International Business Management (IBM) - BBA & MBA NOTES / POWER POINT PRESENTATION.... This ppt will tell you about the merging and takeover companies in India along with various examples. Presented By: Janvhi
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• When two companies agree to
combine their operations into a
single entity.
• Legal Consolidation of two
entities into one entity.
• Placing one party’s business
under the indirect ownership of
the other party’s shareholders.
• In India, it is known as
AMALGAMATION.
MERGER
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5
REASONSFOR
MERGER
1. Industry Consolidation : Tactical move that
enables a company to reposition itself into a
stronger operational and competitive industry
position.
2. Improve Competitive Position : Reduces
Competition, and allows the combined firm to use
its resources more effectively.
3. Defensive Move : Attractive Tactical move in
any economic environment – particularly in a
cyclic down-turn where a merger can be a strong
defensive move.
4. Synergies : Allowing two companies to work
more efficiently together than either would
separately.
5. Acquire Resources And Skills : To obtain access
to the resources of another company or to
combine the resources of the two companies.
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WAYSOF MERGER
6
Ways of Merger
By Purchasing
Of Assets.
By Exchanging
of Shares For
Assets.
Ways of Merger
By Purchase
Of Common
Shares.
By Exchanging
Of Shares For
shares.
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HORIZONTALMERGER
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1. A Merger occurring between companies
producing similar products, goods and
offering similar services.
2. This type of Merger occurs frequently as a
result of larger companies attempting to
create more effective economies of scale.
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VERTICALMERGER
1. A Merger between two
companies produces different
goods and services for one
specific finished products.
2. The Merger of the firm that have
actual or potential buyer-seller
relationship.
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CONGLOMERATION
1. A Merge between firms that are
involved in totally interrelated business
activity. For Example: WALT DISNEY
and AMERICAN BROADCASTING
COMPANY.
2. Two types of CONGLOMERATE
MERGERS are:
a. PURE CONGLOMERATE MERGER: It
involves firms with nothing common.
b. MIXED CONGLOMERATE MERGER: It
involves firms that are looking for product
extensions or market extensions.
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MARKETEXTENSIONMERGER
1. This involves the combination
of two companies that sell
the same products in
different markets.
2. A Market-Extension Merger
allows for the market that
can be reached to become
larger and is the basis for the
name of the merger.
3. For Example: ALIBABA and
AMAZON.
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PRODUCTEXTENSIONMERGER
1. It takes place between two
business organizations that
deal in products that are
related to each other and
operate in the same market.
2. Companies which sell
different products of a
related category.
3. For Example: PIZZA HUT and
PEPSICO.
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ACQUISITION
1. An Acquisition is where one
company purchases another. It is
also known as “TAKEOVERS”.
2. It involves the acquiring company
(the acquirer) making an offer for
the common stock of the other
company (the acquiree) at a fixed
price per share.
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PROBLEMSWITHMERGERANDACQUISITIONS(M&A)
1. WORKING IN A GLOBAL ENVIRONMENT :
(A) Offices in Different Countries ,
(B) Language Barriers
2. STRATEGIC PLANNING :
(A) Professionals are not sufficiently involved with the evaluation of target companies before deals are
signed.
(B) Employee Retention, training and other components of integration.
(C) Challenge is to ensure that ongoing business is not adversely affected by M & A activity.
3. COMMUNICATING AND TRAINING :
(A) Companies can forget to stop and check their progress.
(B) Employee productivity often falls where major staffing decisions are being made.
(C) Merger training is often overlooked and can present obstacles if not implemented promptly.
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