Long-Term Investment Decisions Research Papers Example
The formation of a merger has been a move widely employed to enable businesses enjoy significant benefits that couples large-scale operations. Numerous businesses have adopted options in merging with other firms after the evaluation of the benefits that the process would have in the event it merges with another company. However, there are numerous consequential factors that must be put into account before the merging takes place. In essence, it displays the various pressures and implications that come as a result of the process. Depending on the behavioral actions of one or more businesses in the merger, the effectedparties can be a business as a whole or the stakeholders of one or two of the corporations involved. To bring out the best course of action with the respect to the question of merging the business in question with another or more, it is necessary to establish the parameters that come as a result of the move. This is a wide factor of consideration and includes the significance of the government in the control of trade and business etiquette that governs the transactions. This context necessitates a comprehensive analysis of the different aspects of merging this business with another.
The role of the government in the control of trade cannot be undisputed. There are numerous significances and responsibilities that the government has in all aspects of trade within a country’s boundary. Taking the example of Microsoft, it is evident from the previous discussions that its actions are undoubtedly questionable as far as morality and ethical practices in business is concerned. As a matter of fact, it can be viewed as an oversight on the US government’s side for failing to protect the interests of other competing firms that were relinquished by Microsoft. The government is mandated through its involvement in the government to protect exploitation during practice. Moreover, the government eluded an essential aspect of transactional ethics when Microsoft managed to break its competitors.
In the context of the aspect of merging Microsoft with another company, there are numerous factors that should be put into consideration. The overall perspective of executives on Microsoft’s move to dominate the world of software is guided by the failure of the government in taking control of its actions. The company can protect its name by involving the government in the control of its activities. This, however, will deny the company the freedom of unlimited transactions. Other competing firms will feel protected and safe to involve in the merging given the economies of scale enjoyed by Microsoft. Actually, the state of monopoly in the software market leaves too much control in the hands of a single company (Microsoft). This is very dangerous. Moreover, it completely distinguishes the presence of competition in the market. Different studies in the act of business show that competition contributes significantly in the quality of products. In general, if the government is not involved in business activities, such market systems (monopoly) will not only exploit competitors, but also consumers due to the absence of market pressure.
In the context that Microsoft actually considers the idea of merging, it will have to incur the impacts that couple the process, especially in the market structure it serves. This will welcome competition and more pressure will be put on the quality and nature of software it will produce. Awakening competitors means that the amount of control the company has on the market will be reduced. Additionally, its products will be exposed to more scrutiny. This shows the negative consequences that the company will have to suffer as a result of merging. Furthermore, profits shared by stakeholders will have to reduce as a result of the entry of a new party in a market that was entirely controlled by the company. As a matter of fact, studies on shifts in the market have shown that the existence of two or more suppliers in a market with constant demand will reduce the profit margin of each of the suppliers by a common factor. The realization of this by the shareholders of Microsoft will yield ideological differences.
On the other hand, there are a variety of challenges coupled with these systems of business. The process of decision-making will be lengthened owing to a significant managerial department which will have to serve the whole corporation. In this aspect, the establishment of a common idea would take a lot of consultation time. Additionally, the management would have to deal with resistance voices from the stakeholders. It is a logical fact that different companies have different policies in handing, ranking, and payment of its employees. This system would be reshuffled to come up with a common and fair policy uniting the two companies with all its employees. This is always difficult given the disparity of value of each employee from the respective companies.
In the context of Microsoft Software Company, its belief on the quality of the software it produces and acceptability in the market will be the significant principle behind resistive voices. The factors above show clearly that both alternatives have their own consequences on the future of the business. Microsoft as a company would want to merge to correct the misconceptions on its dominance on the software market. The idea of merging and consideration of government involvement would actually paint it as a very good and customer oriented organization. However, it would have to devise a plan or strategy that would see it individualize itself again from the group. This would prove impossible and if it does, it would have tremendous implications on not only the company’s stability, but also the faith of the shareholders as well as that of the customers. Therefore, from the perspective of the most appropriate solution, it would be better if the company adopts an expansion approach with a number of adjustments in its way of business.
The idea of expansion will, to some extent, suffer the limitations highlighted above. However, on the basis of the interests of the company, it would be the best move to heighten its scales. The company would first have to convince shareholders through a demonstration on the significance of expansion with respect to merging. Microsoft, for instance, will have to maintain its stability in the production of quality software but in the process fight competing firms in a more legal and acceptable manner. Fundamentally, the involvement of the government in the evaluation of its business policies is very essential in maintaining its ethical business practices. It would not only earn the company trust from its customers, but also a demonstration of good competitive faith with its shareholders.
In conclusion, there are numerous business strategies that are employed in the business world. The morality and ethical viability of these strategies are not the only issues of concern that arise. The businesses have to weigh between two strategies and pick the best alternative that would suit all the stakeholders. In the context of merging and business extensions, Microsoft displays a better choice of extending as opposed to merging based on the highlights above. There are cases when merging becomes the best option for a business aimed at making the best long-term investment decision. For instance, the competing firms in the market that Microsoft serves can merge to develop a significant company that would perform well in the competitive front with a company of Microsoft’s caliber.
Dyer, A., & Yvan, J. (2007). The New Importance of Scale. Boston: Boston Consulting Group.
McGuckin, Robert, H., & Sang, V. (2010). The Impact of Ownership Change. International Journal of Industrial Organization, 732-762.
Paul, A. (2008). The Effects of Mergers and Post-Merger Integration. Federal Trade Commission.
Richard, S., & Reeves, R. (2007). What Determines Acquisition Activity within an Industry. European Management Journal, 93-98.
Trimbath, S. (2012). Mergers and Efficiency: Changes Across Time. Kluwer: Milken Institute.