20 page paper
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655Week6Assignment.docx
Week 6 Assignment
Derrick L. Booker
California Intercontinental University
MGT 655
Dr. Orlando Rivero
Introduction
The case study for which this essay is written in response to does a very good job of outlining the possible struggles and fears that are associated with mergers, and acquisitions. Unfortunately for large firms, making too much of a profit also can lead to financial trouble. In one article, an attempt to asses a particular oil companies overall value is made, and in the following quote we are given a glimpse at the response large firms can expect when their acquisitions work too well, “If this post-merger share was greater than 50 per cent, the ACCC suggested this would be likely to result in competition concerns in that local market place” (Bloch, 2011); and as we know, competition concerns means that a response from the regulatory market can be expected, and as a result, restrictions, and losses will surely ensue. Here, though, we look to find a glimmer of light with respect to the possibilities that M&A’s could hold for some company looking to increase their gains. One might begin to ask themselves questions about how it could be possible to carry out a merger with another small business when they themselves have yet to firmly establish their brand, or product, while inversely, a more successful and experienced business owner might wonder what it is they have to gain from joining, or acquiring a smaller business; the answer is not in any modicum of cleverness, or business experience, but solely with the valuable skill of openness.
So here we are, with a clear understanding of the ways by which a prospective business, or firm could help institute an increase in profits through mergers and acquisitions, but before we reach our any conclusions let us make note of two crucial factors. For one, much in same way that a large corporation like Atlantic Records might acquire a new smaller label and simply add them to their already functional marketing mix, small businesses within any sector of the e-commerce world have the same option at their disposal. One fear that might come associated with this, is the thought of whether your brand will be lost and assimilated. There is absolutely no need for this fear; the same way that hierarchies are formed between distributors, and retailer, as well as producers, the same principle can be taken from the music industry and applied to any general market. This is possible because while there are still laws that must be abided by, the intricacy of negotiations is diminished by the minute size of these everyday businesses, and the instant one business with a strong social media presence makes itself available to another of relative value, and nature, communication can ensue virtually immediately. Appraisals on matters of value and worth are easier to determine, and so once again, the lack of depth makes the situation much more attractive. Even more so, one issue that larger corporations frequently run into is the fact that there is much more at risk for a company thinking about merging with another or looking to acquire another. There are employees whose jobs are at stake, there are investors whose money is at stake, and there are even a number of top executives whose reputations are at stake (See Appendix A).
When it comes to a small business owner, or corporation, the main fear is one regarding not finding the success and profit that larger businesses are more focused on not losing. While the following statement may not sound as technical as a paper such as this should aim for, the one advantage that smaller businesses have in risking mergers, and acquisitions is that is the scheme of it all, they have nothing to lose, and this can be a powerful thing. With fear acting as one of the leading factors in the failure to take proper risks, these young businesses operating off of a hope, a dream, and an Instagram page are filled with only one fear, and that is that their business will not get to where they want them to be. With, small business owners also gain one of the few benefits that comes with inexperience and is the absence of overconfidence; while larger firms are at risks of trusting unstable calculations, and changing consumer needs, a small business has nothing to worry about, literally.
Understanding the Advantages
The second, and more technical point that must be acknowledged with regard to small business mergers and acquisitions is the fact that in today’s industries there are multiple forms of distributors that can, in a way, be seen as promotional devices, but when used in accordance with this analysis’ perspective, these promoter’s, and advertisers can become business partners, and co-owners in some future million-dollar corporation. The ultimate goal of any individual who makes something their business, less we forget, is most effectively looking for a means to generate profits from the thing that they aim to call their product. For some, as stated earlier, this means presenting a persona that people are able to empathize and relate to. In doing so, these public people create a communication channel that puts them at the center of some demographic of Society. Single entities now become entire marketing companies, and when done intentionally, these entities become the distributer to their respective consumer demographic. Geographic barriers no longer exist in this, the year 2017, and more importantly, the world of business is no longer completely political, but to a certain degree, it is based very heavily on true necessity, and consumer desire. The young inventor/business woman looking to find a retailer can do so by opening an app on their phone and working out a deal to merge their companies within the span of a week. The local store owner who has just acquired this new product line is now prompted to look for a new distributor, as well as a way to promote this new product in order to increase sales, and ensure that the product they just invested in will truly bear worthy fruits; this too, can be done in a fairly short amount of time, and provided that the proper legal measures are taken, transitions, and transactions that would take large corporations months, and even years to carry out, can be handled within a fraction of the time. It can be said very easily, that regardless of what the product is, as long as the service or product that is being provided has relevance to another already functioning business, or company, the chance to increase marketability, brand presence, and overall profits is certainly present. While larger corporations have the prestige, and notoriety, it is the small business owner that really holds all the power to create new forms of profit, and income for their firm; this, they can do with comparable ease.
Summarizing – Small M&A’s vs. Large M&A’s
In an attempt to reach a conclusive state, we shall happily revisit the case study conducted in Beijing, and more so, the perspective this study gives on practiced regarding mergers, and acquisitions. The study in question was conducted to assess the validity of one firm’s standing as valid competitor in its respective market, and whether the firm had placed itself in a position to become a monopolizing factor. The ability to maintain ownership of the company the distributes essential business products directly to another one of your businesses that uses these products creates not just a cheaper cost for the owners, but it makes it harder for competition to compete; fortunately for the State Group, we have found this has not happened. After overcoming a period of regulatory tape, the firm was able to acquire two separate companies that had previously acted as separate corporations in the role of business product distributors for the entire competitive market, and as time has shown, this company’s actions have not led to monopolization at all. Even more so, there have been no indications of the various destabilizing effects that often accompany the presence of monopolies; only profit was found. In hindsight, we can infer from both our discussion, and the info presented in the case study that while there are always fears of monopolies when it comes to M&A’s, the truth is that when there is ample competition, and a conscious consumer base, monopolies become less of a bother. We have found that regarding smaller, more mainstream businesses, the risk is almost nonexistent, and so much of the fear that comes with mergers, and acquisitions becomes null. The benefits, however, are now abundant, and uncontested; for the merger or acquisition to end successfully there is only a need for capable owners, and desirable products. Using modern day communication channels, small business has the opportunity to take advantage of the interconnectedness that accompanies this social media-based economy we now know as e-commerce.
Conclusions
Ultimately, while in the case of one large company acquiring another, there are certain measures that must take to ensure that losses do not follow a tedious business move. These principles have originated and maintained existence in response to the many dangers that larger corporations have to be aware of when discussing mergers, and acquisitions. Hopefully though, this analysis has bought to light the fact that these principles that large businesses and firms have learned to operate by do not necessarily apply to small firms and business owners. Much in the way that unsigned artist, and independent labels operate with the mindset of gaining a mass of attention just to allow their brand to be acquired, small business now have the ability promote themselves and put their product within view of larger firms that could make certain that a profit is gained with relative quickness. Inversely, more recognizable business that are still looking to grow their product and business relevance can acquire newer products that can help build their worth without the risk of regulation, and monopolization. Lastly, we have found that there are even different forms of distribution the smaller businesses have at their disposal, and so by the time it is all said and done, we can easily say that through an active acknowledgement and application of mergers, and acquisitions that a business owner can open any number of doors that will lead their product or service to a future of success, and profit.
Appendix A
Tracking the Largest Coal Producers in Australian Black Mining Across Time
These figures give an insight to what a potentially hazardous merger and acquisition looks like in terms of a resulting market share, and employment value. Following the merger of two significant coal producers, these charts show the after effects on which companies possess most of production values; ultimately, signaling how an un-ethical shift in market power can result in negative effects for an economies stability (Warring p.74-75, 2005).
Numbers
References:
DePamphilis, Donald. (12/2013). Mergers, Acquisitions, and Other Restructuring Activities: An Integrated Approach to Process, Tools, Cases, and Solutions, 7th Edition. [Bookshelf Online]. Retrieved from https://bookshelf.vitalsource.com/#/books/9780123854889/
Hu, J., & Ji, C. (2016). Vertical mergers & acquisitions, industrial competitiveness and antitrust issues - based on the case study. Management & Engineering, (24), 71-80.
Poddar, D.,F.Fin, & Marshall, J. (2010). Merger control during the GFC, systemic risk issues and failing banks. Jassa, (2), 11-15.
Waring, P. (2005). Some employment relations consequences of the merger and acquisition movement in the australian black coal mining industry 1997-2003.Australian Bulletin of Labour, 31(1), 72-89.
