The trend toward globalization is rising and as globalization's popularity grows worldwide, companies are inclined to develop globally. Therefore, cross-border mergers and acquisitions (M&A) are becoming more fashionable these days as they offer increased opportunities and cheaper alternatives to building companies internally. However, a great majority believe that cross-border M&A is complicated and contains many variables that can lead to business failures.

The most popular motive behind many cross-border M&As is to increase a company's efficiency in production. Most companies top priority is profit growth and companies would take significant measures to achieve this objective. Mergers and acquisitions happen to be one of the ways a company can complete this objective.  Merging companies in the same industry allows companies to increase the scale of production. Additionally, business operations of the two merging companies may be very similar, easing the process of joining operations in order to share technology while also reducing costs. Take the acquisition between Walmart and South-African based Massmart as an example, because of its sheer size, Walmart can often decrease its expenses by buying in bulk and producing large amount of goods in each production cycle. Expanding its business to South Africa has increased the demand of Walmart products and has also increased product supply. Thus, Walmart becomes more productive.

Other than increasing economies of scale, cross-border M&As also expand market reach. In our case, Walmart has extended its market to South Africa by acquiring the biggest local retailer, Massmart. This has definitely increased Walmart's client base and has made Walmart more well-known to the world. Enlarging the scale of services in other countries also benefits companies by attracting diverse professionals with outstanding talents. These professionals from other countries can bring new ideas to the table and help the companies achieve its goals.

However, there are challenges and risks associated with cross-border M&As. Different countries have different business regulations, and therefore, labor and tax issues arise when integrating companies across borders. Also, developing countries usually do not have refined business market structure like developed countries do. This brings several complex variables to the M&A deal and complicates the business merging process.

Overall, cross-border M&As could increase a company's share prices greatly, but may obstacles can often result. Understanding the business structure of both countries involved in a M&A and learning from similar cases are imperative. In my opinion, although keeping pace with the rapid changes of globalization is important for a corporation, the decision maker should use all the resources available before investing in other countries.

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