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Mergers and Acquisitions: Advantages and Disadvantages
The concepts of mergers and acquisitions are commonly used when describing the methods of increasing companies value through purchasing assets or businesses. Thus, the former means the integration of two entities for the benefit of both parties while equally dividing their profits (Hitt et al., 2016). It allows them to enhance the effectiveness of regular operations to guarantee the stability of demand for their products and lower the costs of goods. In turn, the latter is buying the interest in another company to exercise full control over its activity (Hitt et al., 2016). Adopting such an aggressive approach helps achieve more significant market power.
The described methods of ensuring competitive advantage have both advantages and disadvantages that should be considered when planning. Hence, the benefits of mergers are better results due to combined efforts and, consequently, higher profits, whereas acquisitions, they include greater expansion of the product base and avoiding the accompanying costs (Hitt et al., 2016). Disadvantages of mergers are the possibility of an increase in prices and initial struggles with cooperation and acquisitions; they are complicated integration and challenges with identifying the new value (Hitt et al., 2016). Therefore, there are no perfect initiatives from the perspective of effectiveness, and their proper selection is required.
Dell Technologies: Recent Experience
The experience of Dell Technologies over the past five years shows the effects of the above strategies in practice. Concerning mergers, the companys decision was to EMC Corporation in 2016, and it created the possibility for the new business, Dell EMC, to pay off all debts (Haranas, 2021). From this standpoint, the solution to the existing financial problems was optimal and effective, even though the profits were initially not significantly affected (Haranas, 2021). The acquisition, which this corporation recently performed, is the purchase of VMware, and it was beneficial in the long run (Haranas, 2021). The mentioned struggles were addressed because an extended product base compensated for the sale of other Dells businesses (Haranas, 2021). In these cases, there were no particular disadvantages since the parties reputations supported the value.
References
Haranas, M. (2021). The 10 top Dell Technologies news stories of 2021 (so far). CRN.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management: Competitiveness & globalization: Concepts and cases (12th ed.). Cengage Learning.
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