With the increased partnership, companies have been coming together to form a big company. These huge companies have for long overpowered the economies of different countries. Small business or economic units have experienced the hurt from the dominance of the big tech companies.
Some of these big tech companies include Amazon, Google, Twitter, Facebook, and many others. However, over the recent years, various huge tech companies have received proposals by popular government officials to dismantle them into smaller units. Advantages of breaking up these big companies include:
1. Reduces monopoly: With existent of several business firms, the prices of commodities will drastically fall. Monopoly can be very dangerous as it encourages over-exploitation of the end-users or buyers of a service. Breaking big companies will thus lead to many smaller firms or economic units. As a result, the user can choose from any of the firms if they require certain services.
2. Leads to innovation: having many firms creates competition in the respective field of operation. Each of the small firms tries to find newer and better ways which are different from the existing ones. This promotes invention and innovation which is good in today`s tech world.
3. May prevent bankruptcy: In case a very big company notices that it cannot sustain itself as a whole, breaking up would be an alternative. Managers can easily manage smaller firms so as to fully regain economic stability.
4. Creates more options to the common consumer: A country with a few huge companies involved in supplying technological resources may lead to crisis. This is because one has a few choices to choose from. Breaking up the companies would thus increase the consumer`s options according to his or her preferences and dislikes.
5. Leads to high-quality goods and services: Due to reduced monopoly, each of the smaller firms that arises from the breakup of the big company strives to offer the best products and services to its consumers. Thus if more companies arise consumers should expect high-quality goods from the best of the firms.
6. Decisions are made promptly in smaller firms: Small firms make decisions more quickly. They will be able to decide and implement procedures more quickly and at a fast pace. This may promote small companies’ growth.
7. Fewer partnership disputes: Breaking up would lead to fewer clashes or disputes in the management of small firms. Peaceful management is very crucial to ensure smooth running and higher profits in a firm.
8. Reduces liabilities on stakeholders: In a huge tech company, any failure to pay debts that may arise brings shared liabilities to all the stakeholders. Breaking huge companies means proper management. It would eliminate debts or any liabilities encountered.
9. Will promote the growth of small economic units: Small firms will get a chance to compete favorably if big high tech companies are broken up. Take the instance of a very dominant online selling store.
10. Ensures credible investments: It is easier for shareholders in a smaller firm to decide and make deals concerning their shares. Breaking big tech companies will result in the rise of smaller economic units or firms. These firms will start to build profound investments corresponding to their ability.
1. Reduced capital: There is a reduced number of resources put for investment due to the reduced number of stakeholders after the breakup. This may have a huge limitation on the newly formed and small firms that arise.
2. Reduced borrowing capability: A bigger firm is able to borrow and repay larger amounts of funds without fear from lending organizations. After a breakup, smaller economic units or firms have low borrowing capacity.
3. May lead to fewer experts: Breaking up a big firm may sometime lead to firing some of the laborers. As a result, new firms will reduce their spending. This would affect the families of the employees as most of the staff are breadwinners in their respective families.
4. Discourages collaborations: Collaboration is very important in high tech companies. It leads to sharing of skills at a lower cost. Breaking up big tech companies inhibits collaboration in projects undertaken by the big firm as a whole. Stopping collaboration might also lead to the production of low-quality products or services.
5. Loss of crucial employees: During the split, some of the staff lose their jobs. Some of the staff may have special work skills that are hard to find.
6. Production of some goods and services may be lost: Such breaks ups could stop the production of certain commodities or service. Some goods or services can only be produced by a big tech company rather than the smaller units.
7. May impose some negativity on the economy: If a country enjoys huge earnings from exports, breaking the big tech company might lead to failures. This may, in turn, have an impact on the economy negatively.
8. Reduced tax advantage: Since the tax is imposed on each of the single firms, this may be a disadvantage to smaller firms. They will have to struggle to enjoy huge profits. Big tech farms have reduced tax burden since the tax imposed is shared among the stakeholders.
9. Disputes may arise during breakups: During the split, some of the shareholders may disagree on the sharing of benefits. This can lead to great losses to the firm in case of such a chaotic transition.
10. No assurance of profits: companies undergoing through breakups may not be a hundred percent sure that they will make profits after the split. This is a huge challenge that is dependent on the competence of the new management. Some companies incur losses after the breakup.