Page "Mergers and acquisitions" Paragraph 77
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Wikipedia
The Great Merger Movement was a predominantly U. S. business phenomenon that happened from 1895 to 1905.
During this time, small firms with little market share consolidated with similar firms to form large, powerful institutions that dominated their markets.
It is estimated that more than 1, 800 of these firms disappeared into consolidations, many of which acquired substantial shares of the markets in which they operated.
Companies such as DuPont, US Steel, and General Electric that merged during the Great Merger Movement were able to keep their dominance in their respective sectors through 1929, and in some cases today, due to growing technological advances of their products, patents, and brand recognition by their customers.
There were also other companies that held the greatest market share in 1905 but at the same time did not have the competitive advantages of the companies like DuPont and General Electric.
These companies such as International Paper and American Chicle saw their market share decrease significantly by 1929 as smaller competitors joined forces with each other and provided much more competition.
The companies that merged were mass producers of homogeneous goods that could exploit the efficiencies of large volume production.
Due to high fixed costs, when demand fell, these newly-merged companies had an incentive to maintain output and reduce prices.
These " quick mergers " involved mergers of companies with unrelated technology and different management.
The new and bigger company would actually face higher costs than competitors because of these technological and managerial differences.
Thus, the mergers were not done to see large efficiency gains, they were in fact done because that was the trend at the time.
Companies which had specific fine products, like fine writing paper, earned their profits on high margin rather than volume and took no part in Great Merger Movement.
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