Regulation of Mergers
Government regulation of mergers and expansion in the smartphone operating systems market primarily protects consumers and encourages free market competition. There are antitrust laws that protect wireless consumers and promote competition against monopolistic practices.
Simply put government regulation is needed to allow more competitors to enter the market. Therefore offering consumers more innovative smartphone operating system choices and options.
Another advantage of regulation is to ensure pricing of products is not overly burdensome to consumers or generating an unreasonable profit for the corporations involved.
Mergers should not unfairly take advantage of consumers or force them to use their products or services due to dominating by monopolistic strategies.
Intervention of Government in Mergers
The rational of the Department of Justice overseeing regulations concerning mergers of corporations is to ensure free or open market competition (Stewart, 2011). This allows multiple software companies to develop new technological products that differentiate smartphones from one another. Thereby giving consumers multiple pricing options and the ability to choose the features and services they want.
The first step is to apply the Herfindahl Hirschman Index (HHI), a mathematic formula used to determine the effect of a merger on competition (Stewart, 2011).
This formula has been applied to potential merging corporations since 1982 in order to measure the effect on market competition. The results are a guideline based on a scale of up to 10,000 points. The high end being an indicator of a perfect monopoly (Stewart, 2011). Under President Bush the median score was 1,800 and above which meant that the industry was fairly concentrated. If the merger added 100 points then the industry would reach an anti-competitive level. However, under President Obama the median score was raised to 2,500 and the merger qualifier raised to 200 points (Stewart, 2011). This increase in the HHI makes it slightly easier for a merger to pass the qualifier.
Expanding Markets and Alternate Strategies
Alternative strategies based on threats to the industry should be considered in order to expand market reach.
Horizontal mergers allows two competitors say Google Android and Apple to join selected assets and consolidate operations (West and Mace,...
International mergers and takeover processes are positively influenced by efficient control by the parent country which may lead to the formation of a direct link between protection of investors and a companies' access to debt financing (La Porta et al., 1998 as cited in Martynova and Renneboog, 2008). Martynova and Renneboog in the year 2007 explained that debt financing is directly related to merger and acquisitions across the border
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One specific phase that the author uses that can be applied to RBS is that innovations may force banks into decisions that are micro-functional, but macro-dysfunctional. In the case of RBS, leadership focus on reductionist metrics that offered increases in efficiencies in certain business functions, however by focusing on micro-functional areas of improvement the organization lost perspective on the macro benefits or losses incurred by a more comprehensive analysis.
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