Effect of Business Merging to the Society (Essay Sample)

INSTITUTION AFFILIATED
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NAME
PROFESSORS’ NAME
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History of the Firms
Lewis Tappan created the Mercantile Agency in 1841 that established a network of correspondent that would then function as a source of consistent, reliable, and objective credit information. Lewis then in order to allow expansion turns the business to a former clerk Benjamin Douglass who then capitalized on the improved communication and transportation of that time thus expanding the agency. In 1859 Douglass out to Robert Graham Dun who then changed the firm’s name to R.G. Dun and Company. A strong competitor John M. Bradstreet Company was founded in Cincinnati, Ohio. Bradstreet organized and popularized the use of credit rating with publication of the first book of commercial ratings. In 1930’s, the grave effect of rivalry and economic depression on both companies could not be ignored. Dun’s CEO Arthur Whiteside engineered a merger, the merging was then successful (Dun and Brandstreet,2007)
The competitive environment in the industry
The net effect of the Dun and Bradstreet merger was the increase in the firms assets base and the productivity capacity. From the point of view of the investor-acquirer, mergers will respond similarly to external incentives to invest(Teece, 1980). This documents the expansionary motive for mergers, by examining the determinants of the corporate mergers to invest. The expansionary motive of the merger will then lead to increase the lateral size of the industry and also increase in the services provided this leads to productive efficiency. The company is consistently expanding the size and improving the quality of its global database. Currently the global database covers more than240 million business worldwide (John G, 1994). The financial statement of Dun and Bradsheet from the period 2011-2014, 2011 total net income was $260.30 million, 2012 $295.50 million, 2013 $258.50 and 2014 $294.40 million. Dun and Bradstreet has offices in five continents namely South America, Australia, Asia and Europe. The company has its core office locations in Canada, United States, Ireland, Netherlands, Taiwan, Hong Kong, Brazil, and Australia (Ravenscraft, 1987)
Effects of merges on Consumers
Prices
The elimination of at least one competitors allows the remaining firms to implement a coordinated price increases. However if the merged entity passes on cost saving this may then lead to a reduction in prices ( Gordon, 1995)
Quality
The merger may improve the quality of good or services that is being produced and as a result this may benefit the consumers. For instance the merger of two software companies may result to the production of quality software products
Variety
Merger may result to an increase or decrease in the choices that are available to the consumers. For instance the merger of two airpline can greatly reduce the choice options for the consumers.
Effect of Business merging to the Society
Mergers have different effects on the society at larger. There are certain mergers that provide positive externalities while there are certain firma that provide negative externalities. For instance the merge of two firms may led to growth of the two firms and as a result this may lead to creation of employment. While there are also certain mergers that result in decrease in employment.(Storper, 1992)