by Infoshelter

Created on: September 12, 2009   Last Updated: June 09, 2011

Every company should consider, at regular time intervals and after taking into account the conditions of the external environment (the market, the suppliers and the competitors), as well as the parameters of the internal environment, whether there is a harmonization between targets and results and to check whether to continue the application of its current strategy or to choose an alternative one. Under the second option, a particular company could choose to merge with one or more companies.

A merger is implemented by the amalgamation of two or more companies, each of them holding a certain percentage of shares of the new company, which has been formed. The question is how to achieve a merger between previously extraneous entities so that the new structure can turn into a successfully operating and profitable enterprise.

Firstly, we should bear in mind that with a merger, although it refers to the whole structure and operation of the firm, it still is important to achieve synergy between the respective parts of the merging companies. In other words, there must be a coordination of activities, starting from the upper managerial-strategic level, ending at the level of selling the products or services to the final consumer, even to the stage of after-sales service.

Of course, during the initial investigation of the calculation of the possibility for a successful merger, the standard way of doing inside a company, which is a distinct characteristic, is certainly taken into consideration, as well as the ability of harmonization of activities. However, sometimes a merger is "forced", when companies unite in order to gain the necessary size, which will allow them to survive and continue to operate, through the complementarity between different sectors and activities, so that they can respond better to the challenges of the competition, provide better service to their customers and clients and gain economies of scale, for more profitable and bigger volume production.

Making mergers work is a process, which is similar to the alignment of rail networks among different countries, applying different operating systems and using different equipment and facilities. In this case, harmonized operation can be achieved only if the problem areas are identified, across which, different operating systems are applied, so that normalization practices and procedures can be implemented. In the example of the railways, if we consider that the width of the rails varies between two neighboring countries, which, however, wish to be connected by rail, we will not have to change the entire network in one or both countries, in order to achieve our objective. It can be sufficient to make alterations only in the points of change. This means, changing the current equipment and the procedures applied across the borders, so that the travelers-products will continue their travel, towards their final destination: the consumer.

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