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International Business - Essay Example

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International Business Merger and Acquisition Globalization and liberalization have brought huge changes in business world and the evolution of new business strategies is one among them. Competition is intensifying in global market because of the increased readiness of the countries in attracting foreign direct investment as a mean to enhance economic growth…
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Download file to see previous pages In short, international business is facing fewer constraints at present even though it faced plenty of barriers in the past. The mode of entry into overseas market by international companies is often attracted huge debates. Some companies are looking for alliances with a company in the target country whereas other companies are looking for merger and acquisition as a mode of entry strategy to expand their business to overseas countries. Even the same company opts for different mode of entries in different countries. For example, Wal-Mart established a business alliance with Bharti group in India as a mode of entry in India market. At the same time, they used mergers and acquisition as the mode of entry in European and South African markets. “Cross border mergers and acquisitions (M&As) are a main vehicle for foreign direct Investment. Yet despite its quantitative importance, the determinants of cross-border M&As are still not well-understood” (Brakman et al, 2008, p.1). Gaughan (2007) explained M & A as a process in which two corporations combined together to form a single one. Moreover, only one corporation survives after the M & A while the merged corporation goes out of existence after the merger process (p.12). Merger and acquisition are one of the most popular business strategies in the modern business world. However, there are lots of concerns and debates about the success and failures of this business strategy. This is because of the fact that there are plenty of examples about the success and failure of the M & A deals in recent times. Some of the recent statistics show that the popularity of M&A as a mode of entry is decreasing in recent times. Some think the M&A cycle has already started to turn up. In the first three quarters of 2012, as the euro tottered and fear gripped the global economy, M&A activity worldwide was 17.4% lower than in the same period of 2011. Yet it surged in the fourth quarter, to the highest level of any quarter in the past four years. This is one reason to expect more mergers this year, says a report by Wachtell, Lipton, Rosen & Katz, a law firm that specializes in M&A. However, Mr Moritz suspects that some deals in late 2012 were rushed through by companies that were worried about possible changes to the tax code. Most deals in 2013 will probably be fairly small, designed to strengthen or fill a gap in the buyer’s existing operations. These are known as “plug and play”. Transformational megamergers grew rarer in 2012, with only four deals topping $20 billion. That was the same as in 2011, and fewer than in each of the three previous years (Mergers Shall we?, 2013). From the above statistics, it is evident that business pundits are not sure about the success and failures of M & As. To merge or not to merge, that is the question. Whether it is nobler in the mind to suffer the pains of negotiation & integration or to defy global trends and find alternatives. This paper critically evaluates the arguments of the pro-merger and anti-merger schools and takes a conclusive position that global mega-mergers are a good policy to undertake in international business practice. Arguments in favor of M & A Miller (2008) pointed out that Edwin L. Miller (Author) › Visit Amazon's Edwin L. Miller Page Find all the books, read about the author, and more. See search results for this author Are you ...Download file to see next pagesRead More
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