International business context Essay Example | Topics and Well Written Essays - 4000 words

International business context - Essay Example Most significantly is the fact that mergers have resultant benefits and accrued demerits. As a result, there have been diverse arguments for and against the policy of mergers in the international business. Over the years, the growth of mergers continues to fall. In fact, in 2011 and 2012, there were few mergers, with only four deals hitting the $20 billion mark in 2012. The pro-mergers argue that those global level mega-mergers are inevitable as part of the cycle of consolidation and concentration in globalizing industries where firms seek to gain advantage and accelerate their presence (Deans, Kroeger, & Zeisel 2002, p.1-3). On the other hand, the anti-mergers argue that business leaders should embrace innovativeness and desist from mergers in approaching international business Ghemawat & Ghadar (2000). Indeed, according to AT Kearney, in a span of 25 years, all industries in the globe will consolidate in four stages that include the opening phase, the accumulation, focus, and allia nce stage (Deans, Kroeger, & Zeisel 2002, p.1-2). He notes that the four stages are distinct and derive unique results. He argues that industries follow a similar consolidation pattern although some industries may spend more time in certain stages than others may. Moreover, he states that all industries encounter similar challenges at respective stages. Additionally he argues that the size, location, and type of business does not matter in consolidation but endgames stage matters. An industry starts at a low level of concentration and increases its merger and acquisition activity until it reaches saturation. At this point, alliances form. From the article, we can derive that companies follow a uniform consolidation pattern and consolidation allows companies to get bigger (Deans, Kroeger, & Zeisel 2002, p.1-3). More so, merger decline upon reaching concentration and result to alliances. As such, when companies understand the patterns that mergers follow, and appreciate that their com panies stand on the consolidation curve, then they can initiate successful mergers. Actually, A.T. Kearney’s theory predicts that then dominant players in the industry will gain 60-70% of global market revenues in a merger endgame. This demonstrates the escalating free movement of resources, people, and information over the few years (Deans, Kroeger, & Zeisel 2002, p.1-3). Most importantly, it is worth noting that mergers bear significant benefits to international business despite the process having reasonable risks. As such, the benefits of any merger rely heavily on the marketing strategy in application and therefore not all mergers are successful. Notably, a successful merger that combines two or more companies’ leads to expansion of services and products offered as well as customer base and market shares. Ideally, when companies combine in a buyout strategy, they relevantly share resources and expand their market presence locally and internationally. More so, the m arket expansion and consolidation of resources cuts down operation and business costs (Periasamy 2009, p.11). For example, when a local company mergers with an international company the local company gains international market presence through the networks established by its partner. Indeed, most companies lack international networks and thus to gain international market presence a merger is relevant. More so, the establishment of a merger enables a