Merger And Acquisition Essay

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Mergers and acquisitions is the process in which two companies are combined together to form a new company while acquisition is the process in which one company is purchased by the other company and no new company is formed. While on the other hand, CSR is the concept of incorporating responsibilities related to society, health, and environment within the business model. In this paper, these two concepts are discussed in which benefits and drawbacks of mergers and acquisitions are elaborated along with UK Laws. Furthermore, implementation of corporate social responsibility in Shell Plc. is discussed in the paper for illustrating the ways in which quality of life in the society and business environment can be improved.

Benefits and Drawback …show more content…

After the process of M&A the shareholder value of the firm rises which becomes greater than the sum of the shareholder values of the parent companies. They also make use of economies of scale for generating cost efficiency through mergers and acquisitions (Gaughan, 2013).
Tax Gains
This process gives rise to tax gains and lead to a revenue enhancement with the help of market share gain. Organisations make use of the concept of mergers and acquisitions due to the fact that joint company would help them in generating more value in comparison to the separate entity. When the companies combine, it is expected that the total shareholder value will be greater than the sum of the shareholder value of the separate entities (Anderson, et al., 2013).

Gaining Cost Efficiency
The joint company that initiates from the process of mergers and acquisitions avails the benefit in terms of cost efficiency. This becomes possible because the organisations make use of economies of scale. As the companies combine and form larger firms, the process of production is conducted on large scale due to which the output rises. This would reduce the cost of production per unit providing the benefit of cost efficiency to the firm (Flanagan, …show more content…

Moreover, Fair Trading and Competition Act were proposed by the government of UK that would help them to maintain a healthy trading and environment and reduce the level of monopoly to the negligible level. It is noted that most of the large-scale organisations are quite keen to merge their activities with other organisation in order to get the maximum advantage by charging high cost from customers. Due to the merger and acquisition of large businesses, it would influence the overall market in a pessimistic manner that is why the top officials of UK are quite keen to restrict their activities to some extent in order to give adequate opportunities to others to enter in a market without any problem. It is observed that by imposing strict rules & regulations the officials can easily tackle the problem of misallocation of resources and manage their activities in an ethical and legal manner (Holgate,

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