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Cross Border Mergers and Acquisitions in India Essay

The corporate sector all over the world is restructuring its operations through different types of consolidation strategies like mergers and acquisitions in order to face challenges posed by the new pattern of globalisation. The intensity of such operations is increasing with the de-regulation of various government policies as a facilitator of the neo-liberal economic regime. The intensity of cross-border operations recorded an unprecedented surge since the mid-1990s and the same trend continues.

Earlier, foreign firms were satisfying their market expansion strategy through the setting up of wholly owned subsidiaries in overseas markets which has now become a ‘second best option since it involves much time and effort that may not suit to the changed global scenario, cross-border mergers and acquisitions became the ‘first-best option’ to the leaders and others depended on the follow-the-leader’ strategy. The Indian corporate sector too experienced such a boom in mergers and acquisitions that led restructuring strategies especially after liberalization, Four types of growth strategies adopted by the firms.

Firms started with domestic production and began to export to the foreign markets, establishment of subsidiaries in overseas market was the next stage and as a fourth phase, firms started to acquire firms in foreign markets instead of establishing subsidiaries. The increasing magnitude of investment through cross-border mergers and acquisitions and its emergence as a major component of FDI even in the case of developing countries such as India, why firms are engaging in cross-border consolidations instead of establishing subsidiaries or to engage in export-oriented growth.

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