Organizational development: Mergers and Acquisitions

Résumé du document

Nowadays, mergers are very common in all sectors. Indeed, in many sectors, the competitive pressure, the decline of prices and research costs provoke numerous mergers. However, all mergers aren't successful; there are some steps to follow to avoid risks. There could be be multiple reasons to realize a merger and they may be linked to very different factors. But we notice that some relevant factors are often taken into account in this type of a decision. Indeed, the companies frequently refer to the economies of scales because the merger permits them to purchase at a cheaper price thanks to the volume. Moreover, synergies are often expected. Indeed a company could have a powerful distribution network. A merger with a competitor could permit it to sell new products where the competitor did not get a sufficient sales force. We could also invoke the fiscal reasons, the size on the market, the supplementary resources, the diversification, and so on. All these reasons are valuable factors because they could create financial value and we could see, thanks to this paper, that on the one hand the mergers and acquisitions could be realised in every sectors of the market, and on the other hand, there are different ways to lead a merger.

Extraits

[...] After the sale of Chrysler in August, Daimler changes its name to Daimler AG in October 2007. Nowadays, the group offers new financial service. We can also note the increase of revenues in September. This case is very example of a merger which failed. Indeed, numerous differences noticed between the two companies showed themselves as real threats for the merger. We notably point out the various styles of management (rigidity for Daimler and flexibility for Chrysler). This big difference provoked partially the failure of the merger. [...]

[...] Historically, strategic investment has not been prioritized. The acquisition of BET left the Group with a highly diversified portfolio. Since that acquisition, there has been little clarity about where the best value creation opportunities is and, therefore, where the Group should be prioritizing and investing. The ambition of the group is to be the trusted provider of services for its commercial and residential customers. The goal is to be recognized as a leading international business, dedicated to outstanding customer service. [...]

[...] III/ The merger It's a horizontal merger. Indeed, both companies are on the same field (car manufacturer), so we can say that there are two similar entities. It's the main industrial merger in 1998: 84 billion Euros capital stock exchange. The target will become larger thanks to the differentiation strategy. IV/ Results and Recommendations Results Why did they fail? The main factor was the incomprehension between both companies. Indeed, there was a big problem in terms of management. After the merger, both companies wanted to keep its board director and there were some social and cultural differences that are why the decision-making was very slow and hard. [...]

[...] For the operating profit, we can see on the chart that there was a big decrease in 2001 (from 9752 million Euros in 2000 to 1318 million Euros in 2001). Just after the merger, figures showed that both companies succeed in the merger. However, some years after, when the incomprehension is very intense between the two groups, we see that it's reflects on financial figures just like the turnover and the operating profit. The problems that they met in terms of management were very difficult for the group; that didn't encourage the development of the group and the merger failed. [...]

[...] The firm's early innovations include the gasoline tanker truck and the drive-through filling station. Standard Oil of Indiana, as the company was officially known for many years, took shape in 1899. Initially it consisted of a single facility outside Whiting, Indiana, which refined oil intro products that people and business needed: axle grease for industrial machinery, paraffin wax for candles, and kerosene for home lighting. By the end of the century, it was the largest natural gas producer in North America, with a reach that stretched well beyond its home continent: exploration in 20 countries, production in 14 countries. [...]