Extended Essay

In this chapter, we first provide coverage of expansion through corporate takeovers and an overview of the consolidation process. Then we present the acquisition method of accounting for business combinations followed by limited coverage of the purchase method and pooling of interests provided in a separate sections.

An acquisition will typically result in greater growth for an MNC, but it is riskier because it normally requires a larger investment by the company and the decision cannot be easily reversed once the acquisition is made.

The main objective of M&A by the company is to merge their power and control over the market, and also strengthen company’s competitiveness. Not only that, financial risk also can be reduced. Besides that, by sharing resources and services will results in economies of scale, which producing greater quantity products but at lower cost. As a result, the company can gain value efficiency in new entity because of cost-saving. Furthermore, it is a strategic way to gain quick access to new resources, technologies and capabilities. Therefore, the only way to succeed in executing M&A strategies is by knowing who are the persons involved, how it can be implemented and when the strategies are best implemented. The strategic plan must be done systematically, monitoring progress, evaluating performance and taking corrective action if problem

Haspeslagh and Jemison (1987), argue that what determines the success of a acquisition is not the actual purchase itself, but the development of the acquisition strategy the supports. Unfortunately, many executives face the acquisitions as an end, not a means to achieve that end. According to this author, the acquisition is only one strategy business growth. There are others as internal growth, joint venture, partnership, franchise and strategic alliance. All should be evaluated by the company before implementing a business development strategy. A proper analysis of the acquisition goes beyond the study's own candidate company. It must include a contribution from the analysis of potential acquisition for the strategic development, as well as

Mergers and acquisition plays an important role in survival/vitalization of a corporation in today’s market. It continues to be a breakthrough strategy for improving innovation of a company’s product or services, market share, share price etc.

Many organizations will either experience a merger or acquisition to try to absorb the costs during unstable market times. Mergers and acquisitions to employee’s usual mean staff reductions and major changes, especially for an acquisition which, is when another company purchases a company and becomes a new company. (McClure, 2016)

Now, I would like to clarify the concept of acquisition, which is defined as the process performed by a company when making operational control of another. The decision regarding the acquisition is fundamental for the acquiring firm, therefore; it should be done after a proper research and a deep analysis. In this case, the decision is taken faster than normal without an accurate assessment. The cash flows and growth rate have been calculated based on a projected value made by Mr Harry and Mr Jack. This is a wrong step since Harry could not take the Framingham’s own estimate; he needs to make a self-evaluation.

The advantages to an acquisition are immense. First, it offers a high level of control – the acquisition is subject to the leadership of Southern Company. In addition, the assets of the acquisition allow for a quick, large-scale market entry; Southern Company will benefit from inherited PP&E. Furthermore, an acquisition avoids entry barriers into a foreign market and gives access to acquired firm’s skills. Not to be overlooked, but the acquired firm’s expertise can have a large influence on the success of the acquisition; this will be discussed further in strategy. Overall, the new subsidiary will act as its own division under Southern Company – it will have its own functional divisions.

Mergers and acquisitions are the right practical choice for accelerating the development cycle for the companies because there are some advantages from broadening and market extension, such as enhancing business performance, increasing profits, and overall shareholders value. However, it may be there some negative impacts on the company. For example, team management can face some obstacles such as culture, legislation and laws and command-and-control. I believe if there are more beneficiaries and less losers then acquisition or merger is ethical model. The potential of failure for merger or acquisition is high; trying to integrate firms with two different cultures, legislation and laws is difficult. For example, if the company merged or acquired with another company in the same field, it is difficult to grow sales because there aren't really new potential customers. The key to growth through merger or acquisitions is a faster, less expensive, and a much less risky

Careful thinking about what it means for an acquisition to succeed, coupled with an analysis of why deals fail, can lead to some practical advice for managers, thus helping them to develop a more refined view. More specifically, in order for acquisitions to pay off, they ought to pass four tests. I describe the tests below, showing how each offers a way to head off common sources of merger malfunction.

Islam, S., Sengupta, P., Ghosh, S., & Basu, S. (2012). The behavioral aspects of mergers and acquisitions: A case study from India. Global Journal of Business Research, 6(3), 103-112.

Acquisitions and mergers is the growth strategy of many companies today. Sometime a company may decide to buy shares in another company while other times a company may decide to acquire the whole company. This paper discusses how Dow Chemical could benefit from the acquisition of DuPont. It will also cover the various accounting methods used.

As with IPOs, there are strengths, and weaknesses associated with acquisitions. Obviously, those strengths and weaknesses must be evaluated thoroughly prior to making the decision to seek an acquisition. Opportunities, although mainly positive, are also essential considerations. The opportunities associated with acquisitions are readily apparent and correspond with the strengths of this option for expansion. Acquisitions provide important opportunities for increased shareholder value, brand recognition, and profitability, in addition to certain tax benefits.

I understood from this case that when you make an acquisition you really need to have the strategies and the objectives on the same page as the other company from the very beginning. Sharing the same visions and act with integrity are crucial skills in acquiring

By identifying and discussing the various government approaches towards GM and Chrysler available (in the given context), using information collected from various sources and the application of economic theories, a conclusion on to what extant was the interventionist approach of the U.S. government towards the auto industry in 2008-9 justified will be derived.