Market Structure of Oracle and PeopleSoft - Essay Example

However, PeopleSoft produces specialized software programs for managing human resources while Oracle has a different specialization. So why would Oracle need this merge?

As Ellison has noted, Oracle will continue supporting and improving PeopleSoft products if acquisition takes place. However, further, he adds that the PeopleSoft products will not be integrated into Oracle offerings and PeopleSoft programmers would have to rewrite the most important functions from scratch as part of the new Oracle software. Following these two contradicting claims, the conclusion can be made that Oracle just wants to eliminate the dangerous competitor while the interests of PeopleSoft customers are not taken into account at all.

In addition, Ellison has claimed that mergers with other smaller rivals are of no interest to Oracle, probably because they do not present a threat to Oracle's market standing.  Nevertheless, in the long run, the merger will prove to be beneficial for the consumers because the company will be able to use specialists of PeopleSoft as the tool to develop new programs aimed at making data easier to manage. Both Oracle and PeopleSoft focus on stand-alone products and probably would not survive and meet the growing demands of customers. PeopleSoft have limited offerings and merging with Oracle provides the opportunity to become the team within the larger structure and accelerate the consolidation among the vendors. Customers will benefit from improved products.

However, the second article provides insight into the problem from a different perspective. If in the first article, most of the comments have been provided by Oracle representative Ellison who has claimed that the merge is necessary and otherwise PeopleSoft products will be doomed, the second article emphasises the PeopleSoft position and their unwillingness to merge with Oracle. The Oracle bid for PeopleSoft is hostile and is being solved with the intrusion of the state. As a result, the court has to conduct an antitrust investigation. There is a chance that leading specialists of PeopleSoft will not remain in the company if a merger takes place, thus, the consumers will be negatively impacted in the short run. From this standpoint, it is inappropriate to conclude whether customers will benefit in the long run.

One of the prerequisites of a successful merger is a two-sided agreement between both companies to unite in an attempt to develop better products and meet the needs of customers, as well as attract new potential buyers. However, in this particular case, the customers could be pushed away from Oracle because of its hostile attitude towards PeopleSoft. Business people are the customers of both Oracle and PeopleSoft who use the software products in their everyday business operations and they do understand that cooperation cannot be based on hostile mergers.

Connecticut Attorney General Richard Blumenthal has decided to block the proposed merger on antitrust grounds and it is probably the right decision. Returning to the customers, it is evident that the consumers of PeopleSoft will not benefit from the merger because PeopleSoft products will not be marketed actively.  The consumers of Oracle products will not be impacted so much but will benefit in the long run because they will be offered more products of higher quality. In addition, the consumers of PeopleSoft will have to switch to other brands, most likely to Oracle because it acquired PeopleSoft. In conclusion, it is unreasonable to make assumptions about the long-run benefits of the merger; while the short-run the consumers of both companies will be impacted differently. Read More