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Organizational development: Mergers and Acquisitions

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  1. Introduction.
  2. Daimler - Chrysler.
  3. Pernod Ricard - Allied Domecq.
  4. Totalfina - Elf Aquitaine.
  5. Microsoft - Multimap.
  6. Nestle - Dreyer's.
  7. IBM - Lenovo.
  8. BP - Amoco.
  9. Rentokil - BET.
  10. Conclusion.
  11. References.

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.

[...] Amoco produced 13 million tons of chemicals a year and was the world's largest producer of PTA. II/ Merger's drivers Strengthen the market shares Reduce competitive pressure Become the world's third largest oil company - Amoco is the number one in USA - BP is well known and well implanted in Europe The weakness of oil prices In fact, the weakness of oil prices on the international market, affected by the Asian crisis and very important oil reserves in industrial nations, facilitated this 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. Recommendations Internal reasons: - Strong vision: be the Global Manufacturer - Strong financial health - But risks of cultural misunderstood External reasons: - National growth - Reinforce its worldwide position Absorbed in 1998 by Daimler, Chrysler was resold to Cerberus Capital Management. [...]


[...] The mergers and acquisitions operations are often criticized by financial analysts because the main aim is to create value through the equation 1 + 1 = 3. But sometimes the result of the merger between two companies is inferior to the two previous companies. The main reason of the failure is the corporate culture or a bad management of the integration. Furthermore it is sometimes difficult to make a merger profitable on the short term due to the important costs involved. [...]

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