Impact of Mergers, Acquisitions and Internal Growth on Organisations

The question is, should the company expand horizontally or should the company diversify or expand vertically? There is no clear cut answer to this question. There are advantages and pitfalls to each of these methods and there are many examples of organisation where a certain choice has proven extremely profitable and vice versa. This essay will provide advantages and disadvantages of horizontal expansion by comparing it with vertical and diversified growth. The reader will be presented with the facts and at the end will be allowed to make his own decision. One major deciding factor on growth strategy will be the organisations long term strategy and the behaviour of the Markets, and its competitors.

Mergers and takeovers are forms of external growth within a business. External growth occurs when one firm decides to expand by joining together with another. A takeover specifically refers to the gaining control of a firm by acquiring a controlling interest in its shares (51%). Merger, on the other hand, means the joining with another firm to form a new combined enterprise, shares in each firm are exchanged for shares in the other.

Mergers and acquisitions have become a growing trend for companies to inorganically grow a business within its particular industry. There are many goals that companies may be looking to achieve by doing this, but the main reason is to guarantee long-term and profitable growth for their business. Companies have to keep up with a rapidly increasing global market and increased competition. With the struggle for competitive advantage becoming stronger and stronger, it is almost essential to achieve these mergers. Through research I will attempt to dissect the best practices for achieving merger success.

At Bank of America we are looking to deliver what the customer wants. We believe that there are five pillars. They are easy to use, clear, and straight forward banking, friendly and knowledgeable associates in the community, reliable products and services, security and accessibility. These tools will help our customers feel in control of their financial decisions. To make sure that this commitment is communicated we will market through mass media, associates, print ads, and radio. We have also switched the way we will target the customers. The customer will fall into three segments. They are Mass Market, Mass Affluent, and Small business. This will assure that we are delivering the

The goals of mergers range from reducing the number of competitors, to access of new products (Belcourt et al., p 330). Statistics show that 80% of new product developments fail (Howells, 2011), partly due to challenges and conflicts with human resources functions. Mergers and acquisitions are the fastest way to enter new markets. “It is estimated that 1/3 of all mergers fail due to faulty integration of diverse operations and cultures,” (Chhinzer, 2013). Therefore, the success of a merger or acquisition lies in the ability to guide, motivate, retain, and effectively use

The growth of the bank’s revenue for its shareholders, is also as a result of the respect the bank has on delivering quality services, respecting the views of everyone involved in their business, having a leadership system that is easily approachable, being

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)

Banks that can offer a multitude of consumer products and acquire customers through branches will continue to own customer acquisition and product distribution advantage over the coming years

According to Froud (1999) in grocery retail customers’ real expenditure on food in UK has been stable around 32 to 34 billion pounds a year since 1960 and hence the major retailers were able to achieve growth on the expense of other smaller retailers. Therefore retailers may pursuit mergers and acquisitions as a mean for growth.

Thus, each bank needs to differentiate their product offers to customer, strengthen their portfolio, and improve services, etc depending on its strategies.

When commercial and manufacturing aspects need to be rationalized, the regulatory affairs (RA) function must adopt a leadership role in cross functional projects, to ensure their companies are compliant in aspects ranging from notification of site changes and product branding to the transfer of marketing authorizations and harmonization of drug formulations. This article discusses the issues and potential pitfalls of which the RA professional should be aware, and explains the need to espouse a leadership position in such

In 1996, Citibank was an emergent banking institution attempting to increase its market share in the competitive Los Angeles area. In order to do so, the bank’s strategy was to focus slightly less on their financial growth, and much more on providing “a high level of service to its customers”. Management viewed this paradigm shift as “critical to the long term success of the franchise”.

Organic growth is said to take place within a company’s operation when it increases output by enhancing sales turnover internally. This type of growth does not take into consideration growth results from mergers or acquisitions, revenues or growth acquired from takeovers because these activities are not internally generated. An example of an organic growth of a business is when a company grows

“Organic growth”- This is when the business sponsors itself to grow and develop. It can be attained through: Generating increasing sales- increasing in revenue to increase the overall gain. Use of retained profit- reinvesting retained profit back in the business. Sale of assets- facilitate financing of the company, but reduced its capacity, because selling of assets can reduce the ability of the business to expand in the future.

There are various ways to grow a company. However, two major ways in which a company can grow is through inorganic and organic growth.