Effect Of The Sugar Tax On Consumer 's Demand

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Introduction Story 1 Johnson controls is thinking of a tax inversion merger with Tyco international to reduce their tax burden. This will help Johnson controls complete their move towards a more focused company in building controls (Independent, 2016). I will analyze the benefits and risks of such a merger on the companies involved as well as their employees. Story 2 The government is considering a levy on sugar as part of a national strategy to tackle childhood obesity. However, Paul Polman, Unilever’s boss argues that there is little evidence that proves a sugar tax would help tackle obesity (The guardian, 2016a). I will analyze the effect of the sugar tax on consumer’s demand. I will also analyze Unilever’s actions as a result of this…show more content…
Johnson Controls have lost more than a quarter of its value and Tyco’s shares have also fallen by over 30% (TheGlobeandMail, 2016). In order to improve growth, they have taken rationalization measures aimed at saving costs by reducing its workforce and selling off other lower margin units to enable a more competitive and sustainable cost structure in the future (Investopedia, 2015). In addition to the cost-saving measures mentioned above, the merger which creates a new company called Johnson Controls Plc with revenue of more than $40 billion; as stated in TheGlobeandMail (2016) is another method to boost margins and strengthen their market positions around the world by acquiring additional consumer demand. While Johnson Control has strong positions in North America and China, Tyco has strengths in other parts of the word. This merger eliminates a competitor; together they are far-reaching and can increase their market share by combining the resources to create a firm that caters to every aspect of the building controls industry (Financial Times, 2016). As a result of the benefits of the merger, TheGlobeandMail (2016) states that the new company will create savings of $500 million in the first three years. One of the benefits is cost-savings as a result of rationalization which would reduce overhead costs and economies of scale. This could also lead to increased production and quality of services and employees are
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