Final Exam Questions Assignment Example | Topics and Well Written Essays - 2000 words

Final Exam Questions - Assignment Example Although mergers and acquisitions are always used in the same breath, the two terms have different implications. Generally, the main difference between mergers and acquisitions is based on how the purchase is articulated and communicated or received by the concerned parties. For example, unlike acquisitions, mergers occur when two companies agree to join and operate as one. In this regard, the merged companies can operate as equals or through laid down agreements. On the other hand, acquisitions involve a company taking over another company and establishing itself as the owner through a purchase. A fundamental characteristic of many acquisitions is that the acquiring company always takes over the management and ownership of the other companies they have acquired and eventually combine their operations. In this regard, the controlling power of one company is transferred from one shareholder group to another. One of the ways through which mergers and acquisitions contribute to business growth and expansion is that they offer quicker methods for companies to grow and reorganize their assets portfolios. They allow companies to acquire assets across many industries. It allows them to establish and penetrate new markets depending on the objectives of the company; acquired assets may be sold or retained (Maksimovic, 2011). ... In an acquisition, the acquiring company establishes sustainable positive results by spreading its risks through many different industries (Ross, 2005). Another important contribution of mergers and acquisitions related to business growth is that they enable companies take advantage of economies of scale. They increase the purchasing power of equipment’s and office supplies saving costs. This is due to increased negotiation power due to increased company size. The new entities, can access new technologies which gives them a competitive edge over their competitors. Expenses related to information and intelligence logistics are also reduced due to a shared infrastructure. This makes the cost of production per unit output to decrease increasing profits (Maksimovic, 2011). Question 4: How can a firm create the conditions for innovation? There are a diverse number of ways through which firms can create enabling conditions for innovation. Innovation is crucial to the growth and sust ainability of modern companies because. Increased innovation leads to more products in the market generating more sales. The top companies in the world are leading in innovations. Creating a culture of innovation is one of the best ways that companies can create favorable conditions for innovation. For example, a culture of risk aversion is one of the critical barriers to innovation. As a result, to ensure continued innovation, firms should move from risk aversion organizational culture to a culture of calculated risk taking. Similarly, firms should also create organizational cultures that promote curiosity and tolerance of mistakes and wish to experiment with new things. This includes giving the employees the freedom to experiment, promotion of open communication as well as