Merger of HSBC and Oman International Bank - Essay Example

Since this research is focused on mergers, it considers mergers as the collaboration of two mature business entities.

2.2 Meaning of Mergers 
Mergers have different meanings to different entities. To the most important stakeholders, the parent companies, use mergers are partners to explore a common business interest. On the other hand, mergers mean teamwork between businesses with a common business goal. The difference between business goals and business interests is that the former indicates the plan of a business and how it plans on meeting various financial and operational goals. On the other hand, business interests involve common ambitions as well as a shared vision of taking opportunities head-on. However, business interests take on the assumption that the market has a gap that the merging companies have to collaborate to ensure success is achieved in the most financially and economically effective manner possible.

2.3 Types of mergers 
Five types of mergers are identified within the business environment. Among these includes horizontal, product extension, market extension, vertical, and conglomeration. Horizontal mergers involve two companies that are in direct competition with each other. The motive of this type of merger is to cut down on competition and maximize factors that can improve the economic footing of both companies. Vertical mergers include a customer and a company. Production and market extension mergers are other types of mergers that involve two companies selling related but different products within the same market and companies selling the same product in varying markets. Conglomeration, on the other hand, involves two companies with no common business endeavors. For instance, the merging of a manufacturer with a logistics company makes an example of a conglomeration.

2.4 Motives of Mergers
            There are different reasons why mergers are considered in the first place. Before considering a merger, various options fall under a business’s disposal.