Verified Document

Competitive Strategies And Government Policies Essay

¶ … Competitive Strategies and Government Policies Merger of Publicis and Omnicom

The mergers are a risky yet profitable venture most companies consider today for the purpose of growth. In the airline industry, two biggest players are considering to merge in order to benefit from the workforce, market and competencies of each other. But the government regulations do not allow easily doing so. There are many hurdles in getting perfect match for merger and then to make it operational. Likewise, Publicis and Omnicom have merged becoming the biggest marketing agency in the world. The merger is global success since Publicis is based in France and Omnicom is an American organization and these companies bring $23 billion revenue and 50% networks of industry at single platform (O'Leary, 2013). These two companies serve companies from different corners of the world. The clients include Coca Cola, Master Card, and Visa. The challenges of the merger include integration of data of the companies, maintaining workforce and making use of complementary skills of the workforce, avoiding cultural conflicts etc. It may involve huge costs as well as require management skills and determination of the top executives (Turner, 2013). The management of the organizations feels that there might be similar events in the industry since the other market players see that the merger of two big companies is so successful that the remaining small companies will not be able to attract big clients. So, this event of the merger of companies can trigger further mergers in the industry that has several advantages as well as disadvantages.

Pricing and Profits

The mergers have several disadvantages for the industry. The merger of big companies result in "too big to fail" companies that are hard to race with. In the free economies and the capitalistic systems, the big players can play the role of a dominant company and may derive other mergers that end up in an industry where there are only a few very big companies which is against the concept of perfect competition...

Thus, the big clients in financial, airline, information technology, drinks, FMCG and automobile industries will hire the biggest advertising companies which will decline the business of small organizations and advertising agencies. Thus the merged company i.e. Publicis and Omnicom will be able to set and dictate prices in the industry. Also the profits of the industry might concentrate and rest with the big companies.
Type of Merger

The mergers can be horizontal where same level organizations merge or vertical where a company merges with supplier or distributer of conglomerate where different companies form different levels of business combine. Since the advertising industry is mainly service industry and there is very little dependence on raw material, the suppliers have a little role to play as compared to the dominant role of suppliers and distributors in automobile and retail business. Thus this is a horizontal merger in which two companies at same level of business have merged.

Current and expected government policies

The governments in many countries including America and France oppose development of oligopolies and thus demand fulfilling tough criteria as well as pay heavy charges so that the perfect competition is not affected in the market. The companies cannot occupy a much higher share in the market than the sum of two (Perry and Porter, 1985). Besides that, since the merger of two advertising companies is a global example, the governments may be a little more concerned and may tighten the requirements for mergers to prevent monopolizing the industry.

Taxes:

The corporations are taxed at two different levels that is organizational and individual level. The mergers are highly taxed at the time of combining organizational assets.

Global competition

It is quite evident that the impact of a merger between two globally ranking firms will be long lasting on…

Sources used in this document:
References

O'Leary, N., (2013), "Publicis and Omnicom Take Merger Road Show to London Analysts,"

Retrieved from: http://www.adweek.com/news/advertising-branding/publicis-and-omnicom-take-merger-road-show-london-analysts-151545

Perry, M.K. And Porter, R.H., (1985), "Oligopoly and the Incentive for Horizontal Merger," The

American Economic Review, 75(1), 219-227
(2013), Retrieved from: http://1blog.com/these-are-biggest-client-conflicts-created-by-the-most-massive-ad-company-merger-ever/
Retrieved from: http://blogs.wsj.com/moneybeat/search/publicis/?s=publicis
Cite this Document:
Copy Bibliography Citation

Related Documents

Competitive Strategies and Government Policies Carnival Cruise
Words: 1882 Length: 6 Document Type: Essay

Competitive Strategies and Government Policies Carnival Cruise Line: Carnival Cruise Line is a British-American cruise line headquartered in Florida, United States. It is one of the top ten cruise lines owned by Carnival Corporation & plc -- the largest operator of cruise ships in the world. Carnival Cruise line has the largest fleet size of 24 ships among all other subsidiaries of the Carnival Corporation. These ships provide deep sea cruising as

Strategy and Policies of the
Words: 4060 Length: 11 Document Type: Essay

This is important, because physics has allowed the combustible engine to provide the world with a cost effective solution for traveling long distance. Sadly, the electric car can only be used for short to medium distances. Then, there is another potential problem that could be developing with the lithium batteries that are used, where China control 95% to 100% the resources for these batteries (lithium). This is problematic because

Government Policies and Solar Power
Words: 2777 Length: 8 Document Type: Research Paper

It now applies to a wide range of generation technologies, including but not limited to solar thermal electric, photovoltaics, wind, and geothermal electric (DSIRE). For solar systems, the credit is "equal to 30% of expenditures, with no maximum credit. Eligible solar energy property includes equipment that uses solar energy to generate electricity…" (DSIRE). For small wind turbines, the credit is "equal to 30% of expenditures, with no maximum credit"

International Business Competitive Strategy Is the Bedrock
Words: 6174 Length: 18 Document Type: Term Paper

International Business Competitive strategy is the bedrock on which companies base business decisions to reach their targets and achieve profitability. Formulating and implementing strategies in international business is much more complicated and difficult task than doing so in home or familiar markets. Competitive strategy deals with the development of abilities by a firm to keep ahead of competitors in the fields in which it operates. Firms develop competitive edge in global

Tourist Development Strategy and Policy
Words: 3276 Length: 12 Document Type: Term Paper

Over 90% of Qatari citizens live in Doha, the capital. (State of Qatar, 2007) The "Big" Picture Figure 3: Map Qatar, Middle East - From a Distance (Map of Qatar, 2007) Figure 4: Qatar, Middle East - From a Star's Distance (Map of Qatar, 2007) Figure 5: Qatar, Middle East - View from a Satellite (Map of Qatar, 2007) Figure 6: Qatar, Middle East - From the Clouds (Map of Qatar, 2007) Figure 7: Qatar,

Company's Competitive Strategy and Value
Words: 3492 Length: 12 Document Type: Thesis

Product Returns is a third process area that Imperial Tobacco has to contend with, specifically from its distributors and channel partners. Typically Tobacco products are returned if a specific lot of tobacco or packaging has been found to be defective. There have at times been product recalls as defined by governments. A third reason for product returns is when a product has been discontinued and Imperial is not willing to

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now