Criticize the disadvantages of mixed mergers and acquisitions

Enterprise resources are scarce. Enterprises that achieve diversification through mixed mergers and acquisitions have a minimum resource demand for entering the industry. To sum up, the minimum resource demand of enterprises is huge, but the resources of enterprises are always limited. Enterprises do not have enough resources, and the demand for resources will be far greater than the supply, so that the development of enterprises is always under the hard constraint of insufficient resources. The direct consequence of this is that enterprise resources are scattered in many business fields, which disperses the resource strength of enterprises in specific business fields, especially affects the competitive strength of core business or main business fields that need considerable resources to ensure, damages the profit "engine" of enterprises and brings risks to enterprises. In view of the fact that the resources of enterprises are always limited, only by putting resources into the fields that are most conducive to the long-term survival and development of enterprises can enterprises gain comparative advantages in the cruel competition.

The diversification pattern formed after mergers and acquisitions of enterprises belonging to different industries often leads to a sharp rise in management costs because of the low degree of resource correlation between enterprises. Resource relevance refers to the relevance, transferability and transfer efficiency between the existing resources of the enterprise and the resources owned or needed by the merged enterprise. Diversified operations with low correlation can't enjoy resources, which leads to low resource occupation efficiency, and management span and management failure lead to increased management costs, which further affects the failure of diversified operations after mergers and acquisitions. In addition, due to the highly dispersed business fields and different management modes in different fields, higher requirements are put forward for managers of enterprises, and the contradiction between centralization and decentralization within enterprises is also aggravated. If we don't grasp it well, it will easily lead to financial crisis. Mixed mergers and acquisitions involve industries that they are completely unfamiliar with. They basically have no experience, no talents, no social relations and only a certain amount of funds. However, if they put their money into an unknown black hole and underestimate the changes in the market, they still stay in the simple replication of successful experiences. The most direct consequence is a financial crisis.