Financial advice within business is required, namely as a result of the wide range of issues was can either cause tactical or strategic concern. Merger and acquisitions are one area which requires quite in depth understanding on the subject, otherwise careless decisions can be irreversible and often result in detrimental consequences.
A number of advantages can be witnessed within an acquisition/merger strategy which if applied properly will convey a positive outcome. Central to its purpose is to incorporate and integrate existing capabilities with those recently acquired by expanding operation and knowledge bases. Specifically, 3 key areas such as production, managerial and technical elements are applied so that economies of scale can be realised, resulting in cost savings and faster development times.
Joining with another company as shown can be advantageous both tangibly and intangibly. In other words, the knowledge base will be developed and added to already acquired knowledge to such an extent which provokes new thought and generate ideas for better decisions.
Successful mergers include GM purchase of rival firms. Amongst these were; Subaru, Fiat and Suzuki. Within the car market, the level of competition is extremely high. That is, the level of demand is not sufficient enough to meet supply and output, therefore, one strategy that is effectively implemented applying aggressive methods – including takeover of rival firms.
However, applying this method does not guarantee success. GM’s chairman and chief executive, Rick Wagoner, recognises this by saying it only needs a few successful results to prove the value of their strategy. In total, 30 joint projects were undertaken by GM and Subaru, but 20 didn’t work out. Therefore, it is important to understand, a lot of negative things can occur; and be careful when devising your plan, otherwise the resulting time will be pointless.
The car industry is only one example of how a merger can be implemented and effectively completed to ensure success for a company. It however needs to be calculated and the various ramifications of any decision needs to be analysed before they are put into effect. But once correctly applied, their success can be incomparable