(Masulis, and acquisitions. Some authors see this choice between

(Masulis, Wang, & Xie, 2007)

Several papers looking into the merger and
acquisition motives delve into theory of industry  organization and describe it as an increase
of market power ,enhancement of efficiency,ensuring sources of supply and
gaining access to new markets (Motis, 2007) (DePamphilis, 2012).The Alibaba group for illustration acquired a 10% stake in
Singapore post whereas it took a 40% stake in order to gain access to emerging
countries like India and Singapore.Another example includes BYD ltd and German
Automaker coming together as part of a joint venture to enhance their
efficiency as well as better target Chinese electric car sales.To augment
supply and secure it for the future BP 
and Reliance Industries come together and thus prevent the possibility
of future production losses on account of shortage in raw materials. When firms
undertake a combination of resources  with
other  firms(of a strategic nature  ) two alternative governance structures  emerge  between
alliance and acquisitions. Some authors see this choice between the two
governance structure as a  generalization
and view them as interchangeable or to view with particular interest one
approach(Lihua & Zajac, 2007).It must be remembered that  motivation for alliances are contingent on the
specific firm’s needs any effort directed towards  criterion and corresponding weights may not
be productive (Chen, Wang, Chen, & Lee, 2010).

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It is seen that strategic alliances are
becoming  increasingly prevalent over the
past two to three decades and this has led to more research interest in this
very area (Zajac, 1998).A merger may be seen as a special transaction that combines two
companies leading to one surviving firm ,however when  a company or person  purchases another company it is referred to
as acquisition (Hitt, Michael A.Hoskisson, Robert E.Ireland, 1990).Motis view
both these as forms of takeover whereas the target company’s management at the
intial stage rejects the offer for acquisition .Motis also delineates how in
case of a merger the bid for takeover is sent in the form of a proposal to the
management whereas in the case of an acquisition the deal for takeover is
announced to equityholders.Scholars have looked at the superiority of business
alliances that are sharing of risks,introduction of relatively new
products,sharing of technological innovations,exiting businesses or merely
based on the opinion that regulators are more likely to accept these as
compared to M&As.

It has been investigated that risk is
managed through the vehicle of strategic relationship (Das & Teng, 2001).Thus when in the end of 2004 an opportunity arose in the gasoline
engines for light trucks that are hybrid both GE and Daimler Chrysler went for
a business alliance. Economic theory and antitrust tend to view welfare as  consumer surplus rather than economic
surplus.The concerned market’s  service
or product pricing ,overall quality and diverse range of choices end up
influencing consumer surplus.Thus in economists’ view horizontal and vertical
mergers create antitrust concerns 
whereas conglomerate mergers do not influence product markets and hence
do not change welfare.

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