Business Combination Research Paper Example | Topics and Well Written Essays - 1000 words

Business Combination - Research Paper ExampleThus they fiction petroleum products to a market which is characterized by some firms. Valero experiences a net egress of by 53.21 percent with net revenue $125987 while Marathon Corporation on the other hand has a growth rate of approximately 25.86 percent with a revenue of $78709. As per the financial data, it clearly shows that Valeros revenue almost doubles the endurance contest and of the same arrive by growth rate. With a $ 15 million in the good go out for the CEO to make investments, the company can acquire the services of the marathon to increase their productivity in the market (Hove, 2006).The company should acquire a firm which is in similar line of production as it would be lucky to integrate it with ease in the system as the employees can be retained or the existing workers will perform the tasks without difficulty saving the worry a lot of cash. This represents a form of diversification in the related fields. Diversi fication in the unrelated is usually complicated as the organization will have to expand every unit in the system so as to accommodate the parvenu venture. Labor will have to be increased, new units brought and the company missing out on the opportunity to use the economies of scale provided by the existing employees. This would increase the cost of production of the outputs which may result in the high prices making the corporation make losses since prices are determined by the market as the industry is quite competitive. Hence it would be single rational if the management invests in the same line of production since there would be minimum risks involved.By acquiring marathon corporations, there would various synergies that would military service the firms to maximize the profits. The two companies will have a reduced cost of production as there would be sharing of costs. This would make the organization to manufacture at relatively lower costs which will increase the units of o utput for the market. This will