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Takeover Impact on Stakeholders

In: Business and Management

Submitted By stevey23
Words 1149
Pages 5
After Kraft announced takeover of Cadbury’s, it announced job losses. TWE do you agree that mergers and takeovers are not always in the best interests of their stakeholders (40)
A stakeholder is a group or organisation/institution that has an interest in or is affected by the success of a business. Many stakeholders would argue that takeovers/mergers are not in their best interests because the new ownership will usually cut jobs to reduce costs. This is because the new ownership are likely to have their own HR department, operations, management etc, therefore roles such as middle managers will be regarded as surplus to requirements. Cutting jobs would be supported by shareholders such as shareholders/higher management but opposed by employees and the local community as the firm would not be fulfilling their social responsibility. After cutting jobs, the firm will then transfer production overseas as another method of cutting costs which will be supported by management and customers (since the firm may reduce prices), however it will be opposed by the local community because of the job losses and impact on the economy incurred. However if a firm decides not to transfer production overseas they may introduce more capital intensive labour and replace human workers as a method of reducing long term costs which will be favoured by customers and shareholders but opposed by employees. However whilst most takeovers will favour the cutomer, the firm taking ownership may rise prices to improve their profit margins because the firm has removed a rival from the market and therefore the PED in the market becomes more inelastic because the customer has less choice, this would be supported by shareholders but opposed by customers. In the weeks after Cadbury’s were taken over by Kraft, job losses were experienced within Cadbury’s because of the aforementioned reasons of roles…...

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