Question

• research acquisitions that are currently underway and choose one of these acquisitions to discuss. Based on the firms' characteristics and experiences and the reasons cited to support the acquisition, do you feel it will result in increased strategic competitiveness for the acquiring firm? Why or why not?
• Of the problems that affect the success of an acquisition, which one do you believe is the most critical in the global economy? Why? What should firms do to make certain that they do not experience such a problem when they use an acquisition strategy?

Answer 1

Mergers and Acquisitions have become a very common phenomenon in the present business environment. Historically mergers have occurred between companies that are of a similar size that have had related interests. Acquisitions gravitate towards larger organizations acquiring smaller businesses. The overarching goal behind mergers and acquisitions is to create long-term shareholder value, obtain a larger market share and achieve greater efficiency. 
Companies use mergers and acquisitions for a variety of reasons. This is a result of the present day dynamic environment in which companies are faced with dealing with constantly changing ongoing technological advancement, market globalization, global competition and the drive to leverage advantage. It is clear that mergers and acquisitions have become one of the most important corporate level strategies in the new millennium

In contrary what we often find is that many such mergers fail to create efficiency’s, achieve synergistic benefits or increase long term shareholder value. Mainly in circumstances where the underlying motivations and conditions surrounding the restructuring are with the purpose of taking advantage of factors such as perceived market reaction of the M&A as a sole motivation, then usually the foundations on the acquisition or merger may not be sufficient to create true shareholder wealth. Mergers and acquisition is always involve layoffs as the administrators of the purchasing employer try to reveal that the acquisition becomes useful, and this is often due to the increase in revenues / profitability which is easier to achieve by using cost reduction, and this happens regularly through the reduction of labor costs. Transnational mergers and acquisitions will regularly pose culture-related problems, which need to be reduced.