Merger and acquisitions - Research Paper Example

Merger and Acquisitions Merger and Acquisitions Introduction A company can implement one of the two following strategies while acquiring and merging into another company: they can either merge with the other company or operate as one company under one management or they can both operate separately. Body The benefits that will be obtained by creating one company out of two companies are enormous. Firstly, the new company created out of two companies will have elements obtained from both the companies (Hill, 1998, p.292). The strategy of creating a single company out of two companies is mostly used when both the companies are producing homogenous products, competing in the same market and industry.

When a single company is created out of two companies, a lot of conflict arises between the employees and the management of the two companies. If the members of these companies are able to come over their differences with each other, then one of the companies acquires the culture of the company. In most cases, the acquired company alters its culture in accordance to the culture of the company that has conducted the process of acquiring. To make such a transaction successful, it is necessary for the members of the acquired companies to accept change and take the entire process of integration positively.

This means that the member of the company that are adopting the changed culture have to give up their own differentiating factor and accept the culture of the acquiring company. Due to this the acquired company and the acquiring company will be both operating legally and culturally as a single firm. In certain cases, the products produced, the culture and the technology used by the acquired and the acquiring company are different. In these cases, companies can still operate under one single name while continuing there business in the way they used to operate.

The benefit of this method will be that the acquired company will be able to continue to operate in accordance to its differentiating factors and culture while they will be controlled by the management of the acquiring company. While investigating whether this implementation strategy of merger is successful or not, a company has to check whether the purpose of implementing the strategy has been achieved. This strategy is mostly used by companies when they want to increase their market share and decrease competition.

If this merger implementation process aids the company in gaining higher market share, the strategy is said to be successfully implemented. The second strategy that can be adopted during mergers is to operate two companies separately with separate managements (DePamphilis, 2011, p.125). In this scenario, the acquired company operates separately and the acquiring company operates separately. This strategy is mostly used when two companies have two different product portfolios integrate with each other.

For example: A financial institution merges with cement manufacturers. In this case the financial institution operates separately and the cement manufacturer operates separately (White, 2007, p.258). When this strategy is implemented, the acquired company continues to operate according to the culture they were operating in before they were acquired and there is not connection or similarity between the two companies. This strategy is quite helpful in managing as two different sets of management manage their own companies and they contact and relationship between two companies remain at the minimum level.

The management of the acquiring company focuses on their own business and the level of supervision they implement on the acquired company is quite low. Conflict may arise because of the acquired company’s will to remain separate from the acquiring company. The management of the acquiring company may not have expertise over the operations and the technology that is being used by the acquired company, thus they can not make decisions related to the acquired company and they are unable to supervise the acquired company well.

The acquiring company needs to give autonomy and responsibility to the management of the acquired company to operate on its own, make decisions on their own. To figure out whether the strategy implement has been successful or not, the management needs to pay emphasis on the reason for the implementation of the strategy. This strategy is mostly implemented in cases where the company aims at increasing shareholder profits and to decrease the risk of failure. If this strategy leads to increased profits for the shareholders, the strategy is said to have been implemented successfully.

Conclusion The decision of operating jointly or separately is dependant on the kind of merger that is taking place. If the mergers are taking place between companies that are producing similar products, then they should operate as a single company and vice-versa. References DePamphilis, D. M. (2011). Mergers and acquisitions basics: All you need to know. Burlington, MA: Academic Press. Hill, C. W. L., & Jones, G. R. (1998). Strategic management theory: An integrated approach. Boston, MA: Houghton Mifflin. White, M. A.

, & Bruton, G. D. (2007). The management of technology and innovation: A strategic approach. Mason, OH: Thomson/South-Western.