Showing posts with label Management. Show all posts
Showing posts with label Management. Show all posts

Thursday, 20 August 2015

All About six sigma

21:08:00

Six Sigma is a management philosophy developed by Motorola that emphasizes setting extremely high objectives, collecting data, and analyzing results to a fine degree as a way to reduce defects in products and services. The Greek letter sigma is sometimes used to denote variation from a standard. The philosophy behind Six Sigma is that if you measure how many defects are in a process, you can figure out how to systematically eliminate them and get as close to perfection as possible. In order for a company to achieve Six Sigma, it cannot produce more than 3.4 defects per million opportunities, where an opportunity is defined as a chance for nonconformance.
There are two Six Sigma processes: Six Sigma DMAIC and Six Sigma DMADV, each term derived from the major steps in the process. Six Sigma DMAIC is a process that defines, measures, analyzes, improves, and controls existing processes that fall below the Six Sigma specification. Six Sigma DMADV defines, measures, analyzes, designs, and verifies new processes or products that are trying to achieve Six Sigma quality. All Six Sigma processes are executed by Six Sigma Green Belts or Six Sigma Black Belts, which are then overseen by a Six Sigma Master Black Belts, terms created by Motorola.
Six Sigma proponents claim that its benefits include up to 50% process cost reduction, cycle-time improvement, less waste of materials, a better understanding of customer requirements, increased customer satisfaction, and more reliable products and services. It is acknowledged that Six Sigma can be costly to implement and can take several years before a company begins to see bottom-line results. Texas Instruments, Scientific-Atlanta, General Electric, and Allied Signal are a few of the companies that practice Six Sigma.
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Sunday, 9 August 2015

HR Strategies for Startups

01:00:00

Did you know that almost one-half of startups fail in the very first year of beginning operations due to many different reasons, and not having a proper HR strategy is one of them? Now we often think that HR is something big companies, and conglomerates focus on, but that is far from true. HR management is critical for all types of businesses – be it SMEs, startups or corporations.

HR Strategies for SMEs and Startups
© pixabay | StartupStockPhotos
In this article, we will shed light on 1) what HR management is, 2) what challenges HR managers face, 3) building HR strategies for SMEs, and 4) top 5 HR strategies for SMEs and startups that can take your small business or startup to great heights. Without much further ado, let us first understand what HR management really is and its two types.

INTRODUCTION TO HR MANAGEMENT

HRM, short for Human Resource Management, is an internal function within an organization with the purpose of maximizing employee performance for reaching the company’s strategic goals. The Human Resources department is primarily concerned with managing people within organizations while keeping in line with the policies and systems of the organization.
Human Resources branches out into two types – reactive and proactive human resource management. We will talk about these types later in the article when discussing the right HR strategies for SMEs and startups. Now you may be wondering what huge difference HRM could make as far as small business enterprises and startups are concerned, so here is what you need to know.
  • Human resource management helps ensure that small businesses have the right number of employees to meet customer demand and run business operations smoothly.
  • It analyzes the impact of internal and external changes with respect to the environment as well as the need for new sets of skills and experiences for venturing into a new market, dealing with competition, or adjusting to changing economic pressure.

CHALLENGES AND OBJECTIVES OF AN HR STRATEGY FOR SMEs AND STARTUPS

Key Challenges of HR in SMEs and Startups

Paying attention to HR in small businesses and startups is not that common which is why HR managers face certain key challenges in trying to make entrepreneurs see how Human Resource Management can help take their business to new heights.
According to a study conducted by The Society for Human Resource Management (SHRM), here are some of the challenges that HR managers are most likely to face within a span of 10 years.
  • Almost 59% feel that retaining and rewarding top employees is a major issue
  • While 52% think that developing the next generation of leaders is a tough challenge
  • Lastly, 36% feel that creating a work-friendly culture attracts the best and the most talented employees
Now the main question is what can be done to counteract the problems mentioned above? Here are some solutions that can help you motivate and encourage your staff to put in their 100% and strive to become leaders.
In order to retain top talent and reward them generously, it is important to provide employees with work flexibility. Gone are the days when work from home days used to be the goof off days. You can now carefully monitor the performance of employees, or at least offer flexible office hours, to facilitate top talent and satisfy both the employees and the employer.
SMEs have the opportunity to create a work-friendly, easygoing environment with an open culture so the employees can relax and focus on work. HR managers working in such small-scale companies can easily resolve work-place problems by having one-on-one interactions with the employees and share valuable information.
Every employee wants to go far in their professional career and a company with few top positions cannot offer as many promotions and rewards as a big corporation would. In such a situation, HR managers can move employees laterally to enrich the work experience by offering them the chance to learn new skills, job share or cross train. You can also throw in some extra perks like providing top talent a chance to visit industry conferences or other events to add value.
No doubt, SMEs and startups cannot compete with bigger corporations when it comes to offering glamorous salary packages and benefits. Make sure you offer a competitive salary and offer as many benefits to your team as possible, such as health insurance, life insurance, retirement plans, etc. In order to sweeten the deal even more, offer soft benefits like flexible hours and performance-based benefits like profit sharing.

Key Objectives of HR in SMEs and Startups

HRM for small businesses and startups is different from that of big corporations because the challenges they face and the objectives they seek to gain vary from one another. HR professionals strive to establish effective performance management in order to identify development opportunities, reward excellence, and provide disciplinary or remedial actions when necessary.
To achieve the maximum level of profitability and success, an HR professional will align each employee’s work with the strategic goals of the firm and also ensure that the staff is well aware of the required actions and behaviors by setting clear-cut performance expectations in job descriptions. Take a look at some of the key HR objectives that apply to SMEs and startups:
1) Develop a Competency Model
The main objective of an HR department is to hire the right people for the right jobs keeping in mind their skills, expertise, and education. This objective is achieved by setting clear job descriptions, establishing job competency models for each department in the company and benchmarking roles against similar jobs in the industry.
In order to ensure smooth running of the business, HR professionals will take into account studies and data related to staffing, transactions, and costs and then create a competency model accordingly.
2) Define Organizational Dimensions
HR strategies are developed according to the aspects of the organization. It is also interesting to note that the prevailing culture of the company not only has a critical impact on the HR strategies devised but also represents the management style and values of the organization. Defining the organizational dimensions will give you an idea on how the organization is going to be more or less – will it be an organization that expects employees to ‘do more with less’ or will it be overstaffed in order to give way to innovation and experimentation?
Some other key factors that directly impact the HR strategies devised are the nature of business done by the organization, the chain of command and the structure of the organization itself. In order to effectively hire and retain staff to achieve strategic goals of the organization, human resources systems, policies, and practices are also taken into account.
3) Define Role of Mission, Vision, and Values
The mission, vision and values of the small business or startup play a crucial role in shaping the HR strategies and objectives for the future ahead. The mission of the organization will help you understand why the business exists and who it serves while the vision statement basically provides insights on what the organization hopes to achieve and where it sees itself in the future.
The values of the organization are beliefs that serve as a driving force behind the operations and actions of the organization. All three – the mission, vision and values of the organization directly impact the type and number of employees needed to meet the organizational goals.
4) Perform Workforce Analysis
A workforce analysis is considered a key part of the human resource strategy and focuses mainly on the organization, its culture, people, and the systems that have been implemented. Doing a workforce analysis is helpful in analyzing the current situation of the company in terms of the elements discussed above and where they ideally want to be in the years to come.
Identifying the gaps in these areas will enable the HR professionals to come up with specific objectives designed especially to bridge these gaps.
5) Evaluate Implemented Strategy
All HR strategies are guided by evaluation based on specific, measurable factors. A small business or startup will consider a wide variety of factors for developing, implementing and evaluating the effectiveness and performance of its HR strategy. Usually, doing an evaluation will give you accurate facts and figures on employee turnover, number of vacant positions, customer complaints, and employee grievances along with the satisfaction and dissatisfaction levels of both customers and employees.

BUILDING HUMAN RESOURCE STRATEGIES FOR SMALL AND MEDIUM ENTERPRISES

In order to build a solid HR strategy for small and medium enterprises, you should follow these three steps.

Step 1 – Organize

The employee handbook of the organization serves as a blueprint for building an enduring workforce and believe it or not; without it, the chances of HR success are very slim. The best way to make sure your employees are fully informed about what to do and what not to do is to come up with an employee handbook that is easy to understand, consistent in tone and viewpoint throughout.
Some of the most important key points you must incorporate into the employee handbook are:
  • Code of conduct for all employees
  • The organization’s policies and protocol related to use of technology and communications within the workplace
  • Employee benefits such as worker’s compensation, paid vacation (if any), and health insurance
  • Employee evaluations including pay raises and disciplinary procedures
  • Termination and retirement policies of the firm
When preparing content for the handbook, remember to be judicious with your phrasing and never leave anything to the reader’s imagination. Clearly define everything to avoid problems and misunderstandings later. Just like any other official document, the handbook must also be written in detailed prose and organized scrupulously.
Also, remember to maintain records of all employees of at least five years after termination either voluntary or otherwise for future reference.
It is also important to understand that HRM is widely neglected in startups and emerging small businesses. However, it is best to invest your money where it counts – in the people who will take your business to the zenith of success. The reason behind ignoring HR in small companies is not because the entrepreneurs are not proactive when it comes to staffing, but due to lack of awareness because 90% of company founders usually come from an engineering, sales or finance background with little or no knowledge about the field of HR.
But the good news is, almost 88% of the leaders of Top 50 companies believe that building the HR system from day one proves to be fruitful in the long run because it helps in retaining top talent in the company; eventually leading to better growth. Having an HR system in place from conception is important because it enables HR professionals to find and keep top-notch people in the company, offer them enough benefits to make them stay and be able to meet the organization’s objectives.
One of the easiest and most economical ways to expand your firm is to make acquisitions. Once again, growing the firm through acquisitions is not quite popular among entrepreneurs today but it is indeed one of the best strategies to grow exponentially without making a hefty investment. The main reason why entrepreneurs are not usually keen on making acquisitions is because they are hung up on the fact that their company’s assets and products should be brand new in order to own them truly.
Another misconception that keeps entrepreneurs from acquiring other businesses is that the process is confusing, time consuming and overly complex. But have you ever wondered how successful your business venture could be if you play your cards right and acquire the right business? Four young business moguls of Hot 50 companies are extremely successful in their respective fields today just by buying other companies.
Here are some reasons why making acquisitions is the right move for those who are looking for cheaper, easier and more convenient ways to expand:
  • You get quick access to the market.
  • The assets of the existing company are all yours at real value.
  • No need to hire new employees – train the existing staff for a highly productive work output.
Outsourcing is also a great strategy that enables the firm to maintain its focus entirely on what it does best. From marketing experts to call centers for customer care, outsourcing is the new ‘in’ thing that cuts costs and helps SMEs and startups run more efficiently. Perhaps the greatest benefit of outsourcing work is that you don’t have to pay the employees full time or give any extra benefits as you would if you hired a professional employee full time.
The only two misconceptions that keep entrepreneurs from going down the road of outsourcing is that they feel like they are giving up control and that there is no way outsourcing work could actually be cost effective.

Step 2 – Motivate

Sometimes finding smart employees and highly talented workers is not an issue, but making them stay and work at your company for long is a daunting task that baffles many entrepreneurs. It is important to remember that just one paid vacation policy could go a long way when it comes to retaining top-notch talent in your company.
But having a paid vacation policy is not going to cut it; you need to focus on what is going on at the workplace too. It is always the small things that make a difference and will make your employees stay. Here is what you need to do to attract and retain talent in your firm effectively.
  • Recognize employee contributions – in public and private forums
  • Acknowledge your team members as unique and notable humans with a unique set of skills and talent
  • Send ‘Get Well Soon’ cards if your staff member is sick
  • Ask your employees to give you feedback related to professional development from time to time
  • Seek input from employees related to business and industry challenges and acknowledge their suggestions out loud
  • Make the work environment aesthetically appealing, pleasing and warm

Step 3 – Retain

Offering a paid vacation to your staff members will cost you much less than the hefty amounts you will lose if the employee turnover rate is high. Consider personalizing the work environment using innovative and creative methods in order to make your staff members want to work for you and you only. For instance, ‘Pet-Friendly Fridays’ or ‘Work from Home Wednesdays’ seem like a great plan to instill a friendly and warm environment for your employees to work in.
If you are not entirely sure what your employees would like, ask them to give you valuable feedback and then come up with new ideas that will please you as well as your employees. When it comes to retaining employees, remember that an HR strategy implemented unilaterally from above will not make a difference as much as one created by a team and implemented over time through appreciation and mutual respect.

TOP 5 HR STRATEGIES FOR SMEs AND STARTUPS

Believe it or not, having an understanding of the latest human resource trends can really make a world of a difference as far as SMEs and startups are concerned. Take a look at the 5 best HR strategies specifically tailored to the needs and requirements of startups and small businesses.

1) Improve Employee Satisfaction

Business owners must understand that employees are their company’s greatest assets, and it is absolutely critical to make sure that they are fully satisfied with their position and role in the company. Some potential benefits of taking care of your work staff’s needs and wants are improved morale, high productivity, sense of commitment, loyalty, and lower employee turnover rates.
Employee satisfaction can be increased through a number of tried and tested monetary and non-monetary benefits aligned with the current financial situation of the company and its mission, vision, and goals.

2) Construct Fair and Equitable Compensation Strategies

One of the perks of working for a successful company are its fair and equitable compensation strategies because it is the one thing that dictates the fixed cost that the company incurs yearly as well as the satisfaction level of the work staff. When determining compensation levels for your company, make sure you look around and do some research on the latest compensation plans.
It is also just as important to keep in mind that consistent compensation requirements must be established according to the pay grade to ensure all employees are compensated fairly and equally.

3) Design Effective Training and Development Programs

As an entrepreneur, your primary goals should be to increase employee retention and promote growth within the company by designing useful and effective training and development programs. The new employee orientation program is one of the standardized and common initiatives that must be implemented. This will not only inculcate a sense of commitment in the minds of the new employees early on, but will also increase satisfaction.
A mentorship program is also a great idea in which low-level employees are paired with senior mid-level employees for a one on one training and development session. By doing so, you will make your employees more informed about the goals and vision of the company and offer them an opportunity to learn new skills.

4) Implementation of Legal Employment Practices

It is critical for small business owners to ensure that their hiring practices are in line with the legal employment rules and regulations. All entrepreneurs must understand common employment laws in order to reduce the chances of violating them and bearing the consequences later.
The best way to implement legal employment practices is to hire a legal specialist or a seasoned HR professional to draft an employee handbook.

5) Picking what is Right for Your Business – Reactive or Proactive Human Resource Management

The main difference between proactive and reactive human resource management is planning and forethought. While proactive HRM will help you identify and solve the problems with employee training and staffing right from the start, reactive HRM will be a much more cost-effective option for small businesses and startups.
Here is how both these strategies work and how they are different from one another in a variety of aspects.
  • A proactive recruitment strategy is more focused on catering to the staffing needs of your business while a reactive strategy will only work if there is a job opening for a position in the company.
  • When it comes to HR risk management, a proactive strategy will enable you to anticipate issues in staffing levels and employee training effectively while reactive HRM will propose a solution when a crisis occurs.
  • A proactive HRM strategy will offer top talent a whole bunch of benefits to attract them and make them stay. On the other hand, a reactive strategy will only secure the best workers who happen to apply for a job at the company rather than seeking the best of the best from the entire industry.
  • With tight overhead costs, proactive HRM strategies are expensive while reactive HRM is cheap and better suited for companies in their initial stages.
We hope that this article gave you deep insights on human resource management, how it works, its functions and the best HRM strategies that small business owners and startups can use to take their business operations to the next level.
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Google’s business model

00:59:00


Google
© Wikimedia commons | Google Inc.
In 2006, the verb ‘Google’ was added to the Merriam-Webster Collegiate Dictionary and the Oxford English Dictionary, denoted as “to use the Google search engine to obtain information on the Internet.” In this article, we will look at an 1) introduction to Google, 2)business model, and 3) business segments and products.

INTRODUCTION TO GOOGLE

Google Inc is a technology company based in Mountain View, California. The company began as an internet search engine but has since become a technology giant that offers over fifty products and services. These include email, online document creation, software, cloud computing, online advertising technologies, mobile phones and tablets computers among others. The search engine is the most successful one on the internet, handling more than 70 percent of all online search requests.
The company was created by two then PhD students at the Standford University, Larry Page and Sergey Brin, in 1998. The two own 14 percent of the shares together but have voting power through a supervoting stock. The company began with a mission statement to “organize the world’s information and make It universally accessible and useful.” An unofficial slogan is said to be “Don’t be evil.” The company was incorporated in September 1998 and moved to its current headquarters location in 2004.
Google has been listed by Alexa as the most visited website in the world. The top hundred most visited sites are also peppered with google websites, both local Google language sites and other sites such as Blogger and Youtube that Google owns. To run its giant portfolio of services, Google is said to have more than 1 million servers in data centers all around the world. These are necessary since the company needs to process over 1 billion search requests and over 24 perabytes of data generated by users every day. Despite this massive portfolio, the company’s core strength remains its search engine and in 2011, the company earned 97 percent of its revenue through the advertising that is based on users’ search requests.
The size of the company and its vast product portfolio makes in one of the top four most influential technology companies in the world, keeping company with Apple, IBM and Microsoft. Because of the company’s market dominance and success, it is often in the public eye through media coverage including criticism regarding key issues such as copyrights, censorship and privacy.
By 2013, the company had 70 offices in over 40 countries. In October 2014, Interbrand ranked Google as the second most valuable brand in the world, following Apple.

History

The Beginning

The basis for Google was laid in January of 1996. It began as a research project for two PhD students at Stanford University. These students were Larry Page and Sergey Brin. At that point, web search engines would rank returned results based on the frequency of the inputted search terms on a page. Page and Brin took the task of coming up with a better system to analyze the relationships between web pages. This system was named PageRank by the two. This system went beyond the basic process of counting the number of search terms to determining the relevance of a search result page by the number and importance of the pages that linked to this page.
Since the search engine explored backlinks to rank the importance of a website as a search result, the two founders gave it the name BackRub. This name was not much of a success and eventually the name Google was agreed upon. This came about as a misspelling of the word googol. Googol means a number 1 followed by one hundred zeros and was chosen to represent the large amounts of data and information the search engine would process. Before the domain name for the website was registered officially in September 1997, it ran under the Stanford University website. The company was incorporated in September 1998 and the office was set up in a friend’s garage in Menlo Park, California. Another fellow PhD student was hired as the first employee. The company continued to grow and by 2011, the site reached one billion unique visitors per month. In 2012, the company earned annual revenue of US$50 billion for the first time.

Funding and IPO

The company received its first funding from Andy Bechtolsheim, a co-founder of Sun Microsystems. The funding worth US$100,000 came before the incorporation of the company. Page and Brin attempted to sell their website to Excite for US$1 million in 1999 because they felt that it was distracting them from their PhD work. They were turned away and went on to secure $25 million in funding from major investors. These included venture capital companies such as Kleiner Perkins Caufield & Byers as well as Sequoia Capital. The company’s IPO took place five years later. 19,605,052 shares were offered at $85 per share. Morgan Stanley and Credit Suisse were the underwriters for the deal and also designed an online auction system for the shares sale. The sale was worth $1.67 billion and gave the company market capitalization worth $23 billion with this figure growing to $397 billion by 2014.
The company retained control of the majority of the shares. There were misgivings that the IPOwould have an impact on the company’s culture through issues such as shareholder pressure to reduce employee benefits and the sudden millionaire status of many executives on paper. The founders addressed these concerns and assured potential investors that the company culture would remain intact. To ensure that this continues to happen, the company has a designated Chief Culture Officer. This role is served by the Director of Human Resources and the purpose is to ensure that the culture and way of work is developed and maintained and kept true to the core values that formed the basis for the company. Over the years, there have been concerns and suggestions that the company has lost its anti-corporate and no evil way of thinking as well as some allegations regarding sexism and ageism from former employees.

Further Growth

By March 1999, the company shifted to an office in Palo Alto, California. The eventual move to the Googleplex in Mountain View, California happened in 2003, when the company outgrew other locations. Other well-known Silicon Valley tech startup companies also had their offices in the city. Though initially opposed by the founders, the company began its sale of advertisements based on keywords in the following year to form the basis of an advertising-funded search engine. The advertisements remained text only to ensure that the page remained uncluttered and quick. This model was first created by another company which sued Google for infringement. The case was settled out of court with Google issuing shares of common stock in return for a license.

History of Google – The Full Story of Google Company – Full Documentaries

BUSINESS MODEL

The Google Inc business model can be seen more clearly when divided into some key areas:
  • Key Partners: Key partners for Google include suppliers, distributors, the Open Handset Alliance and original equipment manufacturers.
  • Key Activities: Key activities include research and development for both the development of new technologies and features and the improvement of existing ones. There is also significant time spent in the maintenance and management of massive IT infrastructures and products and services. Apart from this, there is work done on marketing, strategy and alliances.
  • Key Resources: Key resources for Google would include datacenters, servers and other IT infrastructure, IPs as well as the human resource. Other resources include patents, licenses and proprietary material.
  • Value Proposition: The company aims to create value for its customers for internet search, advertising, operating systems and platforms and enterprise. The overarching principle is drawn from the mission statement which is to manage the world’s information and make it universally accessible and useful.
  • Channels: Channels to reach customers include google.com, google affiliate websites and google Adwords. Channels to reach advertisers and network members include sales and support teams.
  • Customer Relationships: Channels to build customer relationships can include sales and support services as well as dedicated teams for larger customers.
  • Customer Segments: Google has three main customers. The users who are able to organize information in useful ways using Google products and services, the advertiserswho have a cost effective way to display online and offline ads to customers and Google Network Members and Other Content Providers who use the adsense service. Other extended segments can include mobile device users and makers as well as developers.
  • Cost Structure: Primary costs for Google include the IT infrastructure, people, R&D costs and marketing costs.
  • Revenue Streams: The primary revenue stream for the company remains its ad-powered search engine. This amounts to as much as 96 percent of all revenue.

BUSINESS SEGMENTS AND PRODUCTS

Google has an immense portfolio of products and services under its umbrella. A complete list of these can be found here and here.
Some major products, which can be seen as business segments, include the following:

Advertising

Advertising remains the primary focus for the company and brings in the most revenue. In 2006, the company made over $10 billion in total advertising revenues while other streams brought in only $112 million. By 2011, 96 percent of total revenue was coming in from advertising related programs and activities.

Advertising Products and Services

Some popular advertising products and services include:
  • Google Analytics: This product allows owners of websites to keep track of visitors to their sites and how people use them. One way of measuring is through examining click rates for links on page.
  • Adwords: This product helps advertisers display advertisements in the Google content network. This can be done in a few different ways such as cost-per-click or cost-per-view.
  • Adsense: Adsense is a related to Adwords and this product can be used to help website owners display advertisements on their own website. The owners can then earn money from clicks on these ads.

Search Engine

The search engine is the primary business for the company and also earns its highest revenue. The search engine was ranked the top search engine in the US in 2009 and received 65 percent of all search engine visitors. The search engine indexes web pages by the billions to allow users to access information through keyword inputs. The search uses Google’s PageRank algorithm to refine search results.

Search Engine Products and Services

  • Google Books: The search engine hosts Google Books where the company scans books and offers limited previews for these. Where copyrights are not an issue, whole books are also on offer. These are available in the book search engine. Digital versions of new books are also sold.
  • Special Searches: Other searches include options to search for scholarly articles, blogs, news stories, images and videos as well as the ability to analyze past and current trends. There is a special search option as well where a search bar can be placed on a website to search through the contents of that website.

Productivity Tools

A major product group for Google is productivity tools. These include:
  • Gmail: Gmail is a free web based mail service offered by Google. The service launched as an invitation only one in 2004 and eventually opened to everyone by 2007. By 2009, the service had 146 million users. Gmail was the first service to offer 1GB of free storage space as well as the option to keep conversations in one thread. At present Gmail allows users over 15 GB of free space as well additional storage available for a small fee. The service uses a special technique to allow the webpage to remain interactive without the need to refresh.
  • Google Doc: Google documents is a free office package that offers users the ability to create, edit, share and collaborate on work. The documents are all online and can be downloaded. This service also allows users to create forms and surveys.
  • Google Drive: Google drive is an online storage service offered to Google users.
  • Google Calendar: Google calendar is also a service which can be synced across different Google platforms.
  • Google Translate: Google translate is a free translation service. It provides instant translations for dozens of languages. The service translates single words and also entire webpages.
  • Google Code: Another initiative is the Google Code. This is an open source hosting software project hosting where developers can download incomplete programs for no cost.

Enterprise Products

Some enterprise products include:
  • Google Search Appliance: The Google Search Appliance is a rack-mounted device. This device provides document indexing functionality and this can be integrated into an intranet, document management system or a website. This service was launched in 2002 for larger organizations and in 2006 for smaller ones. Later that year, a Customer Search business edition was also launched which gave an advertising free access to Google.com’s index. This became Google Site Search later on.
  • Google Apps: Through Google Apps, Google’s product offerings can be brought to other domains. There are basic free editions as well as Google Apps for business, education and government.

Other Products

Some other basic Google products include:
  • Google News: This service began in 2002 as an automated service that summarizes news items from multiple websites.
  • Google Fiber: The Google Fiber project began in 2010. The plan was to create an ultra-high-speed broadband network in a few American city. Kansas City was chosen as a pilot project, and the project was completed in 2012.
  • Google Phones and Android OS: Google launched Android in 2007, a mobile phone operating system. Google acquired the OS as an open source software and allows developers to use a software development kit to develop applications. Google also released a phone called the Nexus One.
  • Google Chrom: Google Chrome was announced in 2008 as an open source web browser. In 2009 Google Chrome OS was launched which as a Linux based operating system. The OS only supported a web browser to be used for logging people into their online Google accounts.
  • Google Goggles: This is a mobile application for Android and Apple iOS. It is used for image recognition and image based searches. The application can identify historic landmarks, scan business cards and even solve puzzles.
  • Google Wallet: A mobile application for wireless payments was announced in 2011, called Google Wallet.
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Different types of Mergers and Acquisitions (M&A)

00:57:00

Mergers and acquisition can be categorized according to the nature of merger. Most mergers are simply done when one firm takeover another firm, but there are different strategic reasons behind this decision. In the same way, legal terminology also differs from merger to merger, hence it is important to differentiate and understand the subtle differences.

Types of M&A
© Entrepreneurial-Insights.com
In this article we will look at 1) nature of M&A and different types of M&A, 2) reasons behind each type of M&A, and 3) legal terminology.

NATURE AND TYPES OF M&A

Mergers vs. Acquisitions

A merger takes place when two companies combine together as equals to form an entirely new company. Mergers are rare, since most often companies are acquired by other companies, and it is more of absorption of operation of the target company. The term merger is more often used to show deference to employees and former owners when another company is taken over. Mergers and acquisition are a means to a long-term business strategy. New alliances, mergers or takeovers are usually based on company vision and mission statements, and they have to truly reflect company corporate strategy in terms of what it wants to achieve with the strategic move in the industry. The process of acquisition or a merger calls for a disciplined approach by the decision makers at the company. Three important considerations should be taken into account:
  • Company must be willing to take risk, and make investment early-on to benefit fully from the merger, competitors and the industry takes heed and start to merger or acquirer themselves.
  • In order to reduce and diversify risk, multiple bets must be made, since some of the initiatives will fail, while some will prove fruitful.
  • The management of the acquiring firm must learn to be resilient, patient and able to emulate change owing to ever-changing business dynamics in the industry.

Horizontal Mergers

Horizontal mergers happen when a company merges or takes over another company that offers the same or similar product lines and services to the final consumers, which means that it is in the same industry and at the same stage of production. Companies, in this case, are usually direct competitors. For example, if a company producing cell phones merges with another company in the industry that produces cell phones, this would be termed as horizontal merger. The benefit of this kind of merger is that it eliminates competition, which helps the company to increase its market share, revenues and profits. Moreover, it also offers economies of scale due to increase in size as average cost decline due to higher production volume. These kinds of merger also encourage cost efficiency, since redundant and wasteful activities are removed from the operations i.e. various administrative departments or departments suchs as advertising, purchasing and marketing.

Vertical Mergers

A vertical merger is done with an aim to combine two companies that are in the same value chain of producing the same good and service, but the only difference is the stage of production at which they are operating. For example, if a clothing store takes over a textile factory, this would be termed as vertical merger, since the industry is same, i.e. clothing, but the stage of production is different: one firm is works in territory sector, while the other works in secondary sector. These kinds of merger are usually undertaken to secure supply of essential goods, and avoid disruption in supply, since in the case of our example, the clothing store would be rest assured that clothes will be provided by the textile factory. It is also done to restrict supply to competitors, hence a greater market share, revenues and profits. Vertical mergers also offer cost saving and a higher margin of profit, since manufacturer’s share is eliminated.

Concentric Mergers

Concentric mergers take place between firms that serve the same customers in a particular industry, but they don’t offer the same products and services. Their products may be complements, product which go together, but technically not the same products. For example, if a company that produces DVDs mergers with a company that produces DVD players, this would be termed as concentric merger, since DVD players and DVDs are complements products, which are usually purchased together. These are usually undertaken to facilitate consumers, since it would be easier to sell these products together. Also, this would help the company diversify, hence higher profits. Selling one of the products will also encourage the sale of the other, hence more revenues for the company if it manages to increase the sale of one of its product. This would enable business to offer one-stop shopping, and therefore, convenience for consumers. The two companies in this case are associated in some way or the other. Usually they have the production process, business markets or the basic technology in common. It also includes extension of certain product lines. These kinds of mergers offer opportunities for businesses to venture into other areas of the industry reduce risk and provide access to resources and markets unavailable previously.

Conglomerate Merger

When two companies that operates in completely different industry, regardless of the stage of production, a merger between both companies is known as conglomerate merger. This is usually done to diversify into other industries, which helps reduce risks.

REASONS BEHIND EACH TYPE OF M&A

There are various reasons as to why a company might to decide to merge or acquire another company, although there has to be a strategic reasoning or logic behind the merger. All the successful mergers and acquisitions have a specific, well thought-out logic behind the strategic move. Mergers and acquisitions usually create value for the company in different ways, some of which are listed below:

Improve the company’s performance

This involves improving the performance of the target company, as well as the company itself. It is one of the most important reasons of value-creating strategies of M&A. If another company is taken over, its performance can be radically improves, due to economies of scale. Also, the two companies combined would have a greater impact in the market as they are more likely to capture a greater market share, hence higher revenue and profits. Operating-profit margins can be significantly improved under the new management if wastage and redundancies are removed from the operations.

Remove Excess capacity

In many cases, as industries grow, there comes a point of maturity, which leads to excess capacity in the industry. As more and more companies enter the industries, the supply continues to increase, which brings the prices considerably down. Higher production from existing companies and entry of new companies in the industry disrupts the balance as supply increases more than demand, which lead to a fall in price. In order to correct this, companies merge with or acquire other companies in the industry, hence getting rid of excess capacity in the industry. Factories and plants can be shutdown, since it is no longer profitable to sell at that low a prices. Usually least productive plants or factories are retired in order to bring the balance back to the industry. Reducing excess capacity has a lot of benefits as it extends less tangible forms of capacity in the industry. It makes companies rethink their strategy, and nudges them to work towards improving quality rather than quantity.

Accelerate growth

Mergers and acquisitions are often undertaken to increase the market share. If competitor company is taken over, its share of sales is also absorbed. As the result, the acquirer gets higher sales, revenues and consequently higher profits. Some industries have a mix of very loyal customers, which means that it is very difficult to attract customers from competition by other means, as the industry is highly competitive and consumers are disinclined to make the switch. In such circumstances, merger or acquisition are highly beneficial, since they provide an opportunity to drastically increase market share. It also allows economies of scale, as per unit cost decrease due to higher volume. Smaller players in the market are sometimes taken over to penetrate the market further, where big companies fail to make an impact. Controlling smaller firms in the industry can greatly accelerate sales of those smaller companies’ products and services, since a big name is now attached to them. The acquirer also brings in its expertise and experience to bring efficiency to the operations of the target company. The combined company also benefit from exposure to various segments of the industry, which were previously unknown to the acquirer. The new combined company could help introduce new products tailored for the unchartered markets, hence finding new consumers for the same products and services.

Acquire skills and technology

Companies often acquire or merge with other companies in hopes to acquire skills and/or technology of the target company. Some companies control certain technologies exclusively, and it is too costly to develop these technologies from scratch. This means that it is easier to take over a company with the desired technology. A merger / an acquisition provides an opportunity for both companies to combine their technological progress and generate greater value from the sharing of knowledge and technology. These kinds of merger usually lead toinnovation and entirely new products and services, hence are beneficial not only to the companies themselves, but to the industry as well. Same goes for skills, which are in certain cases exclusive, and can only be sought out, if the said company is taken over.

Roll-up strategies

Some firms are too small in the market and are highly fragmented, which means they experience higher costs, and it is not feasible for them to keep up operations because there are no economies of scale due to a very small volume. An acquisition is such case is more common and can be hugely beneficial to the target company, as it could keep on operating only with an element of economies of scale. It would also help an acquirer, since it would be able to penetrate smaller fractions of the market, as smaller companies have access to these markets. Hence this kind of merger creates value for both companies, and promises greater efficiency in the operational activities. Advertising campaigns can be coordinated together in order to increase revenues and save on costs.

Encourage competitive behavior

Many companies decide to take over other companies in an attempt to improve the overall competitive behavior in the industry. This is done by eliminating price competition, which leads to improvement in rate of internet return of the industry. If the competition is kept at bay, and new entrants are not allowed, firms don’t have to compromise on quality as price is no longer a competing factor. Smaller businesses can only gain share through offering at lower prices, but price competition reduces overall profits for the industry. In order to restore the balance, and invest all effort an energy on quantity, mergers and takeovers are initiated to improve the overall competitive environment in the industry.

LEGAL TERMINOLOGY

Mergers and acquisitions are highly complex, and they most often require authorization from central government organization like competition commissions. There are various legal terminologies used when companies decide to merge as listed below:

Sale of Majority of Assets

In a merger / acquisition of one by another company, one company buys out the majority of assets of the other company. The control is transferred to the acquirer after approval of majority of shareholders of the target company. The acquirer usually only takeover liabilities that are attached to the purchased assets, which means that other liabilities are retained by the target company and paid off by them through their own means. Acquirer may, at times, decides to take up liabilities too. Shareholders have the same rights after the merger, since they are entitles to a divided, which is usually higher after the merger.

Stock for Assets

In this type of transaction, one entity buys outs the other one for a certain number of shares. The target company dissolves, passing all its assets to the acquirer. The control is established after approval from acquirer Company’s management. For the target company, vote of approval from majority shareholders is required for the dissolution. All the liabilities attached to the assets of Target Company are passed on to the acquirer company, while all other liabilities are retained by the target company unless acquirer volunteers to take them on as well. Shareholders after the merger are likely to receive a higher dividend.

Stock for Stock

Stock for stock transaction involves two companies, where one entity buys shares in another company from its shareholders. The target’s company’s assets are passed on to the acquirer, while the target company is run as a subsidiary of the acquirer. A new stock has to be created for this kind of merger, which means that the majority of the acquirer company’s shareholders are required to approval the merger. The shareholders of the target company are able to individually decide whether they want to participate or not. The merger entails limited liabilities for the acquirer in terms of target’s company liabilities. If shareholders decide not to sell their shares, they might be frozen out.

Merger/Consolidation

This kind of transaction requires the presence of two companies. One company purchased the other, or alternatively both dissolve and become a new company. In this case, both companies require approval from majority of shareholders. The company or the acquirer takes up all rights and all liabilities, some of which are unknown to both corporations. Shareholders retain the right to receive dividends, in addition to retaining dissenter’s appraisal rights. This is the most common sort of merger, which basically means that one company is absorbed into the other one. Assets are taken over, while liabilities are cleared at the time of the merger or takeover the acquirer.

Dissolution

Dissolution involves only one corporation, since the company is being dissolved. If the company wants to dissolve voluntarily, it needs the majority vote by shareholders in addition to filing with the state. At times, courts order involuntary dissolution in certain cases such as a deadlock situation. The control is usually held by majority vote by shareholders. In the case of dissolution, all liabilities must be cleared, although any future liability is absolved. Dissolution usually means that the company does not exist anymore, which means its operations are wrapped up during the process dissolution.

Freeze-Out

In this case, the majority shareholders attempt to buyout the shares of the minority of shareholder. Only one company is involved, and control is defined by the majority through board approval. The liabilities in this case remain with the company as there is no other party involved. This is mostly done to reaffirm control by the majority shareholders over the operations of the company, since they face no obstacles once the deal goes through.

Tender Offer

This merger is similar to stock for stock, the only difference being the shareholders are offered money in exchange for their shares, after which the target company is dissolved, merged or run as a subsidiary. Management approval is needed since the acquirer usually borrows to finance the merger. While individual shareholders of Target Company may sell at their will, although a controlling percentage of target company’s shared is required for this mergers. After the purchase of shares, the acquirer has limited liability in terms of target’s company financial obligations. After the merger, shareholders can expect a higher dividend, while shareholders of target have no right, since they are no hold shares.

Triangular Merger

As the name suggest, this merger involves three companies. The first step involves the acquirer company forming a subsidiary, whose only assets are shares of the parent company. The newly formed subsidiary then does a stock for assets or stock for stock as explained above with the target company. Consequently, the target company mergers or completely dissolves.
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What motivates a company to takeover another company

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In business, especially in the modern markets, the usage and application of the term takeover is very common. It is used in reference to when one business assumes the control or the management of another business. There are different factors and reasons that motivate businesses to take over other businesses.

M&A: What motivates a company to takeover another company
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In this article, we will look at 1) what is a takeover, 2) why do businesses plan takeovers of other companies? 3) what are the phases of initiating and completing a takeover? and 4) pros and cons of takeovers.

WHAT IS A TAKEOVER?

Different definitions have been brought forward for the term Takeover. Therefore, to effectively define the term in this article, we will present three of the major definitions for the term and analyze them so as to come up with the most effective definition of what a Takeover is.
The Business Dictionary gives the definition of the term takeover as the assumption of control of a firm (usually smaller) by another firm (usually larger) that is attained through the purchase of 51% or more of its voting shares or stock.
Investopedia, a leading resource for reference of business terms and ideas, defines the term takeover as when a bidding company is allowed to acquire a target company. Upon the acquisition, the bidding company becomes responsible for all the operations of the target company.
The Financial Dictionary defines the term takeover as a general term usually referring to the transfer of control from one group of shareholders to another group of shareholders. It further defines it as a change in the control interests either through a friendly or hostile acquisition of a corporation.
The definitions provided above all point out to three major issues; assumption of control, a bidding company; a target company and acquisition of control. From these three issues, this article crafts the definition of the term takeover as:
A takeover is when a bidding company acquires a target company and as such, there is a change in controlling interests where shareholders of the bidding company assume the control and the management of the target company.

WHY DO BUSINESSES PLAN TAKEOVERS OF OTHER COMPANIES?

Takeovers are some of the most important decisions that a person or a management team can make in business practice. Therefore, there is need to exhaustively analyze trends in the market before deciding to acquire and take over the management of another business. It is important to consider how a takeover can help the ambitions of the business at hand before deciding to venture into one. There are a number of factors that motivate businesses to start off with takeovers of other businesses. These factors vary from one transaction to another depending on the ambitions behind each business in the market. The current article lists and explains most of the common of those factors.

Enhancing business abilities

Modern markets demand that operating businesses are well endowed with abilities to effectively outperform competing businesses. A successful business, at least from the perspective of the modern market, must be marked by efficient production, effective marketing and high sales and turnovers. However, it is quite challenging to ensure that a business has all these abilities without proper investment. Therefore, businesses usually opt to take over other businesses in order to facilitate the efficiency with which they produce, the effectiveness with which they market their products and services and to increase their sales and turnovers.
Logically, taking over another business comes with the opportunity of increasing the abilities of the business. Takeovers come with ready alternative measures that can be used to sort out some management or business issues that previously hampered the attainment of the maximum potential of the acquiring company. The additional abilities of the acquired business can be used to enhance those of the acquiring business. The additional departments and sections availed by the acquired firm should offer the acquiring firm some additional space to effectively manage and utilize management resources in order to enhance the abilities of the acquiring business.

Gaining a larger market share and competitive advantage

Modern markets are characterized by stiff competition among businesses. The quest to attain high sales becomes complicated given the fact that many businesses offering almost similar services and products in the same market exist. Therefore, it becomes very expensive trying to beat this competition and gain a larger market share with the existence of all the competing brands and businesses. It is very hard to increase sales of products and services with all businesses jostling for market space. The end result of this competition usually is reduced market shares which initiate low product and service sale rates.
Initiating a takeover of the competing firm can help a business gain a larger market share in the market and reduce the pressure of completion in the market. By assuming the control and management of the competing firm in the market, it becomes possible that all the products and services offered by the acquired firm are controlled by the acquiring firm and all sales and profits are attributed to the acquiring firm. Once a business has been taken over by another business, the competition that previously existed between the two firms dies off as the two businesses become a single entity in the market competing against other businesses in the market.

Diversifying products and services in the market

For businesses to be assured of ultimate success in the market, they must diversify products and services. Products and service diversification allows businesses to be assured of high sales at all times. However, it is not easy to effectively diversify products and services in a single business. It is very expensive and very time consuming for a single business to offer more than three to five types of products and services. Given this difficulty, it becomes necessary that the business in question takes over the operations of other businesses offering different types of products and services.
Taking over a business with an aim of diversifying products and services comes with a notion of profitability. Logically, a business dealing with many different types of products and services will most likely remain significantly profitable when compared with those that offer just a single product or service. However, legal statutes regulating the practice business in relation to takeovers try to discourage instances where takeovers may create monopolies. Therefore, before assuming the control of businesses that will see a company being in control of most of the products and services in a niche within the market, the business in question must fully meet all set procedures and guidelines.

Cutting business operation costs

Business operation, especially in the modern market, is very expensive. Costs are often incurred from almost every sphere of operation. For a business to attain profitability, it must effectively cater for production costs, management costs, and other miscellaneous costs. Taking over another business provides a window of reprieve from where it is possible to control business management costs. The fact that the two businesses become merged, there is availed an ample opportunity through which the acquiring business expands without incurring huge costs that are involved during the expansion of a single business.
Taking over another business enables efficient production of goods and services given the increased manpower. The reduction of costs is even maximized if the merging businesses deal with the production of the same product. In this case, the total costs of production and management will be lowered while production yield will be increased. Through this kind of merging, businesses combine locations, integrate and streamline support functions which in turn help greatly in reduction of costs, a precursor to profitability. A takeover is generally viewed as an important tool in the economies of scale business strategy. In this strategy, it is theorized that when production costs are lowered as production volumes increase, the involved businesses are guaranteed of maximized profits.

Changing the leadership of a business

There comes a time when a business needs to change its leadership. However, leadership changes in business are often complicated. In most cases, they are intertwined with a haven of legal and procedural issues that demand strict adherence to. This strict adherence to such procedural and legal requirements often becomes a challenge that is likely to hinder maximum business performance. Therefore, the best way to bypass the issue of business leadership incase of a crisis is to initiate a takeover.
The business that takes over the operations of the other becomes legible to bring in new leaders and/or new procedures regarding the management and running of the involved business. Since taking over another business is the only window which allows easy manipulation of business procedures, the management team of the business taking over the business in question can effectively initiate the hiring of new leaders whom they believe that can provide effective leadership for the acquired business. However, leadership change in business is a very critical issue that demands strict adherence to business ethics and legal frameworks in order for success to be attained. Therefore, the acquiring firm ought to ensure all procedures involved in leadership change are exhaustively adhered to avoid a scenario where the business fails due to ineffective leadership.

WHAT ARE THE PHASES OF INITIATING AND COMPLETING A TAKEOVER?

There are four main phases that ought to be followed during the initiation and completion of a takeover. These four phases make up the cyclical process of conducting takeovers in that they are repetitive for all takeover transactions. These phases are:

Business identification

This is the first phase during a takeover process. It involves identifying an ideal business that is worthy being taken over in a bid to streamline operations in the market of the acquiring business. During this phase, the acquiring firm learns of a business that is up for sale. This can be attained either by contacting the management of the target business or by reviewing adverts and identifying those listed for sale, mergers or acquisition. It is important that during this phase, all the contact information of the target information is obtained, and if necessary, a tour to the business site be conducted. It is in this phase that the acquiring firm will have the opportunity of determining whether the target business is worthy taking over.
During the business identification phase, it is important that preliminary valuation of the target business is done. However, conducting preliminary valuation may at times demand express permission from the management of the targeted business. The preliminary valuation will involve reviewing the target business’ market share, the value of its products and services in the market and its approximate market value. It is critical that extensive research on the identified market is done so as to understand fully whether the company will be of significant positive impact to the acquiring business upon a takeover.

Takeover negotiation

Takeover negotiation is the second phase in the takeover process. In this phase, the acquiring business negotiates with the management of the target business regarding a possible takeover. This can be conducted in sub-phases depending on the complexity of the business involved. In this phase, the acquiring business will need to hire the services of experienced takeover negotiators so as to ensure that all the negotiations work fairly to all those involved. During this phase, all critical issues regarding the business to be taken over ought to be fully reviewed and analyzed before concluding on a takeover deal.
It is in this phase that the negotiators of the acquiring business will discuss and agree on the amount that should be paid to acquire the targeted business. Some of the topics that should feature in this phase include:
  • The liquidation value of the target business
  • The enterprise value of the target business
  • The book value of the target business
The liquidation value refers to the target business’ worth once all its assets and liabilities have been calculated. The enterprise value refers to the value that the target business will be worth if the acquiring business was to buy all its shares on the open market, pay off all the debts associated with target business and hold all the remaining cash on the target business’ balance sheet. The book value refers to the amount the company is worthy after the sale of all its assets, settling all liabilities and selling currently held stock.
Once all this three issues have been concluded, the negotiators can then be able to determine a realistic amount that should be paid for the takeover to be completed.

Closing the deal

In this phase, the acquiring company and the target company have agreed on the terms and conditions of the takeover. All that was negotiated and agreed in the previous phase ought to be formalized in this phase. Formalization will usually include the signing of agreements and establishing procedures that will govern the takeover. In this phase, the target business will agree in writing that they are willing and ready to accept compensation to let the acquiring business assume the running and management of their business. Similarly, the acquiring business will agree in writing of its willingness to pay and formally assume the management of all the agreed issues regarding that business to be acquired.
It is in this phase that payments for the takeover will be initiated and completed as will have been agreed during the takeover negotiation phase. Payments will be issued to the target business as per to terms and schedules that will be agreed during the takeover negotiation. During this phase, the involved parties will agree on how to conduct the business in question before the acquiring firm fully takes charge and assumes the management of the target business. Once every detail is agreed and signed and all payments made, it will be up to the involved parties to set a period after which all the responsibilities of managing the business will be transferred to the acquiring business.

Assumption of control and management

Once all the issues regarding the payments for the takeover have been finalized and closed, it is now up to the target business to transfer the powers to control and management of the business to the acquiring business. There should be an integration procedure that will allow adjustments for all the agreed terms to be effectively rolled out between the two parties. The selling firm should be allowed time to complete its post-sale procedures maybe of notifying its clients of the change of management. Similarly, the acquiring firm should have some time to advertise the business as effectively as it will need regarding the new management.
During this phase, the acquiring firm will need to analyze and come up with some important decisions regarding the newly acquired business. It will be necessary for the acquiring firm to decide whether to integrate the new company to the company or let it operate by itself or integrate their mother company to this new company like in the case of back-flip takeovers. It is important to analyze human resource needs once the takeover is complete so as to avoid instances of overstaffing or understaffing. This is a critical phase as it will determine the success of the takeover once full management of the acquired business is initiated.

PROS AND CONS OF TAKEOVERS

Takeovers come with a host of advantages and disadvantages regardless of the perspective one views them from. Although these advantages and disadvantages tend to vary from one case to the next, there are some that tend to reoccur in almost all cases. These will be listed below starting with the advantages then the disadvantages:

Advantages (Pros) of Takeovers

  1. They often come with a positive impact on sales/revenues. Takeovers often see an increase in sales/revenue of the acquiring company. The main reason behind this may be due to the increased yields of products and services and improved marketing abilities that come with the acquired firm.
  2. They enable a business to venture into new markets without necessarily having to face all the procedural issues involved. This is made possible due to the fact that acquiring a business operating in a different market will avail the opportunity of conducting business in that new market easily than when starting a new business in that market.
  3. Takeovers have the ability to reduce business competition in the market. Regardless of the market share of the acquired business, every new takeover ensures that there is less competition. Takeovers guarantee an increased market share for the acquiring business which in turn translates to reduced competition and improved market performance.
  4. Takeovers bring about an increased brand portfolio. In addition to the brand portfolio of the acquiring business, the business being taken over will bring with it its brand portfolio which will increase the brand portfolio of the new business after the takeover. Increased brand portfolio will encourage sales as there is a high probability of attracting new buyers to the new business.
  5. Takeovers offer a window to improve business efficiency and improve business abilities in the market. With acquisition of the new business, it is possible to easily eliminate synergies and redundancies from the business. Takeovers bring about an easy way to eliminate jobs and posts with overlapping responsibilities and duties. This is attained during the restructuring and adjustment period when operations are streamlined and integrated after the takeover.

Disadvantages (Cons) of Takeovers

  1. Upon takeovers, there is a likelihood that employee productivity will reduce. There are two main explanations for this incidence. First, the culture clashes of the two merging companies may work to negate the results of employee productivity. Secondly, issues pertaining to job insecurity will most likely affect the productivity of employees towards negative levels.
  2. There is always an undeniable and unavoidable conflict between the management of the acquiring firm and the management of the acquired firm. This often results into hostile takeovers which often delay success of the acquired firm in the market. It calls for quite a significant chunk of investment to effectively avoid such a conflict and guarantee timely success in the market after the takeover.
  3. Takeovers bring about a notion of a single firm controlling a large section of the products in the market, a precedent to a monopoly. The reduced competition brought about by a firm taking over other firms leads to a situation where consumers are deprived of choices of products to choose from due to the in-existence of competition in the market.
In conclusion, takeovers, given their essence in business, demand prioritized efforts if success if to be realized out of them. All management issues relating to takeovers ought to be effectively ironed out before they harbor negative effects on the takeover. All those involved with the takeover ought to work with a positive spirit if success is to be attained from a takeover. Therefore, it is important that the acquiring firm prioritizes the effective streamlining and integration of the acquired business in the market. All human resource issues ought to be effectively addressed if success of the acquired business is to be maintained in the long term. In the long run, all that will matter is the success of the takeover and it calls for utmost dedication from all those involved in the takeover for that success to be attained in the market of the acquired business.
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