For Grade 8B
__________________________________
New Case Studies Discuss Question
Please read the above mentioned news articles and use the know knowledge in preparing your article for give question.
Its generally said that Mergers and Acquisitions are always in the favour of Multinational companies and big corporate houses, but are against the consumers and government finances.
Discuss up to what extent you agree with the statement.
Submit your article before
February 10th 2014
Please Write Your Response in 500 Words
Note:
1. Write with references.
2. Present market examples in support of your reasons.
3. Marks allocation for this article is 20
Rubrics for Marks.
A. Theoretical Explanation 5 Marks
B. References. 5 Marks [Use Harvard referencing style]
C. Use of Key words. 5 Marks
D. Examples from various Markets 5 Marks
Mergers and acquisitions are two ways to increase the size of a firms . mergers is when a firm decided to buy another firm (take over ) and acquisitions is when two firms decided to join together . mergers and acquisitions will always in the favor of multinational companies and big corporate house. but will make a lot of disadvantages for the consumers and government . this statement is true , but , it wont always make a disadvantages for the consumers , because some companies that doing the mergers or acquisitions , they still focusing in quality and always give the best for the consumers.
ReplyDeleteSo , its true that mergers and acquisitions will always in the favor of multinational companies and big corporate house but are against the customers and government . business , of course will always focused in profit . so they doing mergers and acquisitions just in order to get more profit and help theyre business in recovering . But sometimes , they didn’t look at the customer and government position . The example will be like in the merger of US airways and American airways . its stated that in the economic way , it will be so good for us airways to be combined with American airways . it will make profit but , how about the price? Its stated that the price of the tickets get higher and become more expensive. Customers will have a lot of disadvantages because they need to spend more money . the second one will be in VW and Porsche problems . its stated that VW has buy the remaining half of Porsche . this will be so good , because they both are in the same type of business ( horizontal ) and it means , they can make a brand new car , with a very high technology and a great model. Investors will also interested in buying their share because they will think that it may give a lot of profit for them . But , it turn out that this business , just make a lot of loss for the investors . Its stated that VW had abandoned the earlier merger plan last September, citing unquantifiable legal risks from lawsuits filed by short-sellers in the United States and Germany who accuse Porsche of secretly piling up VW shares during its failed takeover attempt, causing investors to lose billions of dollars. It makes a lot of disadvantages for the people (customers ) who want to buy their shares. So , the statement above will be so true , that it make s a disadvantages for the customers and government. Another disadvantages that may be taken by the customers and government is that , when a firm doing the mergers and acquisitions , sometimes they didn’t choose the correct one to be bought. Like example a car company buy the bread company . there will be no connection between the bread and car company . the car company may produced a bad quality of bread because they didn’t know how to make bread , they just know how to make car . So , customers amy get some bad quality results.
But , it wont always be a disadvantages for the customers and government. Some companies that doing the merger and acquisitions still focusing in quality . The example will be like in Microsoft – nokia . its stated that Microsoft buy nokia, even though they are not in the same type , but they said that they will combine both of the technology to make a good quality product for the consumers . another example will be Travel and holiday companies Thomas Cook (India) Ltd and Sterling Holiday Resorts (India) Ltd. They both are doing merger and it’s a good decision . they both are in the same type(horizontal ) so they can improve their quality by combining the idea of two companies . customers will take a lot of advantages in here . They may have a better services and facility which will be a good improvement.
ReplyDeleteSo , Mergers and Acquisitions are always in the favour of Multinational companies and big corporate houses, but are against the consumers and government finances. This statement is actually true , but it wont always give a disadvantages for the customers and government. Some business doing the mergers or acquisitions ,but they still focusing in the quality . some of them didn’t because they only think about the profit (money ).
References :
- Notebook
- http://www.livemint.com/Companies/FpQWFUfWWVjQhqPbMaEtNL/Thomas-Cook-Sterling-Holiday-announce-merger.html
- News 1 – 5 .
kezia - 8b
Unchecked,
DeletePlease mention the percentage of originality.
If any problem don't hesitate to ask me.
result :87% originality
Delete[B]Good Work Kezia,
DeleteYou have done lot of hard work in completing this assignment. While writing we should give proper attention to punctuation marks, so before posting do proofreading yourself. While writing, we need to be vary careful of appropriate way of referencing.
I have kept referencing guide in library, you can check with sir Alun.
Mergers and acquisitions both have the same goal is to increase the size of their business or firms. Mergers are the combining of two or more companies, basically when they already did mergers the decision is usually mutually between both firms or business, while acquisitions means take over. Well, mergers and acquisitions are always in the favor of multinational companies and big corporate houses, but are against the consumer and government finances, if that is the cases it is correct but not always that it is correct or it will bring them advantages it may also bring them disadvantages, here are the advantages and disadvantages of it.
ReplyDeleteMergers and acquisitions are always in the favor of multinational companies and big corporate houses but are against the consumer and government finances, it is correct because multinational companies and big corporate houses are thinking about profit not about services, well there are services but the percentage is lower than thinking about profit. When they want to increase the profit so they also must to increase the size of the firm and the aim of mergers and acquisitions are that! To increase the size of the firm. Let’s take some example of the mergers and acquisitions , there is a consolidation in the skies continues with the merger of American airlines and US airways group, it is said that it would create the world biggest airlines in term of passenger traffic and with a combines equity value of 8.25 billion Euros. When they merger their both company, American airlines and US airways group, the two airlines company together had turnover of 29 billion Euros last year. The both companies also expect one time transition cost of 900 Euros over the next three years, with annual savings of 750 million Euros in 2015, so it bring them a good affect after they merger together, we also can see that they can get more profit because the ticket are more expensive than before they merger together. Second examples of mergers and acquisitions, Volkswagen’s shares jumped on Thursday following its agreement to buy the remaining half of Porsche. The protracted takeover struggle sparked high-profile family feuds and lawsuits from investors. The effect of mergers and acquisitions of this both company is good, cause it is stated that it generate annual cost savings of 700 millions Euros and erase about two billion Euros of debt at the sport car maker’s holding company. It also makes a good affect to VW that it would lift VW earnings by six percent next year. From the examples above all of the companies are either multinational companies or big corporate house, so it proof that the statement is correct about the mergers and acquisitions are in favor at the multinational companies and big corporate houses not in the consumer and government finances.
But not always that it is always favor in multinational companies and big corporate houses only and are against the consumer and government finances, It will bring also disadvantages side. Sometimes government also wants to merger with any company so that they both will create good quality of neither services nor good quality of goods that given to their community. There is also companies that mergers together and it brings benefit to the consumers, examples are the merger of T-mobile and AT&T, their mergers bring efficient to the consumers, the benefit to the consumers is by helping to solve the AT&T worst headache it’s the shortage of wireless company so when they merger together the problem are solved and it brings advantages and benefit to the consumers.
ReplyDeleteSo in the conclusion, mergers and acquisitions are always in the favor of multinational companies and big corporate houses, but are against the consumers and government finances, it is correct but not always , it may also bring disadvantages and sometimes the both companies merger to bring a good services to the consumers and their aim is to give services not to gain much profit.
References:
- http://tech.fortune.cnn.com/2011/03/21/att-mobile-merger-brings-efficiencies-but-will-consumers-see-the-benefit/
- news 1-6
shelvina gabriela 8B
Unchecked,
DeletePlease mention the percentage of originality.
If any problem don't hesitate to ask me.
score of plagiarism : 92% originality
ReplyDelete[A] Good work Shelvina,
DeleteI appreciate you answer, you tried well to explain how merger benefits more to big companies instead consumer and government. Question expects more detail explanation for the above mentioned cause.
ReplyDeleteMergers are when two or more companies’ join together to become one company, where they share the decision-making process and also share their views (for example: merger of Mandiri Bank with Bank Bumi Daya + Bank Dagang Daya + Bank Eskpor Impor Indonesia + Bank Pembangunan Indonesia). An acquisition, on the other hand, is when one company takeover another company, and they take full control of the company’s decision, responsibility and operations (For example: Microsoft acquires Nokia). Aside from that, there are also integrations. There are 3 types of integrations:
1. Horizontal:
Two firms integrate at the same level of production or same line of business ( for example: US Airways Group and American Airlines or Walt Disney and Lucas Film in 2012)
2. Vertical:
When they have different stages of production. In vertical integration it is divided to forward; buying a firm that sells output (a mill buys a bakery) or backward integration; buying a firm that sells input (a mill buys a farm).
3. Lateral:
Sell similar but correlated products (for example Google and YouTube).
There is a view stating that mergers and acquisitions are usually in the favor of MNCs and big corporate houses since they can benefit financially from them. They can attain higher income since merged companies will have wider commercial span in terms of branches or divisions. Thus, more branches mean more income. They can also obtain higher share price, for example: a merger between one moderate company with a well recognized company will have an impact on the share price of the moderate company. This type of information usually kept discreetly as it may affect stock exchange rate.
The other purpose of mergers and acquisitions of big corporate companies Is to have a more sturdy assets since both assets are combined together. Eventually, the corporates aim to have a stronger bottom line (profit) since each company has their own customers’ base and due to the merger, number of customers will be summed up thus increasing their profit. To sum up, the benefit for corporates to merge are as follow:
1. Synergy & growth
2. Increasing market power & market share
3. Acquiring unique capabilities or resources (this is Facebook’s target when they wish to buy SnapChat). Resources may come in manpower, inventory and other assets.
4. Unlocking hidden values, technology transfer & product differentiation
5. Sturdy asset & higher profit
There is also an opinion that when two companies merged, it may hurt their consumers. Why? Well, firstly, their customers will have fewer selections. For example if Hershey’s and Cadbury merged then they will only produce one product, and that will lessen the selection. Merged companies may incur higher cost due to more products to be made, more suppliers to be paid, more branches cost to support etc., hence it may increase the price of the products and it will be a disadvantage to the consumers since they will have to pay more. It is also a concern that merged company may have poorer services due to bureaucracy of new management or due to employees or customers that need time to adapt with new procedures.
ReplyDeleteBesides consumers, merger & acquisition may not in favor for government. One of the reason, perhaps when two companies merged, logically it’ll grow bigger, and like the economics of scale the bigger the production then the cost per unit will decrease. An example of this is Lotte Mart; if you buy large quantities there then you will result in a lower price. Merger & Acquisition may also be performed to get around government regulations and has tax consideration. For example, before the merger or acquisition, government may collect tax revenue from two companies but afterwards it will derived from only one..
However, in certain extent merger & acquisition may benefit the consumers. For instance, now Mandiri Bank is the number one bank in Indonesia. People trust Mandiri Bank more instead of BBD or BDD or Exim Bank or BPI which are parts of Mandiri Bank now after merger.
For government, merged companies which turned out to be a solid market leader company will affect positively in Stock Exchange marker, become a good source of tax provider, employs numerous working force etc.
So in conclusion to my essay, though not consecutively, I do agree that on certain extent merger & acquisition are benefitting MNCs and big corporate houses rather than consumers and government. However, it has positive impact as well to government and consumers when the merger or acquisition resulting a stellar profitable market leader company.
Charlene 8B
Preferences:
- Notebook
- http://www.investopedia.com/terms/a/acquisition.asp
- http://www.strategicmanagementinsight.com/topics/vertical-integration.html
- http://www.strategicmanagementinsight.com/topics/horizontal-integration.html
- http://www.tutor2u.net/blog/files/Business_Growth.pdf
Result : 100% originality
Delete[A*] Excellent Charlene.
DeleteAll case studies you have given are appropriate, large firm my influence the government decision making process. You give Lotte mart example, its need to be re explained in this sense.
PART I
ReplyDeleteBoth merger and acquisition are a part of joining of two or more companies. Mergers are joining of companies where the ownership of the new consolidated company (the company resulted of merging) are proportionally distributed among the previous companies. While acquisitions are buy-out of a company by an acquirer so the owner of the new consolidated company is only the acquirer. Merger and Acquisition may help firms to increase in their size and valuation easily if it works with proper management.
Mostly, mergers and acquisitions are always in the favor of multinational companies or any big corporate firms. An example of famous mergers are Exxon and Mobil. Exxon was the oil king in 1999 and became larger after assigned $81 billion for agreement and contract with Mobil. Formerly in the 19th century, Exxon was John D. Rockefeller’s Standard Oil Company of New Jersey and Mobil was Standard Oil Company of New York. So both of them actually were big oil company but only originate from different places. As the result of merging, ExxonMobil remains the strongest leader in the oil market, with a huge hold on the international market and dramatic earnings. In 2008, ExxonMobil occupied all ten spots in the “Top Ten Corporate Quarterly Earnings” (earning more than $11 billion in one quarter) and it remains one of the world’s largest company based on revenue (second only to Walmart Stores). So until now, because of their merging, Exxon Mobil can be one of the biggest oil firms in the world which cause other firms also targeted to merge with other developing companies. Another example is about a successful acquisition, Google Inc. acquired Youtube for $1.65 billion. Even though Google now have owned Youtube, however, the company will keep operating its own Google Video as a separate operation. YouTube will still retain its brand, and its 67 staff, including co-founders Chad Hurley and Steve Chen, will keep their jobs. "By joining forces with Google, we can benefit from its global reach and technology leadership to deliver a more comprehensive entertainment experience for our users and to create new opportunities for our partners." said Mr. Hurley. After this buyout, Google Inc.’s assets became more and make it to be more undefeatable in the web market. Also with Youtube.com, they became more popular and become the 1st web media (videos and songs) service provider. So this perfect acquisition will make other big or large firms to also acquire other reliable firms. So based on above perfect and successful merger and acquisition example, it proves that any firms who done those (join either through merging or acquiring) with excellent planning for the new consolidated company business market strategy and management will make those firms become vigorously increase in size, popularity, valuation and earn many other beneficial factors.
PART II
ReplyDeleteHowever, that may doesn’t make consumers and government happy. Let’s discuss for why it may sound bad for consumer with its fact example. We may take two examples. First is when Apple Inc. arrived at Indonesia technology market and introduced to Indonesia many hi-tech devices such as iPad and iPhone (the most popular in Indonesia). When people are introduced with iPad and iPhone by Apple Inc. , since that Indonesian people are always find for updates of the newest innovated hi-tech devices. However, the provider of the newest hi-tech devices was only Apple Inc. that time in Indonesia. So, people who are very interested in hi-tech devices updates are forced to buy iPad and iPhone products with a very high prices because no other multinational companies can provide the most updated hi-tech devices with lower prices. And another example is when Samsung Co. Ltd began to join Indonesian technology market. Samsung can be the rival of Apple by innovating better and greater smartphone and tablets technology with best operating system included, Android. So until know, in Indonesia only those two companies that take control role in Indonesian technology market because no other firms that can offer the same or better technology than both of the firms’ innovation. Same case for the government, it may break their rule such as anti-monopolism policy. But, if the government refuse their joining to Indonesian market, Government may lose their taxes rights and Indonesian technology market development will be very slow and outdated.
How ever, mergers and acquisitions will not always be beneficial to firms. There is an example of merger that was fail and unsuccessful. Such as Daimler Benz/Chrysler ($37B). In 1998, Mercedes-Benz manufacturer Daimler Benz merged with U.S. auto maker Chrysler to create Daimler Chrysler for $37 billion. The logic was obvious: create a trans-Atlantic car-making powerhouse that would dominate the markets. But by 2007, Daimler Benz sold Chrysler to the Cerberus Capital Management firm, which specializes in restructuring troubled companies, for a mere $7 billion. And also a failed acquisition was Quaker – Snapple. In 1994, grocery store legend Quaker Oats purchased the new-kid-on-the-block, Snapple, for $1.7 billion for making Snapple drinks just as popular. However, their efforts failed miserably. After just 27 months, Quaker Oats sold Snapple for $300 million. Those unsuccessful merger and acquisition will also make other firms for not going to merge or buy-out another firms.
PART III
ReplyDeleteAlso with the same case for government and consumer, they may receive benefits too when multinational companies merged or did acquisitions. Merged or did acquisition multinational companies may develop new ideas in innovating better goods quality and cheap prices or even none. That will make Indonesian people or world consumer can easily satisfy their better goods with cheap price or even no prices, such as the acquisition of Youtube.com by Google Inc. Now people in the world can freely watch movies or hear songs in youtube without being charged by the website with only have an internet connection at home or anywhere else. Same with the Government, if those multinational companies only do contribution in helping Indonesian market development with out do monopolism, government rules can be obeyed with also can take much taxes from those multinational companies such as Nike, Addidas, Reebok, Sony, etc.
So finally we may take conclusion that merger and acquisition is not always being an important target by all multinational companies or other big firms. Because instead or merging or acquiring they should really make a good planning for the future consolidated company. Also with government and consumer, they are not always feel bad when multinational companies merged or do acquisition because when those firms obey the anti-monopolism rules, people can satisfy their products with open-hearted.
Resources from above data response :
1. http://news.bbc.co.uk/2/hi/business/6034577.stm
2. http://www.rasmussen.edu/degrees/business/blog/best-and-worst-corporate-mergers/
3. Own thinking and ideas
Score of anti-plagiat :
Checker : http://smallseotools.com/plagiarism-checker/
Result: 87% Unique Content
Plagiarism.net = unsuccessful b’coz exceeding its maximum chars
By C0NS74N71US N31L – Constantius Neil/8B
[A] Great work Neil,
DeleteAppropriate case studies are selected in support of your explanations, we need to give more emphasis on explanations instead empirical example in the form of case studies.
Merger and acquisition is a benefit for all multinational companies because 2 or more companies work together and this would really help a firm to grow. Most of the time when 2 companies decide to merge together, it is against the customers and government because they don’t really focus on the quality of the product. But mergers and acquisitions have disadvantages as well for multinational companies and they have advantages for consumers.
ReplyDeleteAn advantage of merger for a company is that the profit of the business will increase greatly since they are working together. The merger of Nokia and Microsoft could be a benefit for the 2 companies because Nokia is struggling in the mobile phone market, so with Microsoft taking over Nokia can have new features and new phones. This merger would cause the prices of the nokia phones to increase, because of their merger with Microsoft which improved their product, customers would have to pay more money. The merger of US Airways and US Airlines also improved their planes and flights and staff but the tickets became very expensive because of this merger. If a car company takes over an oil company it will really affect the product because the company doesn't know how to extract oil well so the product’s quality will decrease and sometimes the price can get higher, this will be a great disadvantage for the customers but an advantage for multinational companies. These kinds of mergers are a benefit for multinational companies but these mergers can also bring advantages to the consumers.
Even though the merger of Microsoft and Nokia will cause a price increase, Nokia will make better quality phones for the consumers because of Microsoft. The products will be worth the money because of the improvements Microsoft did for Nokia’s phones. When a company merges with another company that have good technology, it will benefit the consumers because the products will be much better in quality and more people will be attracted to buy the newly improved products of the company. The merger of AT&T and T-Mobile proved to be a great merger for the users of AT&T and T-Mobile because now since the 2 companies are merged together they can offer the consumers a really fast mobile connection for a reasonable price, they might also be able to provide consumers the world’s fastest mobile connection. Airline mergers usually add more fees such as baggage fees and in-flight meals, but the company will offer a wider array of flight options and they can make the ticket prices reasonable.
So in conclusion the statement is true since it is a benefit for large multinational companies and big corporate houses but mergers can also be a benefit for consumers. The merger of AT&T and T-Mobile is an example of a merger that benefits customer and the merger of American Airlines and American Airways is an example of a merger that benefits the company and is a disadvantage for consumers.
References:
News 1-6
http://www.investopedia.com/financial-edge/0411/do-mergers-save-or-cost-you-money.aspx
Result: 100% originality
Delete[A] Great work Denzel.
DeleteMerger and acquisitions are ways in order for the firm to grow larger. Both of the ways involved two companies to combines into one company. Merger happens when two companies combines into a company where both of the companies agree to combine. While acquisition happens when a company buys another company so that the company can grow bigger. It can be also called as takeover. It is said that mergers and acquisition will always benefit the company but not the consumer nor the country the company operates in. This fact can be true and can also be false. Here are the advantages and disadvantage.
ReplyDeleteIt is said that mergers and acquisition will always benefit the company but not the consumer nor the country the company operates in. This fact can be correct because one of the reasons of mergers and acquisition is to increase profit. For example: the car making company , VW , buys the sports car making company, Porsche. Before, VW has shares of Porsche but now VW owns Porsche. Due to this the shares of the company goes up. They also generates annual cost savings of 700 million Euros and erase the debt of the sports car making company, Porsche. Through the acquisition , cost of production can be reduced and sales of products can be boosted. At the same time , the firm will grow and it will eliminate a competitor. Both of the companies will combine their resources and clients . All of these is for increase profit. It is predicted that the profit of VW will increase 6% next year. Another example is : American Airlines and US airways merge together and will create the world’s biggest airline in terms of passenger traffic and with a combined equity value of $11 billion. Both of the airlines combined has 1,500 planes, serving 336 destinations in 56 countries with 100,000 employees. It is said that the consumer should pay higher prices and because of the merger there will be cutbacks in flight and schedule. All of the examples mentioned tells us the reason that companies merge is to increase profit and sometimes the action can be a disadvantage to some people.
But the fact can also be false. For example : Microsoft buys Nokia. It is so that Microsoft will be able to produce smart phone using Microsoft operating system. It is said that there will be a win win for the customers. This is because those who wants to buy nokia will have a better nokia because the smart phones are equipped with Microsoft operating system. Nokia will be more interesting and it will attract people to buy. This also helps the company to increase their profit. Another example : Amazon buys Washington Post. It is said that Amazon is planning to change the Washington post. Not only Washington post will be more interesting and more people will be willing to pay for reading it but it will be more convenient for the people to read Washington post.
So in conclusion, there are mergers and acquisition that only benefits the company but not the consumer or the country but there are also mergers and acquisition that benefit both sides.
Unchecked,
DeleteYou should write references and the Originality percentage for answer.
Basically merger and acquisitions are actions that are heading to the same purpose, increasing a firm/a company’s size, using two or more companies in the process. The difference is how it’s going to increase the size of the firm. On the first example given, it is told that Nokia with Microsoft is going to compete with Android and IOS in the market. This is still called a merger between Nokia and with Microsoft, since they are working together creating Windows Phone OS in Nokia Lumia smartphones. On the second and the third article it is said that now Microsoft buys Nokia phones and handsets, this is called acquisitions, since now Nokia has no control anymore of their phone industry, despite it is Nokia’s creation phones. On the fourth example, it is told that Jeff Bezos, the creator of Amazon, bought Washington Post, which means that, Washington Post, even though they still creating news, it’s Jeff who took decisions for the post.
ReplyDeleteSo, by the examples above shows that merger is basically 2 or more firms working together to compete with more power in the market, with each firm is still in control of their own respective owners. Whereas if acquisitions means that a firm is buying the other firm, which also means they work together, but the control is only in a firm, not both owners. Now we’re going to the main point which is where people think that Mergers and Acquisitions are always in the favor of Multinational companies and big corporate houses, but are against the consumers and government finances. And I’m going to explain why it is true.
Merger is normally done only by big firms and corporate houses, because merger is joining two or more firms in the same type of industry. Like VW and Porsche, by merging, they will share ideas about how to build better cars with better technology, etc. It’s only done by big firms because normally big firms don’t trust small, non-dominant firm in the industry, they trust a major player in the industry, which is usually big.
If it’s acquisitions, it’s can only be done by usually big corporations and firms, because buying firms, especially big ones that’s connected by vertical integration, needs a lot of Money. It will help the firm to decrease huge amount of money importing materials. Like, for example on the book on page 241, Tata Steel, by buying Corus, they decrease $350 Million every year from importing steel from other firms. It’s usually unbeneficial for the people and for the government, For the people, it’s because that with merger and acquisitions, there will be less variation of products and in some cases, bad quality of products if the firm buys another firm with lateral integration. For the government, it’s unbeneficial because government usually encourage small firms by funding them to give competition to the major ones, but by merger and acquisitions, there will be less competition which as some people called “one sided” competition because of large dominance for merged firms and firms who buy another firm.
So basically, it’s true that it will be always beneficial for large firms, but it doesn’t mean that it’s always unbeneficial for the government.
Theodore 8B
Sources: News 1, 2,3,4,6
Book page 241
My own brain and ideas
Unchecked,
DeleteYou should mention the originality percentage and referencing in appropriate Harvard style. For Harvard writing style you can check booklet available in our library.
As you know, merger is when one business decides to join together as a partner with another business, while Acquisition is when one firm will takeover another’s firm with an agreed terms and conditions together, therefore, they both are ways to increase the size of a business. Now it is said that mergers and acquisitions are always in the favor of multinational companies and big corporate houses, but against the consumers and government finances. As you may know, a multinational company is a type of business that is available in more than a country and operates in in more than one country. And because of that, they will more likely to do mergers and acquisitions, since they are mostly big and large companies, but they are not always against the consumers and governments.
ReplyDeleteUsually, a MNC will likely merge or acquisition another company for better profits and bigger size of market. They will aim for better profits instead of better service to the consumers that includes the government officials having disadvantages when the two companies merge together. Success Companies usually merges with a moderate companies, this means they can gain more profit and bigger market share despite both of the companies have bigger assets and capital to start off, and when they are combined, they have collected a quite large amount of money. For the market share, since both companies are well-known companies, when they merge and sell their stocks to the market stock exchange, people more likely want to invest in the company, because they know that they will gain a lot of profit since the merged company is known for their success and capability to obtain large amount of profits. Because of these reasons, the merged business will likely do anything to achieve bigger profits, thus, they will sometimes provide not-so-good services and produce a low quality of products. Hence, they will try to lower the cost of sales, and increase in production so more people can buy their products, and sometimes, they will lower the quality of the goods so that they can take profits as much as they can. Other than that, consumers will have fewer choices to choose which type of brand to rely on if many company’s merges with one another, an example is Ken Ansin, the one-time CEO of United Site Services, executed a well-disciplined region-by-region acquisition strategy in the portable toilet business. The business provides temporary restrooms for outdoor concerts, sporting events, and other large get together where the people – and the toilets – come and go. One of the key parts of Ansin’s strategy was buying firms in one region until they were the only choice for large events, which boosted their pricing power. United Site Services started by buying a $15 million portable toilet firm, Handy House, then grew it into a $120 million business by adding dozens of similar companies in 23 states.
Other than the customers, government will have some disadvantages too, as we all know, to start up a business, every company needs to pay several amount of tax to the government, and now, because of the merged companies, they will need to pay only one for the both companies, this is not good for the country’s finances since less tax will enter to the country’s treasury.
ReplyDeleteBut not all multinational companies that merges brings negative impacts for the customers and the government. If a merged company is successful and became well-known internationally, the company may provide higher taxes to the government, becoming a good source of taxes to the country, they may employ more workers and employments so unemployment may be vanished from the country, better quality of services and goods may be produce to be sold and served to the customers, etc. Other than that, merged companies is also happening between a successful firm, and a “dying” firm, an example is the merging of Microsoft and Nokia, Microsoft is a well-known company and is very successful for their software windows, but they decided to start selling handset and needed one to put their program to work. Vice versa, Nokia used to be worldwide best selling phones but now is last to Apple and Samsung. Despite of this, they decided to merge together so Nokia can rise again and Microsoft can sell mobile phones to customers. Now since they work together, they can produce better quality in smartphones to the customers and they both can be the first from Samsung and Apple.
So in my conclusion, yes, I agree that most big corporate houses that does merges and acquisitions are against customers and government, but some of them aim to give better services to the public, and some of them does it for survival in the market.
References:
ReplyDelete- Notebook
- http://www.forbes.com/sites/robertsher/2013/02/19/why-industry-consolidations-like-the-american-airlines-and-us-airways-merger-are-not-just-for-big-companies/
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[B] Good Work Celine,
DeleteYou have put in lot of efforts in doing this assignment.
Referencing is not up to the mark, please consult the Referencing booklet available in library. If any doubt don't hesitate to ask me.
Merger is a way for firms to grow and expand inorganically or with involvement of other firms. Merger happens when a firm becomes one with another firm by a legal agreement, and both firms share 50% of the new firm’s control and earnings. Firms merge in order to help and provide integration of their products, whether it’s vertical, horizontal, or lateral integration, the integration is used as a strategy for the firm to increase overall sales. Acquisition is another way for firms to grow inorganically. This happens in a same way of a merger except that one firm will have more or total control and earnings than the other firm hence the word “Acquisition”. Acquisition just like merger is also a viable strategy in increasing overall sales.
ReplyDeleteIt is said that M&A mostly favors MNCs and big corporate houses, but does not provide any significant positive impact or even provide negative impact to the consumers and government finances.
I do agree to this statement to an extent because mergers do benefit the firms and provides no advantage to the consumer in certain situations.
By merging two firms together their newer firm will have a more assets and capital which all add up to having more economic advantages and much better sales and survivability of a firm, which is very good for a firm. But at the same time this could give disadvantages the consumer because of price increase in products. An example of this would be the merging of American airlines and US airways group, the firm has a combine equity value of 8.25 Billion Euros which is good for the company, but at the same time increases price for airline tickets and an increase in cutbacks in flights and schedules, which is a clear disadvantage for the consumer.
But there are limits to that extent because there are cases in which the consumers, gains advantages by a merger or acquisition.
Because when a merger or acquisition happen products from both firms, are integrated with each other to make better use of the products, this is good for the consumer as integration on different products usually makes them easier to use when the consumer has both products. One case would be Microsoft’s plan to integrate Nokia’s smartphones with their products after the recent acquisition of Nokia by Microsoft themselves.
This also helps increase the sales of certain products of a firm. By integrating two products together it helps to increase demand and sales of that product, because the consumer know they are going to get a better use of their product if they bought the two products that are integrated. Again increase sales and earnings for the firm which is good, not just for the firm but also for the consumer.
But this all depends on if the firm wants to do the integration.
In conclusion, so to a certain extent I do agree that Mergers and Acquisitions is only a one sided benefit, but there are ways to reduce it and provide benefit both to the firm and consumers by a good usage of integration.
Sources are:
http://www.euronews.com/2013/02/14/fly-the-merging-skies/
http://www.euronews.com/2013/09/03/microsoft-nokia-move-could-revolutionise-mobile-market-competing-with-apple-/
Notebook
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[B] Good work Ivan,
DeleteYou have put in lot of efforts in this assignment.
but you missed out to write the impact of mergers/ acquisitions on consumer and government.
Merger and acquisitions are the ways of how a company grow externally it by the combing of two companies onto one companies this is usually to cut cost of goods,increase market share,financial leverage Merger and acquisitions are the ways of how a company grow externally it by the combing of two companies onto one companies this is usually to cut cost of goods,increase market share,financial leverage and increase of their companies competitiveness and by doing this their company will get more fame ,customers and trusted by banks for loans and so many other advantages and merger and acquisition usually benefits many multinational company and big corporate houses examples of the advantage merger and aquistion bring is
ReplyDeleteGood examples are such as Microsoft that buy Nokia phones this give Microsoft advantage which is they get the expertise from Microsoft which can help them making mobile phones second is that they get the machines and raw materials suppliers of Nokia and they get the fame all ready from nokia mobile phone which make them easier to make mobile phones because they get advantages from the Nokia purchase and like when american airlines and us airways fuse they also became a very huge company and they bring also advantages to the government which is the huge amount of tax payments.
but does merger and acquisition against government finances and consumer does this only benefits the firms itself does this benefits others to
ok , i have a example about how this effects the government finances and the customers good examples are such as american airlines and us airways they were once rivals in the past but than they merge into one that make them having 1500 plane and they serve 336 destination in 5 countries with 11.000 employee with a capital about 11 billion us dollar this really makes the owners huge amount of profit but there are some other people that get affected because this merge which are he customers because of this the airlines tickets when high that make the customer pays more this is because lack of competition in the economic they use to fight by lowering price of their tickets giving discount prices free luggage and many more and they could have lowered their product quality because less competition too and now no more because they are very huge so they have no competition with other airplane company which also made some customers change their air travel company and government that finances small company also will be stressed because the company that they fund wont have a chance in the market so less range of product will be make and if the company fused with lateral integration bad products would've been made like if a car making company like Porsche purchase a mustard company life their mustard quality wont be that good because they have no connection
So in my conclusion of a company wanted to merge is a good and beneficial things to do because it can make them bigger , lower cost of production and many more but they must also think about what gonna happen in the future because they could also lost customers because of the lowering quality and more expensive price .
Sources:
http://www.euronews.com/2013/02/14/fly-the-merging-skies/
http://www.euronews.com/2013/09/03/microsoft-buys-nokia-phones-smart-move-or-desperate-gamble/
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DeleteDear Jason, punctuations marks are very important in writing skill. I think in your explanation you forget to mention appropriate punctuation marks.
Merger and acquisition are both part of integration, they are forms of integration. Integration is a way to grow a firm in size. Integration itself means united. So, both merger and acquisition are the ways of increasing or growing firm in size by uniting companies and industries by different ways. They are both an aspect of corporate strategy, corporate finance and management dealing with buying, selling, dividing and combining of different companies and similar entities that can help an enterprise to grow rapidly in it’s sector / location of origin or a new field, new location, without creating a subsidiary or other child entity or using a joint venture. The differences between both merger and acquisiton is because merger is the uniting of two companies by cooperating with one another, while acquisiton is the uniting of two companies by one of the company taking over the other one. From a legal point of view, a merger is a legal consolidation of two companies into one entity, whereas an acquisition occurs when one company takes over another and completely establishes itself as the new owner. The growth of a firm itself is divided into two, organic growth and inorganic growth. As we know, integration has two forms, acquisition and merger. Integration is divided into three : 1)Horizontal 2)Vertical 3)Lateral. What is meant by horizontal integration is the unity of two companies that have the same level of outputs. Vertical Integration is the join of two firms with different stage of production but still related. While, lateral integration is the join of two companies which are not related to one another and produce different products. In a vertical integration, there is vertical forward and vertical backward.
ReplyDeleteWell, there are people saying that mergers and acquisitions are always in the favour of Multinational companies and big corporate houses, but they are against the consumers and government finances. This statement maybe true. From all the cases, it is true that big companies and MNCs get many benefits from mergers and acquisitions. They unite to make the problems they’re facing easier. When they unite, there are two possibilities : success or fail. If they succeed, they can increase their sales. But if they fail, they will faces bankrupcy. But many of them succeeds and at last receive great profit. Well, for customers, they don’t always receive what they want. There are also two possibilities : satisfied or not satisfied. Some customers will of course be satisfied, and some will not. But from a different side, let us see, if the company merges together with another company, who they could just increase the quality of the product and satisfy the customers. If they merge successfully, then they can find two products into a product. And when it happens, company can find it easier to buy just one product rather than buying two. This can satisfy them.
So, it’s not always MNCs and big companies that are benefit from mergers and acquisitions. Both customers, government and big companies can benefit from them. But there are also possibilities where they’re not gonna.
Resources : - Notebook - http://en.wikipedia.org/wiki/Merger_and_acquisition
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Regina 8B
[B] Good work Regina.
DeleteYou should write the impact of merger/acquisition on Government and consumers as well.
According to business, merger or merging is when 2 or more companies join together, and acquisitions is when a company buy shares from the targeted company so that they can take over that targeted company. Both of them are almost the same, they have the same aim which is to make the firm grow larger and stronger. When the market rides high, multinational corporations continue their merger mania. Mergers are held to increase shareholder value and boost corporate efficiency. New data track the tendency of firms to merge with others outside of their "home" country. National regulatory authorities, once actively opposed to high market concentration, are posing few objections.
ReplyDeleteThese can disadvantages society because it has a high risk failure, According to Investopedia.com, an estimated 66 percent of mergers and acquisitions are not successful because of M&A intent. Of the 33 percent that are considered successful, the mergers and acquisitions achieved a net gain from the M&A with our without bad M&A intent. A number of reasons for the majority of failures exist in addition to the failures themselves indicating a potential disadvantage of M&A activity is a relatively high risk of failure. in theory, mergers and acquisitions may be economically beneficial in terms of reducing complexity of regulatory oversight, increasing global corporate competitiveness, and adding to shareholders net wroth. This is verified by the M&A activity that is successful through increases in equity valuations, larger market share, improved operational efficiency, higher industrial capacity etc. the cost of acquiring a new company that may not be profitable in the short run. This is why a merger or acquisition may be more of strategic corporate decision than a tactical maneuver. Moreover, if a virus unknowingly emerges after a sudden acquisition of another company’s shares itll be very dangerous for the company. Legal expenses, short term opportunity cost, cost of take over, potential devaluation of equity, and intangible cost is the examples of the disadvantages of mergers and acquitions. In some cases, mergers and acquisitions may not only disadvantage the shareholders but consumers as well. In both cases, this may happen when the newly formed company becomes a large oligopoly or monopoly. Moreover, when higher pricing power emerges from reduced competition, consumers may be financially disadvantaged. The disadvantages for consumer and shareholder drawbacks are Increase in cost to consumers, decreased corporate performance and/or services, potentially lowered industry innovation, suppression of competing businesses, decline in equity pricing and investment value. Shareholders may also be disadvantaged by corporate leadership if it becomes too content or complacent with its market positioning. In other words, when M&A activity reduces industry competition and produces a powerful and influential corporate entity, that company may suffer from non-competitive stimulus and lowered share prices. Lower share prices and equity valuations may also arise from the merger itself being a short-term disadvantage to the company.
There are many examples of acquitions and mergers, some of them are brittish salt operating uk merged with TATA chemicals in india, and Zain telecommunication operating in Africa merged with bharti airtel limited based in india.
So in conclusion, mergers and acquilitions has both disadvantages and advantages, and many mmc to do those things in order to keep growing and earn more profit.
Source : http://kalyan-city.blogspot.com/2012/04/what-is-merger-definition-meaning-and.html
http://www.moneymatters360.com/index.php/how-mergers-and-acquisitions-impact-businesses-17067/
Unchecked,
DeleteYou should mention originality percentage.
acquisitions is an activity when a company buy shares from the targeted company so that they can take over that targeted company while merge is when 2 companies or more agreed to combine together and work together to become stronger. Both of them are almost the same, they have the same aim which is to make the firm grow larger and stronger. When the market rides high, multinational corporations continue their merger addiction. And when 2 or more firms merge, they’ll create better products compared when they stand alone. They’ll create a better quality product and services, which will satisfy their customers and which will make more profit for them, and then they can increase the quality of the product and get famous, they also can be a MNC because they can start to open branch all over the world when they have lot of capital.
DeleteThere are 2 types how firm can grow, internally and externally. Internally, the firm can increase by increasing its number of employees, capital, output and etch. And in externall, there are 2 types which are organic and inorganic, they are called as intigeration. Integration it self has 3 types. Horizontal, vertical and lateral, horizontal integration is 2 companies merged that has same ll of ouput, verutcal means company merged with different lvl of outputs and lateral means 2 companies merged with has no relations.
There are many examples of acquitions and mergers, some of them are brittish salt operating uk merged with TATA chemicals in india, and Zain telecommunication operating in Africa merged with bharti airtel limited based in india.
So in conclusion, mergers and acquilitions has both disadvantages and advantages, and many mmc to do those things in order to keep growing and earn more profit. mergers and aucqitions may lead to 2 destinies, success or fail. When the merge success, the business will earn many profits and become famous and all, they will be able to open many branch in all over the world cause the company is large, and they want to expand more and more, seems very wonderful. But the other destiny is a failure, the business fails and will go bankrupt, but maybe some big firms, like Microsoft wont go bankrupt and will still run well even though they lost a lot of money, the example is when Microsoft have to paid $3.11 billion taxes to U.S.A in 2011. Its not a small amount of money, but Microsoft’s company still run well after that big expense. But maybe some other small companies cant, because their profit is not as much as apple’s or Microsoft’s. and the customers, can either be satisfied by the goods or services by the company or maybe not, because every ppl has their own taste and styles. Firms that merge usually will create a better product, and which has more quality and more advanced. For example is Microsoft who bought nokia, now nokia’s phone has Microsoft programme in it, and its said that nokia has received billions from Microsoft.
Source : http://kalyan-city.blogspot.com/2012/04/what-is-merger-definition-meaning-and.html
http://www.moneymatters360.com/index.php/how-mergers-and-acquisitions-impact-businesses-17067/
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[B] Good Work Thania,
DeleteYou have done lot of research for completion of this assignment. Thumbs up.
I would like to apprise you of the weightage given to various sections in Discuss questions. Generally 20 % Introduction, 30 % favour arguments, 30 % arguments against and 20 % for the Conclusion.
First of all , we must know what is merger and what is acquisitions. Merger and acquisitions are both an aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or new location, without creating a subsidiary, other child entity or using a joint venture.
ReplyDeleteMicrosoft-Nokia move could revolutionise mobile market, competing with Apple, Google :
Nokia first partnered up with Microsoft in 2011 when it began putting Microsoft Windows in its phones. Nokia dominated the handset business for 14 years. Korean electronics conglomerate Samsung overtook it in sales in 2012 . As US Apple forged ahead with its juggernaut iPhone product line, Nokia took a hammering. At least one analyst said Nokia’s phone business is changing hands at a ‘fire sale’ price; others aren’t so sure.
Microsoft’s strategy seems to be approaching Apple’s, in combining an operating system with an application store, an economic model that Apple invented, and which whammied the whole sector, Apple turning up trumps.
Buying Nokia, Microsoft flexes its muscles, adding smartphone potential to its Xbox game console and Surface tablet, seriously planning to fill out its product line.
The deal still needs Nokia shareholders’ and regulators’ approval; after that, Microsoft will have to prove there is a place for a third major player in smartphone Operating System. Telecoms companies say they aren’t against having a third giant in the game, balancing Apple and Google power.
So, as Microsoft buys Nokia, Nokia will have a better operating system of Microsoft such as Windows 8 Phone. Nokia start to cooperate with Microsoft by using Microsoft software (operating system) to Nokia’s phone. Such some devices that running Windows 8 includes: Nokia Lumia and many more devices from Nokia that start running Windows 8 .
In Economics, we have 3 types of integration which includes :
ReplyDelete- Vertical Integration : In microeconomics and management, the term vertical integration describes a style of growth and management control. Vertically integrated companies in a supply chain are united through a common owner. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need. It is contrasted with horizontal integration. Vertical integration has also described management styles that bring large portions of the supply chain not only under a common ownership, but also into one corporation (as in the 1920s when the Ford River Rouge Complex began making much of its own steel rather than buying it from suppliers).
- Horizontal integration : In business, horizontal integration is a strategy where a company creates or acquires production units for outputs which are alike - either complementary or competitive. One example would be when a company acquires competitors in the same industry doing the same stage of production. Another example is the management of a group of products which are alike, yet at different price points, complexities, and qualities. This strategy may reduce competition and increase market share by using economies of scale. For example, a car manufacturer acquiring its competitor who does exactly the same thing.
Horizontal integration is the opposite to vertical integration, where companies integrate multiple stages of production of a small number of production units.
- Lateral Integration : Lateral integration is an alternative term for Horizontal Integration , defining an enterprise pursuing a diversification strategy which is in different production stages and industries under a uniform management in the economy.
So in conclusion , Merger and acquisitions are both an aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or new location, without creating a subsidiary, other child entity or using a joint venture.
Reference :
1. http://www.euronews.com/2013/09/03/microsoft-nokia-move-could-revolutionise-mobile-market-competing-with-apple-/
2. http://en.wikipedia.org/wiki/Mergers_and_acquisitions
3. http://sociologyindex.com/lateral_integration.htm
4. http://en.wikipedia.org/wiki/Vertical_integration
5. Myself .
-Leonardo 8B
Unchecked
DeleteMerger is combining of two companies and acquisition is a company take over another company. It is said that it will be advantage for the multinational company and big corporate house, but it will make disadvantage for the consumers and government finances.
ReplyDeleteIn some cases, it is true that it will make disadvantage for customers is the change of the share’s price that lead for persons to prevent their wants to buy the shares of that particular company and also it will affect the country’s bank. The example is the merger of the euro for the countries in Europe. But it is also disadvantage for the customers, it is high social cost because it is usually observed a reduction in employment resulting from lying off personnel. The disadvantage for the country’s bank are, In many cases, the returns of the share of the banks that made buyouts of other banks was lower than the return of the sector as a whole, the shareholders of the bank that made the buyout profit while the shareholders of the bank which was bought out lose, if the domestic market is fully integrated and competitive, there is not much room for acquiring a bigger share of the market and that on the condition that the products being offered are differentiated by high quality and technology, The cost reductions that are achieved through the economies of scale and spectrum and the synergies are a one-time reduction. And the companies that sell will got the advantage by got the money of selling the company and the one that buy the company will got advantage because it can increase the value of the company like the acquisition of Porsche by Volkswagen (VW). It increase the value of Volkswagen’s shares.
But, this statement is not always true that it will make the company will always got the advantage. There’s also some company that loss after acquisition a company. The example is the acquisition of aQuantive, advertising software and services, for $6 billion. Microsoft purchased this company in 2007 to try and match Google's acquisition of DoubleClick -- and to keep it out of rival Yahoo's hands.
The Seattle-based company had a wide range of products for advertisers and publishers, as well as a digital ad agency, Avenue A | Razorfish. But the integration didn't go smoothly, and eventually Microsoft refocused its advertising strategy on search.
Most of aQuantive's leaders have left the company -- CEO Brian McAndrews, shown here, was gone by the end of 2008. Microsoft has used some of aQuantive's technology in its own ad platforms, but a lot of it was discarded, and Microsoft sold Avenue A for $530 million to ad conglomerate WPP in 2009. It was disadvantage for Microsoft and sometimes there also it will be advantage for the country if the country that is acquiesced is succeed it may decrease unemployment in that and sometimes it can make the country’s technology develop.
So, as the conclusion, we can’t say that this merger or acquisition is benefit or not for a company and customers also the country, because there are some acquisition that runs very well and there are some acquisition that is fail.
Resources :
1. http://www.businessinsider.com/microsofts-15-biggest-acquisitions-and-what-happened-to- them-2011-3?op=1#ixzz2sq32iUje
2. http://kastoria.teikoz.gr/icoae2/wordpress/wp-content/uploads/articles/2011/10/050.pdf
3. News number 6
4. Thinking
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[B] Good Work Richard,
DeleteIn referencing we don't write thinking. Everything base on our knowledge and experience.
Nowadays world economic is growing massively and hence the competition among companies is very tense. There are many companies that survive and even getting bigger as it is but there are also many that struggle and have to find other solution to survive. Some of the decisions that these companies have to make is to merge with other compatible companies.
ReplyDeleteMerger and acquisition are both corporate strategy that could and expected to help an enterprise to grow rapidly in their own original sector or even new sectors. Merger is actually a legal consolidation of two companies into one entity while acquisition is actually a situation where one company takes over the other company and completely establishes itself to be the new official owner of that certain company.These two strategies are very different but lately is not really differentiated.
Although mergers and acquisition might be a good solution for companies and mostly preferable, it is not so prefered by government and consumers. In some cases the merger or acquisition of companies might not be giving both the government as well as consumers a good aspects. This might happen when the case happened to wrong companies and some aspects they overlooked. For example as for quaker and snapple the merger failed because they overlooked the other company's value. Another example is Hp and compaq, in the year of 2001 Hp acquired Compaq which was a similar company that was struggling at that time. For the first few years the decision made resulted in severe loss for the company as they turned out to have a very different culture on managing the company as well as technology. The estimated loss reached the number of 13 billion dollars. Case like this will certainly creates loss to government and consumers. This is because if the company does not earn certainly government will experience loss as well due to tax matter, while for the consumers, due to the differences in the culture of technology and also business management of the two companies, this resulted in a weak products that would have disappointed the consumers. However, later on they realised their mistakes and made changes in their culture and so they survive till today.
On the other hand there are also many successful mergers and acquisitions. For example, the acquisition of Motorola by Google few years back. The reason why google made the decision was because motorola was fully commited to android operating system which suits Google in many aspects. The acquisition actually benefited both companies as they could accelerate their innovation and choice in mobile computing will get better at lower price. Motorola will also be able to enhance their security system on the android ecosystem as android is an open system and are really depended on the consumer's choice in operating it. These things finally benefited all sectors starting the company itself, government as many consumers are using the services will result in increasing tax income for government and in the other point of view the government can also get through socializing laws as well as information to public much easier as people are getting more familiar with the technology. As for consumers, now people can actually obtain information in more efficient ways and also they can easily get the gadgets they need for mobile computing in a lower price. This also means that technology actually is able to reach lower income people too.
Hence, whether mergers and acquitions are benneficial or not is actually depending on the aspects the companies take starting from the type of companied that take the decision, the value of the companies, their culture thoughts and technology, their intention to take the step as well as their financial and management power.
Source
www.google.com/press/motorola/
www.globoforce.com/gfblog/2012/6-big-mergers-that-killed-by-culture/
http://en.m.wikipedia.org/wiki/mergers_and_acquisitions
Vincent CIA
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Delete[B] Good work Vincent,
DeleteBe focused on the discuss format which requires you to write the argumentative answers. You should give present both arguments with strong conclusion.
In you essay you have not mentioned how mergers and acquisitions are against the governments and consumers.
Merger and acquisition are two types of integration; which are used to grow bigger or expand farther. The two methods let a company to buy, sell, divide and combine with another company. When a company grows with the help of merging or acquisition, they can grow inside its sector or other sectors that may be the same, similar or irrelevant. Merger is the combining of two companies into one entity or the same identity. Acquisition is the take over of one company over another and establishing their ownership over it.
ReplyDeleteThere are three types of merging: Horizontal, Vertical and Lateral. Horizontal is the merging of two different companies, which are in the same sector. Vertical happens when a company integrates with another company that needs each other in order to function. Lateral is the type in where two companies, which are not in the same sector, sometimes completely unrelated, integrate into one.
Integrating with another company can be both advantageous and disadvantageous, not only to the companies but also the consumer and government as well. Microsoft bought Nokia for 5.44 billion Euro, this could be seen as a desperate move by Nokia as their shares in handset has decrease tremendously, 40% in 2007 to now, only 15% and even lower in their smartphone shares, only 3.3%, in order to revive itself. But this is also an opportunity for Microsoft to delve into the smartphone world even further, using the opportunity ‘Nokia’, by merging in their operating system to Nokia devices, this opens more roads for Microsoft to get grow bigger, this can be seen to be similar onto what Apple is doing.
The EADS, parent company of Airbus broke off its merging with BAE, British government owned aerospace company, this resulted in the prediction of the BAE, which is the smaller of the two to be quite vulnerable, they were over-investing but, which resulted in the declining defense budget, uncertain direction of defense, cyber attacks from others due to the fall, but this does not only effect BAE, it does affect EADS as well, not matter how little, their capital decrease by bit and less ideas to invent. This means the loss on the both sides.
American Airlines merged with US Airways Group, them combining will make the world largest airline with the combines value of 8.25 billion Euro. As they merged, they maybe economically advantaged but it does not give the consumers that much of an advantage, at most, the one advantaged would probably be Wall Street, passenger would have to deal with higher ticket prices and more delays as well. This is an disadvantage to the consumers.
In order to conclude on what have been said above, merging and acquisition, does not always works in favour to multi-national companies it could make them lose some of their shares and make a higher possibility for them to fall. But it could as well help them widen out their ranges, it’s up to how the companies handle the integration of companies. It has the tendencies to be a disadvantage to the consumers and government.
References:
• http://breakinggov.com/2012/11/26/can-mergers-and-acquisitions-still-meet-future-defense-challenge/
• http://en.wikipedia.org/wiki/Mergers_and_acquisitions
• http://www.euronews.com/2013/02/14/fly-the-merging-skies/
• http://www.euronews.com/2013/09/03/microsoft-buys-nokia-phones-smart-move-or-desperate-gamble/
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[B] Good work,
ReplyDeleteIn this assignment we should focus how integration affects consumers, firms and government. You out to explain the impact on consumer and government.
Merger and acquisitions are the ways of how a company grow externally it by the combing of two companies onto one companies, this is usually to cut cost of goods, increase market share, financial leverage Merger and acquisitions are the ways of how a company grow externally it by the combing of two companies onto one companies this is usually to cut cost of goods, increase market share, financial leverage and increase of their companies competitiveness and by doing this their company will get more fame ,customers and trusted by banks for loans and so many other advantages and merger and acquisition usually benefits many multinational company and big corporate houses examples of the advantage merger and acquisition bring is .
ReplyDeleteGood examples are such as Microsoft that buy Nokia phones, this give Microsoft advantage which is they get the expertise from Microsoft which can help them making mobile phones, second is that they get the machines and raw materials suppliers of Nokia and they get the fame all ready from nosier mobile phone which make them easier to make mobile phones because they get advantages from the Nokia purchase and like when American airlines and us airways fuse, they also became a very huge company and they bring also advantages to the government which is the huge amount of tax payments.
But does merger and acquisition against government finances and consumer does this only benefits the firms itself does this benefits others to.
Ok, I have a example about how this effects the government finances and the customers good examples are such as American airlines and us airways, they were once rivals in the past but than, they merge into one that make them having 1500 plane and they serve 336 destination in 5 countries with 11.000 employee with a capital about 11 billion us dollar, this really makes the owners huge amount of profit ,but there are some other people that get affected ,because, this merge which gets disadvantage are their customers because of this the airlines tickets when high that make the customer pays more this is because lack of competition in the economic they use to fight by lowering price of their tickets, giving discount prices free luggage and many more and they could have lowered their product quality .Less competition too and now no more because they are very huge so they have no competition with other airplane companies, which also made some customers change their air travel company and government that finances small companies also will be stressed because the company that they fund wont have a chance in the market so less range of product will be make and if the company fused with lateral integration bad products would've been made like if a car making company like Porsche purchase a mustard company their mustard quality wont be that good, because they have no connection.
So in my conclusion if a company wanted to merge is a good and beneficial thing to do because it can make them bigger , lower cost of production and many more but they must also think about what going to happen in the future because they could also lost customers because of the lowering quality and more expensive price .
Sources:
http://www.euronews.com/2013/02/14/fly-the-merging-skies/
http://www.euronews.com/2013/09/03/microsoft-buys-nokia-phones-smart-move-or-desperate-gamble/
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[B] Good Work Jason,
ReplyDeleteYou have done much work in completion of this task. Still I can see you have written very long sentences with some lost meaning. I suggest you to start with smaller and simpler sentences instead of writing complex sentence, so that we present a complete meaning to the reader.
Basically merger and acquisitions are actions that are heading to the same purpose, increasing a firm/a company’s size, using two or more companies in the process. The difference is how it’s going to increase the size of the firm. On the first example given, it is told that Nokia with Microsoft is going to compete with Android and IOS in the market. This is still called a merger between Nokia and with Microsoft, since they are working together creating Windows Phone OS in Nokia Lumia smartphones. On the second and the third article it is said that now Microsoft buys Nokia phones and handsets, this is called acquisitions, since now Nokia has no control anymore of their phone industry, despite it is Nokia’s creation phones. On the fourth example, it is told that Jeff Bezos, the creator of Amazon, bought Washington Post, which means that, Washington Post, even though they still creating news, it’s Jeff who took decisions for the post.
ReplyDeleteSo, by the examples above shows that merger is basically 2 or more firms working together to compete with more power in the market, with each firm is still in control of their own respective owners. Whereas if acquisitions means that a firm is buying the other firm, which also means they work together, but the control is only in a firm, not both owners. Now we’re going to the main point which is where people think that Mergers and Acquisitions are always in the favor of Multinational companies and big corporate houses, but are against the consumers and government finances. And I’m going to explain why it is true.
Merger is normally done only by big firms and corporate houses, because merger is joining two or more firms in the same type of industry. Like VW and Porsche, by merging, they will share ideas about how to build better cars with better technology, etc. It’s only done by big firms because normally big firms don’t trust small, non-dominant firm in the industry, they trust a major player in the industry, which is usually big.
If it’s acquisitions, it’s can only be done by usually big corporations and firms, because buying firms, especially big ones that’s connected by vertical integration, needs a lot of Money. It will help the firm to decrease huge amount of money importing materials. Like, for example on the book on page 241, Tata Steel, by buying Corus, they decrease $350 Million every year from importing steel from other firms. It’s usually unbeneficial for the people and for the government, For the people, it’s because that with merger and acquisitions, there will be less variation of products and in some cases, bad quality of products if the firm buys another firm with lateral integration. For the government, it’s unbeneficial because government usually encourage small firms by funding them to give competition to the major ones, but by merger and acquisitions, there will be less competition which as some people called “one sided” competition because of large dominance for merged firms and firms who buy another firm.
So basically, it’s true that it will be always beneficial for large firms, but it doesn’t mean that it’s always unbeneficial for the government.
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