External Growth for a Business Essay

The disadvantages of mergers are that you will get a loss of experienced workers as one company already has one set of specific workers and another company may have different people qualified for the same job so some people will get fired. Also mergers wont always be successful (like the AOL Time Warner merger has shown) as when your buying a share of a company your buying a belief, and beliefs aren’t always

AN example, in 2008, Hewlett Packet purchased Electronic Data Systems to enhance the services aspect of the partnering technology offerings (Yurko, 1996). Marketing networks now give companies much wider customer access including overnight services. One such merger is the Takeda Pharmaceutical Inc. Although distribution chains work great to increase the bottom line, these mergers are not well received by federal agencies like the Federal Trade Commission. The concern being monopolization which is when one company controls too much of a given industry. Another driver of mergers is a desire for a leadership change. Sometimes the owner of the high technology firms simply wants to sale out and has problems finding a successor within to take the helm. Hence, a merger holds an

In Globalization era, more and more businesses seeking to expand their activities abroad. The expansion may create the opportunities for them to grow in other countries. Two major ways in which a company can exploit their resources is through organic and inorganic growth (Davis, n.d).

1. The first issue before all others is to clarify what is meant by 12-15% organic growth is that revenues or profits? That's rather important to know.

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.

Mergers and acquisitions occur because directors see benefits that could come from combining two or more businesses, which could improve the

According to experts, IT is labeled as the “root cause” for many merger failures due to lack of integration, failure of due diligence and the inability to facilitate synergies (“IT M&A”, n.d.). With eighty

External growth involves the acquisition of other firms by a merger or takeover The distinction between the two is often blurred but merger implies that a measure of voluntary agreement, and by fusing of the organizations rather than just a change in ownership. Takeover implies that a predator firm swallows up another firm by buying its shares. Usually the company, which is taken over, remains distinct, but now the predator firm enjoys a controlling interest. In a friendly takeover the company being taken over actually encourages it, and in a hostile takeover the company being taken over fights to prevent the predator from obtaining a controlling interest.

of Heinz Corporation, Berkshire Hathaway/3G and Kraft foods. In addition I will be writing about the unsuccessful merger of K-mart Corporation and Sears. I feel that

Many mergers tend to fail and many others succeed. A merger is the combining of assets and operations, usually between two similar sized companies, in an agreement to join together. Mergers can cause bankruptcy, job losses, less choices, and even a breakup. On the other hand, they have many advantages such as, increased market share, lower cost of production, and higher competitiveness. Most mergers can be highly risky but with the presence of knowledge and intuition they can be successful. One of the most successful mergers is the merger of Disney and Pixar.

your balance sheet and your numbers than relying on organic growth, and, for those at

An effective communication to employees about strategy, targets, and initiatives is vital if employees are to contribute to the strategy. A merger is an agreement between the owners of two companies to combine the operations and brands of both companies into a new, single entity (Merge ahead, 2012). An acquisition occurs when one company purchases and either absorbs or sells another business, with or without the approval or the company's leadership. Mergers and acquisitions affect the employees of all companies involved in a number of ways, making effective and timely employee communication vital to ensuring that the transition flows as smoothly as possible.

Another example of an unsuccessful merger involves internet giant America Online (AOL) and media conglomerate Time Warner. The merger deal occurred in 2000 and is still known as the largest and worst merger deal in American business history at $165 billion. The deal was presented as an equal merger but AOL, holding more valuable stock, essentially acquired Time Warner which resulted in AOL owning 55% of the new company. The proposed vision of the merger was that combining the businesses would benefit from the synergies in technological infrastructure, consumer reach, and operations. The merger was to give Time Warner the ability to digitize its content and reach out to a new online audience. As a trade-off, AOL wanted to access Time Warner’s cable systems, giving rise to innovative broadband capability and additional content to provide to it 27 million subscribers. By 2002, the companies experienced a net loss of nearly $99 billion. By 2010, the companies cut their losses and separated indefinitely. Reasons for the unsuccessful merger can be traced back to the inability to correctly evaluate organizational compatibility as well as the poor execution of growth strategies. Because of economic downturns during the period of merging, both companies experienced a decrease its advertisers and subscribers. This only escalated through a clash in business cultures as executives and employees resisted implementing the new growth strategies put in place. There was also a negative

With an organic growth, as the words itself could state, the company grows in a

Our purpose is to find the potential growth of companies in both the large cap and small-mid cap category of biotechnology industry.