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Vodafone & Mannesmann and Amazon & Netflix Mergers Analysis Report (Assessment)

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Updated: Sep 8th, 2021

Introduction

The significance of creating a merger has grown exponentially with the rise in the globalization movement. Facing a range of major threats in the global economy, companies require the support of partner organizations to increase the extent of their competitiveness and minimize risks associated with economic and financial challenges. For this purpose, the use of a merger should be deemed as a viable solution.

In this paper, the phenomenon of a merger as an economic concept will be scrutinized. Specifically, the concept of a merger will be defined, followed by an example of a successful merger performed in the global economy recently. Afterward, drawing from the example mentioned above, as well as exploring the concept of a merger using scholarly sources, key factors that make a merger successful will be identified. Finally, a hypothetical merger between two well-established organizations operating in the global market will be considered as a possibility, supported by detailed arguments that prove the reasonability of the described hypothetical merger.

Successful Merger

As a phenomenon, a merger is far from being an innovative solution, yet the rules for performing it successfully have not been crystallized into a final set of guidelines yet. According to Chathuranga (2015), a merger is a “combination of two or more firms in which the liabilities and the assets of the selling companies are mainly absorbed by the buying company” (p. 7). However, the phenomenon of a merger has recently been expanded into the concept of the companies involved in a merger sharing their controlling powers more charitably. Overall, the notion of a merger seems to have become significantly looser with time due to the shift in power dynamics between organizations and the need to explore innovative approaches toward managing transactions within a merger (Zhang et al., 2015). The observed trend can be described as fairly positive since it opens new opportunities for challenging the status quo in the global market and implement innovative managerial solutions.

When seeking the examples of a successfully performed merger, one may bring up the case of Vodafone and Mannesmann (Al Suliman, 2015). Due to the high economic potential that both organizations had at the time, coupled with the compatibility of their risk management approaches and available resources, the merger turned out to be a stupendous triumph for both parties involved. By the time when the merger took place, Vodafone had gained the attention of a vast number of people, attracting highly diverse buyers (Al Suliman, 2015). Pioneering in telecommunications with its cutting-edge technology, Vodafone has managed to build quite a reputation for itself (Al Suliman, 2015). Mannesmann, in turn, had built a reputation as a tube manufacturer before the merger (Al Suliman, 2015). Therefore, both companies had enough resources to offer each other in the process of merging.

Factors Contributing to Success of Merger

In hindsight, the evidence supporting the success of the merger was present from the very beginning, with each of the organizations having a plethora of resources to share and provide to its partner. Indeed, the collaboration of Vodafone and Mannesmann is a perfect example of a successful merger, given the circumstances under which the agreement took place. For example, diversification of companies’ portfolios can be considered an important factor since it provides more opportunities for firms to collaborate and join their efforts in producing a homogenous service (Friedman, Carmeli, Tishler, & Shimizu, 2016).

In addition, having a projection which both organizations can work in order to rebrand themselves and gain the following of a larger audience can also be considered an important contributing factor. As the example of Vodafone and Mannesmann has shown, creating a brand product allows companies to cement their new image in the global market and focus on targeting new audiences, expanding the range of their influence, and seeking out new opportunities.

The necessity to expand into a larger market, preferably the global economy, should also be perceived as an important contributing factor that defines the success of a merger, in the case of Vodafone and Mannesmann, the formerly required representation in the German economy setting, which the latter could provide (Al Suliman, 2015). Thus, the described three factors typically represent the conditions under which a merger is likely to produce the desired effect.

Hypothesized Merger

Although the idea of a merger might seem rather accessible and sensible for any organization that enters a global economic environment, it is also fraught with multiple challenges. Thus, using a merger as the means of advancing any company in a particular market would be a mistake. However, some companies could consider merging in order to gain more influence. For example, a merger between Amazon and Netflix is a feasible merger given the recent need for the latter to gain influence among a wider range of customers. Since both cater to predominantly American audiences yet attempts to appeal to different cultures, the merger is likely to lead to an improvement in the companies’ performance. In addition, the merger will help to resolve the financial issues that both companies currently experience, with Netflix lacking new buyers and Amazon being in need of an improved e-commerce framework (Angwin, Mellahi, Gomes, & Peter, 2016). Given that both companies operate in the digital market, the merger will be performed seamlessly and allow both Amazon and Netflix to integrate changes into their framework immediately.

References

Al Suliman, M. H. (2015). In mergers and acquisitions-IT: Results of the absence of CIO in ex-ante planning and the absence of key IT staff in ex-post integration. Journal of Management Information Systems & E-Commerce, 2(2), 1-10. Web.

Angwin, D. N., Mellahi, K., Gomes, E., & Peter, E. (2016). How communication approaches impact mergers and acquisitions outcomes. The International Journal of Human Resource Management, 27(20), 2370-2397. Web.

Chathuranga, D. (2015). Analysis of the impacts of Merger and Acquisition on business development in Telecommunication industry in India: Case study of Vodafone & Hutch (Acquisition) and Indus & Bharti Airtel (Merger). Munchen, Germany: GRIN Verlag.

Friedman, Y., Carmeli, A., Tishler, A., & Shimizu, K. (2016). Untangling micro-behavioral sources of failure in mergers and acquisitions: a theoretical integration and extension. The International Journal of Human Resource Management, 27(20), 2339-2369. Web.

Zhang, J., Ahammad, M. F., Tarba, S., Cooper, C. L., Glaister, K. W., & Wang, J. (2015). The effect of leadership style on talent retention during merger and acquisition integration: Evidence from China. The International Journal of Human Resource Management, 26(7), 1021-1050. Web.

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IvyPanda. "Vodafone & Mannesmann and Amazon & Netflix Mergers Analysis." September 8, 2021. https://ivypanda.com/essays/vodafone-amp-mannesmann-and-amazon-amp-netflix-mergers-analysis/.

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IvyPanda. 2021. "Vodafone & Mannesmann and Amazon & Netflix Mergers Analysis." September 8, 2021. https://ivypanda.com/essays/vodafone-amp-mannesmann-and-amazon-amp-netflix-mergers-analysis/.

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IvyPanda. (2021) 'Vodafone & Mannesmann and Amazon & Netflix Mergers Analysis'. 8 September.

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