Requiring a Plan for Initiative: A Policy to Ensure Mega-Mergers Benefit Society
As Americans follow orders to “stay at home” and “social distance” until April 30, people are glued to their televisions and other media outlets for the latest news. The media is overflowing with stories about the coronavirus, and the effects of this unprecedented circumstance are extraordinarily impacting what U.S. News reports as key issues for America: healthcare and the economy (“2020 Explained: Breaking Down the Candidates, Key Issues and Battleground States”). American healthcare is truly being put to the test as the system is being overwhelmed with COVID-19 patients. Between producing tests, developing vaccines, and supplying protective gear for hospital workers, these missions are requiring all hands on deck. In an effort to make testing easily accessible, CNBC reports that companies, including Target, Walmart, and Walgreens, are going to utilize their parking lots for drive-thru testing (Hirsch). Abbott, a healthcare company, and the Federal Drug and Administration have taken urgent efforts to produce and authorize a faster COVID-19 test (Clifford). Johnson & Johnson and BARDA have partnered in a $1,000,000,000 effort to produce a vaccine (“Johnson & Johnson.”). The American Leather Holdings, LLC, a furniture manufacturer, is one of many companies that are diverting from their typical product line to manufacturing masks and gowns for front-line workers (“American Leather Holdings Companies to Begin Manufacturing Protective Masks”). Amidst this pandemic, the American economy is continuing to take a significant toll. The stock market has plummeted; unemployment rates are skyrocketing; and the government is rolling out large stimulus packages to try to save the economy. In the evolving coronavirus efforts, progress has been made with the joint efforts of many large companies and agencies, specifically those previously mentioned. Companies are contributing what they can to these united efforts to overcome the pandemic. This display of success of merged efforts gives way to a policy that should be enacted to enhance the state of mega-mergers in the American economy and society. Rather than merely passing antitrust laws, proposed mega-mergers should be required to outline how they plan to leverage their united efforts to be a leader in society. This would ensure that mega-mergers bring about positive change and efforts and not result in stagnant, massive corporations.
Capabilities of Large Corporations
In these trying times, companies are coming together to overcome an urgent crisis and are highly motivated in doing so due to many lives at risk. With time being of the essence, substantial progress has come from large companies working together. Brad Smith, President of Microsoft, built upon this idea as he stated “As large corporations, we can take this step and should. But not all businesses will be able to do so (Fleming)”. Hence, large corporations are able to take action because they have the funding to do so. Smaller companies simply do not have a wide enough margin in their budgets to allocate extra funding to these efforts. Why should large corporations only adopt this approach in the times of crisis?
If large corporations extended this approach beyond the coronavirus, substantial progress would be made to further developing different aspects of society, like technology, or combating ongoing issues, such as climate change. Corporate mega-mergers have the potential to be significant assets, not only to the economy, but to society as well. This potential needs to be acted up rather than rested upon.
Analyzing Mega-Merger Performance: Kraft-Heinz
Corporate mega-mergers have the ability to rest upon its large market and are susceptible to taking this easy way out and do so to maximize their profits. For instance, when the Kraft-Heinz merger took place in 2015, the corporation generated $28 billion in revenues. Rather than using this revenue to make a beneficial change in the market, Kraft-Heinz went on to cut its costs. Specifically, in 2014, Kraft Foods spent $149 million on Research and Development, but by 2019, Kraft-Heinz was only spending $93 million on R&D (Creswell). Regarding R&D and the revenue generated, the mega-merger could have been improving its products to enhance the industry, but instead it reduced its efforts for further development.
However, in the current situation, Kraft-Heinz has exhibited its ability to make a difference as one of the largest food companies. The company has donated $12 million in total, consisting of cash and product donations, to ensure that people do not go hungry during this crisis (“Kraft Heinz Commits $12 Million Globally in Support of Communities Impacted By COVID-19 Outbreak ”). This is the type of leadership and initiative that Kraft-Heinz should continually seek, not only during the pandemic.
Improving Mega-Mergers’ Impact
Currently, there is a mechanical flaw with establishing mega-mergers. Proposals are evaluated in accordance with the antitrust laws, but these laws do ensure that mega-mergers will be a greater asset in some way. Requiring proposed mega-mergers to outline their plan for enhancing society in some way will overcome the vulnerabilities for corporate mega-mergers to be stagnant and non-revolutionary. If these corporations wish to become and remain merged, they must plan and demonstrate how their united forces will bring about positive change.
This policy will be enacted through a mandate that will be used in the regulation of mergers and acquisitions. The mandate will require proposed mega-mergers to outline their plan for making advancements and an appropriate year to year timeline for fulfilling their plan. The government will assess the feasibility and effectiveness of this plan, in addition to the pre-existing antitrust laws, to approve or deny the proposal. The government agency will then check to make sure each merger meets their annual benchmarks. If the mega-merger fails to do so, it will receive a warning, and if the corporation fails to fulfill its plan again within four years of the first violation, the government will break up the merger.
Consequently, a system change will also be brought about in corporations. Whether their united initiative is through philanthropy, development, or advocacy, corporations will have to prioritize the mindset of making a difference rather than being motivated by market power.
Mega-Merger with a Purpose: ExxonMobil
In turn, society will advance, and issues will be combated. For instance, the ExxonMobil mega-merger has modeled what this policy will achieve in its effort to be an “effective global competitor.” In 2002, ExxonMobil served as a leader in taking action in the Global Climate and Energy Project, an initiative that seeks to find technological ways to meet the demand for energy while minimizing greenhouse gas emission (“Our History”). Since then, ExxonMobil has pursued partnerships and taken many actions with an environmental focus over the years: increasing oil production in algae with Synthetic Genomics, further developing production of unconventional resources with XTO Energy Inc, reducing greenhouse gas emission in plastics manufacturing with Georgia Tech, and more (“Our History”).9ExxonMobil is continuing to find ways to be an advocate for the environment while also meeting the demand for energy. Most recently, the mega-merger has been working on developing technology that removes carbon dioxide from emissions and has also invested $100 million in research and development for lower emissions with the U.S. Department of Energy’s National Renewable Energy Laboratory and National Energy Technology Laboratory (Leggate).
Societal and Economic Benefits of Mega-Mergers Establishing a Purpose
All mega-mergers have the potential to make this type of substantial impact. Recall that the President of Microsoft claimed that all large corporations have the ability to give the extra effort and should do so. Although he was referring to the pivotal position of large corporations in the fight against the coronavirus, society faces ongoing, long-term issues and challenges. From environmental concerns to hunger to new medications and more, there are opportunities across all industries for improvement or further development. Large corporations have the ability to play a role in these ongoing challenges and areas for improvement, and they should work to act on this potential.
In turn, not only will society be better off, these corporate mega-mergers will benefit the economy. As people gain trust in these corporations, people will want to invest in them and buy their stocks. Look no further than the current coronavirus situation to see this effect play out in the short-term. Amidst a plummeting stock market, Abbot’s and Johnson & Johnson’s stocks have been on the rise as they have made progress with other organizations in developing tests and a vaccine, respectively. Consider how this observation on the economy could play out through this mandate and system change, and imagine the overall economic health could improve in substantial ways.
Mega-Mergers Accomplishing What Exceeds the Capabilities of Small Businesses
Some may argue that enacting this policy could hinder the ability of smaller businesses that align with the same initiative that the mega-merger would be implementing. However, smaller businesses would still be able to compete. Smaller businesses tend to operate in more niche markets and are able to be more flexible and agile than larger businesses (Forbes Coaches Council). Given that smaller businesses operate in niche markets, this policy will allow corporate mega-mergers to be a vehicle for making widespread advancements. Smaller businesses may be able to make advancements on a smaller scale, but with the help of large corporations, these efforts will have a more extensive impact.
The response to the coronavirus pandemic has quickly demonstrated how great accomplishments can be made through the united efforts of large corporations. Let’s sustain this approach into the future with these mandates, and corporate mega-mergers will substantially improve all aspects of society.
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Works Cited
“2020 Explained: Breaking Down the Candidates, Key Issues and Battleground States.” U.S. News & World Report, U.S. News & World Report, 2020, www.usnews.com/news/elections.
“American Leather Holdings Companies to Begin Manufacturing Protective Masks.” AP NEWS, Associated Press, 30 Mar. 2020, apnews.com/Business%20Wire/fcd4f93745fd4685aac094475754a20d.
Clifford, Tyler. “Abbott Labs CEO on New Coronavirus Test Launches: ‘There’s a Need for More’.” CNBC, CNBC, 31 Mar. 2020, www.cnbc.com/2020/03/30/abbott-labs-ceo-on-new-coronavirus-tests-there-is-a-need-for-more.html.
Council, Forbes Coaches. “Council Post: 11 Advantages Small Businesses Have Over Large Corporations (And How To Use Them).” Forbes, Forbes Magazine, 22 July 2019, www.forbes.com/sites/forbescoachescouncil/2019/07/22/11-advantages-small-businesses-have-over-large-corporations-and-how-to-use-them/#740875b72037.
Creswell, Julie, and Yaffe-Bellany, David. “When Mac & Cheese and Ketchup Don’t Mix: The Kraft Heinz Merger Falters.” The New York Times, The New York Times, 24 Sept. 2019, www.nytimes.com/2019/09/24/business/kraft-heinz-food-3g-capital-management.html.
Fleming, Sean. “How Big Business Is Joining the Fight against COVID-19.” World Economic Forum, 2020, www.weforum.org/agenda/2020/03/big-business-joining-fight-against-coronavirus/.
“Johnson & Johnson.” Johnson & Johnson, 30 Mar. 2020, www.jnj.com/johnson-johnson-announces-a-lead-vaccine-candidate-for-covid-19-landmark-new-partnership-with-u-s-department-of-health-human-services-and-commitment-to-supply-one-billion-vaccines-worldwide-for-emergency-pandemic-use.
“Kraft Heinz Commits $12 Million Globally in Support of Communities Impacted By COVID-19 Outbreak .” The Kraft Heinz Company Press Room, 2020, news.kraftheinzcompany.com/press-release/financial/kraft-heinz-commits-12-million-globally-support-communities-impacted-covid-1.
Hirsch, Lauren. “Trump Asks Walmart, Target and Other Retail Giants to Help Tackle the Coronavirus Crisis.” CNBC, CNBC, 14 Mar. 2020, www.cnbc.com/2020/03/14/trump-asks-walmart-target-others-to-help-tackle-the-coronavirus-crisis.html.
Leggate, James. “Five Things to Know About Exxon Mobil, The World’s Largest Public Oil Company.” Fox Business, Fox Business, 1 Oct. 2019, www.foxbusiness.com/money/exxon-mobil-worlds-largest-public-oil-company-5-things-to-know.
“Our History.” ExxonMobil, ExxonMobil Corporation, 4 Sept. 2018, corporate.exxonmobil.com/Company/Who-we-are/Our-history.
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Questions:
- Is the organization effective? Any recommendations for how to improve the organization?
- Do the subtitles provide a good “roadmap” through the paper?
- Are there any other areas of opposition that you could foresee in addition to the concern for small businesses?
- What do you think of the pictures that I included? As a reader, what else would you like to see in graphics?
- Do you think I should have a graphic for each section or just have a few sprinkled throughout like they are now?
1. I think the organization of your paper is logical. I would not change anything in regards to this.
2. I would suggest adding something about the loss of employment due to megamergers when talking about oppositions.
3. I think the graphics were very helpful while reading. In terms of another graph, I would add a graph with how much companies spent on R&D before and after their megamerger.
4. I thought you did a great job with the thesis and supporting it. I would not change anything in regards to that.
5. I feel like the sources you used were great and really helped back up your thesis. I also think you did a great job with the implementation. I liked how you were able to incorporate it into the middle of the paper.
6. Your paper definitely handled the questions of feasibility. I would just discuss the problem of unemployment in regards to megamergers.
7. I think you did a good job with arrangement and would not change anything there.
8. The subtitles did a great job of informing about what each part of the brief was going to cover. So, I would not change anything there as well.
9. I would delete the one picture from the Kraft Heinz website. I think you could write about that in the paper instead of putting that picture there. I think you may be able to put another graphic there instead.
1). Answer any questions the writer may have posed about the draft
I like how you gave the example of a mega merger that did not meet the values that should be expected from such a merger, then contrasted that with on that proved to be very effective. The positive merger came after the description of the policy change, giving proof of a company that is the goal of the policy change.
I think the subtitles are good and help guide the reader through the issue guide.
The only other opposition I can think of would come from mergers that would like to take advantage of their power.
I think the graphics are appropriate. The second picture could give insight a little more into what exxonmobil is doing, as the logo shown doesn’t really add much to the piece. I felt like I kind of glossed over it without noticing.
I think you have the right amount of graphics spread throughout the sections.
2).
The thesis was very much convincingly argued and each part of it was discussed in the paper. I don’t think the thesis needs to be changed in any way.
3).
This essay used mainly previous examples of mega mergers and what several of them have done with their power. You discussed mergers that were and were not effective, and explained why. Statistics were also used when beneficial to the argument. The draft does not need stronger sources to support the argument.
4).
The piece explained very thoroughly how the policy would be implemented by the government, and how each step of it would be carried out. Objections concerning small businesses were also discussed.
5).
The arrangement does a good job of developing the argument and providing examples to show how the policy specifically would change how mega mergers are enacted.
6).
The structure was very good throughout the piece. My only suggestion would be to make the subtitle “Mega-Mergers Accomplishing What Exceeds the Capabilities of Small Businesses” a little clearer and more concise. This would give readers a quick idea of what they are about to read so they can quickly move through.
7).
If anything, I would suggest going more into detail about the system change that is mentioned several times in the piece. It is brought up but never really explained in depth.