Assessing Competitors: Merger and Acquisition 2013

Assessing Competitors: Merger and Acquisition 2013: A company should use various elements to access its competitor. Competitors are other business organizations that share the same market in terms of producing products. The hussy and jester model provides a channel for analysis of an industry. 
This model has a provision that to assess competitors you need to be aware of number of competitors in the industry.  Know the prices they charge for the products they provide. Assess the market growth of the competitors.  Assess the buying capacity of their competitor’s products. Assessing of competitors help in improving on the competitor’s weaknesses.

 Merger and acquisition

Merger refers to the combination of two companies to form one company. Acquisition refers to a company being purchased by company to form a new company. Therefore, merger and acquisition means company’s being consolidated. Merger and acquisition is one of the methods companies have adopted due to economic uncertainties. 
Company’s use mergers as a tool to enhance profitability in the long run by expanding its operations. Mergers and acquisition are important as they ensure there is cost efficiency by ensuring they implement economies of scale. There is a market share gain through use of mergers and acquisition as company’s benefit from tax gains and revenue enhancements. Mergers benefit Company’s by increasing its value generation.  It is important to note that shareholders value in a firm after merger increases than shareholders value of its original company.
 Mergers and acquisition benefit companies by increasing market share. For example if a financially stable company mergers or acquires a company that is financially distressed the new company formed experiences an increase in market share. The new company formed is more cost effective and more competitive as opposed to a financially weak company. Mergers and acquisitions may also have weaknesses to a newly formed company. 

Failures of mergers may occur due to poor decision making by the company’s leadership.
Leaders from the newly formed company may not have the right leadership skill to manage the company. Mergers may fail due to failure of a company to recognize the importance of incorporated company especially when this company is the financially weak company. The new company may also experience poor management. Overestimating the value of the new company may also cause failure of a merger.

COPORATE DECLINE

Financial crisis is a situation where assets and financial institutions lose part of their value in very short period.  Corporate decline can arise due to various factors arising from either the internal environment of the organization or the external environment. External causes of decline are factors affecting a company that the company does not have direct control over. Political and legal factors cause corporate decline. Some legislation is discouraging to existence of business. For example, companies such as tobacco companies are restricted to advertise their products. The government should ensure that legislation favors existence of business.
Economic causes also cause corporate failures. High rates of interest on capital are discouraging to investors. Financial institutions should ensure interest rates are affordable to investors. Technological factors also may cause a corporate decline. Use of outdated technology may lead to low quality of products, which is discouraging to consumers. Companies should ensure they adapt to changes in technology. Socio-cultural factors may also cause corporate decline. Decline in population may affect a company as this lowers a company purchasing power. Cultural changes affect organizations in terms of changes in trends. Companies should ensure they are aware of changes in culture and act accordingly.
Internal causes of corporate decline are the factors that a company has direct control over. Research and development if a factor that a company should consider. A company should be well equipped to carry out research on various changing trends. If a company is not adequate when it comes to research, it is bound to fail. A company should have adequate personnel resources to be able to carry out all tasks required in a company. If a company’s personnel is not adequate there is going to be a corporate decline. Production activities also affect corporate performance. If the people conducting production have poor morale there is going to be a corporate decline. Management should motivate personnel to increase productivity.

ADVANTAGES AND DISADVANTAGES OF LARGE COMPANIES

Large companies have a great share of advantages that work to the company good.  Large companies enjoy economies of scale this is because they buy resources in bulk. Buying goods in large numbers ensures that company’s get discounts. There is a wide personnel base, which provides the company with diversified skills. These skills are used to improve the company in production of goods.  These large companies also enjoy a wide capital base. They can also easily access financial aid from financial institutions. 
They can use these finances to expand the company or carry out research. Large companies also enjoy the fact that they use modern technology in production. High technological advancements ensure high quality products are produced and that these products are in large quantities. Disadvantages of large companies include political interference by leaders hindering the companies from running their affairs independently. Large companies may experience mismanagement of funds if the company does not have an effective system of controlling its accounts.

1 comment:

  1. Good article ,I work for Mcgladrey and there's a whitepaper on Post M&A integration and its importance "Strategic growth and the impact of an effective integration infrastructure" readers will find it very helpful @ http://bit.ly/UvpjVz

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