Mergers and acquisitions

Mergers and acquisitions

mergers and acquisitions refer to the integration strategies through which business entities acquire other business functions that previously did not belong to them. The process could entail the integration of other business ventures that were initially competitors, suppliers, customers, or even partners. Although they are closely related, mergers and acquisitions are different. Mergers entail the unification of two business entities that initially operated independently. Through ta merger, there is the ultimate creation of one large company and the ceasing of the exitance of the single companies. There are both horizontal and vertical mergers.

Horizontal mergers happen through the unification of companies in the same industry. In this case, the companies that come together operate in the same market place or provide similar services. They are mainly common in industries with fewer firms facing high competition. Vertical merger refers to the unification of organizations that share a seller-buyer relationship. In general, the relationship is between two or more organizations that operate within different levels of a supply chain. The importance of vertical mergers is to increase productivity by facilitating the unification of the firms. An example of a merger includes Exxon and Mobil merger that took place in 1999. through this successful merger, the two organizations came together forth the creation of a  superpower that dominates the energy and power industry.

An acquisition refers to the process by which an organization buys the assets of other firms, and allows the acquired firm to continue operating. In most cases, larger firms acquire smaller firms, or firms running at a loss. An example of acquisition is google- android acquisition. Just as the android company was coming up, it was bought by Google, which, even though it has let it continue being operational, has been instrumental in it its increased development.