Mergers and acquisitions are very important decisions made by the directors of multinational organisations. When two companies in the same field of operation, like IT, and who are also competitors, decide on a horizontal merger, investigative antitrust reviews are conducted

because such acquisitions and mergers would lead to a substantial decrease in the competition. However, it is seen that mergers and acquisitions could also stimulate economic efficiency and increase the competition when the assets of a weaker firm are pooled with that of a stronger firm and with efficient organization generate a synergism. On the other hand, it could also result in increase in the prices by the merged firm because of reduced competitors and thus affect the customers’ selection. This is the reason for considering the efficiencies consequent to the merger as positive factors to the merger as they are redirected to the customers.

The IT or the telecommunications industry is booming all over the world consequent to the deregulation and liberalization leading to market competition from their former state of monopoly. Technological innovations have also established new opportunities of business in this industry and accelerated the demand and the growth in revenue. This has led to the development of stiff competition among the players of this industry at the domestic and international levels in gaining new market niches. Because of this competitive scenario, some telecommunication companies have merged in order to gain competitive advantage. The IT mergers and acquisitions can be observed in most countries of the world.

 The present economic downturn has also affected the industry in many ways. Reduced demand resulting in the sudden increase of products and services in the market is compelling companies to take up price related initiatives. Survival on reduced margins would be impossible because it would be difficult to maintain the quality of services. Merging with a weaker competitor is a better way out of the cost economies as it would benefit both the companies to a certain extent and could also be passed on directly or indirectly to the consumer. Of course, the consumer base would be much larger in the merged company and thus bring about economies of scale leading to synergistic benefits from incorporating their parallel R&D programmes, coordinating their network and service conditions, cutting out duplicate systems and staffing costs, increasing their benefits of greater political incentives on the price and accessibility of primary network access and bandwidth. The individual strengths of each of the merged companies would ensure an upward trend in the economy of scale of the merged company.

Investment banking and economics students must be aware of the importance of mergers and acquisitions in the IT industry and the effects of this on the global marketplace. Research paper topics on such subjects are available from our research paper writing service. Just click on the link to get cheap essays or even a free essay paper on this and other subjects.

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