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Is merger a tribulation or growth indicator? |
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At this point of recession, company's look for collaborations and mergers to keep their stakes safe and in place. The article is just a list of pros and cons related to mergers and collaborations. |
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| Author: Amarpreet97 |
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A company facing economic crisis can take the benefits of a flourishing business house to reformulate itself in the market to raise their economic functionality. Even two small companies can combine with each other to form a single entity and take the advantages of a big organization.
Association works most often with companies of similar focus areas. Because they are liable to focus on the similar platform which could be more favorable for the well being of the company. Merger can be categorized in term of their economic functions.
• Horizontal merger is coalescing direct competitors in the same product lines.
• Market extension merger is coalescing companies dealing with same product.
• Product extension merger is coalescing companies dealing with different but related products
• Vertical merger is combining suppliers or customers
• Business merger is combining companies on the basis of some relationship
There are so many live instances where merger proved to extremely beneficial for raising sales graph up and earn more revenues in the souk. In India, two companies Leon computers and Vintech Electronic Systems approach together to share resources on projects that necessitate multiple skill sets. These organizations come together to share IT resources.
Another merging instance that can be conversed here is the merger of leading organization Cisco. Cisco has its channel partners all over the world. The number is around 12 countries that includes Australia, Brazil China, Russia, Mexico, UK, US. According to the marker reviewers a hefty project gains more revenues. That is the reason that Cisco collaboration sets an illustration to the followers. Cisco collaboration enables 78% resellers to gain reputed projects in the market, 75% acquire new customers in the market and 74% feel more satisfied in terms of market revenues.
Even the consumer are perceiving benefits of unification, because they get chance to work with new vendors at new locations. Customers can get post sale support and service from vendor globally where the company has a vendor.
Merger has its own challenges. It is not a trouble-free situation to bring clients from different location together on the same platform. The mergerning works on the principle “If you do not grow, you will die”. This means if you are committed to a big organization for merger, you have to continue your merger; otherwise it would be difficult for a small organization to grow in market as an s ingle entity. The collaboration can be pursued only on the basis of trust. No doubt it is followed by lots of legal documentation, but the key element for merger is the conviction between associations.
Yet the merger is so constructive for the growth of a business, still is has some tribulations that can act as a speed breaker in the growth race. Some such difficulties are as following:
1) Uncertain responsibilities and roles of executives.
2) Communication breakdown.
3) Separated loyalties.
4) Change in policies.
5) Goal distortion.
6) Idea confliction.
7) Job insecurity to some recruits
8) Personal conflicts like ego problem or personal clashes.
9) Resistance to amendments.
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