Another disadvantage is that the culture and values that the other company established may clash with the culture and values of your existing business, especially if you choose to retain the staff of the business that you acquire. Reduction in Bankruptcy Costs. Complacency Companies may become too set in their ways when they feel that competition no longer aggressively breathes down their corporate backs.
Disadvantages One of the disadvantages to buying another business in the same industry is that you run the risk of being redundant. Strengths, weaknesses, opportunities and threats, where strengths and weaknesses are analyzed from an internal prospective and opportunities and threats are viewed from an external perspective.
By merging, Riordan Manufacturing will be able to complete more projects and acquire more clients that in turn will produce more capital for the company. To fill the large gap of planned and achieved growth. The most difficult factor for the merger comes from within the Riordan family of companies.
It involves specifying theobjective of the business venture or project and Weaknesses of acquiring another organization in the same industry theinternal and external factors that are favorable and unfavorable toachieve that objective. Threats Riordan Manufacturing has a very big threat that comes with this acquisition and with any business merger.
Riordan can take maximum advantage of tax-breaks and reinvest its tax payments toward owning another profitable operations. Appraisal value is quantifying the worth of a company by an independent appraiser. Both have their place, yet integrating such starkly different customs can take months of effort, create ill will and result in layoffs or departures that directly impact the bottom line.
Shareholders of the target firm can have two perceptions: It is a tool which provides the instant reviews for the organization and from that we can assess the strengths, weakness, opportunities and threats.
In a merger, previously depreciated assets can be revalued and tax benefits arising from increased depreciation of revalued assets create wealth. B SWOT provides instant review for each personality.
As a result, other competing companies may file antitrust lawsuits or help the target firm submerge from financial stress on terms of turning down acquisition opportunities.
A SWOT point that generates valuable strategies is central. Riordan pays six and a half times the amount of interest on existing liabilities to taxes; this means that with the tax incentives Riordan will gain it can invest in six other profitable entities.
Advantages One main advantage of buying another business that sells similar product or services is that you can create economies of scale, which refers to the process of increasing production by lowering production costs. The importance of individual SWOTs will be exposed by the value of the strategies it creates.
That scenario will eventually catch up with the acquiring company as new businesses emerge to fill market gaps. Removal of Ineffective Managers. In other words, unless the two companies have distinct geographical spheres and target audiences, you may end up competing against the second business that you bought.
In contrast, mergers often involve a chain of command that gives the leadership of the other company some form of authority or control over how decisions are made. To improve the position in the market. Customer Impact Companies that acquire other businesses within the same industry may feel they can raise their prices given the reduced competition, yet consumers may well rebel when confronted by increased costs as they seek cheaper product alternatives within the marketplace.
In case where a firm is failing and is forced to a possible liquidation or bankruptcy be creditors, assets are sold at a depressed value, and what channels down to stockholders are even less amusing since legal fees and selling costs are levied before disbursement of any fund to anyone.
Subsequently, they may force the target firm to liquidate assets to repay outstanding debts; and the financial stress makes the acquisition unfeasible to finance. These circumstances create numerous opportunities and conflicts for the company; however, with proper planning, the company can capitalize and reach a net gain.
Rather than relying on partners or new joint ventures for robust production and delivery, Riordan will now expands its own and thus be able to determine future product directions. The target company can dissolove and operate under the acquirer name.
There is a potential that the deal could fall through or that the profits from the company will not be enough to recover. SWOT analysis can be particularly useful in mid-term evaluations as it can provide useful clues about the intermediate objectives of the programmed mainly as far as the ability to exploit the opportunities and to avoid the threats is concerned.
Short-Term Financial Consequences Despite the assumed cost savings that come along with eliminating duplicative back-office and marketing functions that occur within the same industry, acquisitions still require significant outlay of either cash or company stock and may not be immediately profitable.
Any hint of monopolistic tendencies suggested by the merger, however, may draw the attention of regulators and increase legal fees. As a recourse to loosing clientele due to closure of Pontiac Plant and shifting operations south to the Mexican Factor, Riordan Manufacturing may choose to acquire or merge with a U.
A merger may be a good solution for the creditors and the stockholders to absorb least amount of collateral damage.Riordan Manufacturing Merger Acquisition SWOT Analysis? Weaknesses, Opportunities, and Threats Analysis after shutting down Pontiac Plant it is acquiring another firm in the same industry.
At first blush, acquiring another company in the same industry may strike a board of directors as a straightforward way to success and higher income given their depth of industry knowledge and.
Acquiring Another Organization In The Same Industry Acquiring another organization in the same industry Kudler Fine Foods was founded in and have three locations only in California. They are trying to expand their services and overall efficiency (Kudler, ). The three options for expansion are going public through and IPO, acquiring another organization in the same industry, and merging with another organization.
This paper will list the three options and provide the strengths. Acquiring Another Organization In The Same Industry Discuss The Strengths Weaknesses Opportunities And The Threats Of Doing So Essays and Term Papers Search Results for 'acquiring another organization in the same industry discuss the strengths weaknesses opportunities and the threats of doing so'.
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