For Grade 8C
__________________________________
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
What is Merger ?
ReplyDeleteMerger is the combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company on exchange for the surrender of their stock
What is Acquisition ?
An acquisition is when one corporation takes over another corporation . When an acquisition occurs , the company that is being aquired is dubbed a target company .
There is some benefits from Acquisition and Mergering for Companies . So much advantage such as they can receive more profits such as get more profits between two companies by joining forces and profits , or control more of Market Share such as Pepsi or Coca Cola or then increase popularity , production , and can achieve the business objectives , so there are so many
But there is also benefits from Acquisition and Mergering for Society and Government such as :
(Page 1)
More Tax Paid
ReplyDeleteFor every companies should have pay taxes for their country or even guest country such as payng land taxes , import and export taxes , or other things . Hence , bigger size of a company bigger tax . And we can guess that if a company merges or acquisiate , then the tax had to be paid mre large than before . Hence the government can get more money and hence could give them to the poor , or make more merit goods , or public goods for society could enjoy for . For Example , After Microsoft purchased nokia company , then the Microsoft corporation should pay tax more han before and then the US government could get that huge money ( especially nokia is a Finland MNC but now turn into America MNC after the acquisition ) for the unemployement , or poor people , and can increase their welfare .
Society Can Buy Shares
After Nokia bought by Microsoft , there will be more capital needed because Nokia has so many liabilities and then more capital is needed so that it can cure Nokia's financial problems and make a new start . In that case , Microsoft could sell some shares of Nokia into the Stock Exchange or Market and then, people ( as we call could be society ) could buy shares of Nokia and can benefit by that . Because shares are more like another income because the shareholder get dividends by that . In terms of dividend we say that dividend are the divided profit returned or given to the shareholdr after investing money into the company .
There Will Be More Production
Before Microsoft Acquires Nokia , on some stage production there is some disagreeing from either two companies that makes some trouble from the production , such as lowering cost or number of production because Nokia has so many liabilities and cannot afford more production but Microsoft is rich so they can make may products , so there maybe some disagreements from the number of production or maybe in real life there could be many or less . So that is one part from the meaning of Acquisition , so there could be no disagreements between two sectors and then can run the business smoothly . And after the Nokia was bought by Microsoft , there is a smooth run on the production and then they could produce more , so the consumers are not out of stock on sales .
Lower Price of the Product
Speaking of the more production in the before section , because of that the company could cut cost so that society could afford to buy the product and the company could get profits . So that the two of them could get benefits . For Example : Microsoft and Nokia before produces 4000 units phones per month with $2 million materials, and each phone costs 500 . Because after the Acquisition Microsoft can produce 5000 phones per month Wth 2 million materials and so each phone is 400 . So the product lowers 100 or like 20 percent discount so some people/society could afford to buy it
Employee Gets More Wages
Again after Microsoft purchases Nokia , there is an increase on production. So the workers let's say with a piece wage , can produce 2 per day , so they could get $20 dollar each day , but when Nokia wasn't Acquisiated with Microsoft hey only can produce 1 per day and could get $10 dollar each day .
Improve in the Country's Kind of That Industry's of Companies
It would be dizzy but it is said that when Microsoft companies were puchasing Nokia (Finland Phone) , the Microsoft Company (Software US) employee could get more knowledgeon making a phone , and it then can pass through society . So for example a Microsoft worker ( US Boy ) are making a phone and then he teach it to the families ad can spread over so there's the benefit
So my conclusion is I'm not truly agree with that statement above but I agree that Merger And Acquisition has so many benefits and a lot of the benefits coming to the company , less for society and it kind of a difficult to look for them and so that's the end (Page2)
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Merger is when two companies join together into one. Acquisition is when a company buys another company. Some big corporations and multinational houses are likely to merger or acquisition. For example, when Microsoft buys Nokia’s handset business. One of the reasons why some companies do acquisition or merger is so that their company can grow bigger and earn more profit, or in other words, profit maximization.
ReplyDeleteMerger and acquisition is sometimes oftenly done with companies because then they can increase the size of their company, earn more profit, revenue, gross income and more. Also, then they would be able to compete with other bigger firms, as some business owners are competitive.
According to the statement, I disagree, consumers and government is not against the action of merger or acquisition of companies. This is because if two intelligent companies join together, then it is more likely that the product that is produced will be a high quality product. For example, Sony and Ericon used to be two different companies. However, they merged together into Sony Ericson and are now producing different types of mobile phones. One of the examples of a mobile phone that they created is “Xperia Mini Pro”.
On the other hand, the government is also not against the fact that some companies merged or acquisited together. This is because if two companies join together, or if a big company bought another company, in result that firm will receive advantages. One of those advantages could be receiving a higher amount of profit, revenue, income and etc. In return, they can pay a higher income tax to the government, which is an advantage for the government.
As if for the consumer, the more better quality of the product, the more the customers will trust the brand and demands for more. This will bring an advantage to the firm because then they will receive more profit. And if they chooses to change into capitalization, they will be able to do so. And sooner or later, their product may become more popular and their brand might become an international brand that is known to many people or best selling product.
Most companies are willing to do merger or acquisition because they know that they will receive some advantages along the way. One of the advantages that they will receive is the fact that they will earn more profit, income, revenue and more. Also, it is possible for them to become a bigger company and have their product demanded by a lot of people and their brand being a top international brand or best selling product.
An advantage for acquisition is that they will be able to compete with the company that is competitive towards them. For example, when Facebook got rejected by Snapchat. If Facebook won though, both companies wouldn’t be fighting agaisnt each other anymore. However, they didn’t accept the acquisition, therefore they are still compeeting against each other.
Overall, I disagree with the statement. This is because not all multinationals or big corporate houses always decide to merger or acquisite. There are some companies that chooses to stay in their position they way they are at the moment.
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Delete[B] Good Work Joan,
DeleteYou have not mentioned the references in your essay. Its really good idea to read our own articles many time before finalising it. Some time we ourself are good editors.
Well done keep writing.
First of all merger which happen when the owner of one or more firms agree to join together to form a new large enterprise which means that all the companies that are merged, control together the new enterprise, have a sharing profit, and have the new enterprise together. While acquisition which the other name is takeover happen when one company buys enough shares in the ownership of another company so it can take the overall control which may happen with or without the agreement of owner of other company, which means that the company that buy the other business may control the faciltiies, employees, and many more from the other company but they don’t do profit sharing among the companies.
ReplyDeleteMergers and Acquisition are held by companies that of course want their companies to be better than before they did the mergers and acquisition. It is true that mergers and acquisitions are always done by multinationals company most of the time. Because the advantages of mergers and acquisition is to increase the market share which means that the company that do mergers and acquisition are selling their shares and it will also produce a larger new company which means that before the merger and acquisition, the company itself already earn a large amount of profit which is also one of the characteristic of multinationals.
Here are some examples of merger that are succesfull until this time, such as Disney and Pixar which already succesfully released a movie namely Wall-E, Up, and Bolt. The second example is Sirius and XM radio merger since they are succed due to the numbers of big names recently added to their roster, and having a foresight to combine forces in down market. While the third example is the merger of Exxon and mobil which they have succesfuly became the the largest company in the world, also they remains to be the strongest leader in oil market with huge hold on the international market and dramatic earnings. And from the examples, we can see that the mergers are succes are mostly done by multinationals company.
While the not succesfully merger are did by New York Central and Pennsylvania Railroad which they actually are the 6th largest coorporation at that time but then 2 years later they files to bankruptcy protection which we can know they are a government finances.
In conclusion, I concluded that most of the time, mergers and acquisition are done by a multinationals not by consumers or government finances since they usually befor the merger, the companies have market shares and also we can see form the evidence that the companies that do mergers and are succesfull are all multinationals and none of them are government finances. And there is also an evidence of a merger between New York Central and Pennsylvania Railroad that they both are government finances but they have a bankruptcy protection.
Sources :
http://www.rasmussen.edu/degrees/business/blog/best-and-worst-corporate-mergers/
http://www.economicshelp.org/microessays/competition/benefits-mergers/
http://en.wikipedia.org/wiki/Mergers_and_acquisitions
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originality : 100 %
Delete[B] Good Work Tiffany,
DeleteYou have put in lot of efforts to complete the task.
In simple words this assignments is asking your views on the question "Who will really benefit from mergers and acquisitions: Big companies, consumers or government".
I request you to read some of answer which were awarded A*.
keep writing, well done.
Mergers and acquisitions are some ways that all firms can use to expand their business instantly. Mergers is two firms/business that agrees to combine their business to make a bigger business. However, acquisitions is buying the shares of other company and take over the company. These two ways are always in the favour of multinational companies and big corporate houses in general. But, consumers and government finances are against these 2 ways of expanding business. This is caused by several reasons.
ReplyDeleteIt is true that in general, mergers and acquisitions are always in favour of multinational companies and big corporate houses. However, combining two business can be very risky to the business because it can cause bankrupt if the business fails. One of many examples is Microsoft that buys Nokia. They sucessfully make a new type of phone and they can sell it to the public. However, the phone is not demanded by the consumers and they still prefer Apple or Samsung products rather than the new phone Microsoft created. But, most of the mergers and acquisitions that happen mostly brings profit to the company. So, mergers and acquisitions are in favour of multinational and big companies.
Mergers and acquisitions are against the consumers and government finances. This statement is true because consumers and government finances are at disadvantage. The example of this is the American Airlines that mergers with US Airways Group. This merger brings profit to the company. However, consumers are not happy because the airline tickets become more expensive and they will be less convenience because there will be many cutbacks in flights and schedules during merger. The government finances will also be at disadvantage. Because the two company mergers become one, the amount of tax they can collect will decrease. So, these two way of expanding business are not supported by consumers and the government finances.
The conclusion is this statement is true and I agree with it because mergers and acquisitions really brings profit to the business even thought in some cases, those two ways of expanding business can fail. And those two ways really brings disadvantage to the consumers and government finances which make them against these two ways of expanding business.
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[A] Great Work Alfred,
DeletePrecise and in very simple English you have answered. Try to give at least 2 or 3 reasons in the favour and against with the help of suitable examples.
Merger is when two companies combine or merge together forming a bigger business. It is one of the ways how firms grow in size. There are three types of integration which are horizontal integration, vertical integration and lateral integration. Horizontal integration has the same stage of production or same product. Vertical integration has the different stage of production or different product and is divided into two, forward vertical integration and backward vertical integration. Lateral integration is the combination of the three.
ReplyDeleteMergers and acquisitions are often in the favour of MNCs and other big corporate houses because most of the companies are competitive and are making different brilliant products that are sold in the market. Some of them have the software but lack of hardware, one example is Microsoft took over Nokia in order to be able to make hardware to increase customer base. However, there are also companies that are having both hardware and software such as Samsung(Android), Apple(iOS), and Blackberry(Blackberry Messenger).
However, mergers and acquisitions, on the other hand, are against consumers and government finances. This could be because the consumers and government finances do not meet their needs in growing and improving their business. Some big corporate houses or MNCs want to avoid unwanted government regulations that might affect their company so they merge or takeover MNCs and other big corporate houses instead of consumers and government finances. Not to be mention, consumers and government finances do not involve in the manufacturing of electronic devices or any software and hardware. Therefore, many big firms find no benefits to merger or takeover any consumers and government finances.
Companies merge with another company in the hope of making more profit. In fact, most firms believe that they won’t make as much profit if they merge or takeover consumers and government finances. The doubt they have in loss they will make or even bankruptcy if they happen to be involving their firm with consumers or government finances. Although, there are some firms whom are looking forward in getting involve with consumers and government finances because they thought that it would be an advantage for them in the matter of partnership or even trust.
An example of acquisition such as Microsoft recently bought Nokia’s handset business. Microsoft made the decision that they will start producing devices and services. They deliberated that they have already their own software which is Microsoft itself, so they thought that they needed hardware in order to attract more consumers and perhaps boost its income. It is said that the price that Microsoft paid for Nokia company is over $7.2bn.
So my conclusion is that mergers and acquisitions are not always in favour in multinational companies or big corporate houses and are against consumers and government finances. It is true that most firms do so, however, I believe there are some companies who do need something from the consumers and government finances in which to do so, they merge or perhaps takeover. In addition, all activities in mergers and acquisitions done by many firms have the same objective which is to make as much profit.
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Merger is known as the joining of two or more firms together to form one larger company. When companies merge they will combine all their profits, market shares, total asset, etc. An acquisition or otherwise known as a takeover is defined when one company purchases all, or most stake, of another company’s ownership in order to pursuit control of it. They are both types of ‘external growth’ in a growth of a firm.
ReplyDeleteIt is true that most of mergers and acquisitions (M&A) are done by multinational companies, as their main aim is to grow as large as they could in size and to earn as much profit. The decision to merge or take over is often formed as a part of the firm’s growing strategy where it is more efficient and beneficial compared to expanding by their own.
It is often easier to merge or take over with/and another company. Firstly, combined or firms taken over have less to worry about increasing in capital and their number of employees, as they can combine employees from both sides. Market shares previously owned by the purchased company is now often owned by the company purchasing. When two or more companies became one they are supported by each side, which in turn is sure to gain more than enough profit in the means of financial gains and performance in work. Seen from the above, it is more likely that a multinational grow by external growth by purchasing/merge with another company, because it can save costs.
Merger and acquisition promises the increases of market power of their company, which limits the severe condition of the strong market competition. This allows the firm to take advantage of advancement of hi-tech technology against undesired demands and price wars.
It’s easier to maintain the competitive edge when merging as there are so many issues and planned strategies be understood well and acknowledged by joining both resources and the skills of two or more companies. The combination enhances and strengthens their business network because M&A improves market reach. New sale opportunties bounding with new areas can be made in the business.
The merger and acquisition can likely fail, however. Flawed aspects in terms of incorrect motivation and or too high expectations in a business therefore can lead to failure of the merger. If any company dreamt of high gain in capital along with eager of fame, not respective of the corporate strategy to fulfill the needs of the company, obvious that the decision to merge will fail.
Agreement that is based utterly on the demanding stock market condition can also lead to failure as stock market is of something uncerain. Some cases have more risks involving with the current merger. Another cause of failure is due to bankruptcy.
The main big problem in the case of merger is cultural difference. Two companies that have different corportating cultures became one it makes a challening aspect to integrate with. It is very difficult to keep the difference and continue and being successful without any integration or problem.
A good example of utter failed mergers due to cultural difference is the merger of Daimler and Chrysler, both car companies. Daimler was known as “conservative, safe, efficient”, Chrysler is described as “daring, diverse, creating”. Their attitude towards hierarchy was one of the cultural gap, there was also their issues on trust. They were lacking in coordination, and the severe lack of trust between both employees. All resulted in the failure to communicate which by turn can cause decrease in productivity.
ReplyDeleteDecision of a multinational can also harm their society and consumers. For example, multinational will always try ways to cut costs, but they will charge their consumers for far more money. That is what had happened to the merger of US Airways and American Airlines Group. Their merger might create the world’s biggest airline according to passenger traffic and a combined equity value. However, their consumers ended on paying more for tickets generally, their convenience towards it is less because during the merging of both companies there are many cutbacks in cost on the flights and schedules. As a business grows larger, especially a multinational, they refrain from paying taxes, which makes the local government and their own against the idea of a growing multinational and to provide finances for them.
As conclusion, multinational companies merge and take over to expand their company and make more profit and because it benefits the company on a lot of factors. But, merging and acquisitions aren’t always a safe idea unless the company has decided on a strong strategy on their plan. It does not benefit their society or consumers sometimes because on their focus to cut costs.
References:
http://www.euronews.com/2013/02/14/fly-the-merging-skies/
http://www.mergersandacquisitions.in/problems-of-merger-and-acquisition-in-india.htm
http://www.kwintessential.co.uk/resources/daimlerbenz-chrysler-merger.html
en.wikipedia.org/wiki/Mergers_and_acquisitions
Economics textbook
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Delete[B] Good Work Nathania.
DeleteYou have put in lot of efforts to complete this task.
I think you are deviated from the real question which was asking, who will really benefits from mergers and acquisitions firm, government or consumer. We should not forget to use the discuss format.
There are two ways a firm can increase in size. One is called internal growth. This is also sometimes reffered to as natural or organic growth. It involves a firm increasing the market for its current products or diversifying into other products. This type of growth may occur through increasing the size of existing plants or by opening new ones. For example, MacDonalds - the US fast food chain, has grown to a large size by opening more and more outlets throughout the world.
ReplyDeleteThe other way through which a firm can grow is through external growth. This involves the firm joining with other firm/ firms to form one firm through a merger or acquisition(takeover). Such joining is known as integration. The tree main types of integration are horizontal integration, vertical integration and conglomerate integration. Horizontal integration is the merger of two firms at the same stage of production, producing the same product. There are two key motives behind horizontal integration one is to take greater advantage of economies of scale. The new firm will be larger and hence may be able to produce at lower average cost. The other is to increase the market share. By merging with another firm producing the same product, a direct competitor is eliminated. Another possible benefit that may arise from horizontal integration is rationalisation. Vertical integration accurs when a firm merges with another firm involved with the production of same product but at a different stage of production. It can take the form of vertical integration backwards or vertical integration forwards. Vertical integration backwards is when a firm merges with a firm that is the source of its suppy of raw materials, components or the products it sells. The main motive behind such an integration is to ensure an adequate supply of good quality rew materials at a resonable price. Another aim might be to restrict the access of the rival firms to the supplies. Vertical integration forward is when a firm merges with, or takes over, a market outlet. The two key motives behind this form of vertical integration are to ensure that there are sufficient outlets and the products are stored and displayed well in high quality outlets. A firm may also hope that such a merger may help in the development and marketing of new products. A conglomerate integration involves the merger of two firms making different products. The main motive behind a conglomerate merger is diversifaction. Such a merger spreads a firm's risks and may enable it to continue its growth, even if the market one of its products is declining.
ReplyDeleteSo, the conclusion is that Integration(merger) can bring advantages to the society and also for the business. If it leads to greater economies of scale, consumers may enjoy lower prices. They may also benefit from high quality products and innovation, if the merger increases the efficiency of the firm. However, if the integration results in diseconomies of scale, consumers may experience higher prices and poorer quality. There is also a risk, in the case of horizontal integration, of reduced choice for consuners and use of greater market power by the merged firm to push up prices
ReplyDeleteResources:
-Economics book IGCSE
-Economics notebook
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DeleteMergers and acquisitions (M&A) is the area of corporate finances, corporate strategy, and corporate management dealing with the purchasing and/or joining with other firms. A merger is defined as the combining of two or more companies, generally to form a new entity. An acquisition, on the other hand, is a corporate action, in which a company purchases most (or all) of the target company’s ownership stakes, to gain control over the target company.
ReplyDeleteThe process of mergers and acquisitions, in big corporate houses and MNCs, generally succeed in achieving cost efficiency through the implementation of economies of scale as economies of scale is to be generated as a company grows and increases its production units. Apart from that, as companies are merged or acquired into one large company, employee reduction may be necessary. As a result, the company may reduce its cost and increase its profit margins.
When 2 or more companies are combined together, it sure will gain the support it needs to enhance its work performance. Mergers and acquisitions may lead to the obtaining of additional knowledge, skills, and technology. The merged or acquired corporation will have to make the best use out of the minds and skill sets in both firms in order to satisfy more customers. Technically, the procedures of merging and acquiring companies may result in financial gains as the company satisfies more customers through their enhanced work performances and receives tremendous profits from it.
With merger and acquisition, it is definitely easier to reduce competition and improve market reach as the combining of companies strengthens and enlarges the business’ network. The enlargement of business’ networks may offer new sales opportunities to the business, helping the business to explore new areas into which it may be able to grow again.
However, the process of merger and acquisition does not only bring effects to the corporations, but as well as to the society. When two companies are merged or acquired into one, customer services (such as warranties and guarantees) may change. Some corporations change for the better, some for the worse. This may affect both customers and corporations as the companies’ customer service evolves. When customer services gets worse, customers may be unhappy as they do not get what they want and corporations may start losing many of their customers. Customers might not feel the personal connection they use to have with your corporations and this can be bad for both sides.
When mergers and acquisitions result in one brand, consumers will have fewer options of products to choose from. This may not be an issue with particular products, but it might be a disadvantage to consumers in other products as prices may increase, although a few may decrease its prices.
ReplyDeleteBy eliminating at least one competition in the market, a merger may be able to provide a chance to a corporation to gain its monopoly power. Less competitions in the market and a larger amount of market share will always tempt firms to raise their prices. An example would be the merger of American Airline and TWA, which observers say may lead to higher airfares and poorer customer services as “this would clearly reduce competition and increase concentration in the airline industry,” as stated by Paul Hudson.
Mergers and acquisitions can lead to job losses, as well, which results in heavier burden to the government finances. With more unemployment happening in large corporations, the government will have to finance more and more people. The government will have to try to finance their daily lives in order for them to survive.
Although this may seem like mergers and acquisitions are causing disadvantages to the society, many corporations may merged to increase the quality of their products for the sake of their customer’s satisfaction. Some corporations put their customers above all else even after they are combined into one large firm, which may lead to benefits to the customers.
To sum it all, I do agree that mergers and acquisitions will always lead to greater benefits unto the corporations doing the procedure, as compared to the society. Though, I would have to say that on a certain extent, it does give benefits unto the consumer and government finances.
Anabelle – 8C
References:
• http://en.wikipedia.org/wiki/Mergers_and_acquisitions
• http://www.mbda.gov/node/1394
• http://www.economicshelp.org/blog/5009/economics/pros-and-cons-of-mergers/
• http://abcnews.go.com/Business/story?id=88813
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Delete[A*] Excellent Eanbelle,
DeleteWell developed arguments in favour of merged firms. Your article seems to be in the favour of firms with well developed arguments with lots of market example.
In Discuss question we should give balance weightage to both sides in our writings with strong conclusion in the light of arguments.
Very good keep the same spirit for writing.
Merger is the legal consolidation of to companies under one entity examples for this is when Exxon and Mobil1 decided the merge and created a new company under the name ExxonMobil and Acquisition is when one company decided to buy another company and claim it to be his examples for this is when Google Inc decided to buy Youtube in a $1.6 billion buyout in 2006
ReplyDeleteMergers and acquisition for Multinational company can be proven quite useful because for example Microsoft's Buyout of Nokia in a value of $7.1 Billion in the end of last year for Microsoft this buyout has become useful for them because it has let Microsoft to have its own mobile phone production line which can benefit Microsoft to enter the Mobile phone industry and this has increased the chance of Microsoft to step up against Apple Inc in making mobile phones and Microsoft's buyout has also save cost in making a new factory line unit and because Microsoft has no experience in making Mobile Phones it can also fail but because Microsoft has now owned Nokia's Mobile Phone making unit it can the consult with the experts and designers of Nokia to make their own Mobile Phone
And this also applies to Merger Such as the Mergering of CitiCorp and Travelers which has created CitiGroup Inc and this has proven quite useful because this has made both CitiCorp and Travelers a very succesfull Companies under the name CitiGroup this has also expnaded the service of CitiGroup throughout the world because now Citigroup Has Banks all over the world
Now for government , Merger and acquisition has also proven to be quite beneficial for the government because companies thet have merged tend to be bigger such as Exxon and Mobil1 because they have merged both the companies asset is owned together so what Exxon and Mobil1 assets were .it have to be shared among each other and because of this it has a new total acumulative amount of Asset making the company to have higher value and because it now worth more they have to pay a higher amount of tax and this have of course benefit the government because this means that they would have higher income from the company
In Conclusion of the discussion i don't really agree that government get less benefit from MNC's mergering because this means that the government now will have more tax income and but i do agree that the Mergering and acquisitioning of MNC's have proven to be quite beneficial for the company itself
Sources:bbc.co.uk/news/business-23940171, en.m.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Google, www.independent.co.uk/news/business/250bn-exxonmobil-deal-is-biggest-merger-in-history-1188674.html. en.m.wikipedia.org/wiki/Mergers-and_acquisitions
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[B] Good work Hans,
DeleteIn discuss question we should give more weightage to the arguments.
Mergers and acquisitions are ways for a firm’s growth of size. These two are similar. Merger is when two companies combine and form one company. While acquisition is when a company buys all the shares of another company and buy the company. The term is also known as takeover. Mergers and acquisitions will make an impact on many sectors. Those are the general public, or also known as consumers, the shareholders, industries, and the government.
ReplyDeleteConsumers are surely affected by mergers and acquisitions. When a merger or an acquisition happens, the two or more companies will share ideas, in which these ideas shared together will create or supply a better production for consumers to consume. In other words, it can increase satisfaction for the consumers. An example is the merge in the automotive or car industry between Fiat and Chrysler. These companies together released Abarth 500, Avventura, and the new Linea. These cars bought by consumers will increase satisfaction for the addition of quality made by both Fiat and Chrysler.
Mergers and acquisitions can either rise or destroy shareholder’s value. It depends on how the M&A is planned and executed. M&A that begin with the right vision and executed at the right price enhance shareholder value. An example is Oracle’s and IBM’s string of software acquisitions that have allowed the two companies to create the rising demand for enterprise software. But M&A that begins with bad planning/wrong vision and executed at a wrong price destroy shareholder’s value.
The usual common thing that happens on an industry of mergers and acquisition companies is the increase of competition in the industry. When a company merge or takeover and became a tougher firm, the other firms in the industry will strive harder to get to the top spot in the company’s industry. An example is the merge of US Airways and American Airlines. With the merge of this two airlines industry, it creates a huge competition in the airline industry in region of the US or the whole world. Companies like Southwest airlines, Jetblue, Spirit airlines, Delta airlines will strive harder on the airlines industry.
One of the things that will happen after a merger or acquisition is the increase of the quantity of production. When a company produces more, it reduces cost and increase profit. When there are more consumers of the merger and acquisition company, the more sales produced, the more profit. But the main point is that the more sales of a company and profit made by a company, the larger the increase of the tax. With higher sales, there will be more tax paid which will make the government richer. With richer government, it can be used for the country’s facilities or needs such as evacuations for disasters, public facilities for the people in the city, and many more used by the government.
My conclusion is that most mergers and acquisitions will result in an advantage both to the society and themselves. Mergers and acquisition will mostly provide benefit for the general public, shareholders, the industry, and the government.
Kevin 8C
References:
- http://consumerist.com/2013/11/14/impact-of-us-airwaysamerican-airlines-merger-will-depend-on-who-gets-leftovers-from-wedding/
- http://www.autonews.com/section/topic?taxid=4020005&taxword=Mergers%20-%20Acquisitions%20-%20Takeovers
- http://www.investopedia.com/terms/m/merger.asp
- Cornell notebook
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DeleteMergers and acquisition are 2 types of ways the business can increase the size of itself . Mergers can be defined as two companies that agreed to combine together become one, and create a brand new company with the combination of total assets and liabilities from both of the companies. If acquisition can be defined as one company takeover other company by buying 51% of their total share or become the biggest share owner of that company. both of ways above is called integration. there are three types of integration, first is horizontal, second is vertical integration , and the third is lateral integration or conglomerate integration. If horizontal integration is when two companies merge or acquistion at the same stage of production but in the same market. If vertical integration is when two companies merge or acquistion at different stage of production but at the same market, there are two types of vertical integration, first is forward vertical integration and backward vertical integration. If forward vertical integration is when a company merge or acquisition with a company that is used on the next step after the production, if backward vertical integration is when a company merge or acquisition with another company that is used before or when the production is happening. If lateral is when 2 companies merge or acquist at different market. For example: walt disney with american broadcasting.
ReplyDeleteMergers and acquisition usually are used because some companies only focused on software only or hardware only, so they need the other parts that they dont focused on, so that they can compete with others. For example: microsoft bought nokia, microsoft bought nokia because micosoft only focused on software, and nokia is a company that focused on hardware, but with bad software. Microsoft bought nokia, so that they can compete with apple and samsung also. Because samsung has a great hardware and a great software (android), if apple has a great hardware and softwares also (ios).
There are many benefits from merge or acquisiton, first is for the company itself and second is for the society or consumer. If for the company the company will get much more specialised workers,so the company don't need to search for the right people, it will take a long time to fill all of it. Second, the company' s capital and revenue will increase. Third is the company's market share will increase also. The forth is the competition and the cost for production will decrease. the fifth benefit is the company's productivity will increase. the advantage or benefits for the society is the society can get the better product with cheaper price. Second, the society will be more developed. Third is it will provide jobs for people.
So the conclusion is that I truly agree with "merge or acquisition can provide many benefits to the society. " william / 8c Resources: note book,http://www.mbda.gov/node/1394,http://www.economicshelp.org/microessays/competition/benefits-mergers/,http://en.m.wikipedia.org/wiki/Conglomerate_merger Originality=98%
[B]Good work, you have put in lot of efforts to finish this task.
DeleteIts important to be focused on the question asked. Examples are good but you should emphasis more on the arguments.
Merger and acquisition are some ways for firms to expand their companies. Merger is the combination of two or more firms forming new company by offering shares of one company to the target company. In return, the company will receive ownership of the target company. Acquisition or also known as takeover is the purchase of one company buying its target company, but no new company is formed. Mergers and acquisitions may have some effects to customers, government, shareholders and industries.
ReplyDeleteMergers and acquisitions may have good and bad impacts for general public. When companies merge, the productivity of the products produced may increased and customers would be more satisfied and they could probably by some more of the products that is beneficial for the company.
However, there are bad impacts that mergers and acquisitions may give to general public. Not all mergers and acquisitions may be successful. There could be mistakes that the company made during the process of merge will results in failure of join forces for the company. The products produce may have bad quality and as there is a strong competition in the market, many customers would not demand the products. For example, the acquisition of Microsoft and Nokia. Microsoft specializing in software started to produce phones with Nokia brand and Microsoft’s software. The quality of the products may not be good which may results in dissatisfaction of customers.
There are also advantages and disadvantages that mergers and acquisitions may bring to government. The advantage is that when companies merge, they will have bigger assets and with bigger assets, they will pay bigger tax to the government. Companies will make products when they merge. If the products are demanded by the customers, the company will have bigger revenues and eventually, they will also pay high tax.
Mergers and acquisitions may also bring disadvantages for government. If the merged company fails to sell the products to customers, they will have smaller revenues that may results in lower tax that they need to pay for the government. Government would really encourage the company to sell more products so that they will pay more tax, and it need a lot of effort for the government to convince them. For example, the acquisition of Microsoft and Nokia. The company will produce products. However, the products produce may not be demanded by the customers and they will sell less products which results in lower revenues and they will pay less tax to the government.
Merger and acquisitions may also have advantages and disadvantages for shareholders. The action of merge may results in increase or decrease in the value shares. As the result of mergers and acquisitions, the value of target company will rise, and the value of bidding firms diminishes. Shareholders of target firms gain a positive wealth effect while shareholders of bidding firms experience a negative wealth effect.
The merge of firms may decrease in the competition in industries, which is beneficial. Industries may produced better quality products, as two companies are sharing ideas, the productivity of the products will increase, as well as the quality. If the products produced are on demand, the company will have grater revenues and profits.
Mergers and acquisitions are in favor for multinationals and big corporate houses. However, even though there are several disadvantages for customer and government due to mergers and acquisitions, there are also advantages for customers and government.
References:
1. http://www.euronews.com/2013/09/03/microsoft-nokia-move-could-revolutionise-mobile-market-competing-with-apple-/
2. http://vuir.vu.edu.au/15700/
3. http://www.euronews.com/2013/02/14/fly-the-merging-skies/
4. Notebook
Charlotte 8C
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DeleteYou have not mentioned the Originality percent.
98% originality based on plagiarisma.net
Delete[B] Good Work Charlotte,
Deleteyou have put in lot of efforts to complete this task. Keep writing, and read your writings again and again to see the improvements.
so basically when we say merger, it is the joining of two companies. yes , it could be benefit(s) for industries and companies. When they join, obviously the company becomes bigger and of course more profit can be received. A merger which can also be said as intergration can be vertical and horizontal. When we say horizontal intergration, it occurs between same type and same stage of companies. If its vertical intergration, its between different type,different company and different stages of production. Theres actually one more intergration which is lateral intergration. Lateral intergration occurs between firms in different industries in the same stage or different stages of production.
ReplyDeleteBut, the benefits that companies receive aren’t against consumer and government. Its maybe because the consumer prices can rise. Of course when an object is consisted of two different brand, the price of the object will increase. That makes consumers don’t want to buy a merger object.
Government may not agree of having merger in their country too. Because companies are always competing of having the first place. As they keep merging and merging, one of the companies might win and fighting might occur. Maybe government are just too worried of this and they don’t want this to happen. That’s why government are trying their best to not have these merging companies eventhough there are still some.
Yet, intergration still gives benefit(s) to them too. Merged companies usually give high profit to their employees. This means, government(s) will not have to give that much support as people will have their money from their own profits. In fact, government can get more taxes from the public revenue. But this can also be a reason why government doesn’t want a merging of companies. As they get more taxes, government(s) can also be confused of what are they going to do with the money.
For the consumer too, intergration can still give benefit. When companies merge, especially in gadgets, people can have the benefit of having these high technologies. Higher technologies help people to have better communications, better research, etc. but still, the price maybe expensive and people might not be able to purchase.
One most important thing to know is that people can lose their job because of merger. If those people aren’t good enough in doing this joined job, then they’ll have to go. This kind of situation can burden government as there are some employments.
But overall, for me, the benefits of having merger are still bigger than the disadvantages. People and goverments don’t really need to worry because government can still give support through taxes that they get from those companies.
Sources:
- http://techandfilm.wordpress.com/2011/08/31/what-does-the-government-merger-block-between-t-mobile-and-att-mean-to-you/
- http://www.voxeu.org/article/effect-mergers-consumer-prices
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DeleteYou have not mentioned the originality percent.
Merger occurs when the owners of one or more firms agree to join to form a bigger, larger and more profitable company. While acquisition occurs when one company buy enough shares (51% or more) in the ownership of another so it can take overall control. This may happen with or without the agreement of the owners/ shareholders of the other company. Both mergers and acquisitions are two ways in which companies can expand their companies. But more people prefer to expand their companies with acquisitions or take over.
ReplyDeleteIt's true that mergers and acquisitions are always in favor for multinational companies and big corporation houses but against the consumer and government finances. This is because the multinational companies and the corporations always wants more profit to be earned while the governments don't need to get too much profit and the consumers do not want to pay more. Private and public limited companies will also be in favor of mergers and acquisitions. For example Microsoft, it bought Nokia for 7.2 billion US dollar, it is an example for acquisitions. Then there is Amazon who bought a game developer (Double Helix). Bharti Airtel acquired Kuwait based Zain Telecom's African business for USD 10.7 billion. The biggest acquisition deal in the pharmaceutical sector was the acquisition of the generic drug unit of Piramal health care by USA based drug maker Abbot Laboratories for USD 3720 million. Those are the example for acquisitions. I also have some examples for merger integrations, AT&T Broadband with Comcast the Comcast company bought AT&T Broadband for $60 billion in 18 November 2002. Another example is the Exxon petroleum company who merges with Mobil in 1999 with a $82 billion deal. There is also the Travelers who merges with citicorp, it is told that the Traveler paid the share citicorp for $70 million. These are the examples of mergers. The largest merger deal is done by Reliance communication which merged it's telecoms tower business with GTL infrastructure Ltd for USD 11 billion. There are many disadvantages of mergers and acquisitions for the governments because when they fail to sell their products, the government isn't going to make profit and the will bankrupt so it is rare for the government to merges or acquired one firm or business with another.
So the conclusion is that Multinational companies and big corporations houses will always be in favor with the mergers and take over and the government financials will always be against the merger and acquisitions.
Fernando 8C
Sources:
http://wiki.answers.com/Q/What_is_the_Latest_example_of_merger_and_acquisition?#slide=4
http://www.themiddlemarket.com/news/amazon-buys-game-developer-247619-1.html
http://www.billshrink.com/blog/6834/the-12-biggest-mergers-in-american-history/
Notebook
Economics Textbook
89%
DeleteWell done Fernando, you have done lot of hard work in completing this task. Good to see you have presented numerous data in support of you answer.
DeleteIts important to be around the topic that is asked, but sorry to say that you have moved away from it. Try to focus on the question asked.
I appreciate you hard work.
Merger is the process where two or more companies join together, creating a larger force. They do this by generally offering the stockholders of one company securities in the acquiring company in exchange for their stock. Why does one company buy another company? Because by merging with other companies, both companies can cover both of their weaknesses, and improve their strengths to be a more competitive company in the market. It is also because they think it is a good investment and they will earn a positive return on the investment. The goal of any business in a society is to maximize shareholder wealth and buying a company that can help accomplish the company’s goals. What are the benefits of merger? Economies of scale. This occurs when a larger firm with increased output can reduce average costs. Lower average costs gives lower prices for consumers. Different economies of scale includes technical economies( if the firm has significant fixed costs then the new larger firm would have lower average costs) Bulk buying (A bigger firm can get a discount for buying large quantities of raw materials) Financial (better rate of interest for large company), and Organizational . Merger can also benefit from Network in Economy, Improved Research and Development, and gains the regulation of monopoly. But, where there are strengths, there are also weaknesses. Disadvantages of Mergers incude giving the society higher prices, Less choice for consumers, job losses due to aggressive takeover (Mainly by an asset stripping company), and also diseconomies of scale.The advantages are Reduced Costs because a merged company can reduce many of its expenses. Budgets for marketing might bereduced, while the new, larger company enjoys greater purchasing power, which lowers the costs of raw materials, Market Penetration because by merging, the new company is now provided with access to more customers. This is if the individual companies had been successful in separate markets, Diversification because merged companies can offer a greater range of products and services, and Skills and Knowledge so the merged company can make use of the very best minds from both companies and make up for shortfalls in the individual companies' skill-sets. For example, allowing the scientists from two previously separate pharmaceutical research and development departments to work together is more likely to generate more innovative products. The combined skills of the marketing departments will then be able to sell these products more effectively. The net result is that shareholder value is increased.
ReplyDeleteReferences:
http://www.ask.com/question/how-can-a-merger-benefit-society
http://smallbusiness.chron.com/advantages-company-mergers-22476.html
http://www.investopedia.com/terms/m/merger.asp
http://www.economicshelp.org/blog/5009/economics/pros-and-cons-of-mergers/
Original Content:
90%
[B] Good Mathew,
DeleteYou have put in lot of hard work in completing this task. Its important to write in smaller paragraphs for better clarity. It seems that you are deviated from the real question and giving more weightage to introduction. We must be balanced and should give more emphasis to the body part (Arguments favour and against).
This comment has been removed by the author.
ReplyDeleteMerger is when two companies combines together to form one bigger company. This can happen with no party agreeing or both party agreeing. When a company is forced to combine with another company its called acquisition. When a company agrees to merge together it is called merger.
ReplyDeleteA merger can benefit a company because it allows the company to have a bigger access to capital and rescources. This means they can increase their input and produce even more profit. Merger is most likely going to benefit the company because it helps them grow and allows more profit.
However having a merger doesn't only help them but it also helps the society. Lets say that when they merge they use the additional capital to increase quality of product. This means that everyone who buys their product will get more out of it and receive better goods and services from the company.
Lets put an example like Microsoft. They bought Nokia for 10 billion dollars. From this we can already see some advantages for Microsoft and Nokia.
Microsoft has the advantage of resources and operating system. However,in the growing smart phone business, Microsoft can’t compete with Samsung or Apple. To compete with them Microsoft need vehicle to put their operating system in. So they bought a Nokia, a former world famous handset company so that they can combine Nokia handset with their operating system.
Another advantage for Microsoft is the demographic that Nokia appeal to. Nokia hand phone although is no longer world most sell able hand-phone it is still quite popular in the 3rd world country. Microsoft try to kill the competition of android in the low end segment.
Nokia has a lot of thoughtful software engineers who have built accessible and innovative apps over the last few year and they may combine with Microsoft ‘s vast ecosystem of service to make somethingpowerful
The advantages of this for the society is that the society may receive a better range of smart phone products. And with more cheaper Nokia hand phone, more people can have access to smart phone and hopefully it can improve one’s productivity.. ..
refference
http://connect.dpreview.com/post/7019707187/6-things-from-microsoft-nokia-merger
Unchecked,
DeleteYou have not mentioned the Originality percent.
91%
DeleteMerger is the combining of two or more companies generally by offering the stockholder of one company. securities in the acquirimg company by surrender for their share.many company do merger because it can make their company become near to perfect by combining their their strength and remove their weaknesses.
ReplyDeleteIf acquisition is a game over of one companies
Know i want to Explain the benefit off merger to the society first thing is economic of scale which happen because of merger or acquisition of company in economic of scale there is effiency that can Reduced Costs A merged company can reduce many of its expenses. Budgets for things like marketing might be trimmed, while the new, larger company enjoys greater purchasing power, which lowers the costs of raw materials and other necessities. More often than not, a merger results in staff layoffs as positions become redundant in the new single entity. Merged companies can also share office space and eliminate duplicate manufacturing facilities. That is the first example of the benefit of merger to the society. The second benefit is company Will growth bigger and need To employeed more people so reduce of unemployment and they Will pay more wages because off effiency example they produce more because of technology getting better because two company Will combine their think together. One of the example is Nokia producing hardware for microsoft and Microsoft make software for the hardware and they produce lumia for phone that is affordable and they can fight Samsung or Apple . Third one is they producing high quality product with the same price.
So my conclusion is merger can be both benefit for society and its company they have a Lot of benefit for both ,this is Why many big companies do merger or even acquisition but Most of them do merger. so i agreed the statement above
Michael 8C
Source:notebook
http://www.investopedia.com/terms/m/merger.asp
wikianswer.com
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DeleteYou have not mentioned originality percent, follow the proper style of referencing. Don't hesitate to ask me.
A merger is when one or more companies join together to become one. An example would be the merger of American Airlines and US Airways Group. One of the benefits of their merger would be the efficiency in their operations.
ReplyDeleteAn acquisition or takeover is when one company or firm buys out another company or its business. An example would be the acquisition of Nokia by Microsoft. Microsoft bought off Nokia to increase both Nokia’s sales of handset and the use of Windows’ operating system.
Some MNCs and big corporate houses and consumers may benefit from a merger or an acquisition. An example would be the acquisition of Volkswagen (VW) and Porsche. The innovation of Porsche made VW have advantages. One of the benefits would be, operation efficiency. Their factories would not need to produce in 2 places, they would require just 1. Also, an increase in product range was a win-win case for both consumers and Porsche. Porsche used to only be able to sell racing cars and 2-door cars. After its acquisition, Porsche was able to sell SUV and 4-door cars.
It is not always a certainty that mergers and acquisitions are always in the favor of MNC and big corporate but are against the consumers. If the consumers don't believe the new company’s goods and services, it might not be an advantage to MNCs and big corporate houses. For an example would be the acquisition of HP and Compact. The new laptop and PCs of HP are not favored by the consumers. Their expectation of stronger PC divisions was a total fail.
If the merger or acquisitions of companies are successful, it may be a favorable point for the government. An example would be the merger of Disney and Pixar. Disney, Pixar films became a top seller and made Pixar has an early filming plan for the next 2 years ahead. Pixar also gained marketing plugs, advertising and merchandising. This will help with the increase in jobs and tax revenue for the government.
Mergers and acquisitions are always in the favor of MNCs and big corporate houses, but may be against the government finances. The government might have to pay for some consequences due to mergers and acquisitions of firms such as job losses and potential loss of tax revenue. In every merger or acquisition, there will always be job losses. Due to job losses, the government has to pay the social benefits of those employees. The government would have to go through tax loss as those employees whom used to be able to pay tax, may not be able to.
Reference
http://www.rasmussen.edu/degrees/business/blog/best-and-worst-corporate-mergers/
Monique 8C
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DeleteYou have not mentioned the Originality percent.
Thanks For Sharing. Especia Associates provides Mergers And Acquisitions Valuation Services. A merger is the joining of two organizations, while an obtaining is the acquisition of the responsibility for business by another.An acquisition/takeover is the acquisition of one business or organization by another organization or other business substance. M&A is a corporate technique that might build an incentive for the acquirer by making a significant worth driver known as Synergies. if you need Mergers And Acquisitions Valuation Services call at 9310165114 or visit us Mergers And Acquisitions Valuation Services
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