The Research Of Synergy Based On Internal Value Chain

With the surging economic tides,the companies must continue to enhance the strength in order to remain invincible in the ever-changing business economy,and an important means to enhance the company strength is to expand size.There are a lot of ways to expand size,among which business combination,as one of the ways of expanding business scale with the shortest time and the fastest effectiveness,draws wild attention in the current market.The successful mergers and acquisitions can bring huge profits for the companies,but there are also high risk hidden in these huge profits.The failing Mergers and acquisitions cases have been common in the market,and the Mergers and acquisitions failure rate is also rising on a yearly basis.The failed Mergers and acquisitions not only make the companies not achieve the goal of enhancing their own strength,but also the high costs for the implementation of mergers and acquisitions would decimate the merging parties.It becomes an important issue to be solved in academia and industry how to make the companies increase revenue and reduce risks in the in the mergers and acquisitions process.Taking control of target companies is only a small part of the acquisition,while the real mergers and acquisitions start from determining the plans for mergers and acquisitions and looking for targeted companies.After taking control over the target companies,integrating the resources of both parities is also highlight in the mergers and acquisitions process.Whether the effective integration of resources can be achieved largely determines the success or failure of the mergers and acquisitions.In the evaluation of the effectiveness of the resources integration,we should focus on whether the companies involved in the merger can achieve the merger synergies after the process.How to achieve the merger synergies becomes the focus after the merger.This paper adopts value chain analysis to analyze the merger synergies and provide constructive advice for the realization of synergies after the mergers and acquisitions.This paper,taking COFCO's merge of Mengniu as an example,changes the usual practice of considering the merger synergies from the three aspects of operational synergies,financial synergies and management synergies in the past and focuses on the exploration of paths to realize the synergies from the fundamental activities and support activities of the enterprise value chain.The paper find the efforts COFCO and Mengniu make for the realization of merger synergies by understanding the COFCO and Mengniu's management before and after the merger and determines whether the merger synergies have been effectively realized by comparing the companies value before and after the merger.The paper adopts the case analysis of combination of theory and practice,with internal value chain theory,Merge theory and M & A synergy theory as basis and with COFCO's merger of Mengniu cases as the core,and starts from the enterprise internal value chain to run a brief analysis on Mengniu merger synergies.The chapter 1 introduces the relevant literature,research ideas and research methods of this paper and framework of this article.The chapter 2 introduces the definition of internal value chain,companies mergers and acquisitions synergies;gives an overview of Porter value chain theory,company resource theory,company merger theory and other theoretical basis and the implementation path and evaluation methods of merger synergies based on the internal value chain.The chapter 3 outlines the internal and external environment of COFCO and Mengniu during the merge process,the motives and processes of COFCO's merge on Mengniu and the impact of mergers and acquisitions on COFCO and Mengniu.The chapter 4 and Chapter 2 echoes with each other and mainly state the realization paths and evaluation methods of merger synergies between COFCO and Mengniu from three aspects of basic activities,production support activities and infrastructure support activities.Wherein the basic activities include three aspects of warehousing activities,production activities and marketing activities;production support activities focus on technical studies,procurement,and basic production resource integration;basic supportive activities run brief analysis from three aspects of financing activities,management modes and human resources.The chapter 5 presents enlightenment based on case studies,and this paper believes the clear motives for merge contribute to the achievement of merger synergies,while the achievement of merger synergies depends on a reasonable assessment of their resources,and strategic merges is in favor of the continuing effect of synergies.At the same time,the paper clearly states the success of mergers can be guaranteed by clearing out the strategy and their respective advantages,timely optimizing the value chain structure and all-round promoting companies cultural integration.The paper,through analysis on COFCO's merge Mengniu and starting from the perspective of internal value chain,shows that company merger is essentially a full range of integration of both parties' resources and the evaluation criteria for successful merger should be whether the merger synergies are achieved.The premise of enterprises' merger synergies should be the correlation between both parties' value chain before the merger;the path to achieve merger synergies should be effective integration of both parties' resources after the merger as well as optimization and upgrading of both parties' value chain.In short,in order to achieve merger synergies the companies should fully integrate the internal and external resources of merger companies,improve the use efficiency of resources,reduce costs and increase company value.