On January 21st 2014, Italian car giant Fiat announced it had acquired the remaining shares needed to complete a full takeover of the Chrysler Group of the United States. 1 This deal provides Fiat with access to the previously unbroached US car market and the resources and facilities already established by Chrysler in the United States. Having a foothold in the United States also gives Fiat the opportunity to expand its operations into other regions nearby. This is evident with the recent announcement by Fiat that it plans to open a new production facility in Brazil within the next 3 years. 2
A merger between two companies within the same industry potentially allows for greater investment in research and development of new products and technologies. As the union between the two companies will be generating higher profits, more funds can be made available to invest in research projects which can be seen as low yield and financially hazardous.
With Fiat and Chrysler becoming a single company, their increased size and multinational scale of the new company will be advantageous to competing globally in the automotive market. Many smaller companies will choose to merge organisations and keep their identities rather than be subject to a takeover from a much larger company. This can have an effect on consumer confidence, mainly among customers loyal to the Chrysler brand, who may feel that the brands ‘All American’ image has been diminished by being overtaken by a European car manufacturer.
By creating a larger company, Fiat can benefit from producing vehicles on a more massive scale which will in turn reduce the average cost of producing each car. This is referred to as increase in economies of scale meaning that the cost involved with ...
... middle of paper ...
...he raw milk from outside sources. Many large companies will acquire a smaller company if it is the producer of a raw material required for the larger company’s production needs. On some occasions it can be cheaper for a company to purchase another that produces the material it needs rather than develop the production internally. This is an example of a vertical merger. 44
The acquisition of Robert Wiseman by Müller can be viewed as a vertical merger because they are purchasing a company that produces a raw material vital to their production.
In conclusion I feel that I have listed most of the major impacts caused by the takeover of Robert Wiseman by Müller. The effects and outcomes I have made note of occurred rather quickly following the takeover, but with the merger of the two companies taking place fairly recently, some consequences may take longer to manifest.
A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate clinical and managerial interventions.
The purpose of this paper is to attempt to recompile information about the merger of two corporations; one of many taking places i...
Vertical integration is when an organisation own companies on two or more levels of the buying chain. Examples of this can be found within “The Big 4,” all of them own an airline, travel agent and a tour operator. The companies have until recently used different names for their travel agency, airlines and tour operators, but now they are power branding their companies so that customers can see whom they are booking with. An example of this is TUI UK, which has rebranded its companies using the Thomson name.
There are a lot of factors that determines whether or not a company will be successful. These factors are usually derived from economics. One factor that I plan to focus on is scale economies or better known as economies of scale. Firms that have expanded their scale of operations to obtain economies of mass production have survived and flourished. Whereas smaller firms who have not been able to expand have usually ended up as high-cost producers. The topic discussed will be the Italian automotive industry and how it is affected by economies of scale.
According to a North American dictionary entry vertical integration is defined as “merging of companies in supply chain: the merging of companies that are in the chain of companies handling a single item from raw material production to retail sale” (“Vertical Integration,” 2009). Though the definition of vertical integration is quite simple the concept is much more complicated than one may think. There are four strategic factors that must be established by business leaders before the implementation of vertical integration can take place that must be well-thought-out in order to achieve any level of success. The factors that influence vertical integration are economic, market, operational, and strategic.
Ford’s production plants rely on very high-tech computers and automated assembly. It takes a significant financial investment and time to reconfigure a production plant after a vehicle model is setup for assembly. Ford has made this mistake in the past and surprisingly hasn’t learned the valuable lesson as evidence from the hybrid revolution their missing out on today. Between 1927 and 1928, Ford set in motion their “1928 Plan” of establishing worldwide operations. Unfortunately, the strategic plan didn’t account for economic factors in Europe driving the demand for smaller vehicles. Henry Ford established plants in Europe for the larger North American model A. Their market share in 1929 was 5.7% in England and 7.2% in France (Dassbach, 1988). Economic changes can wreak havoc on a corporation’s bottom line and profitability as well as their brand.
Vertical integration is where a company becomes their own supplier or distributor through acquisition. Seprod uses the strategy by their acquisition of Belvedere Estate in 2006 so as to expand its dairy farm pastures to increase their supply of milk output from the dairy farming. They also use vertical integration in their subsidiary Industrial Sales Limited. This is done by making them the main distributer and marketer of their
This paper examines the expansion of General Motors overseas in its various phases, as well as triggers for internationalization and the problems faced during the process. The paper also considers what benefits have been achieved through international growth, and how the company can be classified with regards to Bartlett and Ghosal’s 4 typologies. Finally, the paper discusses the concept of a “world car,” meeting the demands of customers across the globe.
Mergers and acquisitions immediately impact organizations with changes in ownership, in ideology, and eventually, in practice. There are multiple reasons, motives, economic forces and institutional factors that can, taken together or in isolation, influence corporate decisions to engage in mergers or acquisitions. The financial risks of merging with or acquiring an organization in another country and how those risks can be mitigated are important issues for corporations to conduct research on. This paper will examine the sensible and dubious reasons for mergers and acquisitions and the benefits and costs of the cash and stock transactions.
Horizontal mergers are likely to create value for shareholders because they combine firms in the same industry, thus the opportunity for synergies is very high. As competition decreases, market share and pricing power increase. Horizontal mergers often create economies of scale, allowing companies to offer the same product at a lower production cost.
As a result of the increased demand of cars, the competition among car companies is becoming intense. Although the market of car is the biggest growing market in the world, there are still some companies who make cars failing year after year. However, there are some outstanding car companies such as The BMW Group performing distinctly.
At a macro level as a result of the acquisition the combined size of Turner & Townsend Thinc was considered to be of strategic benefit to both firms. While there have been no official mass redundancies, role duplication has resulted in early retirement and resignations. However, the common problem faced after the acquisition is power struggles, excessive overhead, bureaucracy, uncontrolled layering, and decision strangulation.
After a period of continuing growth, the stagnant sales growth of the automotive industry in the late 1970s led all car makers to start to look for methods to fit the new climate. With the purpose of using money on research and development more effectively, spreading the risk of making main components in greater volume, and accessing to new market which were hard to enter, more and more automobile producers reached to the conclusion of collaborating with others. In addition, to remain independent, joint venture seemed to be the best answer. (Campbell, Stonehouse & Houston 2002)
The most significant beneficial for corporation when come together by merger and acquisition is cost efficiency. This due to two corporations which form a newly company that have a higher purchasing power to reach for a bigger market. In fact, after merger and acquisition take place, the value of shareholder for the newly formed corporation will greater than the sum of shareholder values of a single corporation. Hence, corporation benefits for the cost cutting as the volume of production increases that result in the cost of production per unit being reduced. This eventually enhance the raise economic of scale by producing a product with a lower cost and a better way. Other than that, merger and acquisition lead to a business expansion that contribute an organic growth for a corporation as one corpora...
‘Horizontal Merger’ is when two companies with similar products join together. ‘Vertical Merger’ is two companies at different stages in the production process. ‘Conglomerate Merger’ is when two different types of companies join together. ‘Market extension merger’ is between two companies who produce the same product but sell in different markets. ‘Product Extension merger’ is between companies with related production but they do not compe...