Causas, sintomatología y comorbilidad

The change forces are having major impacts. The technological requirements for firms have increased. The requirements for human capital inputs have grown relative to physical assets. The knowledge and organizational capital components of firm value have increased. Growth opportunities among product areas are unequal. New industries have been created. The pace of product introductions has accelerated. Economic activity has shifted from manufacturing to services of increasing sophistication. Distribution and marketing methods have changed. The value chain has deconstructed in the sense that more activities are performed by specialist firms. Forces for vertical integration have diminished in some areas, but increased in others. Changes in the organization of industries have taken place. Industry boundaries have become increasingly blurred. The forms and number of

competitors have been increasing. New growth opportunities have attracted such large flows of resources that unfavorable sales-to-capacity relationships have developed, even in new industries such as telecommunications and e-commerce. The decline and failure rates of firms in some sectors have accelerated. Strategy formulation and revisions are more important. Real-time financial planning and control information requirements have increased.

These impacts have expanded opportunities and risks. A wide range of adjustment

processes have been used by firms in response to their increasingly changing environment. 4.3 MERGER MOVEMENTS

The foregoing describes M&A activities beginning in 1993, the fifth major merger movement—the era of strategic megamergers. This M&A activity exists worldwide, not just in the U.S. economy. The forces in Europe have been similar to the factors in the earlier merger movements in the United States. The four previous merger movements in the United States can be briefly summarized:

First Merger Movement—1893 to 1904

The merger movement at the turn of the century was associated with the completion of the transcontinental railroad system. It created the first common market. Europe is

experiencing similar forces from its effort at integration. In relation to the gross domestic product (GDP), this merger movement in the United States has thus far been of greater magnitude than any others, so the merger forces in Europe are very strong. In the United States, major horizontal mergers took place in steel, oil, telephone, and the basic

manufacturing industries at the time. Second Merger Movement—1920s

This period was characterized by an increase in vertical mergers. These were associated with the development of the radio, which made national advertising possible, and the automobile, which permitted more effective geographic sales and distribution

organizations. Vertical mergers enabled manufacturers to control distribution channels more effectively.

Third Merger Movement—1960s

The conglomerate mergers of the 1960s represented in part an adjustment to the slowdown in defense expenditures. In every sample of conglomerates, at least one-half of the

companies were aerospace or natural resource–depleting companies (oil, forest). Also influencing this was the idea that a good manager, with the new planning literature, could manage anything. Also at this time, industries like the food industries, hoping to avoid their growth being tied down to population growth, diversified. Much of the diversification at this time was ill advised as companies moved away from their core competencies. Fourth Merger Movement—1980s

Financial innovations, junk bonds, made all firms vulnerable to a takeover bid. Any company that was not performing up to its potential could be taken over. Chemical Bank and Disney were both almost taken over. So the availability of high-risk financing strongly propelled the 1980s and there was some dismantling of the diversification of the 1960s. Each of the merger movements in the United States was driven by a different set of

economic and development forces. But these movements did not occur randomly. A distinct group of change factors propelled each movement. In the fifth merger movement described above, more than 50 percent of the M&A activity in a given year has been accounted for by five or six industries. However, the identity of the industries has varied at different time periods. The industry characteristics related to strong M&A pressures can be summarized as follows:

• Telecommunications: Technological change and deregulation in the United States and abroad (particularly Europe) have stimulated efforts to develop a global presence.

• Media (movies, records, magazines, newspapers): Technological changes have impacted the relationship between the content and delivery segments. There is potential overlap in the content of different media outlets. It is an attractive and glamorous industry (attracted Japanese investors beginning in late 1980s).

• Financial (investment banks, commercial banks, insurance companies).

Globalization of industries and firms requires financial services firms to go global to serve their clients.

• Chemicals, pharmaceuticals: Both require high amounts of R&D, but suffer rapid imitation. Chemicals become commodities. Pharmaceuticals enjoy a limited period of patent protection, but this is eroded by “me, too” drugs and generics. Changes in the

technology of basic research and increased risks due to competitive pressures have created the stimulus for larger firms through M&As.

• Autos, oil and gas, industrial machinery: All face unique difficulties that give advantages to size, stimulating M&A to achieve critical mass. Autos face global excess capacity. Oil faces the uncertainty of price and supply instability due to actions of the OPEC cartel.

• Utilities: Deregulation has created opportunities for economies from enlarging geographic areas. New kinds of competitive forces have created needs for broadening managerial capabilities.

• Food, retailing: It is hampered by slow growth. Food consumption will only grow at the rate of population growth. Expanding internationally offers opportunities to grow in new markets.

• Natural resources, timber: Both face exhausting sources of supply. Problems exist in matching raw material supplies with manufacturing capacity.