Disadvantages of combinations

Corporate combinations may result in disadvantages for the merged corporation stockholders and consumers. Corporate mergers sometimes have negative consequences for the merged corporations, both from the standpoint of corporate performance and from the standpoint of worker satisfaction.

In some instances, especially in conglomerates, the managers of merged corporations may not have the necessary skills to supervise the production of newly acquired goods. and services. Lack of supervisory skills can result in decreased efficiency and profits.

Mergers also may result in added unemployment because of changes in business operations. Employees may be reshuffled and some people may be laid off. The employees who stay on the job sometimes suffer from low morale due to altered job descriptions or other negative changes that occur in the workplace. While mergers usually are beneficial for stockholders in the acquired company, almost half of all major mergers in the United States result in a decrease in the value of the purchasing corporation's stock. For consumers, one of the major disadvantages of corporate mergers is that they often lead to decreased competition in the marketplace. This lack of competition may result in higher prices for consumers. It also may limit the choices available to consumers by reducing the number of competing goods and services.

Words and Expressions

abandon v - покидать, отказываться, прекращать

absorb v - поглощать, всасывать

acquisition n - приобретение, поступление

charter v - давать привилегию

coal mine - угольная шахта

conglomerate combination - конгломератное объединение

corporate merger - корпорационное слияние