The level of management for an organization is generally divided into three levels.

They are very important as per organization need. The strategies can be understood
under the following three forms:-

1) Corporate Level Strategy.

2) Business level strategy &
3) Functional level strategy.

In corporate level financial strategies the most common accepted concept is the CEO
level & directors are entitled to form such policies, decisions which provides good
sustainable results in the long term. Decisions like investment in new project,
diversification, mergers and acquisitions and take over, are related with the
corporate level financial strategies.

A merger takes place when two companies decide to

combine into a single entity. An acquisition involves
one company essentially taking over another
company.

CURRENT TRENDS IN MERGERS

AND ACQUISITIONS
Mergers and Acquisitions were at an all-time high from the late 1990s to 2000. They
have slowed down since then—a direct result of the economic slowdown. The reason is
simple, companies did not have the cash to buy other companies. In 2005, however, we
are seeing a robust economy and corporate profits, which means that businesses have
cash. This cash is being used to buy companies—mergers and acquisitions. The end of
2004 saw several deals: Sprint is combining with Nextel, K-Mart Holding Corp is buying
Sears, Roebuck & Co., Johnson & Johnson is planning to buy Guidant. These big
corporation deals are spurring on an environment triggering more acquisitions.

The operational and financial advantages of mergers and acquisitions are widely
documented and may also present the face of M&A activity to shareholders, the public,
corporate appeals to legislators etc. These advantages can include increased market share,
lower cost of production, higher competitiveness, acquired research and development
know how and patents. These and other advantages (2) of M&A are listed below:

• Increased market share

• Lower cost of operation and/or production
• Higher competitiveness
• Industry know how and positioning
• Financial leverage
• Improved profitability and EPS
Advantages of Mergers & Acquisitions

The most common motives and advantages of mergers and acquisitions are:-

 Accelerating a company's growth, particularly when its internal growth is

constrained due to paucity of resources. Internal growth requires that a company
should develop its operating facilities- manufacturing, research, marketing, etc.
But, lack or inadequacy of resources and time needed for internal development
may constrain a company's pace of growth. Hence, a company can acquire
production facilities as well as other resources from outside through mergers and
acquisitions. Specially, for entering in new products/markets, the company may
lack technical skills and may require special marketing skills and a wide
distribution network to access different segments of markets. The company can
acquire existing company or companies with requisite infrastructure and skills and
grow quickly.
 Enhancing profitability because a combination of two or more companies may
result in more than average profitability due to cost reduction and efficient
utilization of resources

 The Tata Group is known for its acquisition spree, both in India and overseas, to
fulfill its ambitious plans through inorganic expansions at a faster click – be it
Tata Tea’s one of the oldest acquisitions of UK-based blended tea-marketing
giant, Tetley Tea, at $400 million as early as Feb 2000; or Tata Coffee’s buy-out
of America’s best selling whole bean coffee brand Eight O’Clock Coffee at $220
million in June 2006.

Then again, they had Tata Teleservices take-over of Hughes Telecom in June 2002,
Indian Hotels buy-out of Regent Hotel at Bandra, Mumbai, in Sept 2002 and Tata Motors
acquisition of Korean-based Daewoo Commercial Vehicle Company at $100 million in
March 2004.

In yet another significant step towards becoming a global player, Tata Motors acquired
the businesses of two iconic British brands – Jaguar and Land Rover – from Ford Motors
for a net consideration of $2.3 billion in June 2008, with the aim to spread its footprint
globally and at the same time enter the high-end premier segment automobile market.
Having said above all, the biggest Indian acquisition was yet to come. In April 2007, the
Tatas came up with the most ambitious acquisition led by an Indian company in the form
of buy-out of Anglo-Dutch steel maker Corus Group at $12 billion by Tata Steel. This
investment led a significant progression in Tata Steel’s globalization initiatives, together
with its earlier acquisitions of NatSteel and Millennium Steel Company.

However, every coin has two sides to it – and, expectedly, some of these ambitious and
leveraged buy-outs inevitably invited troubles for the Group companies, like Tata Motors
and Tata Steel, during the sharp economic slowdown in American markets followed by
Euro-zone crisis later.

The global recession had badly hit the demand for the premium brands Jaguar Land
Rover (JLR), so much so that Tata’s takeover of JLR was in itself seen as a bailout for
the Ford. In fact, the situation had worsened to such an extent that Tata’s had to seek
financial assistance to the tune of 1 billion pound from the UK government for the then
ailing JLR brands, in less than 9 months after acquiring the iconic brands.

Industry analysts had reached a consensus view that Tata Motors had, indeed, paid a
premium for the renowned JLR brands; and that they might have to ensure massive and
sustained cash injections to preserve, or rebuild, their up market reputations and recoup
the loss-making operations triggered by dwindling sales of the vehicles.

To sum it up, JLR units posted a loss after tax of $504 million in the 10 months of the
fiscal year to March 2009 as a brutal slowdown crippled car sales, primarily luxury and
sport utility vehicles. The sales during the period for JLR slumped to 167,000 vehicles as
against 246,000 vehicles sold in the same period the year before.