Mergers, Acquisitions and Strategic Alliances
Summary
TLDRThe video script explains the key concepts of mergers, acquisitions, and strategic alliances in the business world. Mergers combine two companies into a single entity, as seen in the Exxon and Mobil merger. Acquisitions involve one company taking control of another, exemplified by Walmart's acquisition of Flipkart. Strategic alliances are cooperative agreements between two firms to leverage mutual strengths, like Maruti Udyog Limited's alliance with Suzuki for cost-effective car production in India. These concepts are crucial for business growth and market expansion.
Takeaways
- 🔄 **Mergers** are the process where two companies combine to form a new entity, giving up their individual identities.
- 💡 **Example of Merger**: Exxon and Mobil merged to become ExxonMobil, illustrating the creation of a new company from two existing ones.
- 🛒 **Acquisition** is when one company buys a majority or all of another company's shares to gain control, typically over 51%.
- 🏬 **Acquisition Outcome**: Post-acquisition, the acquiring company, like Company A, becomes larger, and the acquired company, like Company B, becomes part of it.
- 🌏 **Real-Life Acquisition**: Walmart's acquisition of Flipkart in India is cited as a real-world example of an acquisition.
- 🤝 **Strategic Alliances** are cooperative agreements between two companies to work together in areas such as production, R&D, or marketing.
- 🔄 **Mutual Benefits**: Strategic alliances allow both companies to benefit from each other's strengths and resources.
- 🚗 **Joint Venture Example**: Maruti Udyog Limited from India and Suzuki from Japan formed a strategic alliance to manufacture cost-effective and efficient cars for the Indian market.
- 💼 **Alliances in Business**: Strategic alliances can also be seen as joint ventures, where two companies come together to create a new entity, like 'Company A B'.
- 📈 **Business Growth**: Mergers, acquisitions, and strategic alliances are business strategies aimed at growth, market expansion, and leveraging combined strengths.
Q & A
What is a merger?
-A merger is the process where two existing companies unite to form a new company, giving up their individual identities. For example, Exxon and Mobil united to become ExxonMobil.
How does a merger differ from an acquisition?
-In a merger, two companies combine to create a new entity, whereas an acquisition involves one company purchasing a majority or all of another company's shares to gain control, with the acquired company becoming part of the acquiring company.
Can you provide an example of a merger in real life?
-Exxon and Mobil's union to form ExxonMobil is a real-life example of a merger.
What is an acquisition?
-An acquisition is when one company purchases at least 51 percent or all of another company's shares, thereby gaining control over the acquired company.
Can you give a real-world example of an acquisition?
-Walmart's acquisition of Flipkart in India is a real-world example of an acquisition where Walmart gained control over Flipkart.
What is a strategic alliance?
-A strategic alliance is an arrangement between two companies to cooperate in areas such as production, research and development, or marketing, benefiting both companies mutually.
How does a strategic alliance benefit the companies involved?
-Strategic alliances allow companies to utilize each other's strengths to manufacture products, conduct research, or provide services more effectively and efficiently.
Can you provide an example of a strategic alliance?
-Maruti Udyog Limited, an Indian company, struck a strategic alliance with Suzuki based in Japan to manufacture cost-effective and efficient cars for the Indian market.
Is a joint venture the same as a strategic alliance?
-A joint venture is a type of strategic alliance where two companies come together to create a new entity to pursue a specific business project or venture.
What are the key differences between mergers, acquisitions, and strategic alliances?
-Mergers involve the combination of two companies into a new entity, acquisitions are about one company gaining control over another, and strategic alliances are cooperative agreements without the loss of individual company identities.
Why would companies choose to enter into a merger, acquisition, or strategic alliance?
-Companies may choose these strategies to expand market share, gain access to new technologies or markets, increase efficiency, or achieve other strategic objectives.
Outlines
🔄 Understanding Mergers, Acquisitions, and Strategic Alliances
This paragraph introduces the concepts of mergers, acquisitions, and strategic alliances in the business world. A merger is described as the union of two companies, such as Company A and Company B, which cease to exist as separate entities and form a new company, referred to as Company C. The example of Exxon and Mobil merging to form Exxon Mobil is cited. Acquisitions are explained as one company, like Company A, purchasing a majority or all of another company's shares, such as Company B, to gain control, resulting in a larger entity known as 'Bigger A.' The acquisition of Flipkart by Walmart in India is given as a real-life example. Strategic alliances are depicted as cooperative agreements between two companies to work together in areas like production, R&D, or marketing, with both companies benefiting mutually. The alliance between Maruti Udyog Limited and Suzuki of Japan to manufacture cost-effective and efficient cars in the Indian market is used as an example, illustrating how such alliances can also be termed joint ventures.
Mindmap
Keywords
💡Merger
💡Acquisition
💡Strategic Alliances
💡Joint Venture
💡Control
💡Majority Shares
💡New Entity
💡Cooperation
💡Production
💡Research and Development (R&D)
💡Marketing
Highlights
A merger combines two existing companies into a new entity, with both giving up their identities.
An example of a merger is Exxon and Mobil uniting to form Exxon Mobil.
An acquisition involves one company purchasing a majority or all of another's shares to gain control.
Acquisition example: Walmart's purchase of Flipkart in India.
Strategic alliances are cooperative arrangements between two companies in areas like production, R&D, or marketing.
Alliances benefit both companies mutually by utilizing each other's strengths.
Joint ventures are a form of strategic alliance, as seen in Maruti Udyog Limited's partnership with Suzuki.
The purpose of a joint venture is to manufacture cost-effective and efficient products.
Maruti Udyog Limited and Suzuki's alliance aimed at the Indian market.
Understanding the differences between mergers, acquisitions, and strategic alliances is crucial for business strategy.
Each business structure has unique implications for company identity and control.
The impact of mergers and acquisitions on the market and competition.
Strategic alliances can lead to innovation through shared resources and expertise.
The role of strategic alliances in expanding market reach and customer base.
Joint ventures as a means to enter new markets or industries.
The importance of cultural fit and compatibility in successful mergers and alliances.
Risks associated with mergers, acquisitions, and strategic alliances, including integration challenges.
Regulatory considerations and approval processes for mergers and acquisitions.
The financial implications of mergers, acquisitions, and strategic alliances for stakeholders.
Long-term strategic goals that can be achieved through mergers, acquisitions, and alliances.
Transcripts
let's get to understand the terms
merger acquisition and strategic
alliances merger unites
two existing companies into one new
company
for example let's take company a
and another company b these
two entities unite giving up
their identities to form a new company
c to quote a real example
exxon the company and mobile
united to become excellent mobile
composition on the other hand is where
we have one company purchasing
at least 51 percent that's a majority
or all of another company's shares
to gain control of the acquired company
for example let's take company a and
another company b
company a acquires company b
and the new entity will be a bigger a
the other entity in our example b
becomes a part of the company
who initiates acquisition that's
a walmart's acquisition of flipkart in
india
is a real life example of merger
strategic alliances are arrangements
between
two companies to cooperate in areas of
production research and development
sailor products marketing
services etc benefiting
the two companies mutually
for example a state company a another
company b
company a strikes a deal with company b
to utilize each other's strengths and
manufacture
excellent products for their customers
thus a new entity company a b
comes into being maruti of the oak
limited and indian company
struck a strategic alliance deal with
suzuki based in japan
this was to utilize each other's
strengths and manufacture
cost effective and efficient cars
in the indian market this arrangement is
also called a
joint venture that's all about
mergers acquisitions and strategic
alliances
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