Mergers and Acquisition Essay Example | Topics and Well Written Essays - 3000 words

Mergers and Acquisition - Essay Example The paper here studies the effectiveness of the mergers and acquisitions and also the limitations of the overall process in gaining the profitability of the newly formed company. The role of Merger and acquisition: Most organization incorporates the strategy of the mergers and acquisition only in time of crisis faced by them. As a result the organization entering in to the process fails to critically look in to several issues like the strategic fit, and the risk involved with such strategies. The shareholders value in the firm takes a major setback due to such hasty decision making, from the companies’ behalf. The organizations should critically analyze the role play of such strategies. Generally there are various roles which are carried out by the undertaking of an effective merger and acquisition strategy. (The Boston consulting group, n. d) Mergers and acquisitions can create opportunities for the organizations to lower the respective cost of various expenses incurred. The incorporation of the merger strategies by the organization helps them to establish a new set of business model which can result in gain of productivity of both the organizations concerned. The overall market position can also be improved by the successful implementation of the strategy. Overall the mergers can create opportunities for an organization to gain new capabilities or simply add to their existing skill set. (The Boston consulting group, n. d) The success factor of the mergers and acquisition can lead to a gain of the scale both in measures of scale and scope. A successful merger can lead to the elimination of various risks associated with the execution of the business. The option of leveraging the asset of the acquired organization with that of the other organization provides huge financial benefit for the organizations. A successful merger can also lead to tremendous growth and diversification of the organizations. (Hunt, 2009, p.212,) It has been noted that the recent tr end suggests that the organizations are failing to apply the strategy of the mergers and acquisitions in a proper fashion which has contributed to the overall failure. The fine line between the success and the failure of the mergers can be based on significant factors. As the mergers and acquisitions of the organizations leads to a complete restructure of the companies, proper effort form the management is needed to be careful after the implementation. Other than the financial and market factors organizations also needs to be careful regarding the human resource planning. . (Mergers integration, n. d)The failure of the mergers can significantly hamper all levels of the organization. Due to the non achievement of the expected gains of the organization the shareholders are affected at the beginning and it leads to their discontent. The most severe implication of the failure of the mergers can result in the accumulation of more amounts of losses for the organization than the gains whic h leads to the decline of the value of the shareholders. The failure can lead to a complete business tragedy for the organizations by factors like decrease of productivity, and customer satisfaction and loss of reputations of the brand name. (Mergers integration, n. d) Reasons for failure: The reasons for the failure of the