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Industrial Organization Economics - Essay Example

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This has led many corporate organizations trying their best to outdo their rivals. The primary cause of the heightened competition is globalization. Globalization has eased the…
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Industrial Organization Economics
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Download file to see previous pages Globalization has led to opening up of borders to facilitate trade. Those countries and companies that are ahead in the game realize the benefits compared to the laggards. Some of the strategies that nations have adopted to neutralize the effects of competition arising from globalization include creating barriers to entry, strategic entry deterrence as well as mergers and acquisitions. The rest of the paper will outline how the three factors influence industrial organizations as well as their impacts. It will achieve it by discussing three newspaper articles on the same subject.
In an article by Gelles (March 12, 2015) in the New York Times titled, "Uncertainty weighs on Endo’s higher bid for Salix Pharmaceuticals” confirms the competitiveness of merger and acquisition. The article talks about the competition existing between Endo International and Valeant Pharmaceutical over who acquires Salix Pharmaceuticals. Endo has offered $ 175 per share, compared to $ 158 per share that Valeant offers (Gelles2015). It implies that the company that offers a higher bid per share may acquire the parent company and expand the operations. However, many factors hinder the merger and acquisition. These factors are related to policy issues. The board of the parent company has to agree to the offer because the deal will be binding to all the stakeholders including shareholders of the acquired company. In this article, people learn many issues regarding the topic or merger and acquisition. It is contrary to earlier knowledge that acquisition or merger was an arrangement of two companies; this article provides evidence of a third party. Third parties can come in if they offer a higher bid than what others offer. Endo offered a higher bid than what Salix had anticipated, which gives it a greater chance of acquiring the new investment or the company (Gelles 2015). It is a new scenario rarely experienced among accompanies.
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