Businesses in United States - Assignment Example

? Businesses in United s Business merging is a process in, which an entity buys, combine, and sell from an existing firm, which has operated in the market for a long period. Acquisition involves firms, which are in the same sector and trade with the same commodities to help the buying firm become strong and outcompete its competitors in the market. Most mergers involve a bigger company absorbing a small enterprise, which has low market influence though mergers are not always full buying of the firm it depends on the terms of agreement. Moreover, firms, which merge operate dependently, and decisions made are together. Concisely, mergers are not always done out of good heart, but some firms absorb rival enterprises to reduce competition. On the other hand, there are companies, which operate solely without depending on other firms for support. Most mergers are ill intended since the bigger firms use acquisition as a way of extinguishing firms, which pose a threat to their customer base. Businesses go internationally in order to get raw materials, as well as access a ready market. This is experienced in countries where the market is flooded, therefore; international markets have cheap labor and readily available raw materials. International corporations enjoy protection from parent countries incase their operations are threatened by rival firms and government regulations in the foreign country. International mergers Chase bank is a national bank, which has branches both nationally and internationally. Chase bank first started as Chase National bank before it merged in nineteen thirty with Equitable Trust Company of New York and Interstate trust Company. During initial times, Chase National bank was a managed by JPMorgan Chase & Co. Subsequently in nineteen fifty five, Bank of the Manhattan Company merged with Chase bank to form a giant corporation, which established branches in more than sixty countries in the world. Chase bank is among top four banks operating in United States economy. All the shareholders and management of the two banks, however, universally accepted the merging. There was 50% management of the business since the two firms joined their names and formed Chase Manhattan bank, which became a prominent bank in the world (Gaughan 2005). Chase Manhattan Bank, however, abandoned their logos and designed a new logo octagon in shape representing pipes laid down by Manhattan Company. The logo was more of favoring previous activities of Manhattan than Chase bank. Reasons for merging Chase National Bank and Manhattan Bank merged so that they can increase their financial performance. Merging increases the capital available in the firm therefore, high sells revenue and net profit. Furthermore, acquisitions reduce costs spent by the banks in the operations. Cost is a factor, which makes many firms experience loses. More so, bank mergers lead to increase in market size. Geographical diversification is a factor, which guides many firms to merge. Chase National Bank was in New York while Bank of Manhattan is located in Manhattan, which is located in different states. Entities that start new in a different geographical area takes lots of time to get market acceptance therefore, to curb this, most firms acquire entities in the same geographical area and operates with them. Most enterprises use the company’s names to decrease on risks and accrue long run profits. Riegle-Neale Act of 1 June (1997) allowed banks to expand geographically and acquire new markets throughout the United States and internationally. Stewart’s merger motivation theory argues that enterprises merge to reduce on debt capacity, which other banks owe them. Businesses, which have high debts that they cannot settle, agree to mingle with a firm operating well to help in settling of the accumulated debts. As Chase bank merged with Manhattan bank, their capital base increased as well as the lending capacity. This reduced dependency levels and businesses were self- reliant. Normally in businesses, no customer and shareholder desire to be associated with firms, which are indebted in the industry. Merging is key to customer restoration and attraction. Big firms in the industry are pivotal in the economy development therefore, the authority ensures that these firms do not fail because these banks regulate the banking industry insurance funds. Chase bank was bigger than Bank of Manhattan therefore, it merged with bank of Manhattan to secure itself from collapse. Chase national bank commanded much respect in the industry; therefore, it was crucial for Bank of Manhattan to associate itself with it. United States government formulated “Too Big to Fail” policy, which covered vast enterprises from liquidation after the 1984 magical collapse of merger between Continental Illinois National Bank and Trust Company (Hines 2001). Strategies for merger Chase bank and Manhattan banks merged mainly to acquire new customers and increase their joint influence in the market. When the entities operate singly, they experience high taxation, which resulted in low net profit. Conversely, shareholders of the two firms mutually met and promised increased benefits in the future, and this convinced them to stay. These collective strategies aided in amassing high market acceptance and recognition, which ultimately led to increased profits. Merger between Chase and Manhattan banks was justifiable because this led to development of a new bank namely Chase Manhattan bank which was ranked among the top four banks in Unite states. To add to this, the two banks are located in different geographical areas therefore, coalition enabled them increase customers. Furthermore, there was increased capital and lending charges, which boosted net profit and accumulated revenue making the bank among the best in the country (Kourdi 2009). As an international bank, Chase bank has developed many strategies to ensure it maintains market benefits. Overseas markets are hard to conquer which prompts effective centralization of activities and financial state-of-the-art. Efficient managerial traits are necessary to ensure flexibility and quality production. Co-operation with host governments is advisable for instance, collaboration with tax laws, environmental sustainability, and employment acts. Corporate level-strategies are prominent in healthy competition and co-existence between businesses. Chase bank charged the same interest rates as host banks, recruited employees from the host country and complied with corporate Acts. These were the main pillars that ensured its prosperity in more than sixty countries in the world. For desirable improvement, Chase bank should adopt new technology and recruit qualified staff that can work with minimum supervision and avoid soldering on during duty (Robin 1996). Unmerged Company Summit Brewing Company is a beer company Minnesota produces a wide range of tasty beer, which consumed in the 50 states of United States. Mark Stutrud and his friends who brewed the beer locally formed this company in 1986. After twenty fifth anniversary, Summit brewing company has acquired many awards in the Beer festivals for instance 1987 American beer Festival which led to its logo appearing in Michael Jackson’s album(1988) New guide to beer. This company has managed to triumph in the market despite stiff competition from trendy brewing companies for instance Boston Breweries that sells thousands of barrels daily. Nonetheless, Summit Breweries has grown drastically due to its locally crafted beer that customers enjoy. In two thousand and nine, Summit started producing brands of beer which take care of all social classes in terms of price and complexity for example, Dunkle Weizen, Gold Sovereign Ale, Black Ale, Honeymoon Saison, Kolsch, Imperial Pumpkin Porter, India Rye Ale, Belgian and Golden Ale. These product differentiations made its market stable throughout the seventeen States of United States. Due to this tussle, it was number three in Minnesota and thirteenth nationally in 2010.Just like Boston beer, Summit is managed by a sole entrepreneur. Merging would be beneficial because profits will be shared between only two people. Boston Beer Company is a preferable merger for Summit brewing company because it is located in a different geographical area. Moreover, Boston brewery is a larger enterprise producing thousands of beers therefore will assist in establishing the market for the product. Boston Beer Company uses natural herbs to produce tantalizing beer. Since Summit Brewery only supplies seventeen states, Boston supplies fifty states, which will contribute to market diversification of the beer. Contrary to Summit, Boston Brewery is a monumental firm, which enjoys government protection from collapse. This merger is therefore, advisable for the two firms so that they can compete with competitors in the industry because there will be a large capital and profit margins (Gaughan 1988). Summit breweries should emphasize on increasing the employment rate in the economy through payment of tax and establishing its branches in other states. Since it is operational in seventeen States, Its branches should spread over the unreached States in order to compete effectively with competitors. Corporate regulations for example, tax payment and maintaining enabling working conditions are necessary for tranquil working environment. However, the company should improve on infrastructure in the areas they operate therefore, improving on economic development. Business enterprises have different strategies, which help in the day- to-day running of its activities. Business strategies therefore, include profit maximization, market chance, good working environment, and adequate capital base. Strategies are the key pillars of smooth operation of firms. Each company has its own strategies, which are a secret to its prosperity. On merging, these strategies are harmonized and collectively utilized. United States have many businesses, which operate both locally and internationally. Government ensures that there is healthy competition governed by laws and regulations. Merging has made companies sturdy because they are able to acquire resources with ease. Government on the other hand, has implemented policies regulating merging of entities to shun away forceful merging due to competition for example, “Too big to fail policy.” Businesses therefore contribute substantially to United States economy. Reference Gaughan, P. (2005). Mergers: What Can Go Wrong and How to Prevent It. Hoboken: John Wiley & Sons, Inc. Hines, J. (2001). International Taxation and Multinational Activity. London: The University of Chicago. Kourdi, J. (2009). Business Strategy: A Guide to Taking Your Business Forward. London: Profile books Limited. Lamoreaux, N. (1988). The Great Merger Movement in American Business, 1895-1904. New York: The Press Syndicate of The University of Cambridge. Robin John, G. (1996). Global Business Strategy. London: International Thomson Business Press. Read More