Mergers, Aqcuisitions And Bavarian Motor Works

1004 words - 4 pages

Mergers or acquisitions have become a norm for companies aiming at growth. Various companies resort to mergers and acquisition, to form strategic alliances. In majority of cases, the underlying reason for these is to guarantee long-term sustained achievement of "fast profitable growth" for the business. In today's competitive world, it is important for various companies to keep up with a rapidly increasing diversified global market and increased competition. In order to gain competitive advantage it is essential to form alliances.A merger is the combining of two or more companies into a single corporation. This is achieved when one company or business purchases the property or some other form of assets from another company. The result of this action is the formation of one corporate structure. This new corporate structure retains its original identity. An acquisition is a little different from a merger in that it involves many problems being "dissolved", and an entirely new company being formed.There are many reasons for mergers and acquisitions such as, growth of the company, achieving the economies of scale, for power or better management, stability and to increase market share and eliminate competition. At the core of mergers and acquisition lies the sole objective of maximization of shareholder wealth regardless of the scale of the business. This maximization of the wealth must be both in day-to-day running of the business as well as in the long-term through their tactical decisions. A well executed acquisition or merger will increase the profits earned by increased sales income and by reducing costs. It may also place the business in a position of strategic advantage over its competitors that will enable it to add value by using the opportunity of that advantage to increase profitability.In the case of BMW (Gould, B 1998) acquiring Rover for 800 million dollars; highlights the importance of managers and effective human resource management in mergers and acquisitions. BMW was easily able to gain entry into a new market segment without compromising its high end and niche market segment through the acquisition of Rover. The main reason that made BMW purchase Rover and land Rover is that BMW does not have an SUV; the newly released X5 was designed by the Land Rover team. Therefore, the acquisition of Rover acts as a long-term investment for BMW. In addition, the products and quality, although better, needed some help, coupled with the fact that BAE was doing nothing with that division.BMW thought about acquiring Rover, as it was too small to survive on its own. However, a more fundamental objective was the enhancement of shareholders' wealth through acquisitions aimed at accessing or creating sustainable competitive advantage for the acquirer. Such an advantage was to stem from economies of scale, market power or access to unique strengths, for example BMW through it's acquisition of Rover was able to offer a range of cars in every...

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663 words - 3 pages BMW is the abbreviation for the large automotive industry that is “Bavarian Motor Works”. BMW is one of the top cars in the automotive area and it is one of the top selling companies for high quality cars. BMW car is a Bavarian Motor Works, the company that originates from German has the mixture of technology, and comfort, power and verity of colors. That makes BMW one of the must beloved cars in the world. The technology behind the BMW cars is