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Mergers and Acquisitions
Mergers and acquisitions are business strategies that deal with selling, buying, and combining of companies. Mergers occur when two or more companies are joined together. When one company buys another, either through friendly or hostile takeover, it is called acquisition.
593 Questions
the smaller companies are put out of business the smaller companies are put out of business
How does economic theory apply in business management?
How does economic theory contribute to managerial decisions?"
What are the potential economic advantage from merger?
A merger occurs when two firms join together to form one. The new firm will have an increased market share, which reduces competition. This reduction in competition can be damaging to the public interest, but help the firm gain more profits.
However, mergers can give benefits to the public.
1. Economies of scale. This occurs when a larger firm with increased output can reduce average costs. Lower average costs enable lower prices for consumers.
Different economies of scale include:
- 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
- Organisational - one head office rather than two is more efficient
· Note a vertical merger would have less potential economies of scale than a horizontal merger e.g. a vertical merger could not benefit form technical economies of scale. However in a vertical merger there could still be financial and risk-bearing economies.
Some industries will have more economies of scale than others. For example, car manufacture has high fixed costs and so gives more economies of scale than two clothing retailers.
More on economies of scale
2. International Competition. Mergers can help firms deal with the threat of multinationals and compete on an international scale.
3. Mergers may allow greater investment in R&DThis is because the new firm will have more profit which can be used to finance risky investment. This can lead to a better quality of goods for consumers. This is important for industries such as pharmaceuticals which require a lot of investment.
4. Greater Efficiency. Redundancies can be merited if they can be employed more efficiently.
5. Protect an industry from closing. Mergers may be beneficial in a declining industry where firms are struggling to stay afloat. For example, the UK government allowed a merger between Lloyds TSB and HBOS when the banking industry was in crisis.
6. Diversification. In a conglomerate merger two firms in different industries merge. Here the benefit could be sharing knowledge which might be applicable to the different industry. For example, AOL and Time-Warner merger hoped to gain benefit from both new internet industry and old media firm
What are advantages and disadvantages of vertical mergers?
Advantages:
it gets a larger set of resources at its disposal, which includes manpower, inventory and other assets. With the larger set of resources, efficiency is increased which in turn increases the output. The increase in output leads to lower cost of producing services or products, which is the input. The increased output or lowered input definitely translates to better business growth for any entity. Another advantage of a takeover is that brand awareness increases as the business expands, allowing more advertising, products and services.
Disadvantages:
The bigger the business the harder to control
More decision making and more risks
More expensive e.g. more running costs, more demand, more supplies, more products need to be made, new location
What are the disadvantages of a consumer culture?
Consumer culture is a type of capitalism that the economy focuses on selling consumer goods and the spending of consumer money. Some disadvantages to of consumer culture is that it can be associated to greed, can create a vicious cycle where an individual will repeatedly buy things to be happy and must continue to buy things to maintain the happiness.
What are the disadvantages and advantages of a merger?
the companies may be able to save money marketing, producing, and delivering their products by combining their operations and eliminating duplication. Combining may also allow greater efficiency in coordinating activities across the companies' units.
What are the examples of conglomerate merger?
the definition is: the joining of companies, in completely unrelated products.
A simple example would be, a clothing company, like Aeropostale joining a company that sells jewelry, like Kay Jewelers.
That is not the answer!!!!
The real answer for the definition is
Conglomerate:
Is a giant corporation composed of many smaller corporations.
The first is actually the real answer.
A conglomerate is a combination of two or more corporations engaged in entirely different businesses. It's usually made up of a parent company and many subsidiaries.
you guys are getting a bit mixed up... below is the proper definition
A corporation that is made up of a number of different, seemingly unrelated businesses. In a conglomerate, one company owns a controlling stake in a number of smaller companies, which conduct business separately. Each of a conglomerate's subsidiary businesses runs independently of the other business divisions, but the subsidiaries' management reports to senior management at the parent company.
The largest conglomerates diversify business risk by participating in a number of different markets, although some conglomerates elect to participate in a single industry - for example, mining.
What is the difference between merger amalgamation?
"Very often, the two expressions "merger" and "amalgamation" are taken as synonymous. But there is, in fact, a difference. Merger is restricted to a case where the assets and liabilities of the companies get vested in another company, the company which is merged losing its identity and its shareholders becoming shareholders of the other company. On the other hand, amalgamation is an arrangement, whereby the assets and liabilities of two or more companies become vested in another company (which may or may not be one of the original companies) and which would have as its shareholders substantially, all the shareholders of the amalgamating companies." I found it while surfing for the same... Hope it answers.
Why does government carefully monitor horizontal mergers?
Horizontal mergers are closely monitored by the government to prevent a monopoly from being created when the companies merge. Huge benefits can be gained by the merged companies when a competitor disappears from the same market and for the consumer the prices are driven upwards, which can be bad news.
SWAP RATIO IS WHEN A COMPANY MERGES WITH OTHER COMAPNY IT TAKES A SWAP RATION IN TERMS OF THE COMPANY PROFIT ...ACCORDING TO 1:29 RATIO .
How is capital measured under fiscal capital?
When writing or speaking about capital you need to be specific about the type of capital. You might refer to political, human or social capital. Or the capital of a state or country. In this case, fiscal capital refers to an economic measure that is any form of wealth capable of being employed in the production of more wealth. So, what is wealth? In economics and business, the wealth of a person or nation is the value of assets owned net of liabilities owed (to foreigners in the case of a nation) at a point in time. I'll let you continue your economics vocabulary education and look those words up for more details.
If you look at a balance sheet for a company the bottom line tells you the fiscal capital or wealth of the company. Your check book balance is your fiscal capital.
An acquisition is learning a new skill or developing a new quality. Some examples would be learning to ride a bike, learning to drive, learning new jobs at your work place, and learning to read.
A major reason given for conglomerate mergers is that they?
diversify business operations and investments.
In short 2002
Here is a snippit from Wikipedia's page on Montréal
"Montreal was merged with the 27 surrounding municipalities on the Island of Montreal on January 1, 2002. The merger created a unified city of Montreal which covered the entire island of Montreal. This move proved unpopular, and several former municipalities, totalling 13% of the population of the island, voted to leave the newly unified city in separate referendums in June 2004. The demerger took place on January 1, 2006, leaving 15 municipalities on the island, including Montreal." - http://en.wikipedia.org/wiki/Montreal
What is the difference between merger and consolidation?
A Merger is when two or more corporations come together but only one of the corporation stays exists afterwards. For example if company A and Company B merge to and only company A or B exists afterwards. In consolidation, when two or more corporations come together to form a completely new corproation. For example company A and Company B consolidate to form company C.
A corporation's scanning of the environment should include analyses of all relevant elements in the task environment. Managers need to consider the competitive environment, also referred to as the task environment or industry environment. The profitability of the firm and the nature of competition in the industry are more directly influenced by developments in the competitive environment. Industry Analysis
Industry - group of firms producing a similar product or service.
The firm interacts with a more specific environment, the industry.
4 main components that exert influence on industry:
1. Suppliers
2. Competitors and potential substitutes
3. Potential entrants
4. Buyers Competitors, potential substitutes and potential entrants
The number of firms operating within the industry as well as the number of firms wishing to enter the industry are regulated by barriers to entry which determine continued participation in and/or exit from the industry. Some of the constraints are the rate of industry growth, the level of fixed costs, and the degree of differentiation. Potential competitors are not limited to firms considering to offer exactly the same or differentiated products or services, substitutes to the existing products and services are also a potential threat. Substitute products/services may co-exist with the present range of products and services or may render the present range obsolete. Buyers and Suppliers
The competitive situation of business firms is influenced by the nature of its transactions with its buyers and suppliers. Buyers exert their power in the industry when they force down prices, bargain for higher quality or more services, and play competitors against each other. Suppliers can exert bargaining power over participants in an industry by threatening to raise prices or reduce the quality of purchased goods or services. In addition, we usually think of suppliers as other firms. But labor has to be recognized as a supplier as well - one that exerts great power in many industries. Michael Porter's Approach to Industry Analysis
- The 'five forces model' developed by Michael E. Porter, has been the most commonly utilized analytical tool for examining the competitive environment.
- It describes the competitive environment in terms of five basic forces: threat of new entrants, bargaining power of the firm's suppliers, bargaining power of the firm's customers, threat of substitute products, and intensity of rivalry among firms.
- The collective strength of these forces determines the ultimate profit potential in the industry, which profit potential is measured in terms of long run return in invested capital.
- They also determine the nature and extent of competition.
- The stronger each of these forces is, the more companies are limited in their ability to raise prices and earn greater profits.
- A strong force can be a threat, likely to reduce profits
- A weak force can be an opportunity, may allow greater profits A corporation's scanning of the environment should include analyses of all relevant elements in the task environment. Managers need to consider the competitive environment, also referred to as the task environment or industry environment. The profitability of the firm and the nature of competition in the industry are more directly influenced by developments in the competitive environment. Industry Analysis
Industry - group of firms producing a similar product or service.
The firm interacts with a more specific environment, the industry.
4 main components that exert influence on industry:
1. Suppliers
2. Competitors and potential substitutes
3. Potential entrants
4. Buyers Competitors, potential substitutes and potential entrants
The number of firms operating within the industry as well as the number of firms wishing to enter the industry are regulated by barriers to entry which determine continued participation in and/or exit from the industry. Some of the constraints are the rate of industry growth, the level of fixed costs, and the degree of differentiation. Potential competitors are not limited to firms considering to offer exactly the same or differentiated products or services, substitutes to the existing products and services are also a potential threat. Substitute products/services may co-exist with the present range of products and services or may render the present range obsolete. Buyers and Suppliers
The competitive situation of business firms is influenced by the nature of its transactions with its buyers and suppliers. Buyers exert their power in the industry when they force down prices, bargain for higher quality or more services, and play competitors against each other. Suppliers can exert bargaining power over participants in an industry by threatening to raise prices or reduce the quality of purchased goods or services. In addition, we usually think of suppliers as other firms. But labor has to be recognized as a supplier as well - one that exerts great power in many industries. Michael Porter's Approach to Industry Analysis
- The 'five forces model' developed by Michael E. Porter, has been the most commonly utilized analytical tool for examining the competitive environment.
- It describes the competitive environment in terms of five basic forces: threat of new entrants, bargaining power of the firm's suppliers, bargaining power of the firm's customers, threat of substitute products, and intensity of rivalry among firms.
- The collective strength of these forces determines the ultimate profit potential in the industry, which profit potential is measured in terms of long run return in invested capital.
- They also determine the nature and extent of competition.
- The stronger each of these forces is, the more companies are limited in their ability to raise prices and earn greater profits.
- A strong force can be a threat, likely to reduce profits
- A weak force can be an opportunity, may allow greater profits A corporation's scanning of the environment should include analyses of all relevant elements in the task environment. Managers need to consider the competitive environment, also referred to as the task environment or industry environment. The profitability of the firm and the nature of competition in the industry are more directly influenced by developments in the competitive environment. Industry Analysis
Industry - group of firms producing a similar product or service.
The firm interacts with a more specific environment, the industry.
4 main components that exert influence on industry:
1. Suppliers
2. Competitors and potential substitutes
3. Potential entrants
4. Buyers Competitors, potential substitutes and potential entrants
The number of firms operating within the industry as well as the number of firms wishing to enter the industry are regulated by barriers to entry which determine continued participation in and/or exit from the industry. Some of the constraints are the rate of industry growth, the level of fixed costs, and the degree of differentiation. Potential competitors are not limited to firms considering to offer exactly the same or differentiated products or services, substitutes to the existing products and services are also a potential threat. Substitute products/services may co-exist with the present range of products and services or may render the present range obsolete. Buyers and Suppliers
The competitive situation of business firms is influenced by the nature of its transactions with its buyers and suppliers. Buyers exert their power in the industry when they force down prices, bargain for higher quality or more services, and play competitors against each other. Suppliers can exert bargaining power over participants in an industry by threatening to raise prices or reduce the quality of purchased goods or services. In addition, we usually think of suppliers as other firms. But labor has to be recognized as a supplier as well - one that exerts great power in many industries. Michael Porter's Approach to Industry Analysis
- The 'five forces model' developed by Michael E. Porter, has been the most commonly utilized analytical tool for examining the competitive environment.
- It describes the competitive environment in terms of five basic forces: threat of new entrants, bargaining power of the firm's suppliers, bargaining power of the firm's customers, threat of substitute products, and intensity of rivalry among firms.
- The collective strength of these forces determines the ultimate profit potential in the industry, which profit potential is measured in terms of long run return in invested capital.
- They also determine the nature and extent of competition.
- The stronger each of these forces is, the more companies are limited in their ability to raise prices and earn greater profits.
- A strong force can be a threat, likely to reduce profits
- A weak force can be an opportunity, may allow greater profits A corporation's scanning of the environment should include analyses of all relevant elements in the task environment. Managers need to consider the competitive environment, also referred to as the task environment or industry environment. The profitability of the firm and the nature of competition in the industry are more directly influenced by developments in the competitive environment. Industry Analysis
Industry - group of firms producing a similar product or service.
The firm interacts with a more specific environment, the industry.
4 main components that exert influence on industry:
1. Suppliers
2. Competitors and potential substitutes
3. Potential entrants
4. Buyers Competitors, potential substitutes and potential entrants
The number of firms operating within the industry as well as the number of firms wishing to enter the industry are regulated by barriers to entry which determine continued participation in and/or exit from the industry. Some of the constraints are the rate of industry growth, the level of fixed costs, and the degree of differentiation. Potential competitors are not limited to firms considering to offer exactly the same or differentiated products or services, substitutes to the existing products and services are also a potential threat. Substitute products/services may co-exist with the present range of products and services or may render the present range obsolete. Buyers and Suppliers
The competitive situation of business firms is influenced by the nature of its transactions with its buyers and suppliers. Buyers exert their power in the industry when they force down prices, bargain for higher quality or more services, and play competitors against each other. Suppliers can exert bargaining power over participants in an industry by threatening to raise prices or reduce the quality of purchased goods or services. In addition, we usually think of suppliers as other firms. But labor has to be recognized as a supplier as well - one that exerts great power in many industries. Michael Porter's Approach to Industry Analysis
- The 'five forces model' developed by Michael E. Porter, has been the most commonly utilized analytical tool for examining the competitive environment.
- It describes the competitive environment in terms of five basic forces: threat of new entrants, bargaining power of the firm's suppliers, bargaining power of the firm's customers, threat of substitute products, and intensity of rivalry among firms.
- The collective strength of these forces determines the ultimate profit potential in the industry, which profit potential is measured in terms of long run return in invested capital.
- They also determine the nature and extent of competition.
- The stronger each of these forces is, the more companies are limited in their ability to raise prices and earn greater profits.
- A strong force can be a threat, likely to reduce profits
- A weak force can be an opportunity, may allow greater profits A corporation's scanning of the environment should include analyses of all relevant elements in the task environment. Managers need to consider the competitive environment, also referred to as the task environment or industry environment. The profitability of the firm and the nature of competition in the industry are more directly influenced by developments in the competitive environment. Industry Analysis
Industry - group of firms producing a similar product or service.
The firm interacts with a more specific environment, the industry.
4 main components that exert influence on industry:
1. Suppliers
2. Competitors and potential substitutes
3. Potential entrants
4. Buyers Competitors, potential substitutes and potential entrants
The number of firms operating within the industry as well as the number of firms wishing to enter the industry are regulated by barriers to entry which determine continued participation in and/or exit from the industry. Some of the constraints are the rate of industry growth, the level of fixed costs, and the degree of differentiation. Potential competitors are not limited to firms considering to offer exactly the same or differentiated products or services, substitutes to the existing products and services are also a potential threat. Substitute products/services may co-exist with the present range of products and services or may render the present range obsolete. Buyers and Suppliers
The competitive situation of business firms is influenced by the nature of its transactions with its buyers and suppliers. Buyers exert their power in the industry when they force down prices, bargain for higher quality or more services, and play competitors against each other. Suppliers can exert bargaining power over participants in an industry by threatening to raise prices or reduce the quality of purchased goods or services. In addition, we usually think of suppliers as other firms. But labor has to be recognized as a supplier as well - one that exerts great power in many industries. Michael Porter's Approach to Industry Analysis
- The 'five forces model' developed by Michael E. Porter, has been the most commonly utilized analytical tool for examining the competitive environment.
- It describes the competitive environment in terms of five basic forces: threat of new entrants, bargaining power of the firm's suppliers, bargaining power of the firm's customers, threat of substitute products, and intensity of rivalry among firms.
- The collective strength of these forces determines the ultimate profit potential in the industry, which profit potential is measured in terms of long run return in invested capital.
- They also determine the nature and extent of competition.
- The stronger each of these forces is, the more companies are limited in their ability to raise prices and earn greater profits.
- A strong force can be a threat, likely to reduce profits
- A weak force can be an opportunity, may allow greater profits A corporation's scanning of the environment should include analyses of all relevant elements in the task environment. Managers need to consider the competitive environment, also referred to as the task environment or industry environment. The profitability of the firm and the nature of competition in the industry are more directly influenced by developments in the competitive environment. Industry Analysis
Industry - group of firms producing a similar product or service.
The firm interacts with a more specific environment, the industry.
4 main components that exert influence on industry:
1. Suppliers
2. Competitors and potential substitutes
3. Potential entrants
4. Buyers Competitors, potential substitutes and potential entrants
The number of firms operating within the industry as well as the number of firms wishing to enter the industry are regulated by barriers to entry which determine continued participation in and/or exit from the industry. Some of the constraints are the rate of industry growth, the level of fixed costs, and the degree of differentiation. Potential competitors are not limited to firms considering to offer exactly the same or differentiated products or services, substitutes to the existing products and services are also a potential threat. Substitute products/services may co-exist with the present range of products and services or may render the present range obsolete. Buyers and Suppliers
The competitive situation of business firms is influenced by the nature of its transactions with its buyers and suppliers. Buyers exert their power in the industry when they force down prices, bargain for higher quality or more services, and play competitors against each other. Suppliers can exert bargaining power over participants in an industry by threatening to raise prices or reduce the quality of purchased goods or services. In addition, we usually think of suppliers as other firms. But labor has to be recognized as a supplier as well - one that exerts great power in many industries. Michael Porter's Approach to Industry Analysis
- The 'five forces model' developed by Michael E. Porter, has been the most commonly utilized analytical tool for examining the competitive environment.
- It describes the competitive environment in terms of five basic forces: threat of new entrants, bargaining power of the firm's suppliers, bargaining power of the firm's customers, threat of substitute products, and intensity of rivalry among firms.
- The collective strength of these forces determines the ultimate profit potential in the industry, which profit potential is measured in terms of long run return in invested capital.
- They also determine the nature and extent of competition.
- The stronger each of these forces is, the more companies are limited in their ability to raise prices and earn greater profits.
- A strong force can be a threat, likely to reduce profits
- A weak force can be an opportunity, may allow greater profits
What is the meaning of merger of title regarding real property?
Merger of title in the law of real property is used to describe a situation whereby a lesser title is absorbed by a greater title and the lesser title disappears. It is commonly used when referring to easements and mortgages.
Suppose James Smith granted a mortgage on his property to Elizabeth Murphy. Murphy would now have a security interest in the property. That mortgage would remain as a lien on the property until it was paid off and a discharge was recorded to clear the title. If Smith couldn't pay off the mortgage and decided to move away he could convey the property to Murphy by deed if she agreed. Murphy's interest under the mortgage would "merge" with her fee interest under the deed and the mortgage lien would be extinguished. There would be no need to record a discharge of that mortgage.
Now suppose a farmer split a narrow but deep parcel into two lots, one with frontage on the road (A) and one requiring passage over Lot A for access (B). He sold the rear lot (B) to MacDonald with a right of way over the front portion (A). MacDonald and successive owners will always have access over Lot A to reach Lot B. Therefore Lot A will always be encumbered by the rights of the owners of Lot B to cross over their lot.
If the owner of Lot A later purchased Lot B the easement in the right of way would merge with the fee when the same owner acquired the title to both lots. The easement in the ROW would disappear.
What are the benefits if Japanese Airlines and KLM-Air France merge?
You would have an airline that flew almost everywhere in the world and you would thus have a true world airline. At the moment, one does not exist.
How do you calculate the share value of a company?
How to calculate the value of a share of a company which is not quoted in the market. Whether the profits transferred to reserved are to be added to the subscribed amount while calculating the value of the share.
What are the details of bank mergers in India?
There were two recent bank mergers in India. They are:
- Industrial Development Bank of India and its own subsidiary IDBI Bank merged into one entity
- Centurion Bank and Bank of Punjab merged with one another to form Centurion Bank of Punjab
- Centurion Bank of Punjab merged with HDFC Bank and the entity together was called HDFC Bank because HDFC bank was a much larger entity than CBoP
