AOl-Time Warner Merger - rationale for merger?

AOl-Time Warner Merger

2005

AOL-Time Warner Merger

I . Introduction

The maturity on communications and internet technologies has spawn a new model of the world 's economy , bless economy . The terminology refers to the existence of cross-nations or even cross-continents trade commerce , and other economics process . In internet era , companies need to remember that the Web is inherently global - when a company launches a Web site , it is accessible by a worldwide audience

In to spread organization wings and become a multinational enterprise , top managements of a company might take

various policies such as exploring new market , developing new products , or conducting mergers and acquisitions to strengthen companies ' presence in specific market

Mergers and Acquisition (M A ) are one way for a company to keep their business growing and getting bigger . According to the Securities Data Company , the dollar value of U .S (M A ) in 1996 recorded a 27 percent increase to US 658 .8 billion from US 518 billion in 1995

Concerning the attractive potential of becoming a powerful company , in this , we will discuss the rationale of merger between America Online (AOL ) and Time Warner that happened few years ago

II . AOL and Time Warner Merger : The Threat of New Economy

Evans and Wurster in their book , Blown to Bits , discuss another view of the current plethora of mergers that involve intermediary companies like financial services and newss business . They further question the rise of electronic networks and the information revolution

The authors of the book pay attention to the difference of information processing in two difference fashion : the new economy dealing with online news services and the old one dealing with business that involves value chains , supply chain and many others

In the book , the authors seem to worry about the coming of information era that potentially can smash up the old companies that still use intermediary supports . They describe this as melting glue in which information is the glue , which holds value chains and supply chains together . The things that we would not see in today 's online business since the pile of electronics connectivity has enabled the open and almost cost-free exchange of a widening universe of rich information This situation further make communications channels that used to tie people together simply become obsolete . Overall , this condition refers to the threat of new economy

Interestingly , in case of the merger between AOL and Time Warner , the combined company poses and represents both new and old ways of doing information-processing business . Time Warner represents traditional business structures that involve value chains and supply chains while AOL is well-known as one of the best provider of online service

Based on the authors of Blown to Bits , the merger might create a potential pitfall since they think the new economics of information (online business ) will blow all intermediary components to bits Furthermore , the authors show their fear that situation will soon create obvious destruction and reformulation that release company 's value and increases productivity (Evans Wurster...