Comparing and Contrast the Chemical Disasters at Bhopal

In today’s modern society, as many countries have been developing very fast, the technologies are reaching high standards of level, for example, the high qualities weed killers and the liquid cleaner. However, as the big invention occurring, the more and more mistakes will be going on, because some technologies, such as weed killer and liquid cleaners are chemicals. With no doubt, chemicals are really harmful for human beings. As people all know that, toxic chemicals are used in the industries, which have to be safely covered and provide very serious use instruction, such as wearing long gloves, safety shoes or masks.However, even the chemicals are under several instructions, but people may have made some serious mistakes which caused a huge damage and large amount of death to people. In this essay, I am going to write about the two disasters that caused a lot of injures by the explosion of poisonous chemicals, which located in India and Italy. According to Shrivastava (1996), on the night of 2/3 December 1984, an enormous accident happened in Bhopal, India, the highly poisonous and unbalanced chemical gas was escaped from the factory and continue to spread over the city which caused by the lack of the attention and care ness.Apart from that, Marchi and Funtowicz and Ravetz (1996) states that in the 10 July 1976, a powerful weed killer which named 245T was exploded in a small town which located near Milan, the 245T contained the most powerful and toxic chemicals, it can kill any live stocks and human very easily, the accident was caused by man made unmanaged instructions and the toxic dioxin was spilled to the atmosphere. Between these two accidents, they were all caused by people not nature. Unlikely, these two took places in different period and locations. Luke (1984) believed that the Bhopal accident was caused by the ignorance of experts.This factory was built in a crowded population environment, and because they against the rule of US safety standar d, too much amount of MIC was contained in the store and due to the huge quantity of it, the tank was not strong enough to hold the chemical, as the safety manual required at o degree, the safety system was broken down and water leaking in to it and set off the reaction. The chemicals were released into the air. Bhopal and Seveso were similar in that, according to Marchi & Funtowicz & Ravetz (1996) because of the unmanaged instructions and the ignorance, the disasters had a substantial damage and effect.According to Gail (2003), the Indian Government made a great effort in trying to manipulate the situation, yet all their attempts failed to provide the sufficient supply of medical services and food supply. There was not enough place for all the injured people to get medical treatment. That is because of the large number of injuries and the lack of doctors and medicine. Added to this, doctors at Bhopal had no idea of what kind of affection they were dealing with. Unfortunately, most people arrived at the hospital when it was too late, others died while waiting for their tern to see a doctor.Similar to Bhopal, Seveso suffered from lack of immediate responses and from ignorance of what exactly happened and what gases were released. Late decisions of evacuation and other responses were made, after the government first move of realizing and defining the accident and its possible consequences. B. De Marchi, S. Funtowicz, and J. Ravetz (1996), believe that Seveso had a better response than Bhopal, when a comparison between the two disasters were made. The Italian Government had more ability to absorb the affects in a shorter period of time.Unlike Bhopal, the process of recovery was reasonably good, due to the smaller affects, less damage and the high financial capability. There were compensations to victims, redeployment to people lost their jobs and there was some control on health long-term effects by monitoring them through a practical planned program. The main di fference between the effects of the accidents at Bhopal and Seveso is that many people died at Bhopal, whereas there was no any death cases reported in any article at Seveso. Death is considered a short-term effect. David (2002) believes they were roughly 7000 death cases at Bhopal.Baines (1993) mentioned other short-term effects at Bhopal such as difficulty and eye irritation. Similar symptoms appeared on Seveso survivors. Added to this, Shrivastava (1996) points out that people exposed to the released gas had some other short-effects such as cough, vomiting and chest pains. Long-term effects at Bhopal mainly were eye-sight weakness and high possibility of getting different kinds of Cancer. No long-term effects are in detail in â€Å"The long road to recovery†, (B. De Marchi, S. Funtowicz, and J. Ravetz 1996), neither in â€Å"Environmental Disasters†, (Baines 1993).These disasters had involved so many people, some were dead, and some were seriously injured . Also, so me people may have a great risk of getting the negative effect in their rest of lives. Due to these happened , there must be someone stand up and taking the responsibility for the huge damages and waste . In the disaster of Bhopal , the company which involved in was union Carbide , this company in USA was decreased their value of stocks by this failure. Furthermore, the Union Carbide in India has to accept to pay the funding for the patients and for the damages.Even though, the American company against to accept the legal responsibility which done by themselves. But, the local government and a lot of lawyers have sued the company, and they won the beat, so they got the funding for the injured families and hospitals. (â€Å"Bhopal India† DIS Covering Science). In contrast, according to â€Å"The long road to recovery†, by B. De Marchi, S. Funtowicz, and J. Ravetz (1996), the company of the Seveso had paid for the hospitals and government and any hurt, and they will be m ore concern about how to do the securities very carefully and reasonable.To avoiding these things happen again, every people and individuals have done something to prevent these kinds of disasters. First of all, according to the articles, local government had legislate some issues for caring the chemicals and warning people who were working with the chemicals must pay a lot of attentions on it. Also, the companies which producing the chemicals have to be located far from the high proportions of people in the neighborhoods and providing the knowledge for hospitals about how to cure the chemical disease.In conclusion, every one and society have to do something to avoid the disaster happen, because no one wants to die or wants to see other people dead. So, from these two disasters, People have studied how to prevent the disaster happen, and not just blame some one to take responsibility after the disasters. Even though these two serious events had happened years ago, it still named the one of the worst industrial disaster in the world, because many innocent people were died for it, and too many people had to injure the painful during their rest of lives. Essay Foundation 001Academic writing Comparing and contrast the chemical disasters at Bhopal in India and Seveso in Italy Student full name: Li Fei Lu (Lulu) Teacher: Chris Beard Essay length: 1190 words Reference A chronology of events at Seveso and Seveso adapted from B. De Marchi, S. Funtowicz, and J. Ravertz (1996) Seveso: A paradoxical classic in The long road discovery: Community responses to industrial disaster Edited by James K. Mitchell: United nations University Press. â€Å"Bhopal, India. † DISCovering Science. Online Edition. Gale, 2003. Reproduced in student Resource Center.Detroit: Gale, 2004. http://galenet. galegroup. com/servlet/SRC downloaded 26 November 2004 Cancer fears haunt survivors of Italian chemical disaster (1997) Cancer Weekly Plus Retrieved January 23, 2005, from the Expanded A cademic Database David, L (2002) Night of the Gas New Internationalist p34 (2) p9 Retrieved January 23, 2005, from the Expanded Academic Database Shrivastava, P (1996) Long-term recovery from the Bhopal crisis in The long road to recovery: Community responses to industrial disaster Edited by James K. Mitchell: United Nations University Press (adapted)

My Country Nepal Essay

Culture is embedded in the high peaks of Nepal, tradition flows with its rivers, art traverses through its valleys and religion lies in the heart of its people. Nepal, in short, is a country where art, culture and religion are a part of life of the inhabitants. People celebrate every moment with aroma, adding novelty to the traditions without affecting their essence. Art of Nepal The art and architecture of Nepal is deeply influenced by the religion. Unique craftsmanship can be found in temples, architecture, shrines, fountains and the design of religious objects. Art and religion is so deeply interlocked that it is impossible to separate the one from the other. All art forms express both Hindu and Buddhist iconography. Buddhism in Nepal Buddhism, the fourth largest religion all over the world, has strong roots in Nepal. Buddhism in Nepal dates from the birth of Siddhartha Gautama himself, therefore Buddhist influences are evident on the culture of Nepal. Nepal is the meeting point for Indian and Tibetan Buddhist traditions. Culture of Nepal The culture of Nepal is a assemblage of music, architecture, religion and literature. This mountain kingdom is multi-ethic and multi-lingual. The land is rich with unique cultural groups like Tharu,Yadav, Ahir, Newars and others. Food of Nepal Nepalese are great foodies and their food varieties are hot, spicy and nutritious. Newari and Thakali cuisines are the original taste of Nepal. Otherwise, Nepalese style of cooking has been influenced by Indian and Tibetan cooking. Dal Bhat tarkari is the staple food of Nepal. Meat curries and monos are the hot favorites among the tourists. Music of Nepal The rhythm, beats, bounce of Nepali traditional folk and classical music is spiritual enough to sooth you and entertaining enough to cheer you. Music is associated with every event in Nepal, then be it birth, marriage, festivals or national events. People of Nepal The people of Indo-Aryan community are the original inhabitants of Nepal. No wonder their descendents form the majority even now. Other major groups in Nepal are Gurungs and Magars who live mainly in the western region; Rais, Limbus and Sunwars who live in the eastern mid hills; Sherpas, Manangpas and Lopas who live near the mountains of Everest, Annapurna and Mustang respectively. Religion of Nepal Religion in Nepal is not only a system of social coherence based on certain rituals and beliefs, rather it is the binding force that ties the mountain kingdom together. Though Nepal is famous, as the world’s only Hindu Kingdom, equal respect is given to other religions as well. Buddhism is the second largest religion followed in Nepal, others being Tantrism, Islam and Christianity.

Video Game violence and the effects it has on children and Teens Essay

Video Game violence and the effects it has on children and Teens. Arguementative Paper discussing both sides and choosing a side to work with - Essay Example because even if the video game depicted violence (such as the Atari boxing game), the game was unrealistic and much tilted away from the real experience of the activity. ‘Boxing’ involved tiny â€Å"men† with square limbs who fought one another through a series of repetitive movements. (History, 2007) The world of present times has witnessed a change – for the worse. Our young ones have been enticed into a world of their own, one which is filled with terror and brutalities. To put it in a meticulous manner, the violence ‘imparted’ through the video games is just too much to handle and it is about time an end to this epidemic has to be discerned, for a better and prosperous tomorrow. Today for a gamer, video games resemble mere dots on a screen. By the late 1980’s and early 1990’s, personal computers were becoming much more powerful and with the introduction of the Nintendo Entertainment System, to some extent more realistic games started to make their mark. The characters in the games began to take on more â€Å"human† (physical) attributes; they actually looked human so to speak. In the light of an understanding which is reached between the ethical norms of video games and the people at the helm of affairs calling the shots, in recent years there have been many attempts to either censor video games or to limit access to them by children and young audiences. (Outlaw, 2007) Some have even linked violent video games to a greater propensity for murder. (CBS, 2005) Thus the difference between video game simulation and actual reality began its long progress to the current situation in which some of the most advanced video game systems, such as the Playstation 3, have high definition graphics that approach the point at which the characters being controlled by the gamer could be mistaken for real human beings in a film. As video games developed during the 1970’s and 80’s and then literally exploded in the 1990’s, different genres of video games

Tax Havens or Off Shore Financial Centre Research Proposal

Tax Havens or Off Shore Financial Centre - Research Proposal Example Economic federations typically struggle with the impact and desirability of tax policy diversity among member states. In particular, there is widespread concern that low-tax areas within a federation impose a fiscal externality on other countries and might attract investment that would otherwise locate in high-tax areas within the same regions. There are no reliable estimates of the magnitude of such diversion. Moreover, there has been little consideration of the possibility that the availability of low-tax jurisdictions facilitates foreign investment and economic activity in high-tax jurisdictions within the same regions. The latter possibility arises if affiliates in low-tax areas offer valuable intermediate goods and services to affiliates in high tax areas, if the ability to relocate taxable profits into low-tax jurisdictions improves the desirability of investing in high-tax areas, or if low-tax jurisdictions facilitate deferral of home country taxation of income earned in highe r-tax countries. High-tax countries might then benefit from tax diversity within regions, particularly if domestic governments would prefer to offer tax concessions to multi-jurisdictional businesses but are constrained not to do so by non-economic considerations. The study willThe study will analyzes the use of tax havens by multinational firms, and the effect of tax haven operations on economic activities in foreign countries other than tax havens. First, havens serve both to permit firms to relocate taxable income out high-tax jurisdictions and to facilitate deferral of repatriation taxes, suggesting that multinational parents with differing foreign tax rate exposures can benefit from haven activities. Second, the use of havens to relocate profits from high-tax jurisdictions is concentrated amongst larger tax haven countries, and the effect of these havens on activities in non-havens is most pronounced within regions. Third, there appears to be a complementary relationship between levels of multinational activity in havens and non-havens within a region, in that the establishment of tax haven operations is associated with expansions of activity outside of tax havens. Large multinationals, and those with the greatest reliance on foreign profits, are the most likely to operate in tax havens, suggesting that there are economies of scale in using havens to avoid taxes. Additionally, multinational parents with foreign (non-haven) operations concentrated in low tax countries, and those in technology-intensive industries characterized by extensive intra firm trade, are more likely than others to operate in tax havens. While the latter evidence is consistent with the intuition that multinationals employ haven affiliates to move taxable profits out of high-tax jurisdictions through intra firm trade and transfers of intangible property, the fact that

Critical Response to Article by Karl Hostetler Example | Topics and Well Written Essays - 750 words

Critical Response to by Karl Hostetler - Article Example This preamble marks the paper out as something a little different from the usual mainstream literature, and the impression of novelty is further enhanced by statements to the effect that researchers need to be playful and irreverent about serious subjects, and need to offend some people and annoy others. Hofstetler certainly practices what he preaches, since the article is full of provocative statements that could be taken as undermining the most fundamental values of academic research activity in most contemporary universities. The key problem that Hostetler identifies is a tendency for education researchers to focus on how their work is done, rather than undertaking a deep analysis of what they are doing and why they are doing it. Analogies such as debating which way to investigate the effectiveness of thumbscrews (Hostetler, 2005, 16-17) or herding lemmings toward the cliff (Hostetler, 2005, 17) or even sticking students with cattle prods (Hostetler, 2005, 19) are somewhat ludicro us, but the point important: too many researchers do not reflect enough about the fundamental aim of education and how far their work helps of hinders people who might be affected at some later date by the outcomes of this research. This line of argument flies in the face of standard notions of research which involve concepts such as objectivity and scientific rigor. Without the use of statistics and analytical methods, there would be very little beyond anecdotal evidence to inform policy making and practice. Hofstetler makes a valid point, but he overstates it with his deliberately â€Å"naughty† (Hofstetler, 2005, p. 17) examples, and he risks not being taken seriously by the vast majority of interested readers who are quite capable of combining scientific methods with careful ethical reflection, and see no necessary conflict between the two. A second problem that Hostetler describes is that of definitions, for example the very different ways that the conception of â€Å"c haracter† in school programs is constituted. Clearly there are quite fundamental variations in the ideologies that can underpin such notions, and Hostetler argues that this complexity is something that needs to be more fully taken into account by researchers. On this point the article is convincing, and certainly there is a case for more clarity in the way that abstract educational terminology is used, especially in government slogans and initiative titles. Hofstetler speaks up for the particular student experiences that are hidden within the data of randomized trial procedures, for example, suggesting that some of the generalizing theories that researchers produce may contain within them actual harm to individual students, since minority results tend to be lost in the bigger picture. Hofstetler questions whether the trade-off is justified, and this is a commendable observation because it highlights the dilemma of that section of the school population with behavioural or learn ing disorders who are so often lost in the drive for overall quality improvements. This article raises a number of valuable questions, and provides much material for reflection, but it is rather short on concrete answers to these questions. The conclusion which is reached is little more than a platitude expressing approval of the likes of Mahatma Gandhi, Mother Teresa and other moral giants of history and calling for a more

1.How are many-to-many relationships addressed in the relational model Essay

1.How are many-to-many relationships addressed in the relational model Provide a specific example other than the one in your textbook. Illustrate your answer using IE Crows Foot E-R diagrams - Essay Example In a relational model, the many-to-many relationship cannot directly be modeled. Such a relationship has to be converted into multiple one-to-many relationships first. Therefore, a many-to-many relationship is represented in the form of three tables in the model; the two original tables and a junction table. For the country-language example stated above, the relationship is formed as shown in the figure below. The many-to-many relationship between country and language is converted into two one-to-many relationships between the two entities and the the junction table. In the junction table (CountryLanguage), the unique primary key is a composite key (CountryID, LanguageID) which is formed by the two foreign keys which refer to the primary keys of the ‘country’ (CountryID) and ‘language’ (LanguageID)

Pleasant and Unpleasant Description of a Lunch Meal Essay - 2

Pleasant and Unpleasant Description of a Lunch Meal - Essay Example Negative paragraph - Truly disappointed with the atmosphere and service of the restaurant I could not imagine how the food was to taste. The service was slow, non-courteous and interruptive. Sitting on an Algonquin round table with white covers with stains on it. I was looking for a great experience and found this place lacking. The atmosphere is non-conducive no privacy and noisy. Not really worth the trouble services below average, prices much above average than the usual. Had a cheese omelet for lunch overcooked too much strong cheese on it? I could not bear it. A glass of wine here cost more than the lunch itself. "I am not looking forward to a return visit" (Catford, par 4). I used a great deal of word choice in each of my two descriptions. For example in my positive paragraph, I described the cheese omelet to be ‘tasty and delicious’ to a point that I hardly had enough. In the negative paragraph, I described cheese omelet to be ‘overcooked with too much chees e on them’. This means that I could not bear them anymore as they lacked taste. In my positive paragraph, I described the atmosphere to be ‘quiet and relaxing with good privacy’. This implies the place to be cool and conducive. In the negative paragraph, I described the atmosphere to be’ noisy and with no privacy’. This portrays the place to be unbearable and non-conducive. In my positive paragraph, I described the service to be ‘excellent’. This is further explained by the politeness, courteousness and non-interruptive nature of the service. In the negative paragraph, I describe the service to be’ slow, non-courteous and interruptive. This brings out the disappointment nature of the client.  Ã‚  

Why is global distribution more difficult than domestic distribution Essay

Why is global distribution more difficult than domestic distribution - Essay Example Distribution is one of the main parts of marketing. There are actually many kinds of distribution channels. This could include wholesalers, retailers, agents, direct sales, and the overseas and Internet distributors. When products are manufactured, they are normally shipped to the distributor. The distributor then puts them in the market in some ways for the customers or retailers to buy. According to Philip Kotler, another distinguished professor of International Marketing said that the distribution channels can have several levels (www.wikipedia.org). He stated that the simplest level, otherwise known as the "zero-level" channel, has no intermediaries engaged. The next level, called the "one-level" channel, presents one intermediary such as; for manufacturing goods a distributor and in consumer goods a retailer. It would be practical if these two levels are applied in small markets. However, in larger markets, the "second-level" is more appropriate to use. A wholesaler, for instance is largely used to expand the distribution to the great number of a few, neighborhood retailers. Global distribution is a type of distribution wherein products manufactured by a company are delivered to all the markets worldwide. Although there are some difficulties with which how products are distributed, the good thing is that a manufacturer has a bigger chance of getting more income. With global distribution, one must make sure of so many things such as what to use as mode of transportation, how to distribute them properly to all the distributors from around the world, what are the ways of communicating with the distributors, and how to make sure that the products are best kept safe until they are bought by customers. When a company decides to do a global distribution, its main priority is to successfully deliver its products to the consumers so that they win the confidence of their customers and even gain more prospective buyers in the process. If by no means, this becomes a success, the company would surely gain more profit thus, it shall also be good news to its customers. Not only are the customers going to get high-quality products, they may also be able to buy these products at lower prices in the future. What is domestic distribution While global distribution is concerned with the distribution of products in most parts of the world, domestic distribution is only concerned with the distribution of products within a certain range. For instance, if a company is based in one country, then with domestic distribution, the products are only distributed in that country. Moreover, if there are companies in some parts of the world, then those countries where these companies are located are only the ones being distributed by the products. One might say that this is a selfish thing to do, however, with domestic distribution, manufacturers are ensured immediately that their products are transported successfully and quickly. There are many reasons why most companies are into domestic distribution. For one thing, it requires fewer expenses. Another thing is that manufacturers can immediately know how their products are doing on the specific places they have distributed their products. Communication is very important when it co mes to business. if one's distributors are fewer

Chinas Many Faces Research Paper Example | Topics and Well Written Essays - 1500 words

Chinas Many Faces - Research Paper Example The writer is focusing on the racial segregation in China. She first compares it with other developed nations that have mixed races, but the racial factor is less regarded. The author has introduced China basing it on three factors as viewed by the Americans. These include political image, injustices waved on the people and violation of human rights, and the last dimension is the economical image. However, the author has decided to distant herself from this perspective and decided to bring about how China exists in many faces in terms of ethnical diversity.The major ethnical tribe in China is the Han, which constitute about 92% of the total population, the other 8% is for the minority tribes which are marginalized and are referred to as the Minzu (Blum, n.d,). The author has decided to raise concern on this minor ethnic group. In China people are not classified according to their physical appearance. This fact is supported by the anthologists, who state that physical appearance is no t a distinctive factor for human beings. This mode of approach is different from the one used in America, where identification of persons is based on appearance. Although some groups like the Yi and the Tibets are tall, they are not classified using this feature.Most of these minority groups live along the borders of China and the good thing is that they have not been neglected by the state. Rather, there is high concern and their residence along the border is beneficial to the country. The larger majority group is in the central area and is less conversant with the minority tribe, except in the regions where both the majority and the minority are found. Although the government had impacted a lot of efforts to ensure that the minority live in harmony, they still suffer from discrimination and abuse whenever they mingle with the Han (the majority tribe) in the urban regions. Due to their marginalization, they are poor, uncivilized, and uneducated, features that clearly distinguish them from the Han. As a result, according to the author, they have not been able to hold powerful positions in the government. The author further took an outlook on each of the minority groups, the largest of them being the Zhuang, who live in the Vietnam border. Others are the Hui ethnic group, who are well spread across the nation; they are Chinese speaking Muslims with Asian ancestry. The Hui community is also known for their constant clashes with the Han. The Mongolian community is another minor group, whose main economic activity is pastoralism. Wa are hunters and are the most primitive with a unique religious belief. The Han, who are the majority tribe, have diverse cultural practices and regional diversity. According to the author, China is divided in to two main regions; the north and the south; the north is where there is

Dance Research Paper Example | Topics and Well Written Essays - 1000 words

Dance - Research Paper Example The Egyptians danced ceremoniously as a law by the pharaoh while in Hindus believed dancing to be sacred, as they believed the creator a dancer who danced through seasons. In the ancient times, dancing was a form of worship for the early Christians. Most communities around the world danced in their own methods to show the mood that was in the atmosphere at the time. Dance evolves over time not only in the old days but even presently. Dancing varies with the type of music one is dancing to; romantic music tends to be slow and therefore should have a slow dance in order for the song to synchronize with the moves. I, however, prefer hip-hop dancing style, which involves popping, breaking and locking. It came into existence in the 1970’s with American crews popularizing it. The African-Americans have hip-hop as a culture and the dance has been a major identifier of the hip-hop culture. This from of dance has continually gained popularity all around the world due to the many shows commercializing it. In the eighty’s the show soul train premiered the hip-hop shows with many topnotch dancers participating. This trend has been continually pulling a crowd with and the films starring hip-hop dance styles including ‘step-up revolution’, which premiered in 2012. Hip-hop is a street dance and after its development, it had to have choreography in order to attract professionalism. This led to the birth of jazz music. Jazz has a cool dancing style, which is a cooler more relaxed version of the hip-hop street dance. The main distinguishing feature of hip-hop is that it depends mostly on improvisation from activities in the daily life. This dancing style started competitions between various hip-hop crews that known as dance battles. This dance is a way of entertainment for those who participate while to others it is a mode of livelihood and supporting themselves financially. Hip-hop involves three major styles the first is breaking

Ulysses And Tennysons Narrative Techniques Essay Example for Free

Ulysses And Tennysons Narrative Techniques Essay A: Look again at Ulysses and write about Tennysons narrative techniques In Ulysses, Tennyson presents the characteristics and attitudes of the eponymous central character through the dynamic form of the dramatic monologue. Through an adroit blending of literary techniques including those of structure, form and language, he seeks to clarify much of the mystique behind the mythological background of Ulysses, and reveal his persona of desire and heroism, alongside his undesirable traits of contemptuousness and hubristic pride. Throughout the poem, its form and structure allow Tennyson to reveal the character of Ulysses as he wishes him to be portrayed. Ulysses takes the form of the dramatic monologue, with Tennyson adapting the persona of his mythical character and using this form to reveal Ulysses character through his own words. This choice of form, combined with the structural use of unrhymed iambic pentameter, or blank verse, allows the poem to adopt a rhythm that is one of the closest imitators of human speech in verse. This makes the words that Tennyson, writes and Ulysses speaks take on a much more personal tone and a deeper meaning, fully disclosing his character and attitude in a way that a more artificial and structured form, for example the Spenserian, simply could not achieve. This effect is added to the by the extensive and contrasted uses of enjambment and caesurae, further imitating the depth and sincerity of speech rhythms, examples being The long day wanes: The slow moon climbs: the deep/Moans round with many voices, the listed pauses of wanes and climbs accentuating the slowness of the day and moon, and the enjambment through the deep stressing the true profundity of said deep. Furthermore, the extensive use of enjambment allies with the themes of endeavour to an excessive, almost unattainably foolish level, the line beyond the utmost bound of human thought exemplifying this, the poem runs on to the excess of Ulysses mind. Finally, the balance between lines and theme is also important- twenty-six lines go on the zeal of Ulysses previous explorations, and a further twenty-six go on his hopes, fears and attitudes for and towards the future. In contrast, he spends only eleven lines on his government and responsibility, and can spare just a single bitter indictment, aged wife for the ever faithful Penelope. This structure echoes the theme of responsibility against detachment- Ulysses excessive description of himself and the fleeting mention of his subjects illustrates his abdication of responsibility and the egocentric nature of his character, although this could be expected from a great classical king. It also exemplifies the excessiveness of Ulysses ambition, an excess that as the monologue progresses, can be seen to expand to encompass the boundaries of the foolish, the detrimental and the unattainable. However as in much of his verse, the main techniques that Tennyson uses to portray the ideas and themes of Ulysses character are those of imagery and language. This is especially evident through the contrasting imagery and rhythm of his description of his people against his adventures. The initial imagery of the poem, of an idle king, and the barren crags of his kingdom of Ithica, sets up a tone of monotony, suggesting Ulysses lack of passion or feeling for his duties and who unto his duties are performed. This takes another level with his description of his own people, Unequal laws unto a savage race, /That hoard, and sleep, and feed, and know not me. This description shows his contempt and lack of compassion for his people, as they are given a primitive, uneducated character as opposed to his own illustrious nature that is revealed throughout the poem. Furthermore, the lack of even a personal pronoun, that instead of who, for example, furthers the distance between him and his people, the idea of detachment being inverted in conjunction with that of responsibility. The final nature of this point is in its structure- the monosyllabic, strong and harsh beats of hoard, and sleep, and feed portray the tedium that Ulysses sees himself to rule. This contrasts directly with the opening descriptions of Ulysses own character, and his views and memories of his past adventures. He states, I cannot rest from travel: I will drink/Life to the lees, with the enjambment through the two lines portraying the excess and the metaphorical consumption of the lees that he strives to reach- the words could also suggest a curse however, with the extent such that as he consumes so much of life, he will inevitably take in the less desirable and the negative aspects. This consumption imagery is continued with For always roaming with a hungry heart/Much I have seen and known: cities of men/And manners, climates, councils, governments, the listed monosyllables now highlighting how far he has gone, rather than the extent of his contempt in the previous usage- this highlighting the contrasting areas of Ulysses character. Tennyson also employs the technique of antithesis to highlight the extent of Ulysses zeal for travel, and to show that this may reach the realms of foolishness, introducing the idea of the glamour of the unattainable. He states All times I have enjoyed/Greatly, have suffered greatly, both with those/That loved me, and alone, the use of antithesis in the images and the enjambment of the lines combining to highlights Ulysses powerful, almost excessive desire for travel- the excess continues through the drunk delight of battle, as he metaphorically revels in the bitterness of war to the extent that it is almost an addiction of the mind, to the extent that he has become a name. This can be interpreted in many ways- he could be known world over for his great journeys, or left simply as a shadow of a man, with just the superficiality of a name to back up his previous greatness, his involvement with a part of all that I have met. He then moves on to talk of celestial imagery filled with gravitas- Yet all experience is an arch wherethro/Gleams that untravlld world, whose margin fades/For ever and ever when I move, the enjambment of the lines highlighting the fading of the arch, as if he will never be satisfied, that the unattainable is the most desirable. This continues to the extent of To follow knowledge like a sinking star,/Beyond the utmost bound of human thought, the simile of celestial permanence being juxtaposed against its own sinking possibly revealing an acceptance of his plausibly misguided nature, and the exaggeration of utmost bound of human thought showing the foolishness in his wants, or simply highlighting the zealous heroism that runs throughout the poem. The tone of the imagery changes upon his reference to Telemachus- his son who will inherit his title of King. He describes him as blameless and decent not to fail, ending the reference to his son with He works his work, I mine. This shallow praise highlights a caring for his son, but more interestingly reintroduces his contempt and condescension towards his responsibilities- the final patronising and heavily accented I mine implying a scornful attitude towards the insignificant duties that he considers Kingship to be. These descriptive epithets of Telemachus, blameless, discerning, are spoken with an air of indifference bordering on malicious contempt, and become ironic through Ulysses own abdication of duty, though this does not have the effect of removing the depraved tone. The shortening of the lines when referring to Telemachus also relate to his attitude through structure- the zeal of the enjambment and fleshed out lines of his memories (and future plans further on in the monolo gue) is replaced by short, sharp lines, as if they are confined, as opposed to the free flowing, almost liberated verse of his memories. As the tone changes with thoughts of the future, he talks of his trusted mariners, those who have Toild, and wrought, and thought with me, the use of thought over fought being an interesting idea, possibly highlighting Ulysses earlier intellectual superiority over his savage race. He then moves on to talk of death and its consequences- Death closes all: but something ere the end,/Some work of noble note, may yet be done, his acceptance of deaths reality juxtaposed against his overwhelming zeal for exploration heightening the sense of purpose to a possible extent of foolishness. This is furthered by lines like It may be that we shall touch the Happy Isles/ One equal temper of heroic hearts/Made weak by time and fate, but strong in will, the idea of the acceptance of time and fate being more powerful than himself removing the previous hubristic tone that accompanied his words. The final line, To strive, to seek, to find and not to yield, exemplifies all that is revealed about Ulysses in the monologue- he will endure to the end, whether or not if it is the right, or even most rational course of action- his desire will conquer all, as much as he accepts that ultimately, death has the same enduring power. In conclusion, Tennyson uses many literary devices to portray the nature and attitudes of the mythological character of Ulysses. Through artfully blending technically adept poetic devices against the purest echo of human speech, he reveals the multi faceted character of Ulysses through his words, allowing the reader to fully understand the motives behind Ulysses seemingly limitless ambition, and the more sinister power that this ambition can hold to the detriment of the individual- a powerful message to society, as well as an exploration of one of the most remarkable characters of mythology. B: How far do you agree that the character of Ulysses is far from heroic? Tennysons dramatic monologue, Ulysses has been subjected to many literary interpretations since its first drafting in 1833, just weeks after the death of Tennysons closest friend, Hallam. One of the most debated points is on the nature of Ulysses character in relation to heroism, and whether he is the typically zealous and gallant mythological king, or a misguided and erroneously naà ¯Ã‚ ¿Ã‚ ½ve individual, who obsessively seeks the unattainable alongside a malicious contempt for those for who he should hold responsibility. Of course, the concept of heroism is not the only interpretation of the character of Ulysses that has been presented- ideas of responsibility and of social symbolism have also been put forward. Ever since its publishing, literary critics have understood Ulysses to have the underlying theme of heroism with it, and one of the secondary interpretations of this is that the character of Ulysses is in fact far from heroic. Chiasson states that Ulysses is a type of human being who held a set of ideas which . . . [are] destructive of the whole fabric of his society, suggesting that he was not in fact a hero, but someone with no comprehension of responsibility for his people, to the extent of selfish desire over support of his people. This is exemplified by the words of the poem, where he describes his people as a savage race, who hoard, and sleep, and feed, and know not me, highlighting the arrogance and superiority that he feels for over his people, and his subsequent contempt of lifes duties. This is furthered by the virile condescension of his description of his son, blameless and discerning, culminating in He works his work, I mine, highlighting the lack of heroism in his selfish actions of pursuing his aspirations of travel and excess, rather than the basic humanitarian needs of his people. A secondary idea about his lack of heroism is the air of misguided, unattainable desires that permeates some of the description of his character. His desire to To follow knowledge like a sinking star/Beyond the utmost bound of human thought has a sense of foolishness and excess upon reading it, as if it is too far, as if the heroism of the character is being overtaken by this cursed drunk delight- by convention a true hero would know when to stop, yet many of the greatest heroes have had their own hubristic, tragic flaws- perhaps this inability to recognise the boundaries of the gleaming arch is the one that can be put alongside Ulysses. As a tertiary interpretation of a lack of heroism, the closing parts of the poem can be seen to take on a tone of acceptance, almost a suicidal wish for release juxtaposed against the powerfully stirring rhetoric that undercuts the entire poem. Critics have agreed with this interpretation in the past- McCulloch describing the masterly, inspirational oratory of the closing lines of this poem with a recognition that what it encourages is reckless and suicidal, and Buckley has the interpretation that Ulysses does not have a complete will to go forward . . . but a determined retreat, a yearning, behind allegedly tired rhythms, to join the great Achilles (or possibly Arthur Hallam) in an Elysian retreat from lifes vexations. The context of the poem, written just after Hallams death certainly complements this interpretation, with the suggestion of Tennyson wishing to regress from the trials of life into a stupor in memory of his friend, and the words of the poem We may touch the Happy Isles and Death closes all also reflect this interpretation. Therefore the monologue does present a case for Ulysses character to be described as far from heroic, as if he is a symbol of naivety and endless greed, disinterested and indifferent to those who it is his duty to serve. However, alongside the presentation of Ulysses being far from heroic, the idea that Ulysses is indeed heroic immediately comes into focus. The images of consumption early in the poem could suggest a dangerous addiction to his adventure, but equally could suggest the admirable quality of taking life with both hands and throwing himself into experience, I will drink life to the lees and I have enjoyd/Greatly, and have suffered greatly, the juxtaposed ideas heightening the sense of depth that Ulysses goes to as he fully experiences life, and how his seemingly limitless ambition could, or should be an example to the readers, the savage race. This can be applied to much more of the poem- his views on life itself can be extended to heroism. He states that How dull it is to pause/As if to breathe were life, as if he is advocating the proactive approach to life, that pausing turns life to a mere existence- possibly echoing a secondary attitude of Tennyson to Hallams death, that he in fact mu st go on to continue is own life, instead of fading into a mere existence. Furthermore, much of the hyperbolic imagery of the monologue, the ideas of utmost bounds and gleaming arches could exemplify the glamour and beauty of heroism, which for many of the Victorian people was what Ulysses represented, a revolt against the bourgeoisie imposed laws of monontony, to simply hoard, and sleep, and feed. Finally, the acceptance of deaths implications and meaning in the closing lines of the poem could represent an intelligent heroism, as if Ulysses is a true hero, knowing that he cannot go on forever, not now that strength that in old days/Moved earth and heaven, his acceptance that there is a limit showing compassion for those who accompany him, and the idea of to strive, to seek, and not to yield adding to the never-say-die attitude of a hero. A secondary interpretation of the final line is its supposed irony underneath its resoluteness, made relevant to the similar attitude of Satan in Miltons Paradise Lost, never to submit or yield, going back to the perception of Ulysses as an anti-hero of his own resolve. James D. Kissane addresses this idea of a heroism in both sides of his character with desire to escape the wearisome present . . . ; but it is after all the counter-melody to the main theme, a negative emotion which an affirmative must transcend. Thus the mood of Ulysses is resolute though rooted in a sense of weakness as well as strength. As well as the ever-present idea of heroism, there are other interpretations of the dramatic monologue, and one of these is that of social responsibility, and its contrast with detachment from the vagaries of this and life, a similar theme to that presented in The Lady of Shalott. Ulysses is seen throughout the poem to want to escape from his own, enforced reality of Kingship, which is seen through his description of his land barren crags, and his people a savage race. This is in contrast with for example, the Lady of Shalott, who while not in true contact with life, has a suppressed desire to be within it- what Ulysses sees as life is the complete antithesis of what his life was set out to be, and hence this creates a juxtaposition of his personality and adventure against his feelings for his people. This is highlighted with the contrast of the imagery above with his glamorous desires and memories, examples including Gleams that untravlld world and Drunk delight of battle with my peers, accentuating Ulysses lack of concern for his people, but at the same time showing that despite his egotism, his desires for experience and life are ones that can be admired, and could even be seen by him to be his example to his people, that they should know him rather than know(ing) not me- it does also however suggest his inability to look back on and be satisfied with his lot- he can only look for more. A final interpretation of the poem is how it fits in with Tennysons own attitudes, and how he could be seen as symbolic to the Victorian people. The poem was of course written shortly after Hallams death, and as a result numerous conclusions can be drawn as to how the poem relates to Tennyson, and how he sees himself through the persona he adopts. The idea of the poem being an exercise in catharsis for Tennyson is certainly relevant, and one of the attitudes that can be portrayed is that of a desire to go forward from Hallams death, as Charles Tennyson put it in his 1849 biography, Tennyson expressed his realization of the need for going forward and braving the battle of life, in spite of the crushing blow of Arthurs [A. Henry Hallams] death- this is highlighted in Ulysses desire for exploration and experience, I will drink life to the lees. A second idea is that of Tennyson wishing to regress into a stupor of death, as the resigned and almost suicidal air of the closing lines of the monologue indicates, to an extent, an example being It may be that the gulfs will wash us down,/It may be that we will touch the Happy Isles, as if he wishes to join Hallam in the Happy comfort of death. As effectively explained by Thomson, the poem could be recognizably the product of internal debate, suggesting that Tennysons confusion over his own reaction to Hallams death comes out in the two sides to Ulysses attitude to adventure in the poem itself. Finally, the closing line, To strive, to seek, to find, and not to yield came to be a symbol for the people of the Victorian age, a symbol of proactivity and change that they could fully relate to, ironically in contrast to the receptors of Ulysses in the monologue itself, his savage race. In conclusion, I agree that the character of Ulysses is far from heroic. His contemptuousness in terms of his people, combined with the overly hubristic and foolish desires upon the greatest of knowledge shows him to be an egocentrically misguided character, despite some of the qualities portrayed by Tennyson seeming, and being admirable. However, on a grander scale I feel that he character of Ulysses is more driven by Tennysons feelings than the individual portrayed in Homers Odyssey and Dantes Inferno, with the character representing more than anything the deeply personal and highly conflicting emotion of grief.

Analysis of the Daimler-Benz and Chrysler Merger

Analysis of the Daimler-Benz and Chrysler Merger ABSTRACT Globalisation has changed the appearance of the economy. Especially in the 1990s firms expanded into new markets to operate more global and to develop their business. To do so, many companies choosed to expand via corporations with other companies to make the market entry easier or simply to strenghten their market position. Mergers and acquisition became one of the most used tools for development, whereas a merger between well known and successful companies always caused a sensation. Mergers caused such a stir as the companies involved in a merger faced a complete new identitiy and innovations were about to alter the company. The research project proves the decision for a merger rather than an alliance and the synergies gathered due to this tool of development. Two companies, Daimler-Benz and Chrysler, are investigated to illustrate the academic frameworks in practice to come to a conclusion why they merged. Methodology includes analysis of secondary data which has been published on the subject area. The findings and analysis of the research conducted, concluded that synergy is the most important aspect when companies grow through mergers. Furthermore, the results show that internationalisation due to globalisation is the key driver of mergers. The paper concludes with an evaluation of the study and recommendations for further research. CHAPTER ONE 1.1. Reason for Choice of Topic Companies come and go, chief executives rise and fall, industry sectors wax and wane, but an outstanding feature of the past decade has been the rise of mergers and acquisitions (MA). Whether in times of boom or bust, MAs continue to be the preferred option for businesses seeking to grow rapidly. A company has several options to choose from when it comes to growth strategies. One option is to grow organically by increasing sales personnel, new product developments and by expanding into new geographical areas. Alternative options to achieve the desired growth, companies traditionally build, buy, merge with other companies or co-operate through alliances. However, the best example of how to grow inorganic is to merge or aquire (Sherman, 2005). MAs are mainly about growth according to Lees (2003) and Sudarsanam (2003). Internal or organic growth is in most cases a slow process and MAs is another option that will increase the growth process. By doing an MA deal, the acquiring company or the merged companies can get instant access to new markets, technology and operations can be completed more efficiently. Several reasons and motives exist why a company chooses to grow through MA. According to Gaughan (2002) the most common motive for MA is to create synergy. However, other motives play also an important role, like diversification, improved management, market power or tax motives. Johnson and Scholes (1997) state that MAs are a quick way of entering new markets or products. The company can also gain competences or resources through this way. Knowledge about the market situation is also a significant cause why companies choose to develop through MA. Another reason for companies to develop through MA is that they are actively s earching for benefits arising from synergies. The author has chosen the topic to gain further knowledge about the topic of why do companies actually merge to gain synergy. The reasons for attempting to gain further knowledge are based on the authors fascination on MA in general and to the extend why Daimler-Benz and Chrysler did actually merge. The split between those two has not been long ago and therefore the author was particularly interested in this merger. Furthermore, the author is interested what type of synergies were the most relevant in this merger of equals. 1.2. Academic Obejctives of Dissertation This research aims to point out that synergies play an important role when two companies are doing a corporation in order to grow. The author has chosen the following objectives in order to support the research hypothesis: To discover why companies select mergers instead of strategic alliances as tool for development To investigate to what extend synergies play an important role when merging To explore the importance of internationalisation in times of globalisation 1.3. Outline of Chapters Introduction: Introduces the topic of this research and explains the aims and objectives of the study. Setting the scene: This chapter is to set the scene for the study. It presents background information about the two companies and what actually did happen. Literature review: Discusses the academic literature on mergers and acquisition and synergies concentrating on several approaches to be applied to the case study. Methodology: Discusses how the research was conducted and recognizes any limitations and biases of the chosen methods. It involves a description of how the research and data was analysed. Findings: Presentaion of the case study including important information for the research Analysis: The findings from the secondary research are analysed against the earlier literature and research from chapter three. Conclusion: The research project is finally concluded, commenting on the initial objectives of the study. The limitations and recommendations for further research are also discussed in this chapter. CHAPTER TWO 2.1. Background of Daimler-Benz AG As Jurgen Schrempp became the new CEO of Daimler-Benz AG in May 1995, one of his first jobs was the promulgation of a new strategic concept containig five points to strenghten their market position and to expand further. Mercedes considered the US market to be the important and competitive automobile market in the world. They established a greenfield plant in Tuscaloosa in 1994 already to strenghten their position in the US market and were supposed to be market openers. Those were the first signs that Daimler-Benz wanted to expand. 2.2. Background of the Chrysler Corporation From 1994 to 1997 Chrysler beat one historical record after another, where even some models were selected as cars of the year. It was even crowned by Forbes as the company of the year 1996. Bad labour relations have been improved through corporatist agreements. However, most cars were sold in the home market and plans to expand to other non-american countries have been scattered more or less. Nevertheless, the frequent crises and the internationalisation deficits of the company had planted the idea of a partner in the minds of the Chrysler executives. 2.3. The Merger When in May 1998 the CEO of Daimler Benz, Jurgen Schrempp and Robert Eaton, CEO of Chrysler signed the contract for a merger between those two companies, they made the biggest industrial merger in history. Both partners expected great value and advantages, as both companies seemed to complement well with each other. As a matter of fact, the company did not develop as good as anticipated. From the beginning on DaimlerChrysler could only announce little profits and losses, in the year 2001 it was even the biggest loss in history of all German companies. By mid 2004 the market value of the company has been less than half of what the value has been of both companies before the merger. By the same time the sales figures and business numbers of competitors increased. In May 2007, not even ten years after the merger, the dream of a super company bursted like a bubble. CHAPTER THREE 3.1. Reasons for Internationalisation As Kwon Kopona (1993) state in their theory the choice of market entry should relate to the companys corporate strategy and the extent, depth and geographical coverage of the present and intended foreign activities. Furthermore, the decision for growing should be made when there is a sufficient understanding of the different types of entry. On the one hand companies could gather experience through alliances and on the other hand fail to see that in particular cases an acquisition would be more successful (Clark, 2005). Dyer et al. (2004) state that a specific advice is needed about when to apply each strategy that is based on internal and external circumstances. Especially internally, the companies should focus on resources that are to be combined, the extent of unnecessary resources and the type of synergy which the firms seek. Externally, important factors are the degree of market uncertainty and the level of competition. As experience and interests of the company are different, t hese factors will have different degrees of importance. In Porters (1987) point of view entering a new market must be attractive for the expanding company. It needs feasibility of making profits in the target organisation. The costs of entry must be taken into account. These include direct costs as the cost of shares and advisors and indirect costs include such costs as integration costs. According to Dunning (1988) where he argues with the eclectic theory that additional costs can occur because of the failure of knowledge about market conditions, the legal and cultural diversities and the increased costs of operating at a distance. It also must be taken into consideration if the possibility of gaining synergies exists and what the opportunity of benefiting from the target companys core competences is. The local advantages of countries play an important role. The main country advantages can be classified as economic advantages, consisting of quantity and quality factors such as transportation, production, scope and the size of the market. Then there are political advantages that include government policies which have a positive influence on the market entry. And finally there are social and cultural advantages, which implicate the physical distance between the home country and the foreign country, language and cultural diversities and the general attitude towards foreigners. Dunning (1988) declared that companies have to be aware that relative attractiveness of locations can change over the year. He also declares that particular know-how and specific core abilities which count as an internalisation advantage can have a positive impact on the general business performance. 3.2. Methods of Development 3.2.1. Merger and Acquisitions As De Witt Meyer (1998) state in their thesis, mergers and acquisition are the most popular and influential form of discretionary foreign direct investment. Acquiring of another company is a takeover, be it friendly or hostile, while mergers only represent the share in a company according to Douglas Craig (1995). A non-adversarial approach benefits not only buyers but vendors as well, claimed by Beckett (2005). Mergers and acquisitions are significant alternatives to internal growth of companies as they enable companys fast penetration of new and foreign markets, acquire necessary know-how and skilled personal and obtain economies of scale and scope, according to Jackson (1995). Companies that merge gain access to supply and distribution channels through an upstream alliance. Furthermore Contractor Lorange (1998) state that enhancing their reputation and reducing competition if the integrated company is a competitor might be seen as an advantage. MAs are a well developed strategy and not a reaction to the first apparent opportunity as Simmons (1988) argued. As Coyle (2000) states, MA can be the outcome of either an aggressive or defensive strategy. Aggressive would mean that the company will seek to improve its market position to create a bigger company and finally to produce on a bigger scale and more cheaply through economies of scale. Defensive strategies on the other hand are made in order to survive in changing industry. A totally different reason for doing MA claimed Beckett (2005) as he said that companies may benefit from MAs when they acquire a company at a certain value and sell it later at a higher value. Through increasing shareholder value by providing a higher level of dividend and capital gain return and securing a higher return on the investment. This paper is mainly looking for the purposes for a merger and therefore for the realisation of potential synergy effects, as the purpose of most MAs is to achieve some kind of synergy. The belief is that two comparable companies together will achieve far better results than independently. Cost cuttings and savings will often lead to this effect. A successful MA can be classified as one where the potential synergies identified are to be utilised best as Coyle (2000) states. 3.2.2. Strategic Alliances Johnson (1999) has declared that defining strategic alliances are difficult to define as various forms exist. Clark (2005) defines it as two companies which are brought together with similar interest but with different strengths to work on particular projects, developmental approaches and marketing agreements which will offer benefits for both companies. Lorange and Ross (1992) even came to the conclusion as strategic alliances entail a very broad definition that it incorporates MA. Strategic alliances can be separated into three different types as Contractor and Lorange (1988) state: Joint ventures, Non-equity alliances and Minority equity alliances. Preece (1995) recognised 6 main reasons for strategic alliances, starting all with the letter L, therefore they can be named as the 6 Ls. Learning is the first one of them, as he argues that knowledge will be acquired. Leaning is meant as replacing the value chain activities and filling in the missing infrastructure. Leveraging will fully integrate the firms operation. Linking suggests that the links between supplier and customer should be build closer. Leaping pursues a radically new area of endeavour. And finally Locking out, which means reducing competitive pressure from non-partners. 3.2.3. MA versus Alliances The main difference between MA and alliances is the power of control according to Lorange Roos (1992). A pure acquisition would mean that the brought up company is under the control of the ones who bought it. To achieve growth due to acquisition and remain in control, huge financial resources are needed. Rather than buying a whole company, a corporation can propose a joint venture with a specific division in which the corporation is interested in. In case this joint venture works well, a multi-activity alliance could be grown. Equity swaps can be conducted for long-term stabilisation. However, without full control the corporation cannot decide for its own how the alliance or the merger will develop or if it will continue. A company with two equal CEOs does not work out well due to different interest and objects as Lorange Roos (1992) state. And Clark (2005) stated earlier that companies could gather experience through alliances but fail to see later that in particular cases an acquisition would be more successful. 3.3. Mergers 3.3.1. Types of mergers In a merger, the assets of two previously separate firms are combined to establish a new legal entity. In fact, the number of mergers in mergers and acquisition is almost vanishingly small. Less than 3 percent of cross border mergers and acquisitions by number are mergers. In reality, even when the mergers are supposedly between equal partners, most are acquisitions where one company controls the other. When there is a merger between two competing firms in the same industry, it is called a horizontal merger. (Buckley and Ghauri, 2002). When there is a vertical merger, two companies merge that have a buyer-seller relationship. Then there are the three conglomerate types. Pure conglomerate will be a merger where there are different markets and different products, so totally unrelated. Then there is conglomerate market extension, where it is a merger between a company that offers the same products but in a different geographical market. The last type is the conglomerate product extensio n, where the merged company sells non-competing products, but functionally related in production and distribution. In the case of the dissertation, it focuses on horizontal mergers which operate on overlapping markets and segments. Cartwright Cooper (1996) claimed that the definitions and intentions of MAs often read like a cheesy novel with a likeness to a more or less welcomed dating or courtship. The following four approaches are made: Pillage and Plunder One-night stand Courtship/Just Friends Love and Marriage Love and Marriage would certainly best fit to the focus of this paper, as the aim is to achieve a positive long term international growth. The fourth category is aiming for long term integration through assimilation and blending. 3.3.2. Cross-Border Mergers One important aspect of understanding cross-border MA is to examine the logic driving the deals. Strategic motives for a cross-border merger involve acquisitions that improve the strength of a firms strategy. Examples would include mergers intended to create synergy, capitalize on firms core competence, increase market power, provide the firm with complimentary resources, products and strengths, or finally to take advantage of a parenting advantage. However, in a recent book by Mark Sirower (1997) he argues that synergy rarely justifies the premium paid. Sirower declares, many acquisitions premiums require performance improvements that are virtually impossible to realize even for the best managers in the best of industry conditions (p.14). In exploiting a core competence a firm takes an intangible skill, expertise, or knowledge and leverages it by expanding its use to additional industries where it may create a competitive advantage in several different businesses. One strategic reas on to acquire is to gain complimentary products, resources or strengths. Research shows that one important driver of cross-border mergers and acquisitions may be undervaluation (Gonzalez et al., 1998). A driver of cross-border mergers might be differences in the macro-economic conditions in two countries. That is, one country might have a higher growth rate and more opportunity than some other country. Thus, it would seem reasonable to expect the slower growth country to be more often home to acquirers whereas the faster growth country is likely to more often home to target firms as Hitt et al. (2001) stated. Reasons for cross-border acquisitions include market power, overcoming market entry barriers, covering the cost of new product development, increasing the speed of entry into a market, and greater diversification. Cross-border acquisitions can produce both economies of scale and economies of scope. They help a firm enter new international markets and thereby enhance their ability to complete in global markets. Of course, cross-border acquisitions are even more challenging to complete successfully than acquisitions of domestic firms according to Hitt et al. (2001). In fact, some research studies suggests that with the right strategy and the right approach to post-merger integration, cross-border acquisitions can create value for the acquiring firm according to Belcher and Nail (2000). 3.4. Motives and Objectives for Merging The literature on motives for MA has placed a significant amount of different sources and theories by several authors. The merits of using mergers to reduce costs are disputed by managers and by practitioners. For example, managers have been heard to comment that costs reductions are the merger benefit that is most likely to be achieved whereas the achievement of synergy is highly uncertain. On the other hand, Michael Porter argues that what passes for strategy today is simply improving operational effectiveness. Porter (1998) argues, In many companies, leadership has degenerated into orchestrating operational improvements and making deals (p.70). It is understandable how operational effectiveness may have come to be the driving motive for many mergers, however. Often at the same time a merger is announced, there will be an announcement of a cost reduction target. Merging in order to create synergy is probably the most often cited justification for an acquirer to pay a premium for a target company. Synergy effects can be created by redeploying assets. This can mean two different things. In the first case, the acquiring company may transfer a resource belonging to the target company to the acquiring company. Colombo et al. (2007) also found out that a strong predictor of acquisition performance was the extent of asset redeployment from the target to the bidder. Weston and Weaver (2001) stated that the first category is synergy or efficiency for a merger, in which total value from the combination is greater than the sum of the values of the component firms operating independently. Hubris is the result of the winners curse, causing bidders to overpay; it postulates that value is unchanged. Of course, in a synergistic merger, it would be possible for the bidder to overpay as well. The third class of mergers comprises those in which total value is decreased as a result of mistakes or managers who put their own preferences above the well-being of the firm, the agency problem. Economic motives are an important subcategory creating strategic logic for a merger. One example is to establish economies of scale. A second closely related reason is to be able to reduce costs due to redundant resources of two firms in the same or closely related industry. Thus if the company acquires a company that is in the same or a closely related industry and there is substantial overlap between the two businesses there may be ample opportunities to reduce costs. Another reason is that the stock of the firms from a particular country may be undervalued. A fourth reason is the macroeconomic difference between countries such as different growth rates. Finally, the exchange rates may play a role. Recent research did show that acquiring a foreign company when the home country currency has appreciated in relation to the target companys currency has great benefits for the acquiring company when the industry is highly technological (Georgopoulos, 2008). Firms engage in merger and acquisition activity for many reasons. Effective mergers and acquisitions can, for example: serve as a platform for corporate growth, lead to increased market share, provide the foundations required to generate and gain advantages from economies of scale (these are benefits that occur when the firm is able to use its resources to drive costs lower across multiple products; scale economies are acquired primarily at the operational level) and economies of scope (these are benefits realised through using one units resources in the operations of another unit), and reduce organizational expenses by eliminating duplication and transferring knowledge between and among business units and/or individual product lines (Collins and Montgomery, 1999). One of the most important motives for MA activities, as seen from the experience of the last decade, has been economies of scale and scope. Companies aim to achieve economies of scale by combining resources of two merging companies or create economies of scope by acquiring a company allowing product/market diversification. Other motives include access to each others technology or market reach, achieving a dominant position in the industry, consolidation of the industry, and manipulating rules of competition and antitrust as Buckley and Ghauri (2002) state. The question as to whether merge primarily concerns the identification of the corporate objects and which of these objects are to be pursued through organic growth and which through MA in the form of participations or a full takeover. At the same time, the consequences of the growth strategy and its economic or financial effects in the light of the competition situation and the extension of the value added chain must be carefully examined. Empirically, in approximately 85 per cent of all concentrations between undertakings and acquisitions, the question as to whether is answered with a view to the object of achieving growth in the core business (Picot, 2002). However, Buckley and Ghauri (2002) stated also that mergers and acquisition have become the most dramatic demonstration of vision and strategy in the corporate world. More than 50 percent of the mergers so far have led to a decrease in share value and another 25 percent have shown no significant increase. When coming to a conclusion what is now the main purpose to merge, the author would conclude that it depends on the companys expansion strategy and the different motivation to form alliances. However, effective mergers and acquisitions can serve as a platform for corporate growth, lead to increased market share, provide the foundations required generating and gaining advantages from economies of scale and scope as Collins and Montgomery (1999) concluded. These factors are seen as the most important motives to form a merger and to believe that it would help the effected corporations to strengthen their market position and even gain more market share. 3.4.1. Synergy According to Coyle (2000) synergy is the additional benefit that can be derived from combining the resources of the bidding and target companies. Synergy has been described as the two and two makes five effect. It can also be classified as Gaughan (2002) put it, as synergy and value creation are a synonymous and synergy is when the value of the MA exceeds the value of the two separate firms put together. According to Habeck et al. (2000) the term synergy is used as a synonym for cost cutting. However, in his book he argues that those companies that understand this definition of synergy as cost cutting need to redefine it as it also includes the positive aspects of the MA such as growth and knowledge sharing. Furthermore, he states that it is important to capture growth synergies as quickly as possible and favour those areas where cost efficiencies can be gained. Therefore synergy is an important part in a successful merger. Ansoff (1986) classified different types of synergies. Manag ement synergy occurs when the top management of one of the companies resolves problems of the other company through their experience. Investment synergy can occur from the joint use of plant and equipment, joint research and development efforts, and having common raw materials inventories. Operating synergy can arise from better utilization of facilities and personnel and bulk-order purchasing to reduce upcoming material costs. And finally sales synergy where a merged organization can benefit from common sales administration, distribution channels, warehousing and sales promotion. 3.4.2. Creating Synergy through Mergers Hitt et al. (2001) states that there are four foundations in the creation of synergy which are called strategic fit, organisational fit, managerial actions and value creation. As all four foundations exist the chance of creating synergy is substantially better. Strategic fit can be defined as the match between the two companies organisational capabilities. As two companies with similar capabilities and the same strengths and weaknesses merge the chances of creating synergy is reduced. Organisational fit means that the two companies are highly compatible, meaning that these have similar management processes, cultures, systems and structures. This makes it easier for the firms to share resources, knowledge, skills and effectively communicate. Companies without organisational fit could find that the integration process will be hard to implement. Managerial actions is that creating synergy requires the active management of the acquisition process, in order to realize the different synerg ies and the benefits they convey. To create synergy an active management is needed that recognises the international issues and other problems connected with the MA process. Value creation is the last of the four synergy creation foundations. It is based on the fact that the benefits from the synergy need to exceed the cost of creating and capturing synergy. The costs that should be less than the value of the synergy that is created include those associated with a purchasing premium, financing of the transaction and the set of implementation actions required to integrate the acquired unit into the existing organisational structure. Synergy will add no value as creating it outweighs the value of the synergy. Gaughan (2002) has compiled a model of the process of realizing synergistic gains. The management needs to carefully deal with the strategic planning since the better planned MA is a better chance to succeed. Secondly the management needs to integrate the two companies into one. Finally the synergy can be separated into revenue enhancing synergies or cost cutting synergies. Ficery et al. (2007) furthermore points out that synergy created through MA, the targeted company has access to new geographic market or access to a new customer segment allowing the acquiring company to reach those new markets and segments at a faster pace and at a lower cost. CHAPTER FOUR 4.1. Introduction In this chapter, the author examines the most suitable methodology for the research area and justifies the different methods chosen. It outlines the authors main decisions on methods and data collection and considers their implications for the research findings. It also includes details for the sources used for information collection and explanations why other research methods were rejected. Furthermore, this chapter will give an insight into how secondary research has been gathered, discuss advantages and limitations of research methods and illustrate ethical issues. 4.2. Research strategy This chapter examines the most suitable methodology for the research area and justifies the methods chosen. The author explains how the linkage between the academic literature and reality was explored by using research methods. Furthermore, it will give an insight into how secondary research has been gathered, discuss advantages and limitations of research methods and illustrate ethical issues for this thesis. According to Jankowicz (2000) there are four research strategies that can be used for conducting: the archival method, the case study, the survey and the field experiment. By using the archival method, the companys present and future performance can be analysed by using past financial figures. Using the case study as a research method, a specific organisation can be analysed by researching the internal and external situation of the organisation to find conclusion for a specific subject. Through surveys, human input can be used to find representing input out of the population to a specific topic. A field experiment applies the scientific method to experimentally examine an intervention in the real world. The case study is the most suitable research method to use, as the objective of this research is to analyse and investigate the external situation within a real-life Analysis of the Daimler-Benz and Chrysler Merger Analysis of the Daimler-Benz and Chrysler Merger ABSTRACT Globalisation has changed the appearance of the economy. Especially in the 1990s firms expanded into new markets to operate more global and to develop their business. To do so, many companies choosed to expand via corporations with other companies to make the market entry easier or simply to strenghten their market position. Mergers and acquisition became one of the most used tools for development, whereas a merger between well known and successful companies always caused a sensation. Mergers caused such a stir as the companies involved in a merger faced a complete new identitiy and innovations were about to alter the company. The research project proves the decision for a merger rather than an alliance and the synergies gathered due to this tool of development. Two companies, Daimler-Benz and Chrysler, are investigated to illustrate the academic frameworks in practice to come to a conclusion why they merged. Methodology includes analysis of secondary data which has been published on the subject area. The findings and analysis of the research conducted, concluded that synergy is the most important aspect when companies grow through mergers. Furthermore, the results show that internationalisation due to globalisation is the key driver of mergers. The paper concludes with an evaluation of the study and recommendations for further research. CHAPTER ONE 1.1. Reason for Choice of Topic Companies come and go, chief executives rise and fall, industry sectors wax and wane, but an outstanding feature of the past decade has been the rise of mergers and acquisitions (MA). Whether in times of boom or bust, MAs continue to be the preferred option for businesses seeking to grow rapidly. A company has several options to choose from when it comes to growth strategies. One option is to grow organically by increasing sales personnel, new product developments and by expanding into new geographical areas. Alternative options to achieve the desired growth, companies traditionally build, buy, merge with other companies or co-operate through alliances. However, the best example of how to grow inorganic is to merge or aquire (Sherman, 2005). MAs are mainly about growth according to Lees (2003) and Sudarsanam (2003). Internal or organic growth is in most cases a slow process and MAs is another option that will increase the growth process. By doing an MA deal, the acquiring company or the merged companies can get instant access to new markets, technology and operations can be completed more efficiently. Several reasons and motives exist why a company chooses to grow through MA. According to Gaughan (2002) the most common motive for MA is to create synergy. However, other motives play also an important role, like diversification, improved management, market power or tax motives. Johnson and Scholes (1997) state that MAs are a quick way of entering new markets or products. The company can also gain competences or resources through this way. Knowledge about the market situation is also a significant cause why companies choose to develop through MA. Another reason for companies to develop through MA is that they are actively s earching for benefits arising from synergies. The author has chosen the topic to gain further knowledge about the topic of why do companies actually merge to gain synergy. The reasons for attempting to gain further knowledge are based on the authors fascination on MA in general and to the extend why Daimler-Benz and Chrysler did actually merge. The split between those two has not been long ago and therefore the author was particularly interested in this merger. Furthermore, the author is interested what type of synergies were the most relevant in this merger of equals. 1.2. Academic Obejctives of Dissertation This research aims to point out that synergies play an important role when two companies are doing a corporation in order to grow. The author has chosen the following objectives in order to support the research hypothesis: To discover why companies select mergers instead of strategic alliances as tool for development To investigate to what extend synergies play an important role when merging To explore the importance of internationalisation in times of globalisation 1.3. Outline of Chapters Introduction: Introduces the topic of this research and explains the aims and objectives of the study. Setting the scene: This chapter is to set the scene for the study. It presents background information about the two companies and what actually did happen. Literature review: Discusses the academic literature on mergers and acquisition and synergies concentrating on several approaches to be applied to the case study. Methodology: Discusses how the research was conducted and recognizes any limitations and biases of the chosen methods. It involves a description of how the research and data was analysed. Findings: Presentaion of the case study including important information for the research Analysis: The findings from the secondary research are analysed against the earlier literature and research from chapter three. Conclusion: The research project is finally concluded, commenting on the initial objectives of the study. The limitations and recommendations for further research are also discussed in this chapter. CHAPTER TWO 2.1. Background of Daimler-Benz AG As Jurgen Schrempp became the new CEO of Daimler-Benz AG in May 1995, one of his first jobs was the promulgation of a new strategic concept containig five points to strenghten their market position and to expand further. Mercedes considered the US market to be the important and competitive automobile market in the world. They established a greenfield plant in Tuscaloosa in 1994 already to strenghten their position in the US market and were supposed to be market openers. Those were the first signs that Daimler-Benz wanted to expand. 2.2. Background of the Chrysler Corporation From 1994 to 1997 Chrysler beat one historical record after another, where even some models were selected as cars of the year. It was even crowned by Forbes as the company of the year 1996. Bad labour relations have been improved through corporatist agreements. However, most cars were sold in the home market and plans to expand to other non-american countries have been scattered more or less. Nevertheless, the frequent crises and the internationalisation deficits of the company had planted the idea of a partner in the minds of the Chrysler executives. 2.3. The Merger When in May 1998 the CEO of Daimler Benz, Jurgen Schrempp and Robert Eaton, CEO of Chrysler signed the contract for a merger between those two companies, they made the biggest industrial merger in history. Both partners expected great value and advantages, as both companies seemed to complement well with each other. As a matter of fact, the company did not develop as good as anticipated. From the beginning on DaimlerChrysler could only announce little profits and losses, in the year 2001 it was even the biggest loss in history of all German companies. By mid 2004 the market value of the company has been less than half of what the value has been of both companies before the merger. By the same time the sales figures and business numbers of competitors increased. In May 2007, not even ten years after the merger, the dream of a super company bursted like a bubble. CHAPTER THREE 3.1. Reasons for Internationalisation As Kwon Kopona (1993) state in their theory the choice of market entry should relate to the companys corporate strategy and the extent, depth and geographical coverage of the present and intended foreign activities. Furthermore, the decision for growing should be made when there is a sufficient understanding of the different types of entry. On the one hand companies could gather experience through alliances and on the other hand fail to see that in particular cases an acquisition would be more successful (Clark, 2005). Dyer et al. (2004) state that a specific advice is needed about when to apply each strategy that is based on internal and external circumstances. Especially internally, the companies should focus on resources that are to be combined, the extent of unnecessary resources and the type of synergy which the firms seek. Externally, important factors are the degree of market uncertainty and the level of competition. As experience and interests of the company are different, t hese factors will have different degrees of importance. In Porters (1987) point of view entering a new market must be attractive for the expanding company. It needs feasibility of making profits in the target organisation. The costs of entry must be taken into account. These include direct costs as the cost of shares and advisors and indirect costs include such costs as integration costs. According to Dunning (1988) where he argues with the eclectic theory that additional costs can occur because of the failure of knowledge about market conditions, the legal and cultural diversities and the increased costs of operating at a distance. It also must be taken into consideration if the possibility of gaining synergies exists and what the opportunity of benefiting from the target companys core competences is. The local advantages of countries play an important role. The main country advantages can be classified as economic advantages, consisting of quantity and quality factors such as transportation, production, scope and the size of the market. Then there are political advantages that include government policies which have a positive influence on the market entry. And finally there are social and cultural advantages, which implicate the physical distance between the home country and the foreign country, language and cultural diversities and the general attitude towards foreigners. Dunning (1988) declared that companies have to be aware that relative attractiveness of locations can change over the year. He also declares that particular know-how and specific core abilities which count as an internalisation advantage can have a positive impact on the general business performance. 3.2. Methods of Development 3.2.1. Merger and Acquisitions As De Witt Meyer (1998) state in their thesis, mergers and acquisition are the most popular and influential form of discretionary foreign direct investment. Acquiring of another company is a takeover, be it friendly or hostile, while mergers only represent the share in a company according to Douglas Craig (1995). A non-adversarial approach benefits not only buyers but vendors as well, claimed by Beckett (2005). Mergers and acquisitions are significant alternatives to internal growth of companies as they enable companys fast penetration of new and foreign markets, acquire necessary know-how and skilled personal and obtain economies of scale and scope, according to Jackson (1995). Companies that merge gain access to supply and distribution channels through an upstream alliance. Furthermore Contractor Lorange (1998) state that enhancing their reputation and reducing competition if the integrated company is a competitor might be seen as an advantage. MAs are a well developed strategy and not a reaction to the first apparent opportunity as Simmons (1988) argued. As Coyle (2000) states, MA can be the outcome of either an aggressive or defensive strategy. Aggressive would mean that the company will seek to improve its market position to create a bigger company and finally to produce on a bigger scale and more cheaply through economies of scale. Defensive strategies on the other hand are made in order to survive in changing industry. A totally different reason for doing MA claimed Beckett (2005) as he said that companies may benefit from MAs when they acquire a company at a certain value and sell it later at a higher value. Through increasing shareholder value by providing a higher level of dividend and capital gain return and securing a higher return on the investment. This paper is mainly looking for the purposes for a merger and therefore for the realisation of potential synergy effects, as the purpose of most MAs is to achieve some kind of synergy. The belief is that two comparable companies together will achieve far better results than independently. Cost cuttings and savings will often lead to this effect. A successful MA can be classified as one where the potential synergies identified are to be utilised best as Coyle (2000) states. 3.2.2. Strategic Alliances Johnson (1999) has declared that defining strategic alliances are difficult to define as various forms exist. Clark (2005) defines it as two companies which are brought together with similar interest but with different strengths to work on particular projects, developmental approaches and marketing agreements which will offer benefits for both companies. Lorange and Ross (1992) even came to the conclusion as strategic alliances entail a very broad definition that it incorporates MA. Strategic alliances can be separated into three different types as Contractor and Lorange (1988) state: Joint ventures, Non-equity alliances and Minority equity alliances. Preece (1995) recognised 6 main reasons for strategic alliances, starting all with the letter L, therefore they can be named as the 6 Ls. Learning is the first one of them, as he argues that knowledge will be acquired. Leaning is meant as replacing the value chain activities and filling in the missing infrastructure. Leveraging will fully integrate the firms operation. Linking suggests that the links between supplier and customer should be build closer. Leaping pursues a radically new area of endeavour. And finally Locking out, which means reducing competitive pressure from non-partners. 3.2.3. MA versus Alliances The main difference between MA and alliances is the power of control according to Lorange Roos (1992). A pure acquisition would mean that the brought up company is under the control of the ones who bought it. To achieve growth due to acquisition and remain in control, huge financial resources are needed. Rather than buying a whole company, a corporation can propose a joint venture with a specific division in which the corporation is interested in. In case this joint venture works well, a multi-activity alliance could be grown. Equity swaps can be conducted for long-term stabilisation. However, without full control the corporation cannot decide for its own how the alliance or the merger will develop or if it will continue. A company with two equal CEOs does not work out well due to different interest and objects as Lorange Roos (1992) state. And Clark (2005) stated earlier that companies could gather experience through alliances but fail to see later that in particular cases an acquisition would be more successful. 3.3. Mergers 3.3.1. Types of mergers In a merger, the assets of two previously separate firms are combined to establish a new legal entity. In fact, the number of mergers in mergers and acquisition is almost vanishingly small. Less than 3 percent of cross border mergers and acquisitions by number are mergers. In reality, even when the mergers are supposedly between equal partners, most are acquisitions where one company controls the other. When there is a merger between two competing firms in the same industry, it is called a horizontal merger. (Buckley and Ghauri, 2002). When there is a vertical merger, two companies merge that have a buyer-seller relationship. Then there are the three conglomerate types. Pure conglomerate will be a merger where there are different markets and different products, so totally unrelated. Then there is conglomerate market extension, where it is a merger between a company that offers the same products but in a different geographical market. The last type is the conglomerate product extensio n, where the merged company sells non-competing products, but functionally related in production and distribution. In the case of the dissertation, it focuses on horizontal mergers which operate on overlapping markets and segments. Cartwright Cooper (1996) claimed that the definitions and intentions of MAs often read like a cheesy novel with a likeness to a more or less welcomed dating or courtship. The following four approaches are made: Pillage and Plunder One-night stand Courtship/Just Friends Love and Marriage Love and Marriage would certainly best fit to the focus of this paper, as the aim is to achieve a positive long term international growth. The fourth category is aiming for long term integration through assimilation and blending. 3.3.2. Cross-Border Mergers One important aspect of understanding cross-border MA is to examine the logic driving the deals. Strategic motives for a cross-border merger involve acquisitions that improve the strength of a firms strategy. Examples would include mergers intended to create synergy, capitalize on firms core competence, increase market power, provide the firm with complimentary resources, products and strengths, or finally to take advantage of a parenting advantage. However, in a recent book by Mark Sirower (1997) he argues that synergy rarely justifies the premium paid. Sirower declares, many acquisitions premiums require performance improvements that are virtually impossible to realize even for the best managers in the best of industry conditions (p.14). In exploiting a core competence a firm takes an intangible skill, expertise, or knowledge and leverages it by expanding its use to additional industries where it may create a competitive advantage in several different businesses. One strategic reas on to acquire is to gain complimentary products, resources or strengths. Research shows that one important driver of cross-border mergers and acquisitions may be undervaluation (Gonzalez et al., 1998). A driver of cross-border mergers might be differences in the macro-economic conditions in two countries. That is, one country might have a higher growth rate and more opportunity than some other country. Thus, it would seem reasonable to expect the slower growth country to be more often home to acquirers whereas the faster growth country is likely to more often home to target firms as Hitt et al. (2001) stated. Reasons for cross-border acquisitions include market power, overcoming market entry barriers, covering the cost of new product development, increasing the speed of entry into a market, and greater diversification. Cross-border acquisitions can produce both economies of scale and economies of scope. They help a firm enter new international markets and thereby enhance their ability to complete in global markets. Of course, cross-border acquisitions are even more challenging to complete successfully than acquisitions of domestic firms according to Hitt et al. (2001). In fact, some research studies suggests that with the right strategy and the right approach to post-merger integration, cross-border acquisitions can create value for the acquiring firm according to Belcher and Nail (2000). 3.4. Motives and Objectives for Merging The literature on motives for MA has placed a significant amount of different sources and theories by several authors. The merits of using mergers to reduce costs are disputed by managers and by practitioners. For example, managers have been heard to comment that costs reductions are the merger benefit that is most likely to be achieved whereas the achievement of synergy is highly uncertain. On the other hand, Michael Porter argues that what passes for strategy today is simply improving operational effectiveness. Porter (1998) argues, In many companies, leadership has degenerated into orchestrating operational improvements and making deals (p.70). It is understandable how operational effectiveness may have come to be the driving motive for many mergers, however. Often at the same time a merger is announced, there will be an announcement of a cost reduction target. Merging in order to create synergy is probably the most often cited justification for an acquirer to pay a premium for a target company. Synergy effects can be created by redeploying assets. This can mean two different things. In the first case, the acquiring company may transfer a resource belonging to the target company to the acquiring company. Colombo et al. (2007) also found out that a strong predictor of acquisition performance was the extent of asset redeployment from the target to the bidder. Weston and Weaver (2001) stated that the first category is synergy or efficiency for a merger, in which total value from the combination is greater than the sum of the values of the component firms operating independently. Hubris is the result of the winners curse, causing bidders to overpay; it postulates that value is unchanged. Of course, in a synergistic merger, it would be possible for the bidder to overpay as well. The third class of mergers comprises those in which total value is decreased as a result of mistakes or managers who put their own preferences above the well-being of the firm, the agency problem. Economic motives are an important subcategory creating strategic logic for a merger. One example is to establish economies of scale. A second closely related reason is to be able to reduce costs due to redundant resources of two firms in the same or closely related industry. Thus if the company acquires a company that is in the same or a closely related industry and there is substantial overlap between the two businesses there may be ample opportunities to reduce costs. Another reason is that the stock of the firms from a particular country may be undervalued. A fourth reason is the macroeconomic difference between countries such as different growth rates. Finally, the exchange rates may play a role. Recent research did show that acquiring a foreign company when the home country currency has appreciated in relation to the target companys currency has great benefits for the acquiring company when the industry is highly technological (Georgopoulos, 2008). Firms engage in merger and acquisition activity for many reasons. Effective mergers and acquisitions can, for example: serve as a platform for corporate growth, lead to increased market share, provide the foundations required to generate and gain advantages from economies of scale (these are benefits that occur when the firm is able to use its resources to drive costs lower across multiple products; scale economies are acquired primarily at the operational level) and economies of scope (these are benefits realised through using one units resources in the operations of another unit), and reduce organizational expenses by eliminating duplication and transferring knowledge between and among business units and/or individual product lines (Collins and Montgomery, 1999). One of the most important motives for MA activities, as seen from the experience of the last decade, has been economies of scale and scope. Companies aim to achieve economies of scale by combining resources of two merging companies or create economies of scope by acquiring a company allowing product/market diversification. Other motives include access to each others technology or market reach, achieving a dominant position in the industry, consolidation of the industry, and manipulating rules of competition and antitrust as Buckley and Ghauri (2002) state. The question as to whether merge primarily concerns the identification of the corporate objects and which of these objects are to be pursued through organic growth and which through MA in the form of participations or a full takeover. At the same time, the consequences of the growth strategy and its economic or financial effects in the light of the competition situation and the extension of the value added chain must be carefully examined. Empirically, in approximately 85 per cent of all concentrations between undertakings and acquisitions, the question as to whether is answered with a view to the object of achieving growth in the core business (Picot, 2002). However, Buckley and Ghauri (2002) stated also that mergers and acquisition have become the most dramatic demonstration of vision and strategy in the corporate world. More than 50 percent of the mergers so far have led to a decrease in share value and another 25 percent have shown no significant increase. When coming to a conclusion what is now the main purpose to merge, the author would conclude that it depends on the companys expansion strategy and the different motivation to form alliances. However, effective mergers and acquisitions can serve as a platform for corporate growth, lead to increased market share, provide the foundations required generating and gaining advantages from economies of scale and scope as Collins and Montgomery (1999) concluded. These factors are seen as the most important motives to form a merger and to believe that it would help the effected corporations to strengthen their market position and even gain more market share. 3.4.1. Synergy According to Coyle (2000) synergy is the additional benefit that can be derived from combining the resources of the bidding and target companies. Synergy has been described as the two and two makes five effect. It can also be classified as Gaughan (2002) put it, as synergy and value creation are a synonymous and synergy is when the value of the MA exceeds the value of the two separate firms put together. According to Habeck et al. (2000) the term synergy is used as a synonym for cost cutting. However, in his book he argues that those companies that understand this definition of synergy as cost cutting need to redefine it as it also includes the positive aspects of the MA such as growth and knowledge sharing. Furthermore, he states that it is important to capture growth synergies as quickly as possible and favour those areas where cost efficiencies can be gained. Therefore synergy is an important part in a successful merger. Ansoff (1986) classified different types of synergies. Manag ement synergy occurs when the top management of one of the companies resolves problems of the other company through their experience. Investment synergy can occur from the joint use of plant and equipment, joint research and development efforts, and having common raw materials inventories. Operating synergy can arise from better utilization of facilities and personnel and bulk-order purchasing to reduce upcoming material costs. And finally sales synergy where a merged organization can benefit from common sales administration, distribution channels, warehousing and sales promotion. 3.4.2. Creating Synergy through Mergers Hitt et al. (2001) states that there are four foundations in the creation of synergy which are called strategic fit, organisational fit, managerial actions and value creation. As all four foundations exist the chance of creating synergy is substantially better. Strategic fit can be defined as the match between the two companies organisational capabilities. As two companies with similar capabilities and the same strengths and weaknesses merge the chances of creating synergy is reduced. Organisational fit means that the two companies are highly compatible, meaning that these have similar management processes, cultures, systems and structures. This makes it easier for the firms to share resources, knowledge, skills and effectively communicate. Companies without organisational fit could find that the integration process will be hard to implement. Managerial actions is that creating synergy requires the active management of the acquisition process, in order to realize the different synerg ies and the benefits they convey. To create synergy an active management is needed that recognises the international issues and other problems connected with the MA process. Value creation is the last of the four synergy creation foundations. It is based on the fact that the benefits from the synergy need to exceed the cost of creating and capturing synergy. The costs that should be less than the value of the synergy that is created include those associated with a purchasing premium, financing of the transaction and the set of implementation actions required to integrate the acquired unit into the existing organisational structure. Synergy will add no value as creating it outweighs the value of the synergy. Gaughan (2002) has compiled a model of the process of realizing synergistic gains. The management needs to carefully deal with the strategic planning since the better planned MA is a better chance to succeed. Secondly the management needs to integrate the two companies into one. Finally the synergy can be separated into revenue enhancing synergies or cost cutting synergies. Ficery et al. (2007) furthermore points out that synergy created through MA, the targeted company has access to new geographic market or access to a new customer segment allowing the acquiring company to reach those new markets and segments at a faster pace and at a lower cost. CHAPTER FOUR 4.1. Introduction In this chapter, the author examines the most suitable methodology for the research area and justifies the different methods chosen. It outlines the authors main decisions on methods and data collection and considers their implications for the research findings. It also includes details for the sources used for information collection and explanations why other research methods were rejected. Furthermore, this chapter will give an insight into how secondary research has been gathered, discuss advantages and limitations of research methods and illustrate ethical issues. 4.2. Research strategy This chapter examines the most suitable methodology for the research area and justifies the methods chosen. The author explains how the linkage between the academic literature and reality was explored by using research methods. Furthermore, it will give an insight into how secondary research has been gathered, discuss advantages and limitations of research methods and illustrate ethical issues for this thesis. According to Jankowicz (2000) there are four research strategies that can be used for conducting: the archival method, the case study, the survey and the field experiment. By using the archival method, the companys present and future performance can be analysed by using past financial figures. Using the case study as a research method, a specific organisation can be analysed by researching the internal and external situation of the organisation to find conclusion for a specific subject. Through surveys, human input can be used to find representing input out of the population to a specific topic. A field experiment applies the scientific method to experimentally examine an intervention in the real world. The case study is the most suitable research method to use, as the objective of this research is to analyse and investigate the external situation within a real-life