Beyond question, the mergers and acquisitions (M&A) space is a hot one these days as fierce global competition is forcing companies of all shapes and sizes to consider the "bigger is better" mentality. Restructuring issues aside, M&A seems to work out in the end.

OK, so maybe the Time Warner/AOL deal wasn't such a hot idea. After the 2001 merger, the profitabilty of the ISP division (America Online) decreased. Meanwhile, the market valuation of similar independent Internet companies fell dramatically. As a result, the value of the America Online division dropped significantly. By 2002, AOL Time Warner reported a loss of $99 billion -- considered the largest loss ever reported by a company at the time.

We really can't talk about M&A without giving Procter & Gamble (P&G) a mention. They've long been considered the supreme brand kings of the manufacturing community -- the kind of entity that other companies and industries emulate and look up to. Forbes does a nice job of providing a quick update on the company's $57 billion purchase of Gillette more than a year ago. While the article points out a brief IT integration issue that the company experienced in China, it appears that the problems are now behind them and best of all, P&G is applying the hard lessons learned to other operations in Latin America and Europe.

"Our sources indicate that the Gillette integration is progressing ahead of plan," said Nik Modi, an analyst for UBS Investment Research. Modi also said incorporating Gillette into P&G's exclusive distributors will lead to incremental growth for the company. While some might argue that $57 billion should buy a heck of a lot more than "incremental growth," it still sounds like P&G made a wise purchase. Why? Well, it all goes back to this IT integration thing...A Web site called Enterprise Integration Patterns has a pretty good handle on what it means to have an "integration issue," like the one P&G experienced:

Enterprises are typically comprised of hundreds if not thousands of applications that are custom-built, acquired from a third-party, part of a legacy system, or a combination thereof, operating in multiple tiers of different operating system platforms. It is not uncommon to find an enterprise that has 30 different Websites, three instances of SAP and countless departmental solutions.

And better yet:

Creating a single, big application to run a complete business is next to impossible.

While P&G is most definitely not running its business on one dinky application, the fact it was able to solve the Gillette problem so quickly speaks volumes.

And speaking of volumes, let's move onto the mining community, where "digging up base metals like copper, nickel, zinc and iron ore is arguably the very definition of an old-economy effort," according to this NY Times Piece.

But the merger activity involving companies that pull those metals from the earth has the mark of a new-economy fervor," the NYT piece says. The reason? They're flush with cash, as this excerpt points out:

…the fastest way to dispose of cash, and increasingly the most popular, is to expand production by buying other mining companies. As in most mergers, the buyers argue that the acquisitions will make the new company more competitive and efficient by giving it greater economies of scale.

Timothy J. Considine, a natural resources economist at Pennsylvania State University, believes we are in a period of high prices right now "that will not last several more years." It will be interesting to see if the current M&A activity in the mining industry will stem future demand problems.

Demand, coincidentally, seems to be the root of many evils in the business world and certainly can wreak havoc on a sound M&A plan, especially for the volatile airline industry, as this Pacific Times piece points out.

"Competition is good for consumers, but would less competition make the airline industry healthier?" the article asks. "Mergers between major airline systems would result in higher fares, less service, and materially less employment, without addressing the fundamental challenges facing the industry," the article states.

What is your take? If bigger might not be better for the airline industry, why does it make sense for others?