Mergers and Acquisitions Paper Research Example | Topics and Well Written Essays - 1500 words

Mergers and Acquisitions - Research Paper Example By this process, the merging companies aim to enhance their long term profitability by expanding their operations. In contrast, acquisitions occur between the bidding company and the target company and it may be either hostile or friendly. Under acquisition, often it is seen that bidding company purchases the assets of the target company. There are several types of M&A and the mode is chosen according to the nature, market position, and requirements of concerned companies. This paper will examine five types of M&A such as horizontal, vertical, congeneric, conglomerate and spin-offs using recent examples. 1. Horizontal M&A In the case of a horizontal M&A, two competing companies merge together so as to take advantage of its same product lines and markets. This strategy reinforces the market position of the integrated firm since the large scale production considerably minimizes the cost of production and thereby increases the profitability. It is precise that the large scale operations will certainly increase the market reputation of the integrated firm which would in turn enable the firm to negotiate successfully with its suppliers and buyers. In the opinion of Frensch (2007), a horizontal M&A aids the integrated firm to divide the labor among different large organizational units effectively. Merger between Daimler- Benz of Germany and Chrysler Corporation of United States is a good example for horizontal mergers. 2. Vertical M&A Zain (2008) states that a ‘customer-company or company-supplier relationship’ is reflected when two companies are merged under vertical M&A concept. Scholars opine that vertical M&A mitigates market uncertainties and thereby promotes decrease in transaction costs. According to Buhner (as cited in Frensch, 2007, p. 46), these transaction cost may include search and information cost, contract conclusion cost, quality control cost, and administration and taxation costs Amalgamation of Apple with Intel can be termed as a vertic al merger. 3. Congeneric M&A Congeneric M&A is a merging strategy where two companies in the same or related industries offering different product lines merge together. In other words, these companies would not have common customer or buyer. Under congeneric M&A, it is observed that the merging companies may share similar distribution channels. A well popularized congeneric merger is Citigroup’s acquisition of Travelers’ Insurance. 4. Conglomerate M&A A conglomerate M&A refers to the merger of two organizations that are engaged in totally unrelated business operations. In most cases, the merging companies would be operating in different geographical areas. It is a best available strategy for extending business territories and extending product ranges. However, it is noted that conglomerate mergers occurs rarely as a result of strategic failures. It has been identified that Kelso’s acquisition of Nortek was a conglomerate merger. 5. Spin-offs Under this technique , an existing business division of a parent company distributes new shares so as to create an independent company. It can be reflected as a type of divestiture. Business houses wishing to reshape their structure often sell less productive businesses as spin-offs. Factors leading to M&A activities From the above discussion, it is easy to analyze the benefits of different mergers and acquisition strategies. It is found that severe competition is the major reason that often causes amalgamation

CZ56 Critical Evaluation of Current Integrated Marketing Essay

CZ56 Critical Evaluation of Current Integrated Marketing Communications Practice - Essay Example First and foremost, most car manufacturers have been forced to adopt a whole marketing picture. Basically, this implies that the market is not a singular unit and the various entities within it have to be given attention to (Aaker, 1997). Secondly, the car manufacturing companies have been forced to re-align their communications and approach things from a consumer viewpoint. This has enabled car manufacturing companies to respond to the various demands of prospective customers (Bagozzi & Dholakia, 2002) Integrated marketing communication has made it possible for automobile companies to achieve different goals at the same time. This in turn enhances their standing in terms of credibility, positioning, network creation, and creating trust among the various prospective clients (Benkler, 2006). This form of communication has also made it possible for companies to conduct corporate social responsibility efficiently. It is also worth noting that innovative marketing strategies have been necessitated by changes in consumer trends. Most clients today are smarter and more sophisticated. These attributes also implies that they are hard to delight (Barwise & Meehan, 2010). Most prospective clients today demand commodities, which are custom made and increasingly adaptable. Thus, there is a need for maximum differentiation that will appeal to the varying needs of various consumers. Understanding a target market is important for any business entity. Failing to properly comprehend a target market can put a huge dent on the prospects of any given company (Castells, 1996). During the pre-launch of the Fiat 500 car, the company did an analysis of the market and realized that most of the potential consumers were relatively young and sophisticated. Thus, the marketing strategy was informed by this demographic of people. The strategy that was adopted by the