Managerial Economics Essay
Added on 2020-07-23
10 Pages3056 Words61 Views
MANAGERIALECONOMICS
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Question 1........................................................................................................................................1Why and when merger took place?.............................................................................................1Economic factors have led to merger..........................................................................................2Things happened in merger and economics behind it.................................................................2Question 2........................................................................................................................................5Structural barriers........................................................................................................................5Non structural barriers.................................................................................................................5CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8
INTRODUCTIONM&A is done by most of giant firms to increase their business. In current report case ofVodafone and Mannesmann is discussed in detail and reason behind M&D deal and economicsbehind it is identified. In second part of the report, different structural and non structural barriersin respect to entry of new firms in market are discussed in detail. In this way reseaerch iscompleted.Question 1Why and when merger took place?Merger took place in year 2000 when Vodafone finally after long round of negotiationstakeover Mannesmann. There were numeber or reasons behind it as Vodafone was one of thelaregest operator in UK an wants to increase its operations consistently. Mannesman was intrying to gain position in the market from where it can give stiff challenge to giants. Mentionedfirm earlier was involved in manufacturing steel pipes but in past couple of years it successfullyexpand its business and enter in to telecommunication industry (Vodafone AirTouch, 2000).Since its inception in this new domain fast growth rate was observed as Klaus Esser was leadingorganization and fully committed towards achievement of objective where it wants to expandMannesmann business across Europe. Mentioned company was already at leading position in theGerman market and there was high growth prospects for the firm which would be seen to bemateralized in future as CEO was preparing aggreive expansion plan. Vodafone see this thing asbig for it because Mannesmann if would achieve success in its plan then it can be threat forformer firm and can beocme roadblock in achievemment of its objectives. Hence, in orderconsolidate position more strong in entire Europe Vodafone decide to aquire Mannesmann at anycost. Apart from this, there was second major reason behind acquisition and it was thatGerman company aquire cellular firm Orange and news comes in the market that relevant firmsoon become one of the largest mobile operator in the world (Vodafone AirTouch, 2000). Allthese things make it clear few things and one of them is that firm was focusing on multipledimensions and it was eager to expand its business not only in telecomunication networking butalso in cellular services. There was sound infrastructure and good growh prosepects associatedwith the firm. Expansion of Mannesmann would suerly create threat for Vodafone and due to thisreason it decide to aquire Mannesman even by paying very high amount to relevant entities.1 | P a g e
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