COMM 315 Lecture 5: 5 Mergers and Acquisitions

• School: Concordia University
• Department: Commerce
• Course: COMM 315
• Professor: Vladimir Titorenko

Document Summary

Mergers and acquisitions: they can be used because of uncertainty in the competitive landscape . They: increase market power because of competitive threat o spread risk due to uncertain environment o shift core business into different markets. Firms use m&a strategies to create value for all stakeholders, however. Increased market power: acquisitions can bolster market power and leapfrog the acquirer into a position of leadership through economies of scale/scope, market share or five forces related competitive advantage. Cost of new product development and increased speed to market: gain access to new and current products. Lower risk compared to developing new products: less costly and more predictable than internal product development. Increased diversification: it is the quickest and easiest way for a business to change its portfolio. Reshaping the firm"s competitive scope: acquisitions can reduce the negative effect of an intense rivalry on a firm"s financial performance and can reduce a firm"s dependence on one or more products or markets.