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Impact of mergers/takeovers on stakeholders

Business Studies Notes and

Related Essays

Business Growth

 A Level/AS Level/O Level

Your Burning Questions Answered!

Evaluate the various strategies that businesses can adopt to achieve sustainable growth.

Assess the potential benefits and drawbacks of mergers and takeovers for different stakeholders.

Discuss the ethical implications of mergers and takeovers on stakeholders, such as employees, customers, and suppliers.

Analyze the role of government regulations in shaping the impact of mergers and takeovers on stakeholders.

Examine the long-term effects of mergers and takeovers on the competitive landscape and industry dynamics.

Business Growth: Bigger & Better?

#1. Why Grow?

Businesses don't just want to exist, they want to thrive! Growth means:

  • Increased Profits: More customers mean more money.
  • Market Domination: Becoming a leader in your industry.
  • Job Creation: Expanding means hiring more people.
  • Greater Influence: More power in negotiations with suppliers and customers.

#2. Internal Growth: From Within

This is about expanding organically, using the business's own resources:

  • New Products/Services: Think Apple introducing the iPhone or Netflix expanding into gaming.
  • Market Penetration: Reaching more customers in existing markets (like Starbucks opening more coffee shops).
  • Geographic Expansion: Opening new locations in different areas (like Ikea building stores worldwide).

Example: A small bakery could grow internally by creating new cake flavors, opening a second shop in a different neighborhood, or even launching online orders for delivery.

#3. External Growth: Mergers & Acquisitions

This is about combining forces with other companies:

  • Merger: Two companies join together to become one (e.g., Exxon and Mobil merging to create ExxonMobil).
  • Acquisition: One company buys another (e.g., Facebook acquiring Instagram).

Why Merge or Acquire?

  • Access to new markets: Gaining customers in different locations or demographics.
  • Eliminate competition: Gaining a larger market share and potentially controlling prices.
  • Synergies: Bringing together complementary skills and resources for greater efficiency (e.g., one company's strong marketing combined with another's innovative technology).

#4. Impact of Mergers & Acquisitions on Stakeholders

What are stakeholders? Anyone affected by a business decision. They can be:

  • Employees: Job security, promotions, working conditions.
  • Customers: Prices, product quality, customer service.
  • Suppliers: Contract changes, payment terms.
  • Investors: Share value, dividends, company performance.
  • Local Community: Employment opportunities, environmental impact.

Impact Examples:

  • Employees: A merger may lead to job cuts if there are duplicate roles, or new opportunities if combined companies need skilled workers.
  • Customers: A merger could lead to lower prices due to increased efficiency, but also potential changes in product quality or service.
  • Suppliers: Mergers can create new opportunities for suppliers but might also lead to stricter contract terms.
  • Investors: Mergers can increase share value in the short term, but long-term success depends on the integration of the companies.
  • Local Community: A merger could lead to job growth in a region, but also impact local businesses if the merged company closes some locations.

It's a balancing act! Companies have to consider the impact on all stakeholders when making decisions about growth, mergers, and acquisitions.

#5. Challenges of Growth

  • Integration: Combining different cultures, systems, and employees can be challenging.
  • Cost: Growth usually requires significant investment.
  • Competition: Increased size attracts greater competition, requiring more resources.
  • Risk: Expanding into new markets or merging with other companies carries inherent risk.

Growth isn't always easy, but it's often necessary for long-term success in the business world!

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