Entering a Merger and Organizational Form

Entering a Merger and Organizational Form

From the scenario for Katrina’s Candies, examine the major implications for firms entering into a merger.

A merger is the combination of two companies where one corporation is completely absorbed by another corporation. This means that the least important company loses its identity and becomes part of a more important corporation which retains its identity. It extinguishes the merged corporation, and the surviving corporation assumes the rights, privileges, and liabilities of the merged corporation (The Free Dictionary, 2016). A merger is aimed at improving profits and productivity of a company with the objective to reduce expenses of the company. While a merger may be beneficial in some ways for Katrina’s Candies, its impact on various parts of the company could vary. The success of the merger for Katrina’s Candies would be determined by a number of factors.

One of the major implications of firms entering into a merger is resistance. Resistance not only affects the entire workforce, it also harms the credibility of the company. The aftermath of mergers impact the employees the most. Mergers are often followed by layoffs. If the company becomes more efficient as a result of the merger, it would require less people to perform the same task. Another implication of a merger could be a clash of egos among top level management. The two organizations may have varying cultures which may require the new manager to implement policies and strategies that he or she does not approve. As a result, the main focus of the organization gets diverted and the executives may decide to try settling the matter among themselves or just move on to another company (World Finance, 2016).

On the other hand, the merger can bring about reduced costs and reduced competition because it will eliminate the rival product. If the two companies have complementary technologies, it can bring about developed competency in new areas of technology (Wharton School, 2006). A wider customer base and increased market share are also benefits of a merger. Costs and overhead reduction through shared marketing budgets, increased purchasing power, and lower costs are also benefits the merger could bring about.

Explain the criteria the U.S. Department of Justice and the Federal Trade Commission would follow when deciding on whether or not to approve a proposed merger.

Under the Hart-Scott Rodino (HSR) Act, parties involved in certain large mergers are required to file a premerger notification and wait for a government review before proceeding with the merger (Federal Trade Commission, n.d.). The first criteria is that the companies comply with the anti-trust law. The merger of competitors must not harm the competition. In other words, the merger cannot substantially lessen competition.

Federal Trade Commission. (n.d.). Premerger notification and the merger review process. Retrieved from https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/mergers/premerger-notification-and-merger

The Free Dictionary. (2016). Mergers and acquisitions. Retrieved from http://legal-dictionary.thefreedictionary.com/Mergers+and+Acquisitions

The Wharton School. (2006). Will mergers and acquisitions be beneficial or harmful to innovation. Retrieved from http://knowledge.wharton.upenn.edu/article/will-mergers-and-acquisitions-be-beneficial-or-harmful-to-innovation/

World Finance. (2016). Impact of mergers and acquisitions. Retrieved from http://finance.mapsofworld.com/merger-acquisition/impact.html

http://finance.mapsofworld.com/merger-acquisition/impact.html

https://search.yahoo.com/yhs/search?p=major+implications+for+firms+entering+into+a+merger&ei=UTF-8&hspart=mozilla&hsimp=yhs-002

https://search.yahoo.com/yhs/search?p=what+are+the+possible+implications+of+mergers&ei=UTF-8&hspart=mozilla&hsimp=yhs-002

http://smallbusiness.chron.com/effects-merger-acquisition-employee-morale-3196.html (for response)

http://www.gibsondunn.com/publications/pages/USDepartmentofJusticeFederalTradeCommission-IssueRevisedHorizontalMergerGuidelines.aspx (good response information especially under partial acquisitions, etc).

Immediate penetration of an existing market also, depending upon the location of the company involved in the merger, manufacturing resource outlays could be less