Creating a global business

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A key issue facing any large business today is that of rightsizing i.e. developing a business that is just the right size – for the markets it operates in and for the effective running of the organisation. During the 1980s, it was common practice in the UK for many organisations to grow by merging with others. A merger is a situation in which two or more enterprises ‘cease to be distinct’. This can occur in two ways: The enterprises are brought under common ownership and control.One enterprise ceases to exist as an individual enterprise and becomes part of the other. A take-over is a kind of merger which occurs when one company buys a majority shareholding in another. Mergers tend to occur in waves, which are then followed by a lull in activity, before reappearing again – creating a phenomenon known as the ‘merger cycle’. An increase in merger activity often occurs in boom times because organisations seek to expand their market dominance and market share. A merger is a quick way to achieve market growth and enables an organisation to gain synergistic benefits. Synergy is usually explained through ‘simple’ mathematics in the form of 2 + 2 = 5….

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