Inter-firm relationships-Mergers and Acquisitions - 3025 Words

Inter-firm relationships-Mergers and Acquisitions (Research Paper Sample) Content: Inter-firm relationships-Mergers and Acquisitions  1.0 Literature Review of Mergers The Seven S Model, the ITIL V3 model, and the Big Question Approach (Carney, 2011). The Seven S Model provides a framework through which improving effectiveness can be enhanced in an organisation by assessing the following; Structure-relating to organisation hierarchy, Systems of operation and gathering information, Staff-relating to Human Resource, Skills, Style-organisation’s culture, and Super ordinate goal (shared values) (Bruner, 2011). ITIL V3 model on the other hand considers integration of IT in the formulation of strategy that involves defining market, development of service offerings, and organisation of strategic assets to provide value for customers, and preparation for execution (Bruner, 2004). With regard to Big Question Approach, it involves a strategy in which answers to basic and big question needs to be given by the firms forming the alliance (Bruner , 2011). This may be on issues like; what is our uniqueness and why should people opt for us and not our competitors? These corporate strategies are driven by the following four Ps; Perspective-defining vision and mission for the firm, Position- defining distinctiveness and policies of the firm, Plans-defining means and methods to be used in execution, and Patterns-defining daily actions that may allow for new strategies to emerge (Bruner, 2011). Mergers and Acquisition as a corporate strategy also assumes this concepts when strategising a way forward. Definition of Mergers and Acquisitions (M they foresee the move ultimately beneficial and worth investing in. This explanation provides the broader meaning detailing why mergers and acquisitions are inclined to financial aspect. Other than these, there are legion other reasons why firms would merge. It should also be noted that not all mergers are productive and that a reasonable number fail to achieve intended objectives. Another fin ancial motive for mergers and acquisitions is diversification. Some large conglomerate firms considers M diversification is an investment decision that significantly reduces risks for business by engaging in different industries that might not be exposed to similar risks at the same time (Halibozek tax advantage, economies of scales, improving finances, and access to debts and equity finances- large businesses have access to debts that were formerly above their limits (Hoskisson, 2008). Types of Mergers and Acquisitions There are different forms of Mergers and Acquisitions considering corporate philosophies and the strategic alliances. With regard to the perspective of business structure, the difference types of M Horizontal Merger This is a kind of merger that takes place between companies that are competing in the same industry. The reason for the merger may be occasioned by the need for increased capital, profit, and performance. This kind of merger reduces the number of competi tors hence stiffening competition within the business segment (Sherman only operations overlap (Sherman & Sherman, 2011). It is simply a unification of different firms into a single management. 2.0 How to Succeed In Making Inter-Firm Collaboration (Mergers & Acquisitions) Work Hunges and Weiss (2007), report that Mergers and Acquisitions increases by 25 % every year and that such alliances constitutes at least a third of many of these companies’ value and revenue. Interestingly, the same report informs that out of these new alliances, between 60% and 70% fail to work despite a plethora of advises available on making such alliances work. With this information, Hunges and Weiss (2007) explains that making Mergers and Acquisitions work requires that focus be skewed on how to work together and not defining the business plan as has been the tradition. In order to make M&A work, emphasis should not only be on the formalisation of business plan and contract but should be coupled wi th critical examination that thoroughly explores and clarifies the nature of the relationship between the partners (Hunges and Weiss, 2007). The major motive behind Mergers and Acquisitions is achieving an ability of accomplishing what either side cannot achieve when they opt not to form an alliance. This is the reason why Exxon and Mobil, Wells Fargo and Wachovia, and Delta Airline and Northwest Airline merged. This collaboration thus needs other elements beyond just agreement to come together in order to work successfully. For this reason, to effectively manage an alliance (Merger and Acquisition), selecting the right partner will play an important role enabling a working relationship (Ireland, Hitt, & Vaidayanath, 2002). Before making a decision to join an alliance, complementary strengths need to be established. For example, if firm A excels at sales and firm B excels at service, then the collaboration will probably be able to work. When firms that are not complementary to one a nother come together, they always take much time arguing over who has the best way of doing things at the expense of integrating aspects of the best approaches (Bower, 2001). Collaborating firms should be able to excel in different areas of business to enable enhanced efficiency in executing the desired goals (Draulans, deMan, & Volberda, 2003). Considering the fact that firms that have been differently managed are now coming together under one management and control, there is need for constant communication for the partners in the alliance. In cases where Mergers and Acquisitions have failed to work, miscommunication or lack of structured mode of communication has always been the primary culprit (Jemison & Sitkin, 1986). For successful continuity in Mergers and Acquisition, signalling of cooperative intentions is important in conceiving perception of the other partner (Jemison & Sitkin, 1986). This level of relationship helps in avoiding hostile assumptions that may be detrimental in steering the cooperation between the two partner...