BUSINESS ORGANISATION AND POLICY

Business Organisation and Policy

Business Organisation and Policy

Introduction

Today, in the corporate world, mergers and acquisitions hold a lot of importance. Today, they are a key to the success of the business. Companies make sure that they either acquire or merge with other companies to increase their revenues and create a positive image in the market. In 2010, a total of 199 mergers and acquisitions took place. These mergers amounted to £12,414 billion. They help the company in accumulating assets that are for the benefit of the company. Mergers and acquisitions can help a company to grow and create good opportunities for itself in the market. On the other hand, there are instances where the company fails to create a good and successful merger with the other company. It is important that the company researches and investigates about the other company it is going to acquire or is going to merge with. This will help the company in ensuring that there are no chances for error and will also help to plan its future business activities in an effective manner (Straub, 2009, pp. 78).

Mergers help the companies to increase their productivity, thus increase their profit. This is how the companies will be able to make sure that they are benefitting from the merger. Mergers double the financial resources of the companies which help it to make sure that they perform in the best manner and are also able to research more and improve the technology that their company uses. This improvement in technology helps the companies in ensuring that they work in a manner that is better for the customers of both the companies and that help them to improve their business.

There are a lot benefits and limitations of mergers and acquisitions. The different types of mergers and acquisitions have different types of advantages and challenges. It is up to the company to make proper use of the mergers and acquisitions. There are vertical mergers, conglomerate mergers and horizontal mergers. There are different motivations for each of these mergers such as a the economies of scope and scale, diversification, complementary resources, decreased cost of financing, industry consolidation, etc. There are a number of empirical studies that have presented the performance of the company who have been involved in mergers. The returns of the stock that the company earns and the increased earnings of the company show how much the company has benefitted from the merger activity (Mendenhall, 2007, pp. 124).

Mergers and acquisitions help the company to manage their operations with efficiency. They help the companies to collaborate and share the experience that will enable them and the merged company to achieve higher returns on their investment so that they can grow together and earn more. It also helps the companies in utilizing their assets in the best possible manner.

There are a number of reasons that mergers cannot prove to be beneficial for the company. One of these reasons include that this could be a financial disaster for ...