Expansion and Merger



Expansion and Merger

Introduction

Merger is a formal process of two or more firms getting into a union to form into a single entity for the assets and liabilities transferred by the selling firm and absorbed by the buying firm. The main benefit of mergers and acquisitions is that the acquiring firm considers the merger or takeover as a profitable investment. Secondly, there can be a reduction in the expenditure of the both merged companies.

Merger Within The Sofdrink Industry

The US soft drinks market grew at a sluggish rate during the period 2006-2010, as a result of sluggish sales growth in the bottled water category. Although the overall market growth is expected to decelerate in the forecast period, the annual rate of growth is set to rise from a low of -0.5% in 2011 to a high of 0.4% in 2015.

The market' performance is forecasted to slow down with a probable CAGR of 0.4 percent for the five year period 2010 to 2015 which is expected to lead the market to a value of $ 127 billion by the end of 2015.

Moreover, managers may react quite differently as compared to other members of the organization. Furthermore, they advocate that open and accurate communication throughout the post-acquisition process is crucial. The worst thing that can be made after an acquisition is to wait and see what happens instead of making actions. In case nothing happens, anxiety and ambiguity can appear in the acquired company.

Question 1. Explain why government regulation is needed, citing the major reasons for government Involvement in a market economy.

It is significant for the companies and organizations to concern all legal and law regulatory authorities before mergers and acquisitions. There are comprehensive requirement that authorizes the company to intervene in any action that could lead towards merger and acquisition. This is for the benefits for all the organization in case for instances in some mishaps the government could take some legal actions against the transaction. The other thing is that there are certain laws, in case of the international mergers, the tax policies and trading policies should be practiced in order to regulate and the actions can be practiced easily. This is done in order to do the system aligned so that all the beneficiaries could follow the same standardized rules and regulations.

Question 2. Justify the rationale for the intervention of government in the market process in the U.S.

Market processes are the most complex process in terms of mergers and acquisitions in the U.S; this is the reason why the government of U.S focus more on mergers and acquisitions of market processes. The government could also intervene in order to regulate the resources and allocate the right amount of the resources for the improvement in the economies and social welfare. The government wanted to improve and correct the failures that have been taking place all over the market, and to distribute the resources and the income equally in the market place. The government also intervenes in the ...