International Financial Management: Mergers and Acquisitions in Retail Sector

This report evaluates the success and importance of mergers and acquisitions in the retail sector of countries like UK, USA, Germany, and Japan. It analyzes the potential for international harmonization in the field of M&A and discusses the impact of M&A on the economic growth of these countries. The report also highlights the role of organizational structure, taxation, accounting, and funding in M&A activities.

INTERNATIONAL
FINANCIAL
MANAGEMENT

Table of Contents
Executive Summary.........................................................................................................................3
INTRODUCTION...........................................................................................................................3
Mergers and acquisitions........................................................................................................3
Secret Success of Merger and Acquisition.............................................................................6
International harmonisation occurring in the M&A field.......................................................6
Organisational Structure and employees in Merger and Acquisition.....................................8
Taxation..................................................................................................................................8
Accounting and funding.........................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

Executive Summary
The report explains the importance of Merging and acquisition field in retail sector of
four company that is United States, Japan, United Kingdom. This report will emphasize on USA
retail industry which is focusing on replacing leadership and cutting cost by creating large
opportunities in retail industry while UK has slow and gradual increase as the outsider
companies take time to understand the rules and regulation and the legal frame work of the
country. Moreover, M&A activity is increasing in japan as the country supports flow of types of
goods and services in the retail industry. In addition to this, acquisition of German organisations
has led the major positive impact on German customers. Hence, the report analysed the secret
success of M&A in retail sector of all four countries.
INTRODUCTION
Merger and acquisition (M&A) is termed as stabilization or strengthening of
organisations. Further, specifically merger amalgamation of two firm in one company while
Acquisition is completely taking over another firm. Moreover, both play a major role in
cooperative finance world. Hence, the report will evaluate the success of M&A of retail sector in
countries like UK, USA, Germany and Japan and will also analyse the probability of
international harmonisation occurring between fields of Merger and Acquisition.
Mergers and acquisitions
Merger and Acquisitions are the strategy used by the firm of different countries to sustain
a competitive advantage in retail industry across the globe. Companies invest huge amount of
money to use this strategy which ensures the stability and development in retail world. The
accomplishment of M&A in different countries is described in tables given below:
UK
Merger and Acquisition in continuously
increasing UK as the international corporate
firms are easily ready to invest in the country.
M&A in UK has slow and gradual increase as
the outside companies take time to understand
the rules and regulation and the legal frame work
of the country as it is very strictly designed for
USA
Merger and Acquisitions of USA are growing
slowly and gradually in the country is all
about gaining a competitive advantage and
large market share.
Success of M&A in US is all about
diversifying products and services.
USA business enterprises focuses on

the finance world of UK.
The factor which help M&A is the sticking right
balance between tangible and intangible assets
the country which means consideration of
human capital, relational capital and
organisational capital that comprises models of
operating, relationships with stakeholders and
customers.
Developing opportunities in UK establish
employment which is further contributing in
economic development.
replacing leadership and cutting cost by
creating large opportunities in retail industry.
The major factor which help them in merging
is the surviving capability which helps the
firms in identifying the measures which will
ensure the stability of company.
Germany
The involvement of merger and acquisition in
Germany has increased to an outstanding level.
Germany has the maximum international
investment by M&A across the globe.
It has been also recorded that the acquisition of
German organisations has led the major
positive impact on German customers.
The factor which help them in M&A is the
impact of German leadership which means the
firm begins to adapt new policies vision, and
values as soon as possible to gain the
leadership position in market and to earn
maximum number of customer loyalty
(Brinckmann,Salomo,and Gemuenden 2011).
Japan
The merging and acquisition activity is
increasing in japan as the country supports
flow of types of goods and services in the
country.
M&A is increasing in japan as the country
follows the consulting approach which enhance
the level of sustainability which helps the firms
in easy financial transaction, flow of goods and
services in retail sector.
These all easily flow of transaction in japan
helps the merger in covering life cycle of basic
transaction needed to accomplish
organisational goal and to achieve stability in
foreign market.

Developing merger and acquisition activities help the countries the improving economic
condition. The basic criteria behind merging is to find cost reduction areas, prioritizing short
term opportunities. These activities assist the enterprises in analysing new business
opportunities, cost reduction opportunities, optimizing business process and establishing changes
in human resource management. Hence, USA and UK have slow and gradual increase but the
countries gives wide opportunities to the merger company and that is why economic condition of
UK and USA is stable comparatively (Chen, and et.al., 2010).
Illustration 1: M&A in US by month
Source: Serdar Dinc, Erel, I., 2013

Illustration 2: M&A in UK by month
Source: Gaughan,2010.

These activities help the several countries in developing new products and services which
enhances the growth and development of the country. Hence, it provides opportunities to the
organisations in giving customer satisfaction by merging with other enterprise and developing
the new product according to buyers demand (Uddin, and Boateng, 2011). Merging and
acquisition plays a major role in growth and development as it is important:
 To add skills and obtain quality work force
 The firm can diversify products and services for long term business goals.
 Besides, help the enterprises in reducing cost and overheads.
 Decrease the level of competition
 Lastly leads to grab the large market share and customers in foreign country.

For instance, the merging of Disney and Pixar created a revolution in cartoon and
animation industry. Pixar is computer animation organisation while Disney is mass media, the
Disney even tried to use animation like Pixar but it did not work but the merger of both the
companies made perfect sense in cartoon world.
Secret Success of Merger and Acquisition
Coordination and cooperation in business activities of organisation has led to a great
success in field of Merger and Acquisition.
Establishing same goals and objective is also the reason behind the success of M&A in
countries like Germany, United States, United Kingdom and Japan.
International harmonisation occurring in the M&A field
Harmonisation is mandatory in the field of merging and acquisition as it gives the
stability to the enterprise and reduces the differences which can arise in financial reporting in
foreign countries (Giessner, Ullrichand van Dick, 2011).Besides, harmonisation is an agreement
of operational activities for which two firm join hands and merge their business. It is mandatory
for business because it decreases the risk of interpretation in financial statements.
Moreover, there are various enterprises which are trying to eradicated the difference
between foreign harmonization and financial reporting standards because if the foreign
documentation system is attained than international countries will enjoy the benefit, as it will
improve the entry system into international financial markets and will trigger the increase the
business activities and future investment in countries like Japan, Germany, UK, USA. It is
creating stability in the economic environment.
Furthermore, the auditing and accounting process is made by the government of the
country keeping in mind the overall condition, therefore the need of foreign reporting standards
have increased the level of organisational activities across the globe (Nag, 2015). Besides the
system is making standard for financial systems in other countries internationally. To attain
common standards the parties involved with merger and acquisition like, government bodies,
enterprises and business analysts should work in coordination and cooperation. The entities
which support harmonisation of Indian financial reporting system are very less like World bank,
foreign monetary fund, world trade organisation, international security commissions, and
European union (Pardo and et.al., 2012). Henceforth, the importance of the harmonisation
system in the field of merger and acquisition are as follows:

1. It the way which helps in continuous development of foreign capital markets which leads
to economic growth of countries like USA, Germany, Japan, UK.
2. The business activities are becoming more advanced as per the international level.
The international harmonisation has some advantages in merger and acquisition fields
because:
1. It helps the firm in comparing financial statements.
2. It helps the company in developing auditing efficiency of business activities and saving
money.
3. Harmonisation helps in reducing trade barriers in foreign countries.
4. Establishment of common stands helps the business in developing consistency in
international market.
5. Lastly, it assists the enterprises adapting changes on time in new country with specific
rules and regulation and legal framework of the international market.
While, the common standards on agreement also affects the firm in many ways which are
as follows:
1. Following different taxation policies, adapting to political environment, and foreign
accounting system sometimes becomes difficult for the business to attain.
2. Further, common standards of harmonisation are sometimes useless in some economic
environment.
3. It becomes difficult of the organisation to evaluate the changes in performance which can
impact the financial statement of the entity
Hence, establishing common standards in international countries helps the firm in garbing
the market share and customers. Harmonisation in countries like USA and UK helps the entities
in understanding the legal environment of foreign countries.
Harmonisation is based on terms and conditions which includes transfer of undertakings,
protection of employment. Developing opportunities in Germany, UK, USA, Germany and Japan
establish employment which is further contributing in economic development.
Organisational Structure and employees in Merger and Acquisition
Structure behind success of M&A is 5 step process which includes:
1. Organisation share a transparent shared vision and mission

2. Secondly step followed by organisation is to understand the differences which will help
in evaluating uniqueness.
3. Third step, enhances at identifying the people related to firm which are stakeholders,
influencers, leaders and many more.
4. M&A field needs organisations to define and implement the tools and techniques helpful
in process of firm.
5. Last step of organisational structure in the field of M&A involves engaging in business
activities and carrying out effective functioning.
Hence, increasing M&A activities generate employment opportunities for the skilled
unemployed citizen and labourers of the countries across the globe.
Regulations
United Kingdom: The transfer of undertakings (protection of employment), 1981 and
European union Law
United States: Federal securities law (The securities act of 1933 and securities exchange
act of 1934)
Japan: Financial instrument and exchange law.
Germany: Foreign Tax Act.
Taxation
M&A have follows the integrated global structure which aligns treasury goals and
objectives of the companies. M&A follows the flexible framework of international earnings,
future acquisitions, return to share holders and debt repayment. Whereas, accounting standards
of UK and USA depends on the shareholders rights.
Accounting differences
The accounting standards of the Germany are market oriented and based on true and fair
value of company. In contrast, japan is also following market based valuation into its accounting
standards which has impacted the valuation of cross-shareholdings in Japanese organisation.
Strategy
Further, the growth strategies in new industries, international market integration, and
financial factors, such as the use of share exchanges under conditions of burgeoning stock
market valuations in UK and US are almost same. Whereas, in Japanese and German company

are following the growth and expansion strategy to capture more and more market area for
foreign countries.
Accounting and funding
M&A enjoys low interests rates, positive response from lenders, banks and credit
markets, improvement in private equity capital reserves and corporate cash.
CONCLUSION
The report summarized that, merging and acquisition activities have a major contribution
in economic growth of United Kingdom, United States, Germany and Japan. Moreover, it
evaluates the development of the countries because of increasing enterprises in M&A field.
Further, the report evaluates the mandatory need in the fields which is harmonisation that is
documentation of activities carried by the firms. Hence, the report concluded, the benefits and
importance of Merger and acquisition for business in foreign countries.

REFERENCES
Books and journals
Brinckmann, J., Salomo, S. and Gemuenden, H.G., 2011. Financial Management Competence of
Founding Teams and Growth of New Technology‐Based Firms. Entrepreneurship
Theory and Practice. 35(2). pp.217-243.
Chen, H., and et.al., 2010. The role of international financial reporting standards in accounting
quality: Evidence from the European Union. Journal of International Financial
Management & Accounting. 21(3). pp.220-278.
Gaughan, P.A., 2010. Mergers, acquisitions, and corporate restructurings. John Wiley & Sons.
Giessner, S.R., Ullrich, J. and van Dick, R., 2011. Social identity and corporate mergers. Social
and Personality Psychology Compass. 5(6). pp.333-345.
Nag, S.K., 2015. International Financial Reporting Standards-An Overview. International
Journal of Research in Finance and Marketing. 5(4). pp.34-43.
Pardo, C., and et.al., 2012. An ontology for the harmonization of multiple standards and models.
Computer Standards & Interfaces. 34(1). pp.48-59.
Serdar Dinc, I. and Erel, I., 2013. Economic nationalism in mergers and acquisitions. The
Journal of Finance. 68(6). pp.2471-2514.
Uddin, M. and Boateng, A., 2011. Explaining the trends in the UK cross-border mergers &
acquisitions: An analysis of macro-economic factors. International Business Review.
20(5). pp.547-556.