Example Of A Merger Essay

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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 …show more content…

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,

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