Resource motives of mergers and acquisitions of corporations of different economic activities

Abstract

This publication summarizes the main resource motives of M&As of national corporations, which include access to raw material and intellectual resources. Technological chains of processing of raw materials were identified, allowing to carry out the grouping of enterprises of different economic activities to enterprises producing raw materials, enterprises manufacturing products of the first level of industrial processing (production of industrial demand) and production of second-tier industrial processing (production of consumer demand). The effectiveness of enterprises of the first level of technological chain depends on the efficiency of enterprises of the last level of technological chain of processing of raw materials.

Revealed dependence of activity processes of mergers and acquisitions manifests itself in dependence of mergers and acquisitions of businesses of the first levels of the processing chain on raw material processing enterprises of these levels of technological chain, and ultimately on business trends that are targeted to meet the massive consumer demand.

It is revealed that the level of industrial production and processing of raw materials (agriculture, mining, extraction of energy resources, etc.) has a significant share of material resources. Enterprises of the second level of industrial processing (metallurgy, petrochemical industry, petroleum, etc.) have significant both material and intellectual costs. Given the technological dependence of production, those types of production which are the structural elements of the process chain will implement its growth strategy using the vertical type.

Using the scoring and matrix approach all economic activities are ranked from those who have low material and labor costs, high material costs, high labor costs, high material and high labor costs. The effectiveness of mergers and acquisitions in selected groups depends on reduction of labor costs achieved through mergers and acquisitions of horizontal type, whereas reduction of material costs is achieved through vertical mergers and acquisitions.