|Subject Title||Research Methods|
|Assessment Title||Research Questions and Literature Review|
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|Format / Layout of Assessment (details of what to include) (cross the appropriate check boxes)||Report:|
ICMS Cover Page Table of Contents
Synopsis / Executive Summary Introduction
Findings Conclusion Recommendations Reference List Appendices
ICMS Cover Page Abstract
Introduction Body Conclusion
Recommendations Reference List
THE IMPACT OF MERGERS AND ACQUISITIONS ON HOTELS PERFORMANCE: THE CASE OF MARRIOTT INTERNATIONAL INC. AFTER MERGER INTEGRATION WITH STARWOOD
The merger and acquisition is a business strategy applied by different business entities for expansion in the market. The merger and acquisition strategy becomes failure due to mismatch of two corporate culture, high-cost debt, structure, staff working process, working ambience, lack of planning and production processes (King and Schriber 2016). There are many pitfalls, including benefits for application of merger and acquisition. The research is focused on the impact of merger and acquisition on the Hotel performance in context Marriott International merger integration with Starwood hotels & resorts.
Questions of the research
The research includes gathering information on the research topic; this information is gathered based on designed questions of the research. The questions provide a breakthrough to conduct research. The questions of this research are designed as follows:
II Literature overview
1. Merger and acquisition
The merger and acquisition are a financial and marketing approach, which helps a firm to evolve and expand itself in the market. In the process, ownership and management control of an organisation is transferred fully or partly to another organisation. In this case, either the acquire organisation takes full control of the host entity, or the host entity works as a subsidiary of the acquirer company (Brueller, Carmeli and Markman 2018). As per the strategic approach of the merger and acquisition, it helps an organisation to downsize or grow their nature of business and competitive edge in the market. In financial and legal terms, the merger and acquisition portray two different strategic approaches. In case of a merger, two different companies' joints their assets, liabilities, working process and management control to form a new organisation (Zhao and Pascual 2018). For example- A ltd. merges with the B ltd company to form a business organisation naming it C. In case of acquisition, a business entity takes all the control of stocks, debts, assets, management and operations of another entity. The consolidation of assets and liabilities are included in both of the transaction processes. It has stated that a merger and acquisition core reason is to provide some additional values and growth prospect to a business organisation performing in the marketplace. The impact of merger and acquisition usually described as positive for the business entities (Greve and Man Zhang 2017). In the case of applying the strategic option, Merger and acquisition, increase cash availability, operational and production process expansion, access to large market and customers, access to better market opportunities. In financial terms, the merger and acquisition expand the business entities market hold resulting in boosting its market share. On the other hand, the diversification is the second benefit, which is introduced by the merger and acquisition. The business firm applies this strategic approach in regards to enter in completely new m market. The merger and acquisition help an entity to learn about the trends, competition and environment of the market easy and efficient manner.
2. Efficiency theory
According to the efficiency theory, an efficiency business entity acquires less efficiency business entity to increase its market capability and potentiality. The theory explained theta the usage of merger and acquisition is made for enhancing the capability and efficiency of a business organisation in the market (Zhang et al. 2015). The business entities select a small business firm. It is necessary to ensure the product range, production process and managerial approach matched with acquiring organisation. Based on this, the business organisation takes the merger and acquisition decisions. The efficiency theory includes two-approach differential approach and inefficiency approach. According to differentiated efficiency approach, the business entities desire to acquire a firm, which has the ability to increase its market efficiency (Yılmaz and Tanyeri 2016). In the case of inefficiency approach, the business entity looks after the business process or business knowledge, which could be acquired from other business entities. In the economic terms, the efficiency theory is focused on the finest allocation of the resources. This means a company tends to acquire a firm to decline its expenses and investment in gathering raw materials and resources. The acquisition and merger itself provides an opportunity for the business entities to enter into an agreement with a small business firm, which has technologies, resources, raw materials suppliers connects required for further growth.
3. Agency theory
According to the agency theory or principle agency theory, it explains the success of merger and acquisition is based on the dependency of one firm on another firm. The agency theory states that the merger and acquisition approach is a matter of trust, planning and confidence over another organisation (Xu 2017). There are different strategic mergers that have been a failure in the market. The reason behind the detachment has been improper planning and observation about dependency on the merged or acquired firm. The theory explains that for the successful expansion of the business, the management requires to make a proper commitment towards maximisation of their won capabilities (Yaghoubi et al. 2016). It can be said that the agents are stated as the small business firms who could add value, profit, growth opportunity for an organisation. It is the responsibility of the management of the firm to decide which of the small firms could provide the high end of interest, benefits and profitability. Based on this, the merger and acquisition decisions are made by the company.
4. Merger and acquisition in the hotel industry
The globalisation has introduced different scope and opportunities to make growth and expansion for the hotel business entities in the market. The hotel industry has been using merger and acquisition approach widely in the context of expansion and entering into new markets. In the year 2017, there have been 65 merger and acquisition deals has been carried out which has worth in total USD 17 billion (Young 2019). There has been an increase of 13-merger and acquisition deals witnessed in the present year compare the year of 2013. In the current hotel industry, most of the hotels are applying this strategic option to enhance their technological output to increase their service quality. The merger and acquisition have been fall into the regular cycle of practice for the renowned hotel chains in the national and international market (Ft 2019). The increasing online travel tourism and accommodation booking services have developed decision of merging with small hotels to increase the number of rooms to provide better accommodation options to customers in the market.