Business Strategy

SUMMARY: Mergers can be defined as the integration of two or more firms on a co-equal basis. An acquisition refers to the process of one company gaining partial or complete control of another for some strategic reasons. In order to expand the size of the firm through mergers, firms go in for horizontal, vertical, and conglomerate mergers.

Firms opt for M&As due to various reasons such as: increased market power, overcoming entry barriers, avoiding the cost of new product development, increased speed to market, lower risk, increased diversification, and reshaping the firm’s competitive scope. All the four stages of the industry life cycle -- introduction, exploitation, maturity, and decline -- have distinct roles to play in influencing the nature of M&A activity