Mergers and Acquisitions

Mergers and Acquisitions

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Mergers and Acquisitions

Example 1

            One of the reasons the drug maker would want to stymie generic competition is for profit basis. When the generic developers of the drugs introduce the variants, there is a hundred percent chance that the share of market will be affected, thereby losing millions to competition. In addition, the best reaction attributed is cost. The amount taken into investment concerns on the drugs has to be recovered in the process and hence, entry of the generic ones causes limited ability to recoup the finances. By stymieing, the manufacturers have an added period to regain the amounts.

             There are different legal barriers that exist in the market entry of drug makers. Research and development is covered by the concerns of patents. The creation, prosecution, and protection of the patents have to be covered through costs in order to maintain the developers’ originality and investment in the process. Marketing streams are also part of the legal barriers in terms of agreements with respective stakeholders in the entry, utility, and use of the drugs within the market (Andenaes and Andersen, 2011). For example, agreements have to be legally binding on the utilities of the drugs with doctors, pharmaceuticals, and hospitals for the promotion of the respective medicines.

            Possible ethical dilemmas in the example of the drug case involve the trade agreements and relevant costs. Trade agreements are covered by the provision of the Sherman Antitrust Act, which spells the requirement for each party. Divisions expected can be for the right reasons on development of the drugs but hampered in their delivery. Finklestein and Cooper (2010) state that ethical dilemmas on the cost associated include the direct refusal to compete in the market. The buyers can opt to miss the unfair agreement and end up losing the financial investment altogether.  

Example 2

            Consumer advocates have raised concerns over the merger possibilities involving the two major telecommunications companies especially on the potential effects to the consumers. It limits the abilities of the options available for consumer preferences. It creates a gap of monopoly towards the service industry, as the consumers have to use the essential means of communication (Hunter, 2012). The existing options will have it harder to compete or even operate when the economies of scale have been tipped by the merger. The smaller companies will only be phased out with the little ability.  

            Other than pricing, some of the pitfalls that consumers will have to deal with when two major telecommunication companies merge include product base, quality, and options in the market. Once the companies merge, smaller ones will not have equal footing in competing for consumers and therefore, the dilution of products will be evident. Apart from the higher prices in services and products, options will not be available in order to transcend the spending ability of the consumers. Fewer choices lower the quality of competition as monopoly is sought, to the detriment of the industry. 

            Some of the possible ethical dilemmas in the merger of two major telecommunication companies would be customer dissatisfaction and missing the financial investment or opportunity. In the customer dissatisfaction, the requirement to face the pricing and length of the determined services would be out of reach. They will have to comply, as there are no options. As for the financial investment, it targets the agreement between the two companies in the merger (Ferreira, 2011). Any unfair terms would see either of them lose the financial investment opportunity with the available consumer base.    

References:

Andenaes, M. T., & Andersen, C. B. (2011). Theory and practice of harmonization. Cheltenham, UK: Edward Elgar.

Ferreira, M. (2011). Mergers & Acquisitions Research. Global Advantage Journals, 3, 1-11.

Finkelstein, S., & Cooper, C. L. (2010). Advances in mergers and acquisitions. United Kingdom: Emerald.

Hunter, M. (2012). Opportunity, strategy and entrepreneurship: A meta-theory. New York: Nova Science.