Question

Research a company that has had some consolidation with a foreign subsidiary and discuss whether that association was beneficial for both parties and the outcome.

Answer 1

A small business owner typically needs a diverse set of skills to succeed, including deep market knowledge, effective management of business operations and hard work. One way to increase sales and profits is through a process called business consolidation. This process is designed to lower overhead and production costs, create additional revenue streams, attract skilled managers and achieve economies of scale

Reduce Costs
The consolidation of business activities reduces operational redundancies and eliminates superfluous staff and administrative functions. As a result, operating and capital costs decline, which helps improve the bottom line. For example, airline mergers lead to the consolidation of maintenance facilities, which improves the utilization of both the facility square footage and the maintenance staff. During the consolidation process, business functions are frequently re-engineered and systems are deployed that make these functions even more efficient. In an airline merger, the acquisition of goods and services can be centralized, which helps the merged company adopt a corporate-wide pricing policy.

Increase Revenue
Businesses expand through either organic growth or acquisition. When a company buys another company, it might become sufficiently large to serve customers on a national or international basis. This type of organizational consolidation increases the size of a company's market, which in turn can lead to higher sales and profits. An increase in market size also provides an opportunity to expand a company's business line, which can lead to increased sales and profits as well

Attract Partnerships
Business consolidation is one means by which a company can become an industry leader. With greater size, the business can establish a regional or national brand and gain greater purchasing power. When a company buys out a rival company, it reduces its number of competitors. It also reduces the number of customers for industry suppliers. This in turn gives the merged company more negotiating power to get better deals with suppliers.

Increase Economies of Scale
A business consolidation leads to the elimination of duplicate assets, which equals financial savings. By reducing the number of facilities in a business, it can save money and operate more efficiently. This consolidation can also improve communication between business functions, such as production and marketing, and achieve savings by decreasing head count and consolidating systems and processes. For example, a jet engine manufacturer might close one under-utilized manufacturing plant and install additional production lines at another plant. By closing one plant, the company decreases its labor and overhead costs as well as its capital expenditures.