The merging of companies can cause some disadvantages if they’re merged vertically, which means that the businesses are able to consolidate their supplies and complete business processes in house rather, than subcontracting a number of functions.
One particular problem could be the organisation of upstream and downstream operations. New additions in the supply chain can affect the flow of the original operation and will require some shrewd management and supervision. Due to this, there could be a communication break down between managers and employees as the demand causes shortages at the start and final stages of the supply chain process.
Moreover, creating a vertical merger between companies tends to require a big investment in order to integrate all the operations and processes. This means that less money will be available for development in certain areas and research. Therefore, if changes need to be made in certain areas of the supply chain, then it could affect badly on other aspects of the company. In addition, if they can’t make any significant changes in the system then it could affect the quality and variety of the products as well as take a longer time to develop new products.
Another problem with merging companies is the diverse backgrounds and corporate culture of each of those companies. Vertical mergers regard companies that come from very different industries and sectors as opposed to horizontal mergers who aim to integrate companies that are similar to one another. This causes a problem because employees from all the various organisations may not be able to get along with one another because they are used to working in the same environments.
If a merger was to create a common culture for employees in each section of the supply chain, then it would take a long time to complete the process.
One particular problem could be the organisation of upstream and downstream operations. New additions in the supply chain can affect the flow of the original operation and will require some shrewd management and supervision. Due to this, there could be a communication break down between managers and employees as the demand causes shortages at the start and final stages of the supply chain process.
Moreover, creating a vertical merger between companies tends to require a big investment in order to integrate all the operations and processes. This means that less money will be available for development in certain areas and research. Therefore, if changes need to be made in certain areas of the supply chain, then it could affect badly on other aspects of the company. In addition, if they can’t make any significant changes in the system then it could affect the quality and variety of the products as well as take a longer time to develop new products.
Another problem with merging companies is the diverse backgrounds and corporate culture of each of those companies. Vertical mergers regard companies that come from very different industries and sectors as opposed to horizontal mergers who aim to integrate companies that are similar to one another. This causes a problem because employees from all the various organisations may not be able to get along with one another because they are used to working in the same environments.
If a merger was to create a common culture for employees in each section of the supply chain, then it would take a long time to complete the process.
