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This 6-page paper focuses on whether economies of scale were realized through mergers. The paper discusses examples of mergers. Bibliography lists 5 sources.
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6 pages (~225 words per page)
File: D0_MTmereco.rtf
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Unformatted sample text from the term paper:
for such alliances such as better market penetration, increased product development -- and economies of scale. In other words, it is believed that two companies can provide better quality
and at less cost that can one. Is this true? Do mergers actually lead to strong economies of scale? These
are the issues we will be tackling in this paper. Well examine the concept of economies of scale as they pertain to mergers and acquisitions, and then examine certain
companies and industries that have experienced this type of activity. We will then conclude with a discussion about whether or not mergers (and acquisitions as well) have actually led
to economies of scale. Overview According to many economic experts, firms merge with or acquire other firms for four reasons (Fletcher and
Schaeffer, 2001). These reasons are quality of earnings; economies of scale; synergy and globalization (Fletcher and Schaeffer, 2001). In theory, these reasons are valid -- especially when it comes to
economies of scale. The idea behind the concept of the economies of scale is that by increasing size through acquisition of smaller companies, a larger company can end up producing
support functions and cutting costs (Fletcher and Schaeffer, 2001; see also Meyercord, 2001). The emerging entity from such a merger or acquisition would create better management, lower costs and a
stronger brand awareness (Meyercord, 2001). Other benefits of such mergers, it is thought, include more clout in the marketplace and protection against hostile acquisitions (Allas and Leslie, 2001).
However, these same economists indicate that much of this reasoning is actually myth (Fletcher and Schaeffer, 2001). In the area it economies of scale,
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