Films as Mergers and Acquisitions

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Films as Mergers and Acquisitions Firms merge with or takeover another company for different reasons: Growth; The fastest way for growth to occur is to be involved in a merger and because of this it is the main basic factor for merging, diversification; entering different markets in order to cut the dependency on current product range (conglomerate integration), market power; when two rival companies merge the new company has an increase in market power and reduces the competitiveness of the market. A firm may also merge with the intent to asset strip but this is a short-term attempt to increase cash flow and is more likely to involve a horizontal integration type of merger. There are four main types of business integration, horizontal, vertical backward and forward and conglomerate integration. Vertical integration occurs when one firm takes over or merges with another in a different stage in the production process where-as a horizontal integration occurs when one company merges with another at the same stage of production in the same industry, out of the four types of integration this is the most common with such examples like EasyJet taking over Go and Coca-Cola taking over Orangina. Synergy is a commonly used word to explain why mergers and takeover occur; it means that combining the businesses will produce one enterprise that is more powerful and efficient. Synergies are expected when mergers occur due to the ability to take advantage of several economies of scale, such as distribution and production. However many firms under-estimate the effects of diseconomies of scale that two large business merging can bring. A furthe... ... middle of paper ... ...et costs because of the increased competition. There are people who see the merger as not a good idea and resources could be better spent, Critics complain that the company has run out of ideas and the merger is a last ditch attempt to revive the business by an increasingly desperate management. Instead of taking on more shops, Boots should be looking at ways of getting the most from their existing floor space, cutting costs and polishing up their brand name, they say.Critics also complain that a merger very rarely delivers on all of its promises, and destroys shareholder value rather than enhancing it. Bibliography 1. BBC news source, Monday 3rd of October 2005 2. BBC news source, Friday 17th of February 2006 3. BBC news source, Monday 3rd of October 2005 4.BBC news source, Monday 3rd of October 2005

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