Expansion and Merger

Expansion and Merger

Introduction

Multibillion-dollar companies with multiple divisions often fall prey to business typecasting. Corporate leaders at a financial services firm found that developing and disseminating a clear, concise language for organic growth made it easier to identify and pursue the best opportunities.

Discussion

Necessity of Government influence in case of merger

Government influence is necessary because regulations prescribed by government are needed in order to protect from externalities. Government regulations also bring surety for the protection of other rights. Regulations prescribed by government bring fairness in the work and also support caring. There is also an advantage of government influence to the numerous merging organizations such as they may enter or leave the market at any time. They are protected from the competition and exploiting each other.

There are three main antitrust laws in United States of America such as Sherman Antitrust Act (1890), Clayton Act (1914), and Federal Trade Commission Act (1914).

Complexities after Self Expansion

Weaknesses of one company are transferred to the second company. After merger companies may become market leaders and price of products get higher and, this will become overburden to customers. The merger is also a monopoly for organization because; only few organizations will lead the market.

If industry has chosen self expansion rather than merger, then it is understood that merger has not brought any benefits to the organizations. If both companies took several projects after merger but, due to inefficient resources, technology and staff, suffered losses then, it is better to self expand.

Loss of clients

When companies started to self expand it losses valuable clients because, clients may not want to work with that single company. Many clients and customers are addicted of same products and company brands. They do not want same product with other company's name. Self expansion may result in losing of ...