Study On Decision-making Of M&A Direction

Corporate mergers and acquisitions have more than 100 years of history in the West, with the fifth wave of mergers and acquisitions in the country, More and more enterprises participate in the ranks of mergers and acquisitions, although a group of enterprises has a rapid expansion through mergers and acquisitions, a considerable part of the merger ended in failure. There are many reasons for the failure of mergers and acquisitions, the wrong choice of target enterprises, to pay too much and negative integration, of which 80% is choosing the wrong target (Marks and Minis, 2001; Ou Gaodun, 1998) . Enterprises direction orientation is not accurate that brings about the wrong Choice of targets. However, theoretical studies on the direction of the M & A have focused on the correlation between the performance of mergers and acquisitions with the industry, Selection criteria of objectives and the factors affecting choice of target enterprises, and still not formed a complete system of M & A direction for specific studies. This paper attempts to explore the initial theory of directions of mergers and acquisitions.According a summary of the study review, the paper determines four dimensions of the direction of mergers and acquisitions, industry, region, size and profitability. Then it summers up a strategic choice idea for the mergers based on the theory of competitive advantage and the theory of the resource base in strategic management theory that locating the competitive environment of enterprises for background, comprehensively analyzes the resources and using their own resources to determine the most appropriate development strategy for the merger.The paper comprehensively analyzes the external competitive environment of the enterprise, and classifies the function activities for research and development, manufacturing, marketing and services in five parts, the corresponding resources, including human capital, financial capital, physical assets, information and capacity taking the value chain model of the resource-based as the tool. Then compares the various strategic resources and the enterprise' own resources of the five different functions to come to the resource gap. Enterprise resource gap including Redundancy and shortage of resources, resources redundancy is the M & A capabilities, and it also is the resource constraints of M & A; resources shortage is the needs of resources, the demand of resources must meet the constraints of M & A capabilities and the external environment, it is also the internal demand for resources of the M & A direction. Finally, the paper analyzes the preference characters of the resources shortage in different industries and regions, scale and profitability, determines the weight of resources to strategic importance, and then establishes the decision-making model of M & A direction According to the different weights of resources and preferences points, the scope of direction of mergers and acquisitions in the industry, region, size and profitability can be educed.The innovation of this paper is to determine four dimensions of the direction of mergers and acquisitions, find the gap between strategic goal resources and the available resources as the point of resources, and determine the internal resources demand of M & A for the constraint of the external environment and the redundant resources. Then it develops a decision-making model of the direction of mergers and acquisitions according the analysis of resources, and quantifies the four dimensions of M&A direction. The conclusion of this paper is hoped to provide theoretical and practical significance for determining the direction of mergers and acquisitions.