Mergers And Acquisitions Essay

707 words - 3 pages

The wine industry is one that is very unique and different from the standard food/beverage industry. Specifically, the wine industry relies heavily on the weather and the various businesses utilize the weather data in order to forecast and calculate their production quantity as well as the quality of their crops. The grapes life cycle is extremely sensitive to changes in temperature and is therefore, very cyclical. For example, “grapes grown on east-facing slopes exposed to gentle morning sunlight produce more complex wines than those from grapes with a western orientation and exposure to the hot afternoon sun. In addition, a large diurnal cycle (changes between day and night temperatures) ...view middle of the document...

Therefore, foreign competition is really not a major concern for domestic companies. They have been able to sell most of their wine domestically and there with the export tariffs, foreign competition is minimal, but definitely rising.
With the number of wine companies, mergers and acquisitions occur rather frequently and there are always arguments for and against these mergers. Anytime there is a merger or acquisition, it allows companies to cut some costs with both volume discounts and staff that are now performing operations for both companies rather than hiring double staff for each company. For example, instead of the same R&D operations being done at two separate companies, a combined company can cut costs in R&D or even delve deeper with the same amount of capital. The negative effect of this is lost jobs and higher unemployment. Also, when companies merge, they become larger, increasing their brand recognition and allowing them to advertise both companies’ products together, again saving costs and building the brand image. With the constantly evolving economy and population, larger companies are better prepared to...

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