Motives Behind Mergers Acquisitions and Downsizing

¶ … Mergers, Acquisitions and Downsizing

How does the role of a company's motivation determine the selection of a business initiative of a merger, acquisition or a downsizing? Your answer should summarize the role of the economies of scale and be adapted to include a corporate example (current or past employer should be utilized).

The current employer that will be examined is how various services are delivered to the public from local government officials. During this process, there was a focus on downsizing various departments and merging others together. This is illustrating how administrators are concentrating on reducing costs and increasing the quality of services being provided. In most cases, this means that many programs are reorganized and the role of government (as a part of process) is brought into question. As the traditions of providing various services and expanding the number of programs, has not effectively addressed the underlying challenges impacting municipalities. Instead, this has increased the total amounts of expenditures and resulted in many regions experiencing a declining tax base. This is problematic, as these issues have forced many governments to deal with long-term fiscal issues. (DiNapolli, 2009) (Preed, 2007) (Stanley, 1992)

To address these challenges, a larger number of entities are using economies of scale to change their role and redefine the kinds of services that are delivered. This is when there is a focus on reducing the costs of producing different products and services. In the past, these ideas have been utilized to have a positive impact on private organizations. As they have been able to decrease their expenses and increase productivity. Over the course of time, this helps to make these kinds of organizations more efficient. At the same time, they are providing the public with better quality products and services at lower prices. This creates a win -- win situation for everyone by addressing these critical needs. (DiNapolli, 2009) (Preed, 2007) (Stanley, 1992)

Evidence of this can be seen with observations from Aaker (2001) who said, "What matters isn't the label; it's what's included. The idea behind the cost of goods sold is to measure all the costs directly associated with making the product or delivering the services -- the materials, the labor and so on." (Aaker, 2001, pg. 55) These ideas are showing how the public is concerned about the quality of products or services to address their underlying needs. Those firms that are able to achieve these objectives will decrease their costs as much as possible. As a result, various kinds of nonprofit and governmental entities have been following this example in order to realize greater benefits for everyone. (DiNapolli, 2009) (Preed, 2007) (Stanley, 1992)

Different governments are incorporating these ideas into the services they are providing to stakeholders. The way that this is achieved is administrators have been seeking out new strategies for reducing their underlying costs. At the heart of this approach, is outsourcing select functions to third party contractors and forming strategic alliances with various nonprofits. (DiNapolli, 2009) (Preed, 2007) (Stanley, 1992)

For example, working in local government, these ideas were used to help redefine the role that actuaries were playing in addressing the needs of the general public. At the same time, these kinds of agreements and alliances reduced the costs for these services. This meant that the tax base was able to remain consistent during a time when different entities were facing serve financial strains (from economic challenges). (DiNapolli, 2009) (Preed, 2007) (Stanley, 1992)

In the future, this helped to attract more firms who view the community as business friendly (due to the lower tax base). This makes it easier for the region to be able to adjust with changes from an employer leaving. As the local government can utilize these tools to effectively promote themselves to firms who are looking to expand. When this happens, the local government will not have as many fiscal challenges in contrast with other municipalities. (DiNapolli, 2009) (Preed, 2007) (Stanley, 1992)

However, it is important to note that these kinds of changes must be introduced gradually. The way that this will occur is through having specific services delivered by third parties on a probationary basis. This will take place with these organizations taking over select responsibilities in areas that do not have an immediate impact on stakeholders. During this process, administrators will work with and monitor the actions of these groups. (DiNapolli, 2009) (Preed, 2007) (Stanley, 1992)