https://padlet.com/mawarzah/merger Note Building en-us 2017-10-23 06:01:07 UTC 2017-11-13 05:23:29 UTC hello@padlet.com zaim_mukhiz https://padlet.com/mawarzah/merger/wish/201068456 1. merger is a process when two firms joining to become one firm.
e.g. disney + pixar = disney.pixar
2. acquisition is the process of one firm taking over the other firm
e.g. nike bought umbro

reasons why businesses become takeover targets
- have growth potential but lack of sufficient funds for internal growth
- small rival but has growth potential
- widely recognised corporate name but facing a financial crisis
- vulnerable due to drop in profits and subsequent fall in their share prices

4 types of integration
- horizontal integration: amalgamation of firms operating in the same industry
e.g. nike bought umbro
- vertical integration (forward/backward): amalgamation of businesses that are at different stages of production
- lateral integration: amalgamation of firms doing the same operation but not directly compete with each other 
- conglomerate integration: amalgamation of businesses that are in completely different industry/market

benefits of m&a
- greater market share
greater market power and larger customer base
- economies of scale
low average cost of production
- synergy
combined resources
- survival
allow the new firm to be in a stronger position to compete with its rival
- diversification
many types of product

drawbacks
- redundancies
cause job losses
- conflict
potential disagreement and arguments between firms
- culture clash
need to adapt to new culture 
- loss of control
original owners lose controls because new board of directors are needed to be restructured
- diseconomies of scale
suffer from increased bureaucracy/less- effective decision-making
- regulatory problems 
governments will prevent m&as if they create a monopoly with too much power

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