Mergers

Prompt:

In recent years, there have been a number of mergers between firms in entertainment, communications, publishing, banking, automobile manufacturing, and other industries. Some think that mergers result in lower operating costs, greater efficiency, and increased productivity for businesses. Others think such mergers are beneficial because they result in enhanced services and lower costs for consumers. However, some argue that mergers are not beneficial for society because they often result in loss of jobs and may reduce people’s access to goods and information. In your view, are mergers beneficial? Carefully explain the rationale for your position.

Essay:

Everything has its pros and cons. Mergers between firms in entertainment, communications, publishing, banking, automobile manufacturing, and other industries are no different. There are benefits and costs to mergers. In the end, the benefits for merging companies outweigh the cons. Mergers are beneficial because they allow companies to operate more efficiently, they help failing companies succeed, and they allow new competitors to enter the markets.

When there are two firms running similar operations in the same industry, it is beneficial for both companies to merge because it creates efficiency and lower costs overall. Instead of two different accounting departments or two different marketing departments, there will be one merged department, which will follow the same guidelines as the rest of the merged company. This helps bring the best employees and the best practices from both companies together, creating an entirely new, improved, and efficient company that will be able to serve its customers.

In a merger there is always a strong firm and a weak firm. The strong firm will usually apply their company values and training systems throughout the merged company. The weaker company needed to merge or else, they would have been eliminated by their competition. That would cause the company to go under and thousands of people would lose their jobs. With a merged company, the less productive and less efficient employees would be let go. The weaker company would become strong once again.

When two firms merge into one, it allows newer firms to grow and compete in the same industry. The merged firm cannot serve every customer base out there, which allows smaller companies to grow larger and wider. The smaller companies will also be trying to compete in new ways in which the merged company will need to adapt to, and this allows the industry competition to mature. Smaller firms will emerge because it is much easier to compete with one large company than two.

In conclusion, mergers are beneficial to consumers, employees, and firms of all industries because it allows companies to operate more efficiently by eliminating weak areas. Mergers also help weak or failing companies succeed, allowing people to keep the jobs that they have. New competitors will see the merger of two companies into one, and see it as an opportunity to grow. Although everything has its pros and cons, mergers are more beneficial than they are harmful.