Advantages of Company Mergers

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Critical response to ‘Positive outcomes of company mergers’ Eric (2005) discussion about the advantages of the national companies that merged with the bigger international companies is usable. Eric (2005) presents a useful analysis, particularly for the small companies which lack of marketing skills or finance. The aim of this essay is to critical respond to his principal argument. From Eric’s point of view he said that because of a lack of marketing skills or finance, it is difficult for them to expand their goods at home and aboard, as well as the funds they need for this expansion. Before the mergers, the funds almost spend for community facilities such as schools and hospitals but if the international companies invested in the outside countries, their profits from the parent companies will be taken. A recent survey of U.S/Polish takeovers found that an astonishing 79% of profits left Poland after most of these end up in the private bank accounts of the overpaid and greedy executives of the parent company. Another surprisingly, in his discussion of opportunities and benefits in merging, the point of Philips’s argument appears to be that the international companies produce lower production costs and higher quality products. However, the fact of merging is the cost of goods which produced by international merging is higher than the cost of national productons. It is clearly that even manufacturing has established in nation, the material of goods is imported from aboard. For example, the price of Vietnamese milk, Dutch Lady, is just 242,000VND/900g while the cost of Pediasure that is milk in Australia is 547,000VND/900g. To sum up, Eric (2005) has arguably overstated the advantages of merging for small business. At the same time, he claims that local companies could get benefits in better management and produce many goods with higher quality. Perhaps the Eric’s opinion is bias when mentioned some good things about company mergers.
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