Micro Economics Essay

6986 Words28 Pages
Inorganic growth strategies: An empirical analysis of who benefits from them? Latha Chari Abstract Since 1991 Indian Industries have been increasingly exposed to both domestic and international competition. This has forced Indian corporate sector to restructure, reengineer to be competitive and deliver value to stakeholders. Relocation and re-distribution of economic power in the hands of BRIC (Brazil, Russia, India and China) drives home the point that India is firmly entrenched in the evolving multi-polar global businesses. Indian companies have adopted organic and inorganic strategies to enhance value for their shareholders. In developed nations like United States, it has been proved that inorganic value enhancement strategies like mergers, acquisitions have very high failure rates. Various financial journals and publications are full of news which relate to both the success and failure of these strategies. The objective of the paper is to ascertain whether mergers and acquisitions are good value enhancing strategies for acquirers or for the target company, in India. The first section of this paper, we deal with classifying and providing a theoretical framework of all inorganic value enhancing strategies. In the second section we have included a literature review of research papers that have dealt with success and failure of inorganic strategies world over. Using the data of a sample of Indian companies, we have analyzed whether acquisition is a value enhancing strategy, has benefited the acquirer or the target company, in section 3. The last section deals with conclusions and limitations of the study. 1 1 Introduction: Today, the business environment is rapidly changing with respect to competition, products, people, process of manufacture, markets, customers and technology is embedded in all these functions. It is not enough if companies keep pace with

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