The economy today is not stabilized. Even large companies have the ups and downs that come their way to confront. But the only thing that keeps them going is survival. They have to survive in the market and progress quickly or slowly. A strategy to progress is that of 'fusion' between the companies. There are plenty of local mergers take place, but they have no major impact on the market, in particular consumers. But the mergers that take place at national or international level have a major impact on the economy of the countries concerned.
There are several reasons for a merger of two or more companies. But first and foremost, there are various types of mergers.
a) horizontal mergers, where two competing companies connect to form. a large company The companies in horizontal mergers are selling the same product in the same market and so are contenders alike. Such fusion can have a huge impact on the market of creating monopoly to rising prices of raw materials. This is exactly the reason that the Federal Trade.
b) the Commission, which is concerned about the market and consumers keep a hawk's eye on such mergers and sometimes holding the companies from merging in the interest of the people.
c) The Vertical Mergers-are the mergers between a supplier and distributor company of the supplies. This is an anti-competitive merger, but can be very beneficial for the company. It is because the distributor will not have to pay for the production of supplies, it is the product of the base price. So there is a good cost savings as a result of this. Vertical merger also does a lot of competition in the market.
d) Market Extension Merger between the companies selling the same product but in different markets. This merger increases the market for the two companies because they now act as a single company.
e) Product Extension Merger, as those who make their own car between a leading company and other auto parts. So, the companies involved here sell different, but more or less the same product in the same market. This merger promotes sales significantly. Both companies
f) Conglomeration is a merger in which the undertakings concerned have nothing in common to sell with each other.
There are several reasons for the merger of the companies. As
a) Synergy factor requires the merger of most companies. The synergy in business covers the cost and increase revenue. Reduce the companies after the merger staff keep only the skilled labor, working with a single director, CEO etc. So there is good save expenses. Moreover, the economy of the sale ie the purchasing power of the company booms after merger.
b) To increase the production and market control many mergers are made with the intent to overthrow the competition and jointly rule the market. This presupposes healthy relations between the competing firms.
c) Mergers also occur when a company is unable to perform due to any cause, including the lack of the necessary investments in the form of capital, a huge competition, etc. In such a situation, the company is well may merge with one of its parent company or another company that faith in the prior goodwill of the declining business and its potential to grow and improve it. So companies also merge to overcome. Their internal contradictions
d) Many mergers besides economically also politically driven.
e) Acquisitions which imply taking a stronger company with the other weaker are sometimes obscured by the name of the merger.
However, the directors who are planning their companies merge actually think about it, considering all the possible advantages and disadvantages. They should seek advice from neutral financial consultants who are more inclined towards the good of the company and not their own. Their advantage is also hidden in a merger because increasing the progress resulting from the merger. Wages of workers So it is advisable to seek the advice of all those benefactors of the company before a concrete step in this direction.
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