Merger Case
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A MERGER happens when two firms, often about same size, agree to go forward as a new single company rather than remain separately owned & operated by pooling all their resources together, to create a sustainable competitive advantage. For example,both Daimler-Benz & Chrysler ceased to exist when two firms merged, and a new company Daimler-Chrysler was created.
When a Company takes over another one & clearly becomes the new owner ,the purchase is called ACQUISITION. Unlike mergers, acquisitions can sometimes be unfriendly. i.e., when a firm tries to takeover another by adopting hostile measures.
Corporate restructuring is the reorganization of corporate entities. The
reorganizing can be within the company itself or with the involvement of other
corporate entities.
A strategy to change business or financial structure.
Radical changes in composition
Process of redesigning.
Example ‟ GE witnessed tremendous growth during tenure of Jack Welch
Necessity when the company has grown to the point.
Crucial whenever there is a major shift.
Continuous process.
Result – leaner, more efficient, better organized, and better focused .
Types of restructing :
Financial Restructuring ‟ Includes raising the finance, decisions regarding mergers, joint ventures and alliances
Operational Restructuring ‟ Reformulate the company on basis of change in technology and environment requirements
Organizational Restructuring ‟ In order to increase efficiency redefining the organizational structure or the processes or the systems.
Market Restructuring ‟ Is the addition of a newer product or shifting one product or segment to another or enlarge the market for the exiting products.
Hurdles :
Culture.
Inadequate focus and commitment of top management towards change program
“What is in it for me” attitude
Mind set/resistance to change
Lack of involvement of employees
Poor planning
Resource Availability
Cost and time
Poor communication