Research On The Impact Of Corporate's M&A On Cost Reduction-

As China's economic development has entered New Normal,the economic structure is facing serious supply dislocation issues.In order to resolve this contradiction,the state has proposed the Supply-side Structural Reform."Cost reduction",as one of the five major goals of the Supply-side Structural Reform,is of great significance for promoting economic development and ensuring employment and people's livelihood.M&A and reorganization,as an important method for the Supply-side Structural Reform,will help increase industrial concentration,unify industrial regulatory adjustments,and increase the orderly progress of industry operations,and will play a significant role in reducing costs.The merger and reorganization of Baosteel and Wuhan Iron and Steel Group led the precedent of China's supply-side structural reform,not only opened up new ideas for the development of the two major steel companies,but also provided confidence for the implementation of the entire supply-side structural reform.Therefore,on the basis of theoretical analysis,this paper chooses the case of Baowu merger to analyze the methods and risks of M&A and reorganization to reduce costs.On the one hand,it can provide reference for similar mergers and acquisitions in the future and provide effective guidance for relevant administrative departments in China in guiding economic reform.The enlightenment and hints have certain practical significance;on the other hand,it provides theoretical guidance for performance analysis and cost reduction and efficiency improvement of other companies' M&A and reorganization for reference,which has certain theoretical guidance significance.First,this article starts with the theory,briefly introduces the classic theory of mergers and acquisitions and reorganizations,and explains the impact of mergers and acquisitions and reorganizations on cost reduction from four perspectives:synergy effects,tax avoidance effects,economies of scale,and scope economies.Then,this article sorts out the background and process of the M&A of Baowu,including the introduction of the company,the drivers of the merger,and the plan.Next,this paper studies the cost acquisition and its influencing factors before and after Baowu's M&A,and introduces Baowu's methods to reduce cost in procurement,production,marketing,management,finance,and research and development from three levels:synergy,economies of scale,and tax avoidance.This paper analyzes the changes in the cost control capabilities of the enterprises after the merger of Baowu from three perspectives:synergy effects,scale effects,and tax avoidance effects.Finally,the research conclusions and enlightenments are summarized.This case analysis shows that mergers and acquisitions are an important way to promote the Supply-side Structural Reform.Enterprises need to focus on the integration of the later stages of mergers and acquisitions to reduce cost.This paper finds that after the merger of Baowu,the synergy effect in the R&D,manufacturing and management departments is more significant,which deepens the exchange of technical and management information between the two companies,improves production and management efficiency,and promotes the process of reducing costs and increasing efficiency;The scale effect is most obvious in the purchasing and marketing departments.Through the increase in business volume and the expansion of the marketing network,the bargaining power of the purchasing department and the service level of the marketing department have been improved,saving procurement cost and marketing cost;in terms of tax avoidance effects,mergers After the Baowu Group established a new financial company,considering the complementary and differentiated characteristics of the tax resources of both parties,it reduced the corporate tax burden by making up for net operating losses and tax deduction.