Essay Title: 

Strategic Management

March 24, 2016 | Author: | Posted in management, mathematics and economics

strategic management

2006 Strategic Management

1 . Introduction

The maturity on communications , broadcasting and internet technologies has created a new way of seeing flows of information via many types of media . While in 1980s the common information media was only television and radio , in 1990s people starts witnessing the use of a personal computer , which connected to the Internet , as media to browse information that is scattered in small and large computers all over the world . In 2000s , the experience get intense as television can also perform as media to browse [banner_entry_middle]

information in the Internet in addition to its main function to display video and sound

The convergence of the technologies has driven media companies to integrate the functional benefits of separate electronic appliances into a single gadget or to merge different companies into a single entity through a merger and acquisition (M A

Concerning the attractive potential of becoming a powerful company , this exhibits the rationale of merger between America Online (AOL ) and Time Warner that happened few years ago . Each company represents different type media AOL was a well-known provider of online media while Time Warner was a traditional business that involves value chains and supply chains

2 . Merger Analysis

2 .1 Reasons of Merger between AOL and Time Warner

According to the Securities Data Company , the dollar value of U .S (M A in 1996 recorded a 27 percent increase to US 658 .8 billion from US 518 billion in 1995 . Basically , any merger aims at expanding an organization ‘s presence and becoming a multinational enterprise . The merger also opens new opportunities for the combined company to reduce costs of product development , to cut distribution costs or to strengthen companies ‘ presence in specific market

Vadim Kotelnikov (2006 ) in Mergers Acquisitions says there are four reasons why corporations make acquisitions as follows

To acquire complementary products , in to broaden the line

To acquire new markets or distribution channels

To acquire additional mass , and benefit from economies of scale

To acquire technology , to complement or replace the currently used one Concerning the merger between AOL and Time Warner , the objective of the merger is to perform a `synergy ‘ in operation , which is advantageous for many reasons . Basically , a synergy between two separate entities could exist when the combined company can take benefits of each opportunity not available to each unit on its own . For instances , the merger between AOL and Time Warner has provided the ability for the new company to perform cross-promotional marketing and bulk advertising buys in which Time Warner ‘s services , such as CNN .com can be advertised heavily on AOL ‘s internet service

In addition , the merger between AOL and Time Warner is also considered as a strategic move to bring the company into a new formation that challenges the news industry . In my opinion , the merger is inline with the objectives of mergers as usual

The merger between AOL and Time Warner could be considered as vertical merger since it is the combination… [banner_entry_footer]

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