Organizations make operational adjustments in order to survive global competition. When profits decrease, a cost reduction is usually suggested in order to return business to a profitable position by merging or acquiring new businesses (Shook & Roth, 2010). In response to a weakness in the current environment, economically, or competitive threats, there is a need for change. Mergers occur when two companies combine their operations and participate as equal partners in order to achieve strategic and business objectives (Sudarsanam, 2003). An acquisition occurs when one company takes over a smaller company and obtains control to determine how the combined operations will be managed (Shook & Roth, 2010). M&A are rational and strategic alliances …show more content…
a) Vertical: The vertical type is the combination of two or more organizations from successive processes within the same industry, for example, a manufacturer merging with or acquiring a series of retail outlets.
b) Conglomerate: The conglomerate type refers to the combination of two or more completely unrelated fields of business activity. An example of this was the merger between Philips Morris, a tobacco company, and General Foods in 1985.
c) Concentric: The concentric M&As are organizations in unfamiliar but related business fields into which the acquirer wishes to expand. An example is a producer of sporting goods that merges with or acquires a leisurewear manufacturer.
d) Horizontal: A horizontal M&A is the combination of two or more similar organizations in the same industry or competitors that combine. The merger between two defense firms, Northtrop and Grumman (Gaughan, 1996) is an example.
The recent resurgence in M&A activity is of the horizontal type. Organizations engaging in this type of a merger have the advantage of transferring product knowledge and expertise, and offer greater potential for achieving synergy (Cartwright & Cooper, 1992) The growing trend toward related combinations has important implications for M&A management because the successful outcome of such transactions has increasingly become dependent on the wide-scale integration of people (Cartwright & Cooper, 1992; Ivy, A.K
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A number of studies abound in the literature which identify the following factors posing challenges to the merger process: - the improper integration of culture, management of the change process, the technological and business intelligent requirement, the regulatory and compliance requirements, as well as the human element. Yet, there is the realization that little or no attention is given to the human element or the human side of change which is the real key to maximizing the value of a merger (Gunther, 2001; Kay & Shelton, 2000; Schuler & Jackson, 2001; Schuler, Tarique & Jackson, 2004).
By virtue of this realization, though mergers and acquisitions are seen by many as a relatively fast and efficient way to expand into new markets, incorporate new technologies and to innovate, their success is by no means assured, with majority of them falling short of their stated goals and objectives (Schuler & Jackson,
Merging or acquiring a target business in the MEMS (Micro- Electro- Mechanical Systems) senor market could lead to
This strategy is much more harder to implement as Cobra would need to go to their parent company Molson Coors and explain the idea and even need their backing financially. Molson Coors may be expecting a certain return before they invest any money so that would need to be considered. This can help Molson Coors throughout their other beers as they produce other beers and buying a can supplier can be beneficially for all the beers they produce. Additionally if they reject the idea and Cobra want to still go ahead with it they might have to look for foreign investment to be able to do it. To be able to implement this idea there would need to be either a takeover of the supplier or a joint venture.
1) Andrew Carnegie used vertical integration, controlling every step in the process of manufacturing a product, dominating the market. Vertical integration is when the company owns all means of distribution from beginning to end, this makes supplies more reliable and improved efficiency. It controlled the quality of the product at all stages of production. Horizontal integration was used by John D. Rockefeller and is an act of joining or consolidating with one’s competitors to create a monopoly. In Ohio in 1870 he organized the Standard Oil Company.
When major companies decide to merge, for example, the proposed merger will be carefully examined to ensure it will not harm the rest of
Rockefeller’s lawyers created trust to hold stocks from all the combined firms, managing the entire business. On last example of vertical integration is Gustavus Swift who had engineers create refrigerated cars to ship meat. As Swift controlled all aspects of production as he made huge profits, his work force was under paid. He also used predatory pricing to keep competitors on their
19.1- Postwar America • Recovery from World War II Initiates o After World War II came to an end, many veterans returned home in hope that they would be able to return to living their normal lives once again. o The government predicted this would not be the case, convincing them to pass the GI Bills of Rights in the year 1944. This would guarantee veterans work for an entire year while they look for a permanent job or business. o
In the essay “The Iks” by Lewis Thomas, the author explains that the individual Iks’ actions and their personalities can be compared to the group of people, committee, nation, and more. He explained, in the book written by the anthropologist about the Iks, how the Iks have changed to be heartless and negative people. Lewis Thomas explains that the behavior of Ik is same as a nation and city that they steal from each other, exchange insults, and that they do many other horrible deeds to each other. It is indeed true that in our society, the behaviors and the characteristics of the nation, city, and any type of group and committee can be compared to Ik. Companies and business organization compete with each other in a way that, are in some cases,
Background Information: El Camino College (ECC) is a fully accredited public college of the California Community College system, started in 1946. The highest degree offered is Associates degree. There are 24,756 students enrolled, with 32 percent Full time, and 68 percent Part time students. The curriculum features 2,500 different classes offered in 850 different programs. Including online and telecourses, students have wide flexibility in scheduling.
For this acquisition, I would recommend divisional organizational structure. I believe this would be the best fit for these two companies mostly because it would keep the employees of Techfite together. They would feel more comfortable with the transition if they were around familiar faces to communicate with and possibly commiserate with. Also, with a divisional structure, there is more flexibility as they would still have their same internal structure and mostly report to the same managers they had before the acquisition. Lastly, they would have the same roles and responsibilities as their division would contribute to Endothon as a whole.
The merger created the largest office supply company in the U.S. Government regulators approved this merger which was unexpected due to the potential of monopolistic activities that can occur. This document presented an argument in support of the merger and an argument opposing the merger. References Kaur, T. (2014). VALUE CREATION THROUGH MERGERS AND ACQUISITIONS:
On the other side of the fence, a well analyzed study of mergers or acquisitions before actually stepping into the process may seriously pay off and lead to a very successful and smooth experience for both companies and can result in a lot of rewarding financial, cultural and social benefits for the involved
A supply chain is an overall network of vendors, distributors, manufacturers, retailers and other entities that are directly and indirectly linked for the purpose of serving the needs and demands of the same customer. This interconnected and synchronized chain excessively allows services and products to reach a large number of customers, both on national and international level. Horizontal integration is one such tool which is used by entities along this supply chain to expand market penetration and establish growth in the business world. Horizontal Integration is the expanding of a business at the certain specific point within the supply chain, either within the same industry or a different industry. A company can achieve this growth through
3.4. (-- removed HTML --) Chrysler & Fiat General Background Chrysler and Fiat are auto mobile companies like Volkswagen and Skoda. However, unlike Volkswagen and Skoda, two companies are from far region. While Chrysler is a traditional large American automaker such as Jeep, Fiat is Italian company known for small car and delicate engine. In 2009, Chrysler and Fiat decided to merge together to synergize their respective field of expertise (Marrs, 2009).
This model is considered as the most potent and useful tool and is widely used by organisations. This model deals with external factors that influence the nature of completion and internal factors how firms compete effectively to be more profitable. Porter’s 5 forces is used. Industry Rivalry : Porter (1980) reiterated that intensity of rivalry is dependent on number and size of direct competitors as numerous and/or equally balanced competitors may lead to intense competition. The rivalry for market share becomes intense when product differentiation and switching costs are
Growing A Company Describe two major ways in which a company can grow. Give examples to illustrate the two ways of growing. Introduction When companies are experiencing success, they want to grow so they can continue succeeding. The larger they get, the more profit they will be able to achieve.