Running Head: MERGER, ACQUISITION, AND INTERNATIONAL STRATEGIES 1 MERGER, ACQUISITION, AND INTERNATIONAL STRATEGIES Merger, Acquisition, and International Strategies Name Institution Merger, Acquisition, and International Strategies Abstract Merger refers to the combining of two companies, often characterized by one company offering securities to stockholders of another for the surrender of equivalent stock ownership. Synergy, in simple terms refers to the comprehensive integration of business activities with the hope that such will result in increase in performance and a corresponding reduction in operation costs. Usually, two companies opt to merge when they realize that the combined effect of their complementary strengths and/or weaknesses could result in better performance. Reasons for mergers vary, and can be internal, within the industry, or external, involving different industries. The latter case often results from the need for diversification or sharpening business focus. In such a case, the goal is to reduce or regulate the impact of one industry on the performance of the other. Thusly, when a company’s objective involves sharpening of focus, it would consider forming a merger with another provided the latter has control over a specific market share that is of greater interest. Regarding the growth perspective, merger allows a company, usually the acquiring one, to expand its market share without being hands-on on the task. Simply purchasing the company the controls the market of interest implies the acquiring company will have an indirect control of the said market, a case termed horizontal merger. For instance, when a larger beer company overtakes a smaller, yet highly competitive one, thereby allowing the smaller company to make more sales to its brand-loyal customers (Weber & Tarba, 2011), the acquiring company benefits from the increased proceeds. Another objective for merging is to increase supply-chain pricing power. When a company opts to buy out one of its suppliers or distributors, the acquiring company manages to level the costs incurred in the supply chain. By buying out a supplier, the acquiring company eliminates the marginal costs added onto its trading by the intermediary-like supplier. Similarly, if a company opts to buy a distributor inn its supply chain, there is immense potential of conducting the shipment at lower costs, thereby saving the accrued marginal costs. Elimination of competition is another potent reason why a larger company may opt to merge with a relatively smaller one. The result is that the acquiring company is able to remove competition at an early stage, thereby controlling a larger market share. However, to achieve such a goal, a comparatively large amount of premium is needed to convince the shareholders of the target company to relinquish their shareholding. A company may also front for a merger if upon critical evaluation it realizes that the move would be a good invest.

1. Running Head: MERGER, ACQUISITION, AND
INTERNATIONAL STRATEGIES 1
MERGER, ACQUISITION, AND INTERNATIONAL
STRATEGIES
Merger, Acquisition, and International Strategies
Name
Institution
Merger, Acquisition, and International Strategies
Abstract
Merger refers to the combining of two companies, often
characterized by one company offering securities to
stockholders of another for the surrender of equivalent stock
ownership. Synergy, in simple terms refers to the
comprehensive integration of business activities with the hope
that such will result in increase in performance and a
corresponding reduction in operation costs. Usually, two
companies opt to merge when they realize that the combined
effect of their complementary strengths and/or weaknesses
could result in better performance. Reasons for mergers vary,
and can be internal, within the industry, or external, involving
different industries. The latter case often results from the need
for diversification or sharpening business focus. In such a case,

2. the goal is to reduce or regulate the impact of one industry on
the performance of the other. Thusly, when a company’s
objective involves sharpening of focus, it would consider
forming a merger with another provided the latter has control
over a specific market share that is of greater interest.
Regarding the growth perspective, merger allows a company,
usually the acquiring one, to expand its market share without
being hands-on on the task. Simply purchasing the company the
controls the market of interest implies the acquiring company
will have an indirect control of the said market, a case termed
horizontal merger. For instance, when a larger beer company
overtakes a smaller, yet highly competitive one, thereby
allowing the smaller company to make more sales to its brand-
loyal customers (Weber & Tarba, 2011), the acquiring company
benefits from the increased proceeds.
Another objective for merging is to increase supply-chain
pricing power. When a company opts to buy out one of its
suppliers or distributors, the acquiring company manages to
level the costs incurred in the supply chain. By buying out a
supplier, the acquiring company eliminates the marginal costs
added onto its trading by the intermediary-like supplier.
Similarly, if a company opts to buy a distributor inn its supply
chain, there is immense potential of conducting the shipment at
lower costs, thereby saving the accrued marginal costs.
Elimination of competition is another potent reason why a
larger company may opt to merge with a relatively smaller one.
The result is that the acquiring company is able to remove
competition at an early stage, thereby controlling a larger
market share. However, to achieve such a goal, a comparatively
large amount of premium is needed to convince the shareholders
of the target company to relinquish their shareholding.
A company may also front for a merger if upon critical
evaluation it realizes that the move would be a good investment
with potential positive returns. This is consistent with the
capitalist business society whose objective is to maximize
shareholder returns. Consequently, acquisition of another

3. company that offers a chance of conferring such results
inherently becomes a good fixation. The move tends to favor
significantly large companies with the capability of accessing
the necessary finances to secure the deal compared to smaller
ones. Furthermore, since such mergers come with additional
capacity of loan access and equity financing, growth of the
resulting company becomes imminent.
A merger between two companies operating the same line of
business results in improved operation economies. Replication
of functions within every firm may be removed to the advantage
of the merged company. Such functions as accounting,
purchases as well as marketing efforts instantly come to mind.
The chances of realization of such benefits increase
significantly when the firms involved are relatively small.
Business functions are exclusive to small business firms.
Mature company with a low share price but a mass of cash flow
would be a smart target, or an incompetent, or mismanaged firm
that has important brands, assets and distribution channels could
also be a target. If a company has a large free cash flow and
does not have plans to use it then a company may buy it out
load it up with debt to pay themselves and use that free cash
flow to pay interest. A company may also be a good target to
merge with if it wishes to reduce overhead and redundancies
often by reducing headcount.
According to Paul Burmeister, the chief operating officer
(COO) and chief financial officer (CFO) of multiple companies,
prior to making a decision on merger prospects, one should
consider a number of issues. First, there is need to evaluate the
liquidity and financial strength before entering any transaction.
Determine the financial capability of the company by
conducting a financial health check. Thereafter, determining the
company’s liquidity i.e. ability to create and uphold an
investment, and at the same time assess the company’s assets
structure capability of bearing the potential extra strain.
Alternatively, evaluate a range of arrears and equity financial
support strategies that will avail the required financial health

4. for a successful merger. Imperative also is definition of goals
and success factors. In combining your merge and acquire plan,
you should evaluate your competitive position and your future
goals. In doing this, knowledge on the need to acquire the new
product, a process or an intellectual capital is important. Most
important though is that the acquisition should bridge the gap
between the present and the desired future state if the company.
Another factor worth considering relates to planning and
execution of due diligence. In evaluating a probable deal, you
will need a varied array of calculations. Correct follow-up of
due diligence ought to confer a strategically fit acquisition plan.
Meditate over the company’s objectives and assess the key
drivers towards the acquisition. By simply having in mind the
aspects that you need to preserve, the aspect to test in due
diligence will automatically fall into place. Your main goal is
verifying that the expected value is integrated. It encompasses
monetary, legal, operational, technology and people. For
effective implementation, create a transition team with a strong
management since as noted by Burmeister, “it sets the tone for
efficiencies and savings." Additionally, planning and execution
of the integration must be done carefully. The final merging
stage should take into consideration respective cultures and
processes of the individual companies, majorly by focusing on
revalidating all of the procedures developed since the inception
of the merging process. Finally, be aware of its iterative nature,
one that requires consistent evaluation of working and non-
working aspects, as well as the driving values, making
adjustments where necessary. Remember speed is important at
this point; delay drives breakdown and may be costly.
Other methods for ensuring a soft transition include creation of
incentives, usually tied to successful completion of establishing
milestones. Inculcate integration into the company, holding
managers accountable for execution of each course. Remember
simply signing the deal that not translate to benefits; it is made
in combination. Many deals fail due to poor integration
compared to any other aspect, thus necessitating for immediate

5. inception of planning upon target identification. Build up your
plans according to accountability, function and focus more on
aspects that may derail the course of due diligence thereby
curtailing the company’s ability to realize the prospective
benefits. A final tip relates to the infamous C's: Compensation,
Cull, Communication and Care. A well-compensated team
shows more commitment to delivery of objectives. Decision-
making has to be fast and effective. Constant and effective
communication to have stakeholder always informed on current
issues and situations is equally important. Always react to
situations in a manner that shows concern and care for the
wellbeing of the people just as much as the entire organization
and its objectives.
The universal economy has become more bloodthirsty as
organizations of all sizes try to expand beyond regional borders.
Internet and information technology are among the factors that
have made it possible for smaller companies to venture into
international markets. Before moving international, though, it is
useful to understand common reasons organizations to join the
international business field (Grünig, & Morschett, 2011). The
main reasons why businesses go international are: Saturated
local industries give fewer opportunities for companies to grab
customers. This drives them to look overseas for new markets
and clients. For example, developing nations can provide
sufficient opportunity for new income sources. Discovering
resources or building partnership opportunities can also
contribute to your capacity to tap into international consumer
markets. Companies develop internationally to build up
synergies in resources and powers that multiply the value of
growth. Some U.S. companies have stretched into Asian markets
to influence the technological expertise of local populations,
boosting their capabilities while expanding their client bases
(Weber & Tarba, 2011). Distribution effectiveness can also be
enhanced by establishing valuable global systems. This is
mainly true for companies that source supplies on a worldwide
basis. Operating in various countries give superior insulation

6. from economic downturns in one or two areas. A company doing
business in the U.S., Africa, and Asia may not suffer as much
from a U.S. economic fall if it is offset by better circumstances
in its other locations. In this example, the company can use
returns gained in other markets to uphold and develop its U.S.
business. This is an easy but real purpose for many companies
that go international. If your competitors go into foreign
markets, it seems reasonable that your business should do so as
well, conditions permitting. If you have a competitive opponent
in the U.S., your opponent could gain increased recognition and
exposure by joining markets where you do not have a presence.
Business level strategies feature actions taken to give value to
customers and get a competitive advantage. Cost Leadership –
companies compete for a wide customer based on cost. Cost is
based on internal efficiency to have a margin that is sustaining
above average returns and price to the customer so that
customers will buy your product/service (Collis, 2014).. Works
well when product/service is standardized can have generic
goods that are acceptable to many customers, and can offer the
lowest price. Continuous efforts to lower costs about
competitors are necessary to be successfully a cost leader.
Maintain tight control over production and overhead costs.
Minimize cost of sales, research and development (R&D), and
service. Worth noting is that corporate level strategy has a close
association with the strategic decisions made within the
organization. Financial performance, acquisitions and mergers,
human resource management as well as resource allocation are
key elements of corporate level strategy. The corporate-level
strategies address the entire strategic scope of the enterprise,
this is the big picture view of the company and may include
deciding in which service or product markets to compete and the
geographic boundaries of the company’s operations (Goold,
Campbell, & Alexander, 1994).
References

7. Collis, D. (2014).International Strategy: Context, Concepts and
Implications. United States, U.S: Wiley.
Goold, M., Campbell,. & Alexander, M. (1994). Corporate-level
strategy: creating value in the multibusiness company. New
York, N.Y: J. Wiley.
Grünig, R., & Morschett, D. (2011). Developing International
Strategies:Going and Being International for Medium-sized
Companies. Germany, Berlin: Dirk Springer Science &
Business Media.
Weber, Y. C., & Tarba, S. Y. (2011). Mergers, Acquisitions and
Strategic Alliances: Understanding the Process. United
Kingdom, U.K: Palgrave Macmillan.