Advantages of Organisations after Merging - Dissertation Example

Download file to see previous pages With mergers, the power, and strength of the merged organization increase, and it is better able to compete against the competitors in comparison to the other firms in the market. Thus, the merged firm is able to compete against the giants with more resources and more strength and thus it is able to give tough time to its competitors.

There are several advantages and benefits that organizations avail after merging with another firm and some of the most important benefits include cost reduction, achieving economies of scale, taking advantage of better technology or other resources of the other firm, getting access to more markets, getting the number of customers of the other firm and many others. All these benefits are helpful for the organization to prosper in the long run and it allows the organization to take advantage of the market condition in a better way as after a merger the company has better access to resources and better technology and more resources, funds, and assets to compete in the market.

Although, there are several advantages of mergers and acquisitions, however, it is not as easy as it looks as it has several disadvantages as well. Some of the major disadvantages of merger and acquisition include differences in policies, cultural differences, differences in priorities of two managements of two firms, conflicts of power and hierarchical differences, and many others. The management of both organizations needs to carefully and critically analyze the consequences of taking this decision and then decide whether a merger and acquisition is the right way to go to improve the strength and power of the firm in the market.

The acquisition is defined as acquiring of another firm along with its assets and liabilities. It can also be referred to as taking over another firm or purchasing a firm from another company. Although the terms mergers and acquisitions have been used extensively as interchangeable words, the however merger is considered as the consolidation of two or more firms whereas the term acquisition is used to define as buying of another firm and the new company clearly establishes itself as the owner of the firm is referred to as acquisition.

The main objective of the managers of the organization is to maximize the value of the wealth of the shareholders and therefore all the actions and decisions taken by the managers of the organization are in the interest of the firm and shareholders. Mergers and acquisitions can provide several advantages to the firms however they can have negative impacts as well. This is the reason why many firms are reluctant to merge with another firm or acquire another firm as they feel this would have increased the problems rather than solved the problems.

Mergers and acquisitions are important and strategic decisions that the managers of the firm take after carefully analyzing the decision from a different perspective. The decision to merge or acquire is based on several factors. Mergers and acquisitions could improve production capability (Business Government, 2012). Similarly, after a merger with more resources and capital, the firm can market more and all this would improve the profitability of the company. It is important for management to manage the changes that occur before and after the merger or acquisition in order to make the merger or acquisition successful. If it is not managed appropriately, then it could have a drastic impact on the overall performance of the organization. ...Download file to see next pages Read More