WalMart Merger Assignment Example | Topics and Well Written Essays - 1750 words

WalMart Merger - fitting ExampleThe paper has been divided into cardinal briny parts the first part mainly relations with the Retail Industry, the major players, their production schemes, and their impact on the consumers and society overall. The second part deals with the advantages and disadvantages the bulletproofs might mother because of the merger. PART I INTRODUCTION Oligopoly is characterized as consisting of a small number of large sellers, being called the free-enterprise(a) Fringe, with a few mountainous firms dominating the replete(p) industrys production (Lipsey, 2004). These big firms, act as the trend-setters in terms of price and output, and be a major reflection of the entire Market. In this instance, the Retail market, is characterized by one big firm Wal-Mart, with smaller firms either adhering to an acquisition or a merger, for their benefit. For example, in the United Kingdom, the Big Five Banks Barclays, Lloyds TSB, Royal Bank of Scotland, HSBC and HBO S - dominate the Banking Sector. Similarly, there are many small departmental stores, selling retail products, but a dominant few, like Sainsbury, Asda and Tesco, pickings over the entire nation. The small firms, then, sometimes, find it internetable to merge, consolidate, co-operate or be purchased by the Big One. SALES, operations AND FIRMS IN THE MERGER According to Forbes Global 2000 list, Wal-Mart is the worlds 18th largest public corporation, and the worlds largest corporation when it comes to annual revenue ($421.849 billion), with its international operations accounting for 26.1 % of its total sales, and a gross profit margin of 24.7%, running chains of discounted departmental stores and warehouse stores. With a total of 8500 stores in 15 antithetic countries, with 55 different names, Wal-Mart extends its operations in nine different retail formats, including general merchandise, food and drugs, tops(p) Center, small markets, cash and carry stores, membership warehouse cl ubs, apparel stores, discount stores and restaurants (Holdings, 2011). VERTICAL INTEGRATION REASONS TO unify A lot of consolidation has been seen among retailers and retails chains, over the past couple of decades, with 40,788 mergers & acquisitions having been announced only between 1988 and 2010. The main reasons behind the consolidation of firms in the industry may be due to 1. Economies of Scale This refers to a world-shaking reducing in the fixed cost of the merging firms by the removal of duplicate or across-the-board operations 2. Economies of Scope Economies of scope exist due to the alteration of method of the distribution and the marketing of products. For instance, two homogeneous products may have been advertised in a similar way previously, but like a shot they are not 3. Vertical Integration This primarily means the merging of two or more firms from the same industry results in increasing profits and a larger consumer surplus than before, implying a decrease in t he deadweight loss. This is done by the firms deciding on a particular amount of output, and then cohesive to that output level 4. Investment benefits The merged firms have higher chances of receiving greater benefits when it comes to Investment, because of the name of the big firm attached to it. Sensing financial stability, the smaller firms, once a part of the big firm, are viewed as being stable, and thus attract a larger number of investors. There