h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

Entry: Why Do Firms Merge? - A6088836
Author: Dean Rodrigues - U211726

A-level question - essay answer. I thought it was pretty decent - any improvement suggestions are more than welcome.

Hi Dean,

Interesting entry, well done. I think you have hit on a lot of the reasons why companies might merge.

You cite "industrial blackmail" and "tax dodging" as two reasons. These terms to me are very strong with a strong whiff of the unethical about them. It is more likely in the first case that the company wants greater influence (or in business parlance, "leverage") over their supplier so that they can dictate better business terms. In the second case the word "tax avoidance" would probably be more correct.

Mergers tend to be either among equals, or in the case where a much larger company takes over a smaller company. The former case may release economies of scale, while the latter case may often be carried out to gain direct access to skills or technologies or market access that may not be available in-house. I'm not sure if you spent much time on this situation.

Other than that, it's a good entry, and I wish you the best of luck with it.

Cheers,

Woodpigeon

I work in the defence industry, and a prime reason for mergers seems to be to amalgamate enough skill sets to take on "prime" contracts, i.e. the big ones (ships, planes etc) that cover loads of different disciplines and involve many subcontracting companies. You need to have a basic knowledge of everything to take the contract on in the first place. A disparate alliance of various suppliers is unlikely to be capable of managing a very complex project effectively (Beagle 2 springs to mind), but a single company that has fingers in all the pies would succeed. You wouldn't give a contract for a large office block to a plumbing company, for instance.

I think this roughly comes under the "lateral diversification" category in your entry, but not quite. It's also similar to Woodpigeon's comment about access to new technologies and markets, but again not quite. I'm sure you could describe it much more eloquently.

Good entry nonetheless

I think it's worth thinking about how the audience for an A-level essay is very different than the audience for h2g2 entries. This may be quite a decent A-level essay, but I think it could use some work making it more appealing and interesting to the type of audience we have here at h2g2. Is that something you'd be interested in working on?


Mikey

wow I completely forgot I'd posted this one! I've been pretty busy recently with UCAS and A-level course and interviews etc. But yeah I'll give it a stab when I've got some time. Cheers for the input.

When you've had a chance to work on it, please post back here and let us know, and we'll all come take another look.


Mikey

This looks good for the fleamarket - any takers?

I'm no taker, but I'd second a flea market move.

Taker or no, it's added