¶ … CarMax and Amazon.com with an Emphasis on Mergers and Acquisitions
Mergers and acquisitions are the means of business expansion on the positive side, but the company can use these methods in order to ensure their long-term survival on the negative side too. Struggling companies can also request other organizations to acquire them because they cannot operate in isolation. The poor liquidity situation and unmanageable debt are leading causes of mostly completed acquisitions (Cartwright & Schoenberg, 2006). Companies create mergers in order to reap synergistic effects, and a marked difference between merger and acquisition is present because a former approach results in the death of all the companies involved in the deal. Merger results in the birth of a new company that can collectively use resources of all the parties. Acquisition is a sophisticated name for a buyout deal that results the company to become a subpart of another organization. A merger is a source of sharing organizational resources. Small organizations share their technological knowledge with larger ones in order to generate royalties. Experts define acquisition as a means of taking support from powerful players in the industry. The information technology industry is a most volatile one where practices and products are changing rapidly. Organizations operating in the information technology industry need constant growth in order to prevail in the global market (Hitt, Ireland, & Hoskisson, 2013). Furthermore, the challenge of acquiring new sales channels remains significant. Amazon.com is the name of the greatest online retailer in the world, and therefore, it needs to expand with speed (Palmatier, Miao, & Fang, 2007). Recently, the company acquired Audible.com in order to offer audio books and mp3 songs collection as well. The decision of acquisition served the company's goals well because Amazon.com became capable of selling online books, educational programs, and modern formats of books as well.
CarMax does not have any history of acquisitions and mergers. CarMax is a website that supports dealing of vehicles in America. S&P has registered the company as a public organization, but the management did not feel the need to expand the company's operations with the help of applying frameworks of mergers and acquisitions. In general, mergers and acquisitions benefit all of the partners because stronger ones can attain economies of scale, and smaller ones have the satisfaction of having continual operations.
Amazon's Buyout of Audible.com
Amazon bought Audible.com because of a deal that had a value of 300 Million. Amazon had fulfilled its objective of acquiring new sales channels by completing the above-mentioned deal. Audible.com is the largest producer of online books in America. The featured deal was beneficial for both of the parties because Audible became eligible of getting technical and financial support from Amazon, and therefore, its ability of developing new products and services grew substantially. Amazon at the same time developed its competency to have a significant increment in terms of sales. With the passage of time, Amazon-Audible deal changed, and emerged as a joint venture.
Audible is a subsidiary of Amazon with separately managed setup. Don Katz, founder of the company retained control over the operations and in this way, Amazon's leadership created goodwill with their new partner. The parent company of Audible.com became a leading name in the industry of e-books, and audio books. Amazon.com is a sophisticated retailer and seller, but it does not produce products directly those are sellable in nature. The joint operations of Amazon and Audible have been successful because both of the companies benefited from it. Amazon gave Audible a platform to sell its products against modest fees. The companies have worked together, and sales of audio books improved by 60%. The Amazon generated 90 million in sales after buying Audible.com. According to CEO of Amazon, Jeff Bezo, the value of online media is increasing, and therefore they have entered the deal with their new partner in order to tilt the business in the light of new standards. He added that they can use any help in the process of strengthening the company's standing in the global market of online retailing. The successful deal between two online businesses revealed a deeper reality about Amazon's management and leadership style. The company delegated power to the ranks of Audible and Amazon did not interfere with the matters its partner, and offered them with its selling services. Amazon knows the art and science of selling, and Audible has the power to produce high quality audio products. Both of the competencies submerged in order to create memorable...
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