What is a'scorched earth policy'?
What is a 'Scorched Earth Policy'. A scorched earth policy is a strategy to prevent a takeover in which the target company seeks to make itself less attractive to hostile bidders.
What was the scorched earth policy in WW2?
In Northern Norway which was at the same time invaded by Soviet forces in pursuit of the retreating German army in 1944, the Germans also undertook a scorched-earth policy, destroying every building that could offer shelter and thus interposing a belt of "scorched earth" between themselves and the allies.
Who used scorched earth policy in Ireland?
Further British use of scorched-earth policies in a war was seen during the 16th century in Ireland, where it was used by English commanders such as Walter Devereux and Richard Bingham. The Desmond Rebellions are a famous case in Ireland. Much of the province of Munster was laid waste.
What was the scorched earth policy of Memnon?
The Greek mercenary general Memnon of Rhodes unsuccessfully suggested to the Persian satraps to use a scorched-earth policy against Alexander the Great, who was moving into Asia Minor . The system of punitive destruction of property and subjugation of people when accompanying a military campaign was known as vastatio.
When was the scorched earth policy first used?
1915On the Eastern Front of World War I, the Imperial Russian Army created a zone of destruction by using a massive scorched-earth strategy during their retreat from the Imperial German Army in the summer and the autumn of 1915.
When did Russia use scorched earth policy?
After the German invasion of the Soviet Union in June 1941, Soviet soldiers followed a "scorched earth" policy to hinder the German advance. In this German newsreel footage, German soldiers approach a burning village, one of many destroyed during the invasion of the Soviet Union.
Was the scorched earth policy used in ww2?
During WWII, Ukraine suffered through two episodes of scorched earth – as the Wehrmacht retreated from Ukrainian territory in 1943-44, Hitler also ordered a scorched earth policy; some 28 000 villages were burned by the retreating Germans, and any and all resources that could be used by the advancing Red Army were ...
Why was scorched earth policy created?
A scorched earth policy is a last-ditch attempt to deter a hostile takeover by making the target company unattractive to the potential acquirer. Tactics include selling off prized assets, racking up mountains of debt, and promising management substantial payouts in the event that they are one day dismissed.
Who created the scorched earth policy?
commander, Lord Kitchener, devised a scorched-earth policy against the commandos and the rural population supporting them, in which he destroyed arms, blockaded the countryside, and placed the civilian population in concentration camps.
How do you beat scorched earth?
0:2720:30How to Beat the SCORCHED EARTH Map on Ark - YouTubeYouTubeStart of suggested clipEnd of suggested clipAnd the basics are fairly simple you just loot bushes. You hit trees you pick up stones the sameMoreAnd the basics are fairly simple you just loot bushes. You hit trees you pick up stones the same thing you do in normal arc. The only big difference in scorched earth is that whenever you go near.
What is scorched earth slang?
Definition of scorched-earth 1 : relating to or being a military policy involving deliberate and usually widespread destruction of property and resources (such as housing and factories) so that an invading enemy cannot use them. 2 : directed toward victory or supremacy at all costs : ruthless scorched-earth rhetoric.
Did the Mongols use scorched earth?
By razing coastal fortifications as well as using a scorched earth policy along the Mongol frontier, the Mamluks prevented any possible conquest from the West or East.
What is scorched earth history?
Scorched Earth traces the history of scorched earth, military inundations, and armies living off the land from the sixteenth to the twentieth century, arguing that the resulting deliberate destruction of the environment—"environcide”—constitutes total war and is a crime against humanity and nature.
What is the scorched earth policy from the French Revolution?
The fleeing Russian forces adopted a “scorched earth” strategy, seizing or burning any supplies that the French might pillage from the countryside. Meanwhile, Napoleon's supply lines became overextended as he advanced deeper and deeper into the Russian expanse.
What is a scorched earth legal defense?
The scorched-earth defense is a form of risk arbitrage and anti-takeover strategy. When a target firm implements this provision, it will make an effort to make itself unattractive to the hostile bidder.
Why does the Butcher say scorched earth?
Scorched Earth is a strategy of annihilation. It boils down to burning or destroying everything you leave behind so the enemy has nothing to use against you. The English did this in the second Anglo-Boer war in South Africa.
How did the scorched earth policy work in Russia's advantage?
Russia's scorched earth policy was a military strategy in which the Russians would destroy their own land and resources while retreating, making them unavailable to enemy armies. By destroying their own agriculture, industry and infrastructure, they ensured that enemy forces would not be able to make use of them.
What is a scorched earth policy which country used this policy and why?
A scorched-earth policy might mean wiping out stores of food, crops in fields, and water sources. During the Gulf War, Iraqi forces applied the policy when they set oil wells on fire as they retreated, so U.S. invaders couldn't seize them.
What is scorched earth history?
Scorched Earth traces the history of scorched earth, military inundations, and armies living off the land from the sixteenth to the twentieth century, arguing that the resulting deliberate destruction of the environment—"environcide”—constitutes total war and is a crime against humanity and nature.
How was Napoleon defeated 1813?
In the 1813 Battle of Leipzig, also known as the Battle of Nations, Napoleon's army was defeated by a coalition that included Austrian, Prussian, Russian and Swedish troops. Afterward, Napoleon retreated to France, where in March 1814 coalition forces captured Paris.
What is scorched earth policy?
What Is a Scorched Earth Policy? A scorched earth policy is an aggressive defense strategy utilized by a target company to discourage attempts of a hostile takeover by an acquirer.
How can businesses implement scorched earth policies?
They can include taking on additional debt, adopting golden parachutes for senior executives, selling off prized assets, or rescheduling debt repayment for after the proposed takeover.
When did Bendix acquire Martin Marietta?
One of the best examples of this tactic being used in real life comes from 1982 when engineering and manufacturing company Bendix tried to acquire building materials specialist Martin Marietta. Bendix managed to grab a 70% controlling stake in Martin Marietta shares.
What was the purpose of the scorched earth?
During times of war, troops would destroy valuable goods – crops, buildings, routes in and out of towns – in order to make them unusable by enemy troops.
What is a golden parachute?
Golden Parachute A golden parachute, in mergers and acquisitions (M&A), refers to a large financial compensation or substantial benefits guaranteed to company executives upon termination following a merger or takeover. Benefits include severance pay, cash bonuses, and stock options. Greenmail.
Is the scorched earth policy successful?
For some companies, the scorched earth policy is successful and the company recovers after the takeover bid fails. For the rest, however, either the takeover is not prevented or the self-sabotage effectively ruins the company.
When was the scorched earth policy banned?from hitechcreations.com
The scorched-earth policy, in particular the destruction of a food and water supply for civilian populations, was finally banned from warfare at the Geneva Convention in 1977. Article 54 of Protocol I of that Convention states: “It is prohibited to attack, destroy, remove, or render useless objects indispensable to the survival of the civilian population, such as foodstuffs, agricultural areas for the production of foodstuffs, crops, livestock, drinking water installations and supplies, and irrigation works, for the specific purpose of denying them for their sustenance value to the civilian population or to the adverse Party, whatever the motive, whether in order to starve out civilians, to cause them to move away, or for any other motive.”
Who used scorched earth policies in the 16th century?from en.wikipedia.org
Further use of scorched-earth policies in a war was seen during the 16th century in Ireland, where it was used by English commanders such as Walter Devereux and Richard Bingham . The Desmond Rebellions were a famous case in Ireland. Much of the province of Munster was laid waste.
What happens if all the board of directors agree on scorched earth?from investopedia.com
If all the board of directors (B of D) do somehow agree that a scorched earth policy is worth implementing, they still must overcome some potentially difficult obstacles. The hostile company may seek an injunction against the company's defensive actions and might be able to prevent the board from stopping the takeover bid.
How did the scorched earth policy affect the war on the Eastern Front?from secondworldwarevents.weebly.com
The scorched earth policy had a fundamental impact on the war on the Eastern Front. More than half of the victims of war on the Eastern Front were civilians. This was the first time in the history of warfare that civilian casualties outweighed military casualties.
How can businesses implement scorched earth policies?from investopedia.com
They can include taking on additional debt, adopting golden parachutes for senior executives, selling off prized assets, or rescheduling debt repayment for after the proposed takeover.
What was the punishment for ignoring the scorched earth order?from en.wikipedia.org
The punishment for ignoring the order was execution, with destruction of the defector's properties.
What was the purpose of the scorched earth?from corporatefinanceinstitute.com
During times of war, troops would destroy valuable goods – crops, buildings, routes in and out of towns – in order to make them unusable by enemy troops.
How did the scorched earth policy affect the war on the Eastern Front?
The scorched earth policy had a fundamental impact on the war on the Eastern Front. More than half of the victims of war on the Eastern Front were civilians. This was the first time in the history of warfare that civilian casualties outweighed military casualties.
Why did Stalin use the scorched earth policy?
This policy was used by Stalin to prevent Stalin and Hitler from gaining Russian lands.
Types of Scorched Earth Strategies
There are several ways in which a target company could make itself unattractive to the potential bidder. Some of the most important ones are discussed below:
Drawbacks of Scorched Earth Policy
There are four major issues in using scorched earth policy. These are:
Final Words
The scorched earth policy could prove very useful in case of a hostile takeover. It is usually the last option that a target company resorts to. But, when using such strategies, the target company needs to be very careful because it could easily go against it as well.
Sanjay Bulaki Borad
Sanjay Borad is the founder & CEO of eFinanceManagement. He is passionate about keeping and making things simple and easy. Running this blog since 2009 and trying to explain "Financial Management Concepts in Layman's Terms".
Ancient use of scorched earth tactics
Before one can discuss the use of scorched earth policies, it must be understood what such tactics entail. In general, a scorched earth policy is a strategy which aims to destroy anything that may be of use to the enemy, whether that be natural resources, military equipment – even local citizens.
Use of scorched earth tactics up until the 19th century
As society entered the medieval period, scorched earth tactics continued to grow in popularity. Viking chieftan Hastein used the policy during the Great Viking Invasion of England in 893, and its use continued with the Harrying of the North in 1069.
The Napoleonic Wars and the American Civil War
The two most notable instances of scorched earth tactics being used in the 19th century occurred during the Napoleonic Wars and the American Civil War.
Scorched earth tactics during the World Wars
The use of scorched earth tactics primarily occurred on the Eastern Front during World War I, but they were also used on the Western Front. In the east, the Imperial Russian Army used them to create a destruction zone during their retreat from the Imperial German Army in 1915, destroying homes, railways and crops.
Vietnam and the Persian Gulf
Scorched earth tactics during the Vietnam War are typically attributed to the use of Agent Orange by the American forces. The chemical, known for being a particularly powerful herbicide, was used as part of Operation Ranch Hand to destroy crops and the jungle foliage the Viet Cong used to hide.
The 2022 Russian invasion of Ukraine
Scorched earth tactics have become much rarer in the 21st century, but examples of their use were seen in Darfur, Libya and Sri Lanka. Most recently, Russia has been accused of using them during its invasion of Ukraine, with White House National Security Adviser Jake Sullivan saying in early April 2022:
Scorched Earth Policy Tactics
- In order to make itself less attractive, a targeted company may do a number of things, including: 1. Liquidating or terminating significantly valuable assets and securities 2. Making agreements to repay debts as soon as the hostile takeover is completed. The acquiring company would then be forced to pay off the outstanding debt, thereby eroding its...
Origin of The Scorched Earth Policy
- The term “scorched earth” started as a military term. During times of war, troops would destroy valuable goods – crops, buildings, routes in and out of towns – in order to make them unusable by enemy troops. The downside to the scorched tactic is that the items and infrastructure that were destroyed could also no longer be used by the troops who destroyed them.
Issues with The Scorched Earth Policy
- When a company deliberately takes action to make itself less attractive, the goal is to prevent a takeover attempt. In the event that the policy works, the targeted company achieves its desired result, escaping the takeover. There are two major problems that may arise from implementing the scorched earth policy: 1. The acquirer may still see underlying value in the targeted compan…
Final Word
- The scorched earth policy is, at its core, a final, desperate effort by a company to stop a hostile takeover. Other anti-takeover strategies are often better options because they don’t sabotage the value and earning potential of the targeted company. For some companies, the scorched earth policy is successful and the company recovers after the takeover bid fails. For the rest, however…
More Resources
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