors and the managers leave for firms specializing in a workout that is salvaging the value that was assumed to be left in them. Liquidations can’t be left behind. The use of highly leveraged transactions (HLT) expanded the profile of financially troubled companies (Schlossberg, 2007). Financially troubled companies are businesses that were leveraged and unable meet their debt service burden but still separate acceptable or even optimal operating cash flows given their internal resources and market opportunities. Publicity A demerger is expected when competitors start taking advantage of slow growth and development and they may take advantage of opportunities created by merged entity. This is because the competitors have been having existing offices, management and resources supply. Diseconomies of scale and scope start occurring and therefore the operations may not be profitable and a demerger may be considered. The company may at times consider internal expansion to be worth while and may start investing in such hence the merger becomes irrelevant (Bruner, 2007). The expansion to another geographical areas may prove to be unprofitable and thus the firm may consider demerging and concentrating in its primary business operations. The external growth may start being costly and the acquiring company decides to sale its share of the acquired company. The pride of management may be at some cost to the company and the shareholders may decide to demerge. The diversification to another line of production may prove to be extremely costly to the company and a demerger may be asked for so that focus can be on the basic profit gaining activity/business. Both the acquirer and acquiree benefit. The acquiree is funded and its liquidity position is revised and merging is normally a workout for near bankruptcy situations (Gaughan, 2004). The acquirer is also in a position to enjoy; economies of scale and production, advantage of geographical expansion, this is an external growth that cant be compared to the slow internal growth with uncertainties, management pride is improved, market share is improved and they move into a business that they have clear track record. ACCC is an independent authority of the Government of Australia established in 1995 with the amalgamation of the Australian Trade practices Commission and the Prices Surveillance authority to administer the trade practices Act 1974 (Cth) It’s meant to protect Consumer rights, business rights and obligations, perform Industry regulation and price monitoring and prevent illegal anti Competitive behavior (Schencke, 2007). The more of the following criteria a troubled company meets the more marketable it will be to the acquiring company: Is it a manufacturing rather than a distribution operation. Acquiring a manufacturing company will be horizontal integration and will be more profitable to the entity (Robinson, Tranter, Loughran 2007). This kind of synergy results to taking advantages of economies of scale, diversifying into other lines of production, increased market value, expanding to another geographical location and this will be better than internal expansion. Merging with a distribution company will be a vertical forward integration and may be very risky with uncertainties due to lack of a clean track record. Fills a unique product niche rather than produces a commodity item. Has a well-known brand or trademark that is undamaged by its current situation. Sustains a strong defensible market share. A company with a strong market share means that its quite stable and will be profitable to merge with. This will also improve the whole entity’s image and then the share price improves in the stock market. Has a well-maintained machinery and equipment. These are tools of production and this indicates indefinite operation of the company into the future. Such a company is not risky to deal with and may result into huge future losses. Hence the idea of merging may not be necessary. Ernest Young (2006) pg20 In conclusion, mergers and acquisitions should be considered in the company’s research and development. It involves a lot of research that collects data and information in order to evaluate worth candidates for merging. The long-term objectives should be increasing the company’s market share within the industry, making use of economies of scale available and being a market leader. Mergers resulting in long term losses should be avoided because this won’t lead to growth and development of the company. Mergers also determine the structure of an industry because they lead to a decreased number of market players in the industry. This leads to high concentration and competition is reduced. Monopolies may be formed and this may not be healthy to the industry as a whole. Price control bodies need to be in place to control the dominance of the market by a particular holding company. References: Ernest Young, Ernest Young LLP. (2007). Back to Basic Techniques on Mergers Acquisitions (Pg 19-23). Wiley Publications Guy M. Robinson, Pal. J. Tranter, Robert Loughran. (2007). Economy Society Environment. Oxford University Press Hans Schencke. (2007). Accounting for Mergers Acquisitions in Europe. IBFD Michael A. Hit, Jeffrey J. Harrison. R Duane. (2007). A Guide to creating value for Stakeholders. Oxford University Press Patrick A. Gaughan. (2004). Merger, Acquisitions and Corporate Restructuring. Wiley Publications Robert F.Bruner. (2007). Applied Mergers and Acquisitions. Wiley Publications Robert S. Schlossberg. (2007). Understanding the Antitrust Issues. American Bar Association. How to cite Mergers and Acquisitions in Australia, Essay examples

Barbie 2 Essay Example For Students

Barbie 2 Essay Barbie has recently had her 40th birthday. It all started in the 1950s when Ruth Handler saw her daughter, Barbara, and her friends playing with paper dolls. They liked to imagin the dolls beeing different persons who were working, swiming, playing with friends etc. Ruth, who owned the company Mattel with her husband, understood that pretending how the future would be was part of growing up for kids. She did some research and found that there was room on the market for a doll like Barbie. Mattel had been making lots of toys before Barbie but when Ruth said that she wanted them to make a small doll for kids all the men in the staff had their doubts. Many different designs were done before the first Barbie was introduced on the 9th of march 1959. Barbie was named after Ruths daughter. Barbie was then a teen-age fashion model who was very different to the dolls the kids played with at that time. The buyers were at first skeptical to the doll but when Mattel started to make tv-commercial s to reach out to the buyers it was an instant hit. Barbie is still the most popular fashion doll ever created. That is because she is always changing when the fashion and trends change. She wears everything from the Paris fashion to the more youthful look. For example the creaters changed her when the Beatles were popular and they made a copy of Jackie Kennedy when she was popular. In the 1970s Barbie wore very different clothes just to be trendy. She for example wore glittery disco outfits and got a suntan. Her face was redone. She now got an open-mouth smile. In the 1980s Barbie kept changing. This year she was everything from an aerobics instructor to a sophisticated working women. And now in the 1990s Barbie has had 75 careers since 1959. Barbie has given lots of kids better self-esteem by showing them that you can be what you want. Barbie has been a surgeon, a president candidate, an aeroplane pilot and a dentist etc. The kids nearly have her as a rolemodel. They think if she can do it, so can they! Barbie is actually many kids best friend. Barbie was later given family and friends. Her boyfriend was Ken who was named after Ruths son. She also had a little sister whose name was Skipper and her friends were from all over the world. Her group of friends keep growing. Barbie isnt only liked by kids. There are today thousands of adult collectors. They dont always play with them. They just collect them. But it isnt only women who collect, men do too. There are clubs, magazines etc for adults who love Barbie. Now that everything has a lot to do with the new technology, such as computers, Barbie is going high tech too. There are programs and discs to buy to the computer where Barbie is the main character. It is also a way to guide the kids in the high tech world that they live in. So Barbie isnt just anyone she is the most famous doll of all times. Here is some useless information about Barbie:Barbies full name is Barbie Millicent Roberts. She is from Willows in Wisconsin and went to Willows High School. Right now about 120 new dresses and clothes are designed every year and more than 105 million yards of fabric has been used to create them. After stamp collecting Barbie collecting is the most popular hobby in America. The best selling Barbie was the totally hair Barbie which I have here. Barbie has more than one billion pairs of shoes and she has totally had 500 makeovers. Barbie is now sold in more than 140 countries around the world.

Hypocrisy, Bigotry and Ignorance free essay sample

The Chrysalids by John Wyndham, there are many examples of how hypocrisy, bigotry and ignorance are evident in David’s society. People in Waknuk, including the main character, David, are ignorant to the world around them. Through the first few chapters of the novel, David is a prime example of ignorance, being so young and having a lack of knowledge on what Deviations are actually like. Bigotry is also evident in the Waknuk society, and Joseph Strorm is a prime example of that. Finally, in chapter four, we see an example of hypocrisy through David’s uncle. At the beginning of the novel, the best example of ignorance is the main character, David Strorm. David is just a kid at this point in the book. All his life he has heard how terrible deviations are, and has had it drilled into his head countless times on how any creature who is not formed exactly how it is written in their version of the bible is not human and is hateful in the sight of god. We will write a custom essay sample on Hypocrisy, Bigotry and Ignorance or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page David even grew up with his parents telling scary tales of people in the Fringes (the place where Blasphemies are sent), threatening to send people like Hairy Jack if they didn’t behave. On page 21 it says â€Å"Be good now, or I’ll fetch Old Maggie from the Fringes to you. She’s got four eyes to watch you with, and four ears to hear you with, and four arms to smack you with. So you be careful. † Because of these stories, kids such as David in Waknuk believe that all deviations are atrocious creatures, even though many deviations are actually barely noticeable. When he meets Sophie and sees her sixth toe, he is puzzled. On page 14, David says â€Å"A blasphemy was, as had been impressed upon me often enough, a frightful thing. Yet there was nothing wrong about Sophie. She was just an ordinary little girl † David is ignorant because he goes for years believing these creatures are horrifying, having a lack of knowledge on what people with Deviations are really like until he ultimately meets Sophie. The best example of a bigot in this book would be Joseph Strorm, a man who is extremely faithful and strict about his bible teachings, and believes that anything different from the norm is wrong. This is shown on page 26 where David only wished for a third hand and Joseph replied You my own son were calling upon the Devil to give you another hand! Joseph behaves as if every person should think and be the same; and if you dont, people believe you are sent from the devil. He also tells David on the same page â€Å"You do know and yet, knowing this, you deliberately wished yourself a Mutant. That is a terrible thing, an outrageous thing. † Joseph wont handle or deal with anyone who seems to be, or wants to be, abnormal. With Joseph, his way is right and he is completely intolerant of any other opinion or way of thinking. An example of hypocrisy in The Chrysalids would be the incident with the great horses in chapter four. In this chapter, Angus Morton, David’s uncle, acquires a pair of great horses standing twenty-six hands high. From the moment he saw them, David’s father, Joseph Strorm, was positive they were deviations and demanded that the horses be destroyed as Offences, even though they were sanctioned by the government. Angus Morton showed a clear example of Hypocrisy in this chapter because although he is supposedly against all deviations, he bought the horses anyways because they could get double, maybe even triple, the amount of work done that an average horse could do. Theres a good profit there, a good incentive to get them passed but that doesnt mean that theyre right. † The government are also hypocrites in this chapter because even though they do not allow any other type of deviations, they allowed the horses because they were so profitable. This shows that in their society, deviations that make the government a profit, or help the people of Waknuk are allowed to slip by, where as people like Sophie are exiled immediately.

Finance Report for Huffman Trucking

Finance Report for Huffman Trucking Finance Report for Huffman TruckingBy: Jaime SmithFIN/486Mary OrcuttJuly 22, 2013Huffman Trucking is like any other company. They are looking to grow and develop for the convenience of their customers. Huffman Trucking has already purchased more building to expand their business. The company is steadily growing and looking to expand more in the future. The company needs to know if this is the right move for the company as a whole and if they are financially stable enough to withstand another big purchase. The current balance sheets and statement of income will show the numbers to make the decision.Huffman Trucking Balance Sheet2006 2005(In Thousands)Current AssetsCash and Cash Equivalents51,93338,893Accounts Receivable56,29257,441Prepaid Expenses and Supplies3,4433,343Total Current Assets111,72899,677Carrier Operating Property73,02470,957Less: Allowance for Depreciation(57,536)(55,477)Net Carrier Operating Property15,48815,480Assets of Discontinued Operations16,19218,891Goodwill (net )57,76753,977Other Assets26,61324,194Total Assets227,788212,219Liabilities and Shareholders' EquityCurrent LiabilitiesAccounts Payable47,12439,936Salaries and Wages29,75327,048Current Portion of Long-Term Debt2,2042,514Freight and Casualty Claims Payable9,7468,941Total Current Liabilities88,82778,439Long-Term LiabilitiesAccrued Pension and Post-Retirement Health Care58,36252,721Long-Term Debt13,43115,318Total Long-Term Liabilities71,79368,039Shareholders' EquityCommon Stock3.8823.882Treasury Shares(1.952)(1.952)Retained Earnings67,16665,739Total Shareholders' Equity67,16865,741Total Liabilities and Shareholders' Equity227,788212,219Huffman Trucking Income Statement2006 2005Revenue879,944807,288Salaries Wages and Benefits353,739330,597Fuel Expense217,363192,357Operating Supplies and Expenses152,318136,319Purchased Transportation89,95782,529Operating Taxes and Licenses18,61317,989Insurance and Claims13,52613,006Provision for Depreciation2,7262,738Total Operating Expenses848,242775,535 Operating Income...English: Liabilities of the United States as a fra...

National Nursing shortage and Patient Advocacy Act Essay

National Nursing shortage and Patient Advocacy Act - Essay Example o in the hospitals as currently there is a severe shortage in the nursing professionals and some hospitals had nurses which were attending to numerous patients (Buerhaus, 191-198). This paper will assess and document the pros and con that are accompanied with this act. It will mainly focus on the impact in the patients, hospital as well as financial burden that is incurred by the health care institution. Firstly there are obvious financial implications that are accompanied with this act as hospitals are required to hire extra staff members. The financial burden in this instance is incurred by Medicare which is required to adjust its payments to hospitals in order to facilitate for this staff increment. Hospitals however also have some increased financial responsibility as the staff members will be in the hospital facility and incur other expenses besides the wages. In addition, the Secretary only implemented that the hospitals will be compensate only for expenses that are incurred when care is provided to Medicare users. Hence it will remain uncompensated for the other patients and will have to devise new plans to cover these extra costs. This may include a reduction in salaries which will obviously have a negative effect financially on the nursing staff. Another approach which the hospital could take is an increment in the service costs which will affect the patients as healthcare is expensive. The United States Census Bureau documented that approximately 50 million individuals were uninsured which is approximately 15% of the population (Buerhaus, 191-198). There are also advantages that are derived from this act and these include the improvement in the quality of healthcare. Reducing the ratio of patients that are attended by one nurse will result in better services and detection of certain issues that might have been missed due to the nurse’s busy schedule. This also improves the nurse-patient relationship which is essential in the prognosis of the patient

Hamilton's Role as the Secretary of Treasury Research Paper

Hamilton's Role as the Secretary of Treasury - Research Paper Example This paper illustrates that â€Å"The most practical nation builder of the Founding Fathers, Hamilton (1755-1804) fought tirelessly for ratification of the Constitution, played a pivotal role in creating a centralized and powerful nation-state, and argued persuasively for a strong presidency and an independent judiciary. It was Hamilton, at the beginning of the nation's history, who provided a prophetic vision of the United States as a global power stabilized by capitalism and with a military second to none.† While Hamilton contributed to all aspects of government formulation, he is best remembered for his role in designing the young nations economic system. During and after his lifetime Hamilton was overshadowed by his more popular adversary Thomas Jefferson. While Jefferson's dominant image persists today, â€Å"the irony is that Hamilton's concept of the federal government, not Jeffersons, is what has evolved and endures†. This is particularly valid with respect to t he country's economic system and the organization of its constituent agencies such as the U.S. Treasury. Hamilton could rightly be considered a visionary, who saw the importance of economic growth and technological innovation. His state papers on the subject of the economy are considered by modern scholars to be a monumental effort â€Å"toward establishing a rational basis for planning and legislation; his Report on Manufacturers and his advocacy of federal public works are remarkably modern descriptions of the relationship between government and technology†. As the first Secretary of the Treasury and the unofficial aide to George Washington, Hamilton was instrumental in designing the American bureaucracy, which prevails even to this day. In this unofficial capacity as the confidante and aide of the first President, Hamilton also wrote many of the Presidential addresses, most notable of which is the Farewell Address delivered by Washington at the end of his second term.  

U.S. intervention in Iraq

U.S. intervention in Iraq Introduction There are people that are opposed to the U.S. intervention in Iraq, as they believe that it will not lead to stability and democracy. These people, find similarities to Americas Vietnam intervention. For them, America has once more involved in a prolonged and indecisive political and military struggle, from which it will extricate with human and economic loses. On the other had, there are people that are in favour of the Iraq War and they believe that there is no comparison to the Vietnam War. They claim that it is the annihilation of Nazi Germany and its transformation to a democratic ally, that should be used as an analogy.[1] But, the comparison to the Vietnam War and its consequences was unavoidable, as it still influences the publics attitude towards foreign military intervention and was an event that is still in memories of todays American leaders. The question is whether there are any lessons from the American disaster in the Vietnam War that could be applied in Iraqs case. The differences between the two wars are very important: First of all, Vietnam in 1960 was a country with a long national history and a distinct national identity that was created after centuries of fighting against foreign domination. On the contrary, Iraq is a young state with many ethnicities and religions, that make unity difficult. Moreover, in Vietnam the enemy was skilled and experience with important external aid and international legitimacy. In Iraq the enemy had no martial ability and was politically isolated. Besides that, in Vietnam at first the war had the form of an insurgency that changed into a conventional conflict , whereas in Iraq happened exactly the opposite. The nature of the insurgency in the two cases was different, too. In Vietnam there were peasants that were centrally directed by the Communists, that had a clear politico-economic and social agenda. In Iraq, the insurgents were members of small groups that their methods consisted partly of car bombings and sabotage against U.S. forces and the war objectives werent very clear. Moreover, the U.S. was more restricted in military action in Vietnam that in Iraq, by the Chinese and the Soviet threat and they only cared about protecting South Vietnam. Nowadays, the U.S. with its military primacy is aiming at a regime change in Iraq. In Vietnam, the U.S. reached the 500,000 men and left the country after 8 years of bloodshed. In Iraq, the cost in human lives was much smaller and 3 weeks were enough to succumb the military resistance.[2] The comparison is becoming valuable by a political perspective: the lessons and the warnings that may come out of the Vietnam War for policymakers in Iraq War, especially on legitimacy and sustainability. The U.S. that failed to create and sustain a government and political order in South Vietnam, is now trying to do the same in Iraq. The Republic of Vietnam was a Cold War creation of the U.S. and it depended totally for its viability on America. In the end, most of the South Vietnamese didnt have the willingness to fight and even die for its maintenance. The sustainability failed mostly because the Americans abandoned South Vietnam, mainly because of the fall of public support on this war, as time was passing by with increasing American human and economic loses and no remarkable progress. State-building in Iraq is still in progress, so a critic on U.S. policy on this matter would be unfounded. This essay tries to recognize and analyze the comparisons between the American intervention in Vietnam and in Iraq. I believe that the differences are equally important with the similarities for providing political insights. This essay tries to evaluate similarities and differences on: relative U.S. military power, war aims, nature, duration and scale of the war, U.S. manpower lose rates, the enemy, military operations, role of allies, challenges of state-building, and challenges of sustaining political support. It ends with conclusions and recommendations. Relative U.S. Military Power From a military perspective, the international and regional balances were different during the Vietnam and Iraq wars. During the Cold War, the United States relied on allied military support, so its military intervention that took place in Vietnam (1965) had restrains. On the other hand, United States intervention in Iraq (2003) was characterized by freedom of action, as the United States was the only superpower and its military supremacy was globally uncontested. During the Cold War, China and the Soviet Union had under their influence many communist areas in Europe and Asia, including Vietnam, so the U.S. had to be careful regarding its military action in the region. Americans were trying not to provoke directly the Chinese and the Soviet intervention, so they were using their military power with restrictions.[3] But even then, China and the Soviet Union were helping the Vietnamese Communists by providing them with weapons of technological advance. On Iraqs case, Saddam Husseins military strength had almost disappeared by 1991 and in 2003 he couldnt find military support by external actors. For the Iraqi soldiers, training was not a priority, that is why in 2003 the Americans didnt face great difficulties in crushing Iraqi military resistance, taking over Baghdad and overthrowing Saddam Hussein. War Aims The political objectives between the Iraq and Vietnam wars were different. In the 1960s the United States was trying to preserve the non-communist status quo in South Vietnam. In 2003, the United States expressed their intention to democratize Iraq in order to create a model for the rest of the countries in the Middle East. In South Vietnam, as long as the policies that were followed were in agreement with the U.S. interests in the Cold War, the absence of democracy was not an issue.[4] In the Vietnam War, the U.S. wanted to preserve the regime, by forcing North Vietnam to cease its military intervention in South Vietnam. For this purpose, a massive and well-organized military effort was necessary against a determined and skilled enemy. In contrast, in Iraq the U.S. wanted to change the regime and for doing so, less effort and time was needed, although the collapse of Saddam Husseins regime, gave the opportunity to anti-occupation groups to mount insurgent attacks on U.S. forces and reconstruction targets. Another difference was that one of the basic objectives in Iraq was the disarmament of weapons of mass destruction, while in Vietnam there was not such an issue but a struggle over territory. Moreover, the war on Iraq was justified as a part of the war against terrorism, led by al-Qaeda, which attacked the U.S. in September 11, 2001. In Vietnam War, the Americans didnt feel threatened by some kind of terrorism back in their homeland, despite the fact that Vietnamese Communist forces conducted terrorist attacks against South Vietnamese officials and U.S. civilian personnel. But, these attacks were restricted in the region.[5] The main American war aim in Vietnam was to safeguard the credibility of U.S. defense commitments throughout the world. Dean Rusk, the Secretary of State had stated: We have a commitment to assist the South Vietnamese to resist aggression from North. If the U.S. commitment in peace becomes unreliable, the communists would draw conclusions that would lead to our ruin. Indeed, failure to defend South Vietnam would lead American allies to question their credibility and communist advances would be encouraged in the Third World. The credibility of U.S. defense commitments was not an issue in the Iraq war. The Communist threat did not exist anymore and the American operations were not a response to Iraqi aggression. On the contrary, it was a war in order to prevent Iraqis acquisition of nuclear weapons and to stop the expansion of their biological weapons capability. This war depicted the U.S. willingness to use force against states that were seeking nuclear weapons and that could threaten them in the future. Nature, and Scale of the War The American intervention in Vietnam began as a materially self-sustaining, peasant-based communist insurgency in the South, against the South Vietnamese security forces that were supported by the U.S., and it ended up as a conventional military war between the U.S. and the North Vietnamese regular forces.[6] In contrast, U.S. military operation in Iraq began as conventional and quickly crushed Iraqs regular forces and ended up as a counterinsurgent campaign against terrorists. In Vietnam the Communists motivated a centrally-directed, perfect strategically revolutionary war, with a detailed political and economic program in order to mobilize the support of the peasants. Moreover, the communists in Vietnam had external support. The insurgency in Iraq was nothing like it. The Iraqi insurgents were former Baathist regime operatives, Sunni Arabs, al-Qaeda and other Islamist suicide bombers, hired gunmen and anti-American Shiites. So, the insurgency was not centrally directed. Moreover, it has no declared agenda, though it seems that their goal is to get the U.S. out of the country and cause instability on behalf of the restoration of Sunni Arab rule. Until recently the Iraqi insurgency rested mainly on the Sunni Arab community that consisted the 20% of the population. Now the insurgency has expanded but it cannot be compared to Vietnams situation where the peasants (80% of the population) formed the communist insurgency forces. When it comes to scale, the differences are many. In terms of the forces committed the U.S. military personnel in South Vietnam they reached 543,000 in 1969. Allied forces coming from other countries were 65,000 in 1968 and the South Vietnamese armed forced reached 820,000 soldiers. Communist troops numbered 700,000 in 1966.[7] By comparison, insurgent Sunni Arab fighters were no more than 5,000.[8] Militant Shiites, associated with the Muqtada al-Sadr movement and his Mahdi Army, may on the other hand number up to at least a few thousand fighters. The Vietnam War, unlike the Iraq War, had a huge and protracted aerial bombing component. In terms of bomb tonnage dropped, it was the largest air war in history. During the 1962-73 period, 8,000,000 tons dropped through Indochina.[9] U.S. aircraft losses due to hostile action were also numerous, as North Vietnam was supported by the Soviets who supplied them with technologically advanced air defenses. During 1962-73 period the U.S. aircraft loses totalled 8,500, 2,700 airmen were killed and 1,800 were captured and became prisoners.[10] In Iraq, U.S. air power comprised a large component of major operations and had one advantages over U.S. operations in Vietnam: the enemy didnt have effective air defenses. However, as in Vietnam, the helicopters proved vulnerable to hand-held missiles and to machine guns. During March 20-May 1, the Iraqis downed 30 helicopters.[11] U.S. manpower loss rates During the 1965-1972 period in the Vietnam War, the U.S. numbered 55,700 dead and 290,000 wounded, which is translated as 19 dead and 100 wounded per day. These rates are well above than in the Operation IRAQI FREEDOM, which records 2 deaths per day. By April 2004, U.S. casualties had reached 685 dead and more than 3,000 wounded.[12] The Enemy The number of the enemys forces was impressive in the Vietnam War, but so was the number of the U.S. and South Vietnamese forces, which combined to third-country allied forces, outnumbered the communist forces. U.S. forces in both cases had a fire power advantage over the enemy. Despite that fact, in the end the U.S. left South Vietnam to the Communists. One explanation would be because of the anti-war movement back in America and the hostility of the media[13]. Another, would be the outstanding performance of the enemy, based on the asymmetry of stakes. The Vietnamese conflict was a limited war for the United States but a total war for the Vietnamese Communists. The Americans underestimated the enemys ability and most importantly their desire to win even if that meant that they had to die over trying. For the Vietnamese Communists this war was about national reunification, independence and taking over the power in Vietnam.[14] The Communist forces losses during the American period of the Vietnam War had reached 1,100,000 dead and 2,000,000 civilian dead. In the 20th century, it is the highest military death toll proportional to its population (5%).[15] The enemy in Iraq is smaller in number, less ideologically and organizationally cohesive and has no external assistance. During the first period of the Iraqi insurgency, the most dangerous enemy elements were Baathist regime remnants that were trying to restore the old Saddamist order. The characteristics of the enemy since then seem to be changing with the constant appearance of anti-American Islamic militants in the struggle.[16] Religious extremists and foreign fighters begun to supplant Baathist remnants as the primary members of the insurgency, using suicide as an insurgent method and other types of bombings..[17] Additionally, an unknown number of criminals and unemployed former soldiers have been hired by the Baathists to engage in attacks on coalition forces for pay. Saddam Husseins capture brought into Iraq a number of foreign terrorists that now had the kind of freedom of movement that previously didnt have.[18] While Saddam was in charge, an effective internal security prevented any kind of insurgent activity. Moreover, terrorism against his regime was something that Saddam was fighting against. Moreover, al Qaeda takes advantage of the vacuum in the political system that Saddams regime fall created. Members of al Qaeda are considered as leaders of the major suicide bombings that have been taken place in the country, such as the attacks at the UN headquarters, the Jordanian embassy and Kurdish political parties.[19] Another part of the insurgents is people who seek revenge against the Americans for previous actions against their families and friends.[20] But, it is clear that Iraqi soldiers are not as capable as the Vietnamese Communists were. The Communists were organized into divisional-size units, whereas Iraqi fighters operate in squads. The Vietnamese Communists had external access to technological advanced weapons, whereas the Iraqis did not. But the Iraqi insurgents are better armed today, than the Vietnamese Communists in 1960, who relied on stolen and home-made weapons.[21] Iraq starting from Saddam Husseins era, has been a heavily-armed society. Last but not least, the Iraqis have no common ideology, strategy or vision for Iraqs future, while the Vietnamese Communists had. Iraqi insurgents operations are uncoordinated, even though all of them agree on the objective of Americans being thrown out of the country, they have not agreed on a strategy for doing so. Maybe their thought is to kill as much U.S. troops as they can in order to undercut domestic American political support? Military Operations In Vietnam the U.S. got involved in two wars at the same time: one on the ground in the South and an air war in the North. Both of them failed. In the South, the U.S. military forces believed that they could cause huge casualties, because of their fire power, on the Communists and that they would have the initiative in the war field.[22] But, they ignored the Communists readiness to sacrifice and their substantial manpower. Moreover, in fact, the Communists started most of the fire fights, which meant that they could control their losses by refusing combat when it suited them to do so. The enemy managed to keep losses within his capacity to replace them.[23] In the air war against North Vietnam the Americans also underestimated the enemys will to win. North Vietnam was a pre-industrial totalitarian area, so it was difficult to be defeated through air power. Moreover, the Soviets provided them with military means that imposed significant loses on American aircrafts.[24] North Vietnam had a powerful air defense system and the capacity of bomb damage repair, whereas Iraq in 2003 had not. The U.S. air losses in North Vietnam were significant. Apart from the enemys capacity and political restrictions in the use of force, there were other factors that influenced Americas military performance. There was no joint warfare in Vietnam.[25] On the contrary, inter-service rivalry dominated, producing disunity of command and precluding the provision of timely and useful military advice to civilian authority.[26] On the ground things werent any better. Rotational tours of duty of 1 year for enlisted personnel and 3-6 months for officers lead to small unit cohesion under fire and compromised the ability of officers and men alike to accumulate and sustain knowledge and skill in fighting. As a result, only the 15% of the U.S. military personnel in Vietnam were available for sustained ground combat operations, by 1968.[27] Communist forces were leaner because they relied more on stealth and cunning than firepower, and because they recruited hundreds of thousands of peasants to perform logistical tasks. Moreover, they lived in the field, unlike Americans. Vietnamese revolutionary war, combined mass political mobilization and a reliance of guerrilla tactics that deprived a firepower superior conventional foe of decisive targets to shoot at.[28] They relied on camouflage and night operations, hit-and-run attacks and use of terrain and populations as means of concealment. The purpose of Communists military operations was to weaken enemys will through protraction of hostilities. It was the only way for them as a swift victory over the Americans was impossible.[29] Insurgents in Iraq have different targets: U.S. and coalition troops, American civilian contractors, Iraqis working with Americans, oil and electrical power infrastructure. Moreover, Iraqi politicians, police stations and officers and members of the New Iraqi Army.[30] Their methods have evolved through time as the various groups have engaged in trial. They mainly include rocket-propelled grenades and use of improvised explosive devises. Iraqi police officers and other security forces are targets because they are considered to take over the power as soon as the U.S. forces leave the country. In addition, they are more vulnerable because their weapons are not as lethal as U.S. forces and they receive limited training in force protection.[31] Role of Allies In 1965 the United States did not bother to seek U.N. authorization for intervention in Vietnam because of the certainty of a Soviet veto.[32] In 2003, the United States sought an authorizing resolution but failed to garner even a majority among the U.N. Security Councils membership.[33] Indeed, in both cases, much of the rest of the world, including key allies, regarded U.S. military intervention as illegitimate. Not a single NATO ally joined the United States in Vietnam; on the contrary, only five other states aside from South Vietnam itself (Australia, New Zealand, the Philippines, South Korea, and Thailand) contributed combat troops.[34] If Americas allies in the Vietnam War were few, the opposite was true for the Vietnamese Communists. Unlike Saddam Husseins Iraq in 2003, the Communists in Vietnam had powerful and decisive allies. Behind the NLF in the South stood North Vietnam, and behind North Vietnam stood the Soviet Union and China. Deliveries included fighter aircraft, antiaircraft guns, tanks and helicopters. The Chinese, provided the Vietnamese Communists with huge quantities of weapons. Unlike the Russians, however, the Chinese provided over 300,000 antiaircraft and engineer troops who, in the face of escalating U.S. bombing, manned air defense systems and constructed, reconstructed, maintained, and defended North Vietnams transportation network, especially its railroad system.[35] In Iraq, as in Vietnam, the United States has sought international support both to reduce its military burden and to enhance the legitimacy of its policy, although it strongly resisted giving the United Nations a major voice in post-war Iraq policy. In Iraq, as in Vietnam, this effort produced disappointing results, although the number of countries contributing forces to Iraqs postwar stabilization is much more impressive than those that sent troops to Vietnam. In both cases, the United States bore the primary burden of the fighting, although in Vietnam, unlike Iraq, a large indigenous force performed important static defense and other military tasks. In Iraq, the most notable contribution came from the United Kingdom, which contributed 26,000 troops. Since the termination of major combat operations in May 1, 2003, a number of other countries, for a variety of motives, some of them having little to do with support for U.S. policy in Iraq, have committed limited force contingents to assist Iraqs post-war stabilization.[36] Additionally, the more Americanized the already heavily American foreign presence in Iraq becomes, the more likely it is that it will provoke Iraqi nationalist opposition. Some Iraqi nationalists may be drawn to the insurgent cause by what they view as a prolonged U.S. troop withdrawal and the continued absence of a new U.N. effort to take over the establishment of a new Iraq.[37] Challenges of State-Building The Vietnam War ended as a war between two states, the northern Democratic Republic of Vietnam (DRV) and the southern Republic of Vietnam (RVN). The former established in 1945 and the latter in 1954. The U.S. supported the RVN against further Communist expansion. If it werent the U.S. political, military and economic support, the anti-communist regime could not have been created and sustained.[38] The U.S. helped with the state-building in South Vietnam for two decades. It founded governmental institutions, it armed and trained the RVN armed forces, it subsidized South Vietnams economy and it tried to direct the RVN toward democratization. Despite these efforts, state-building failed, first of all because of the RVNs military defeat in 1975. The RVN was defeated so quickly that made an impression even to Communists.[39] The U.S. were to blame for it partially. It reduced its principal goal from securing an independent, non-Communist Vietnam to looking for a withdrawal and when the final Communist offensive was launched in 1975, they couldnt re-enter the war or provide the RVN with materials.[40] The RVN was to blame for the failure, too. Their weaknesses were: professional military inferiority, corruption and lack of political legitimacy. Moral disintegration explains why their three times bigger in size army, with larger equipment was that rapidly defeated.[41] Important RVNAF units didnt go to combat because they were to protect the government from potential threats of a coup detat, and generals that were very skilful were considered as political threats. In addition, military promotions were given with no meritocratic methods.[42] Moreover, many South Vietnamese started stealing American military and economic aid in order to get profit. They didnt care about going to war as for them the Americans were responsible for this task. Black market operations were one of the major components of RVNAF corruption.[43] The Communists fighting power was superior as first of all their political program was very clear: kick out the Americans, give land to the peasants and unite the nation. In addition, they had a totalitarian political system that controlled and directed the society more effectively than in South Vietnam. On the contrary, the RVNAF lacked in discipline and patriotism that would lead soldiers to sacrifice their lives.[44] Unlike the RVN, the Communists succeeded in persuading the majority of Vietnamese in both South and North that it was the only legitimate political representative of national independence. The RVN failed to obtain the necessary legitimacy in order to survive without the American support.[45] In Iraq, as in South Vietnam, the political success will come after the creation of a government that will be legitimized by the majority of people and after the creation of security forces that will be in position to protect this new political order. South Vietnam had a corrupted government and large but incompetent security forces. Its enemy, however, was very capable. On the other hand, in Iraq there is no government and no worth-mentioned security forces. Moreover, any government that the U.S. will try to create must be likeable from the Iraqis and must be secured by U.S. military power.[46] The main threat to state-building in Iraq lies not in the insurgency in central Iraq, but in the potential for the recent uprising of Shiite militants to reignite, expand, and include large elements of that community or the development of the kind of sectarian civil war that plunged Lebanon into near anarchy for almost 2 decades.[47] The creation of a stable and democratic Iraq is difficult. The U.S. does not have the time with their side. Most of the Iraqis and their Arab neighbours look Americas presence there suspiciously and question its motives. So the Iraqi governmental institutions are erected under political pressure and under the objections of Iraqi sectarian leaders.[48] The U.S. with its military presence undermine the constructed governments legitimacy. U.S. withdrawal will reassure nationalists and provide governmental institutions with some space in order to develop.[49] One the other hand, a premature withdrawal a security vacuum may cause disorder that could lead to a civil war. Iraq has met in the past tyranny and authoritarian regimes, so a democracy in order to work needs institutions that can be trusted to deliver representative government, while protecting minorities. In addition, the development of a political society where groups will have the opportunity to be elected without provoking fears to the losers, is necessary. Otherwise, the losers may try to ensure their safety by resisting to national institutions.[50] The institutions need to be protected by security and gradually the U.S. intents to pass this responsibility on Iraqis. This action may lead to the legitimacy of the new Iraq government, provided that the new forces will not operate with visible support from the U.S. . [51] Challenges of Sustaining Domestic Political Support The American intervention in Vietnam failed because citizens back home stopped supporting it. Communists had more to loose from a bad ending of this war than the U.S, so their political will was much stronger. The majorities and opinions of liberal newspapers, such as the Washington Post and New York Times supported the Vietnam war in the first place, as long as it didnt last long, there werent many casualties and it didnt influence much their economy.[52] People trusted the U.S. Government and supported its decisions. But as war went on, this support started to decrease. By March 1969, 66% of the citizens were opposed to the continuation of this war. From April 1969 to December 1972 the U.S. military personnel dropped from 543,000 to 24,000. Public opinion made Nixon pullout the American soldiers even though he knew that this would favour the Communists.[53] In Iraqs case, public support may decreased because of the inability to find any relationship between Iraq and al-Qaeda. Moreover, the costs of the Iraq War are extravagant and they are to blame partially for the cumulative national debt.[54] Operation IRAQI FREEDOM was a war of choice and as such, like Vietnam, publics tolerance in deaths was limited. Before the war started, .U.S. Government assured people that the hole world would consider them as liberators of Iraq. Effects on public opinion between expectations and realities needs to be seen. However, polls taken in March 2004 by CNN/USA Today showed a decline in public support. Only 49% was in favour of the Iraq War. Moreover, the 43% believed that their government mislead them about whether Iraq has nuclear weapons.[55] Conclusions These two historical situations are not identical. Operation IRAQI FREEDOM achieved its goal, that is eliminating a regime that could be a threat to the U.S. . Despite that fact, the U.S. had to face the costly results of state-building while insurgent violence is still on, that resembles the Vietnam situation. Many academics believe that establishing democracy in Iraq is beyond Americas power and that another regime type must be approached, such as a benign authoritarian regime type along the lines of Kemal Ataturks Turkey, as a transition to more representative governance.[56] However, the U.S. must not abandon Iraq as it did with South Vietnam in 1975. It is possible that such an action would lead to civil war. In my opinion the differences between the two cases are more than the similarities, especially in the military aspects. But underestimating the Iraqi insurgents would be a mistake that the U.S. did with the Vietnamese Communists in Vietnam. After all, even the appearance of the insurgency after U.S. operations surprised many. In addition, even though the appeal of the Iraqi insurgency cannot be compared to the Vietnamese Communists, the Iraqi insurgency has attacked key targets to Iraqs reconstruction. Policymakers need to be careful with the two aspects that are similar in both wars. The challenges of state-building and the need to maintain domestic political support. State-building in Iraq could fail for the same reasons that failed in Vietnam: inability to create a political order that gets legitimacy by the citizens. Moreover, the domestic political support cannot be taken for granted, especially now that people have in their memories the consequences of the Vietnam War. In addition, the absence of a North Vietnam in Iraq could change, with a hostile external state intervention. For instance, Iran, which has strong state interests in Iraq that have so far been served by the U.S. destruction of the Saddam Hussein regime may try to cause chaos in Iraq. Iran has no interest in the resurrection of a powerful Iraq, and certainly not a democratic Iraq, and it has the means to get thousands of Iraqi Shiites on the streets to protest the U.S. occupation. To conclude with, it is important to mention the greatest difference between the two wars. The Vietnam War is a finished event, whereas Iraq War is still in progress. We know what happened in Vietnam, but we do not know what Iraqs fate will be. Robert L. Bartley, Iraq: Another Vietnam? Wall Street Journal, November 3, 2003 Harry G. Summers, Jr., Vietnam War Almanac, New York: Facts on File Publications, 1985, p. 113. See John W, Garver, The Chinese Threat and the Vietnam War, Parameters, Spring 1992, pp. 73-85. Larry Berman, Planning a Tragedy: The Americanization of the War in Vietnam, New York: W. W. Norton, 1982, p. 92. Larry Berman, Planning a Tragedy: The Americanization of the War in Vietnam, New York: W. W. Norton, 1982, p. 94. Shelby Stanton, Vietnam Order of Battle, Washington, DC: U.S. News Books, 1981, p. 333 James J. Wirtz, The Tet Offensive: Intelligence Failure and War, Ithaca, NY: Cornell University Press, 1991, pp. 247-251 David L. Anderson, The Columbia Guide to the Vietnam War, New York: Columbia University Press, 2002, pp. 286, 287, 288. Phillip S. Meilinger, Air Power: Myths and Facts, Maxwell AFB, AL; Air University Press, December 2003, p. 78. Anthony H. Cordes