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Social, political and cultural concerns. Since many cross-border mergers are infrastructure-related therefore they are directly linked to social and political opposition. So if the ownership of the national telecommunications or electricity or water provider is to switch to foreigners it may lead to great opposition. Also in the media and entertainment, cross-border mergers may threaten national culture or identity. Also if lots of enterprises are being acquired by foreigners it may be seen as loss of national sovereignty.

Self Analysis before Mergers

1. What Business I am in? The classis railroad and transportation business, i.e., if railroads had realized that they were in transportation business their strategy would have been to develop buses, planes and possibly automobiles.

2. Where are my current markets going? How are they growing: in market potential, distribution frequency of usage and other elements?

3. What's our competitive advantage? SWOT analysis.

Those companies with a global vision are better suited to weather rapid changes in a global marketplace. Those that operate on an ad hoc reactionary basis are likely to see their revenues and profits fluctuate violently.

Case Study

Sony had acquired Columbia Pictures in 1989. But after lot of premium payment, and also spending a huge amount on executives of Columbia Pictures, Sony was forced to take $ 3.2 Billion write down. Problems, which led to this situation, were -

1. Legal problems in recruitment of senior managers under contract with Columbia Pictures

2. Lesser internal control over budget

3. Weak understanding of the acquired business

In case the above problems were addressed, probably the story would have been other way around.

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* Contributed by -
Gulbahar Grover,
PGDIM - 11,
NITIE, Mumbai.