IntroductionToday, companies recognize that maximizing growth potential often means expanding sales and/or operations outside of domestic markets. Whether attempting to increase sales by exploring foreign markets, or attempting to cut costs by adding manufacturing locations in low cost countries, more and more companies are entering the global marketplace. Some of the options companies consider are licensing agreements, joint ventures, exporting, and operating fully owned subsidiaries. In the case of Sony and MGM, a foreign company purchased an American company, and exposed itself to the intricacies of not only a merger, but the issues of doing business internationally.
Pro's and Cons' of Merger AcquisitionThe pro's and con's of a merger/acquisition are many just to name a few:Pros:Long term value is created when combining on companies.
More efficient use of both companies assets.
Performance of the companies will be unrelated to the size of the company.
Stock value changes.
Cons:The focus of both companies can be lost in the increase in size due to the merger.
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English: The main entrance to the Sony Pictures En...
Leo in MGM's current print logo. Out of all the li...Increase in overhead and expenses.
The company can become less innovative and lose competitiveness.
Due to merging some employees will be laid off.
Stock value changes.
In the merger of Sony and Metro-Goldwyn-Mayer (MGM) there were pros and cons as well.
Pros:Merge the huge MGM film library onto DVD discs for sale to the general public.
Merge the huge MGM television show library to DVD disc to be distributed and sold.
Continue to build the MGM library by capitalizing on emerging technologies.
Open the film library to world-wide markets just not the U.S. market.
Distribution and marketing capabilities will increase through Sony.
Value of Sony's stock can increaseCons:Cost of the merger increased to 4.85 from 4.7 billion.
MGM will still be having 60% ownership.
Comcast will have a minority interest in the ventureValue of MGM's stock...