Businesses in United States Assignment Example | Topics and Well Written Essays - 1250 words

Businesses in United States - Assignment Example Most mergers involve a bigger company absorbing a small enterprise, which has low market influence though mergers are not always full buying of the firm it depends on the terms of agreement. Moreover, firms, which merge operate dependently, and decisions made are together. Concisely, mergers are not always done out of good heart, but some firms absorb rival enterprises to reduce competition. On the other hand, there are companies, which operate solely without depending on other firms for support. Most mergers are ill intended since the bigger firms use acquisition as a way of extinguishing firms, which pose a threat to their customer base. Businesses go internationally in order to get raw materials, as well as access a ready market. This is experienced in countries where the market is flooded, therefore; international markets have cheap labor and readily available raw materials. International corporations enjoy protection from parent countries incase their operations are threatened b y rival firms and government regulations in the foreign country. International mergers Chase bank is a national bank, which has branches both nationally and internationally. Chase bank first started as Chase National bank before it merged in nineteen thirty with Equitable Trust Company of New York and Interstate trust Company. During initial times, Chase National bank was a managed by JPMorgan Chase & Co. Subsequently in nineteen fifty five, Bank of the Manhattan Company merged with Chase bank to form a giant corporation, which established branches in more than sixty countries in the world. Chase bank is among top four banks operating in United States economy. All the shareholders and management of the two banks, however, universally accepted the merging. There was 50% management of the business since the two firms joined their names and formed Chase Manhattan bank, which became a prominent bank in the world (Gaughan 2005). Chase Manhattan Bank, however, abandoned their logos and de signed a new logo octagon in shape representing pipes laid down by Manhattan Company. The logo was more of favoring previous activities of Manhattan than Chase bank. Reasons for merging Chase National Bank and Manhattan Bank merged so that they can increase their financial performance. Merging increases the capital available in the firm therefore, high sells revenue and net profit. Furthermore, acquisitions reduce costs spent by the banks in the operations. Cost is a factor, which makes many firms experience loses. More so, bank mergers lead to increase in market size. Geographical diversification is a factor, which guides many firms to merge. Chase National Bank was in New York while Bank of Manhattan is located in Manhattan, which is located in different states. Entities that start new in a different geographical area takes lots of time to get market acceptance therefore, to curb this, most firms acquire entities in the same geographical area and operates with them. Most enterpris es use the company’s names to decrease on risks and accrue long run profits. Riegle-Neale Act of 1 June (1997) allowed banks to expand geographically and acquire new markets throughout the United States and internationally. Stewart’s merger motivation theory argues that enterprises merge to reduce on debt capacity, which other banks owe them. Businesses, which have high debts that they cannot settle, agree to mingle with a firm operating well to help in settling of the accumulated debts. As Chase bank merged with Manhattan bank, their capital base increased as well as the lending capacity. This reduced dependency levels and businesses were self- reliant. Normally in businesses,