Facing The Risk Of Mergers And Acquisition

Although merger sound promising for any business, there are many cases where the merger does not bring the benefit that was hoped for. It can be either in short terms or long terms. Most of the failure from merger is that this action does not improve the value or company’s shareholder.

But, despite the risk of failure, business mergers still a popular decision especially to expand the business market. This goal is supported with the latest world’s economic development, especially with the globalization, the development of information and digital technology, and the increase of business competition.

There are various reasons why business merger goes from hopeful to sour condition, or even worse bring down the company from the business market. Most common reason that can bring failure to a merger action is because the internal friction among the people inside the organization itself.

Until this day, there are no definite recipes to ensure the success of business mergers. A company will require deep and thorough research before deciding to merger with other company, to increase the chance of success from this business action.

The personal skill is also an important factor to improve the chance of success from business merger. A well trained management will able to implement the right attitude to the new organization structure and to form a solid team to perform business operation properly after the merger and acquisition process.

There are some basic steps to help increase the chance of success from merger and acquisition process such as;

Implementing the integration and synergy process before the merger contract is signed.

Top managers from each company could build a team to make arrangement to overcome the differences among the company such as business operation style, management culture, and company policy and make compromises that bring benefit for each parties and reduce the risk of dissatisfaction and revolt within the company.

The team should consist of individual from each party which possesses good management skill, cross-cultural sensitivity and good adaptation ability to bridge the differences from each party.

Because of the organization restructuring, top management should prepare for employee reduction and if possible make proper remuneration compensation for the employee that need to be laid off after the merger and acquisition process.

Top management is also need to build a response or problem solving team which consist the people from each party to provide quick solution from problems that might arise from the merger and acquisition process, making bonds and bring each party to cooperate with the process.

These steps are only help to increase the chance of success that can help to solve most problems that could appear. Other problems that cannot be solved with these steps might still happen.

It is quite easy to purchase other business company, but to unite that company to the main company and achieving success from the business merger is quite tricky.

There are many companies that are suffered from the unsuccessful merger process. The management needs to make sure that they do not make the same mistakes from the unsuccessful merger by other companies.

After the mergers and acquisitions process, the business scope will become wider. This can build new tension for the management. Because of the problems in adjusting to the new condition, any positive decision could become useless and meaningless.

The market share, profit and the company life are at stake if the management does not make proper action. So, in the end it is up to the chief executive to control and manage the new organization company.

Basic Types Of Business Mergers

Most business person is aware that acquisitions and mergers cannot be classified easily. It is not a simple thing to define and explain about various aspects that become the causes whether the mergers and acquisitions are success or failed.

There two types of basic mergers which are the conglomerate mergers and congeneric mergers. Basically the conglomerate merger is the merger between different types of business or industries, while the congeneric merger is the merger of organizations from the same type of business or industries.

The congeneric mergers can be divided again in to two basic types which are the horizontal and vertical mergers. The horizontal merger is the type of merger where organizations that produce the same type of product or service are merger in to a single company.

Meanwhile the vertical merger is happen when the organizations that produce a product is merger with the organizations that produce the supporting product or providing service that supporting the product such as the merger of ice cream cone company with the ice cream company, or with the delivery company.

The horizontal mergers are often monitored by the antitrust legislation because this type of merger can result in monopoly, where a type of product is produced and controlled by a single company. Therefore, the legislation need monitored the merger to ensure the fairness of the business and to make sure that the company does not monopolize the business.

The main reason for business mergers is usually to increase the company’s profit where the company can reach out more customers and expand their market segment. It is also hoped that the business merger will improve the stock value by combining the company’s stocks value.

The merger’s process often called as synergy to define that the business from each party are blend and operated together. Some of the effects that often happen in the synergy are; eliminating the same function in company which will cause staff reductions, expand the market segment, getting the new technology, improve the production capacity to increase the profit and increase the company visibility.

Business Mergers And Acquisitions

In business world, the terms of Mergers and Acquisitions are often used side by side for the activity of combining two or more business organizations. The unification is performed by companies whether they come from the same industry or different industries with different market to become a single business enterprise.

Although it refers to the same activity of combining the business entities into a single entity, merger and acquisition have slight different condition in the term of the size of business organization that performing the unification.

In acquisition the unification process is performed by bigger company to smaller company. In this process the smaller company was bought and takes over by the larger company. In this buyout process the smaller company is inferior to the larger company, so it must follow the larger company decision and policy.

In acquisition, the larger company can decide whether to let the smaller company continue to exist and keep operating their business with the old company name and trading their own stocks but under the bigger company management, so the smaller company will act as subsidiary company. Or, the bigger company can decide to completely cease the smaller company name and stop trading their stocks and operating their business using the bigger company name.

If the smaller company is operating in a different type of market and industry as the bigger company, that is mean the bigger company has branch out to the different type of industry and expand their businesses.

Acquisition is a common practice in business world when big company want to expand their business or want to enter different market and industries but do not want to start from the scratch. So, they do not have to spend their budget in starting up cost such as starting new market research, resources planning, permit, distribution and other startup cost.

Meanwhile in merger the unification process is performed by companies that roughly have equal strength and size. The company name will be decided with the agreement from each parties and each company stocks will be merged and traded as one.

Attracting Customers Through Marketing

Any business will require customers to keep on living and survive. There are some methods that you need to take to make potential people to become your customers, so your business can grew.

Getting customers is the main activity in any business operation. The customers are like foods that will make your business alive just like we are eating so our body is still function.

If your business is ignoring about this aspect even for a while, it can weaken your business. Make schedule for business development every day and attracting customers to your business is a good habit.

It is necessary to understand your motivation to run your business. This is what determine your true value. It will be difficult to develop a successful business if the business is on the opposite of your values.

You need to consider what matters to you. Customers will tend to come to you if your value, priorities and business are in line.

Decide your business niche and use it to appeal new customers and make them interested to use your service. People constantly seeking for specialist, so they needs will be fulfilled splendidly.

Therefore, specialist always to get paid more. So, you should make your business different from your competitors by becoming an expert in your business field.

Make proper research. Find out how your customers find and know about your business. The research will assist you to develop better marketing strategy and plan. So, you will save a lot of time and effort.

Build a website for your business. Your company website must be developed with clear goals. So, your customer can get clear information and find what they need. And then build the website that attract the potential customers to your business.

Spare your time to check on your industry, researching for better marketing strategy, and also check out your business competitors. This will assist you to find better method to attract new customers.

Package your business in the ways that can assist your customers. It will improve the customer’s satisfaction level for your business.

You must aware that marketing is an important part to support the life of your business. Marketing must become a priority to make sure the customers keep coming to your business.

You also need to make the marketing simple, enjoyable and the most important thing that it can be repeated easily. Finally you need to track the result of your marketing to find out the effectivity of the marketing strategy and making improvement if it possible.

 

Simple Methods To Improve Your Marketing

Here are few simple methods to improve your marketing for your business:

Establish good communication with the community around your business establishment

It does not matter if those people are not potential customer or referral sources. You should build relationship with local society. There are various ways to do it such as creating workshops for the local, volunteer events, supporting community groups or chatting with local people using networking.

You do not have to show your business card to everybody. By establishing good relationship with local people, many people will remember your business and organization.

Provide excellent customer service

First thing to do is do not let the customers wait too long for your respond even though they are not an ideal customers or you are busy with other activity and cannot fulfill their need right now. If you cannot give what your customers want, you must explain them why, so the communication between your business and your customers is maintained.

If you let the customers wait too long for your response, they will be upset and make them put bad image to your business. And the image can spread to other customers and potential clients.

Build a blog and filled it with topics about your general business and other related topics

If you are not prepare to build a full website for your business, why not try to build a blog? Make articles about some topics that are related to your business and explain how your business provide good solution to the topics in the articles

Well written articles on a blog can be used as a business card that spread in the internet. Your customers and other people can see and understand about your business expertise. You can either use the free blog platform or premium blog platform that can start from less than $20 per year. You can also make your blog as part of your business main website.

Spare one hour a day to perform marketing activities.

If you do not spare the time yourselves, you will never have the time to perform marketing.

Prepare some budget to learn about marketing.

As an old saying “you’ll need to spend money to make money”. The cost will be worth as good investment to improve your business sales.

Join one or more marketing group.

By having friends as a look out or people who can provide you with tips, ideas, suggestions or consultation will help you to stay on the right track to achieve your marketing goals. Each member will support and help each other by sharing their problems and find the best solution together.

Track every result of your marketing methods.

You will find it useful to track your marketing result. It will allows you to analyze the methods that you are using and make improvement to some parts of your method. You can continue or improve marketing method that give feedback to your business and stop marketing methods that is not working to improve your business efficiency.

Using a simple spreadsheet can help you to track your marketing. Check from customers, calls or mails that come to your business and find out where they know about your business from. The result will show which respond that come from which method and which method that do not give feedback from people to your business.

Start marketing!

No matter how good the marketing method is, it is pointless if you do not do it, so you should start to marketing by doing the methods that you are able to do it first. You will meet many success and failures.

But, even the most successful marketers will have to deal with failure sometimes. But, they do not give up and keep on trying. So, you do not have to be afraid about failure and use it as experience to find the right method to reach the success of your business.