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Disadvantages of mergers and acquisitions
Disadvantages of mergers and acquisitions
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Mergers and acquisitions is the process in which two companies are combined together to form a new company while acquisition is the process in which one company is purchased by the other company and no new company is formed. While on the other hand, CSR is the concept of incorporating responsibilities related to society, health, and environment within the business model. In this paper, these two concepts are discussed in which benefits and drawbacks of mergers and acquisitions are elaborated along with UK Laws. Furthermore, implementation of corporate social responsibility in Shell Plc. is discussed in the paper for illustrating the ways in which quality of life in the society and business environment can be improved.
Benefits and Drawback
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After the process of M&A the shareholder value of the firm rises which becomes greater than the sum of the shareholder values of the parent companies. They also make use of economies of scale for generating cost efficiency through mergers and acquisitions (Gaughan, 2013).
Tax Gains
This process gives rise to tax gains and lead to a revenue enhancement with the help of market share gain. Organisations make use of the concept of mergers and acquisitions due to the fact that joint company would help them in generating more value in comparison to the separate entity. When the companies combine, it is expected that the total shareholder value will be greater than the sum of the shareholder value of the separate entities (Anderson, et al., 2013).
Gaining Cost Efficiency
The joint company that initiates from the process of mergers and acquisitions avails the benefit in terms of cost efficiency. This becomes possible because the organisations make use of economies of scale. As the companies combine and form larger firms, the process of production is conducted on large scale due to which the output rises. This would reduce the cost of production per unit providing the benefit of cost efficiency to the firm (Flanagan,
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Moreover, Fair Trading and Competition Act were proposed by the government of UK that would help them to maintain a healthy trading and environment and reduce the level of monopoly to the negligible level. It is noted that most of the large-scale organisations are quite keen to merge their activities with other organisation in order to get the maximum advantage by charging high cost from customers. Due to the merger and acquisition of large businesses, it would influence the overall market in a pessimistic manner that is why the top officials of UK are quite keen to restrict their activities to some extent in order to give adequate opportunities to others to enter in a market without any problem. It is observed that by imposing strict rules & regulations the officials can easily tackle the problem of misallocation of resources and manage their activities in an ethical and legal manner (Holgate,
An important factor for the successful development of a CSR framework at the corporate level is to ensure that the framework can be easily merged with the daily routines of the store. In the Siemens case that was studied in class, putting the company back in order had to start from the corporate level and with the individual in charge of corporation – the CEO. Therefore, in order to implement CSR at the store, the initiative has to come from the corporate level, however the store here in Nanaimo can assume a key role by developing and testing new CSR practices.
Cost cutting, discontinuation of product or services ,technological changes, and consolidation due to mergers and acquisitions are commonly legal ac...
fail (Cheng, 2012). Mergers and acquisitions are much common in these days and only a few of them are end up in successes. Even though mergers and acquisitions are not result much successes rate, many organizations are still preferring it because, it is used as a cooperative strategy but nowadays it is used for cooperative development. The cultural differences and merger integration can be considered as an important factor for the failure rate but this study mainly focused
Gaughan, P. A., 2002. Mergers, Acquisitions, and Corporate restructuring. 3rd ed.New York: John Wiley & Sons, Inc.
Berry, A. W. (2010, May 31). Advantages and disadvantages of acquisitions and mergers. Retrieved from http://www.helium.com/items/1561489-mergers-and-acquisitions
An organization’s Corporate Social Responsibility (CSR) drives them to look out for the different interests of society. Most business corporations undertake responsibility for the impact of their organizational pursuits and various activities on their customers, employees, shareholders, communities and the environment. With the high volume of general competition between different companies and organizations in varied fields, CSR has become a morally imperative commitment, more than one enforced by the law. Most organizations in the modern world willingly try to improve the general well-being of not only their employees, but also their families and the society as a whole.
As the business, people put it, to maximize the wealth of shareholders (Peavler, 2016). This could be done by pursuing more of an immediate reason that will realize the shareholders wealth maximization goal. However, this main reason may fail to be realized as most mergers depict negative results.
A corporations CSR should be shaped in order to fit the goals of the corporation, although every corporation’s CSR should differ, since most have different goals and different communities behind them. The CSR should be molded into fitting the corporation’s goals in order to make it easier on the corporation in giving back to the community while achieving its goals. For example, a corporation located in a desert wishes to be more efficient, by reducing water usage it is not only creating lower costs, which result in higher revenue, but also helps the community by not taking up so much water. Taking this into consideration, it is critical that the corporation goals and values are established and clear throughout the corporation, they should be developed by the board or directors and CEO, and the highest managerial level should stress their importance to the rest of the corporation. By making the goals and values at the top branch of the corporate hierarchy, it will be simpler for the corporates community to develop in order to nurture those goals and values. Therefore, a corporation can reach the “shared-value,” a value for both its shareholders and community in a simpler manner that can result benefiting the corporation in the end as well. Throughout the article many examples are given of actual corporations that have benefited and changed their CSR in order to fit their goals, therefore, providing solid proof that these methods work. Nevertheless, as acknowledged by the author’s themselves, most of the corporations taken into consideration where one’s that Harvard CSR students were employed
...t in becoming more socially responsible corporations. For example, Pos Malaysia through their CSR practices, this corporation had focuses on a dual-pronged approach that is aimed at bringing value to the community and nation at large by the means of enhancing education particularly towards the enhancement of human capital development mainly in underprivileged areas and also Enriching Communities in which Pos Malaysia seeks to promote commerce and entrepreneurship within the communities they serve particularly in rural areas. The above CSR themes are aligned with Pos Malaysia mission to constantly strive to be a caring corporate citizen by supporting nation building and community services. This CSR will focused on the meeting the need and interest stakeholder of an organization by becoming more socially responsible and as well as to improve their image and reputation
c) Economies of scale as size increases and price per unit of production decreases. Disadvantages: a) High monopoly in the market, can overcharge for the product and customer may lose loyalty. b) Difficult to integrate the work culture throughout the merged firm c) Merged company may fail if synergy is not established and the product becomes outdated.
Mergers and acquisitions immediately impact organizations with changes in ownership, in ideology, and eventually, in practice. There are multiple reasons, motives, economic forces and institutional factors that can, taken together or in isolation, influence corporate decisions to engage in mergers or acquisitions. The financial risks of merging with or acquiring an organization in another country and how those risks can be mitigated are important issues for corporations to conduct research on. This paper will examine the sensible and dubious reasons for mergers and acquisitions and the benefits and costs of the cash and stock transactions.
When entrepreneurs plan their business future they will consider how they can increase their business size or profit in a short period. Entrepreneurs may consider growing their business or company by using a merger or an acquisition. These methods can be a speed up tool and a short cut to enlarge their business. (Burns, 2011) Also they can reduce competition, make it easier for entrepreneurs to think about the market and product development and risk reduction. Furthermore, some lesser – known companies can improve their firm’s image and market power by using merger and acquisition with larger firms. However, there may be risks associated with merger and acquisition related to lack of finance and time. (Burns, 2011) This essay will discuss more deeply the advantages and disadvantages of using mergers and acquisitions, showing how it can affect firms and market with the case study.
Corporate Social Responsibility, often abbreviated as “CSR”, as defined by Investopedia is a corporation’s initiatives to access and take responsibility for the company’s effects on environmental and social wellbeing. Helg (2007) defined Corporate Social Responsibility as the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”. Nigeria as a country is not left out on the need to implement CSR as it is a global best practice. However, it has not gained popularity in privately held businesses (PHBs) as much as it has with big corporations in this
Business organizations regularly run into demands from various stakeholders groups when conducting day-to-day business. These demands are generated from employees, customers, suppliers, community groups, governments, and shareholders. Thus, according to Goodpaster, any person or group of people that can shape or can be shaped by attainment of the objectives by an organization is considered a stakeholder. Most business organizations recognize and understand their responsibilities to these groups and endeavor to honor and fulfill them. These responsibilities are often communicated to the public by a statement of principles or beliefs. For many business organizations, corporate social responsibility (CSR) has become an essential and integral part of their business. Thus, this paper discusses the two CSR views: the classical view and the stakeholder view. Furthermore, I believe that the stakeholder view has brought ethical concerns to the forefront of businesses, and an argument shall be made that businesses would improve both socially and economically if CSR, guided by God’s love, was integrated into their strategic planning.
Strategic management is important to acquisitions because how a product is procured, manufactured and shipped is an integral part of a business. A weak supply chain can lead to excessive costs due to wasted time and fuel while shipping if routes and transportation methods are not properly selected. Also, if deliveries are not made on schedule, customers will be dissatisfied with the service. If a warehouse is not properly managed and organized, orders may not be filled in a timely manner or products could be damaged leading to excessive waste. Companies who enter into contracts to obtain or provide products or services need to be able to effectively negotiate so that they receive the best value for their company. To do this, they need to be aware of what their company’s advantages and disadvantages are as well as what goals and benefits they are trying to gain. Companies need to analyze how well their acquisition process works so that they can be sure that it adds to the competitive advantage of the industry as a