Meaning of Consolidation and Its Characteristics, Also Learn Examples in Various Fields

Kapanlagi.com - Consolidation is not a foreign concept in daily life. In fact, you may have already gone through the process before truly understanding the meaning of consolidation. However, the meaning of consolidation is not difficult to comprehend.

The meaning of consolidation is the process of combining two or more entities with the aim of gaining more strength. Consolidation is often seen as an effort to create a healthy and effective working environment. Unknowingly, you may have also implemented this.

Formally, this term is also used in various business strategies or fields. For example, corporate consolidation, accounting consolidation, consolidation of mass actions, and so on. Considering the widespread use of this term, it wouldn't hurt for you to start learning about it.

Here is information about the meaning of consolidation, its characteristics, and examples of its application in various fields for you to observe and learn.

1. Meaning of Consolidation

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Consolidation has several meanings according to its usage context. The Great Indonesian Dictionary (KBBI) explains three meanings of consolidation, namely:

1. The act of strengthening or reinforcing (relationships, unity, etc.).

2. The merger of two or more companies into one company.

3. The concept that there is a physical change in the brain after something is learned (in the context of psychology).

Although there are many meanings of consolidation, the essence of the term is the occurrence of merging, strengthening, and reaffirming something. The term consolidation itself comes from the Latin word "consolidatus" which means combining into one body.

In the process, consolidation seeks to merge several items into a larger entity. Consolidation becomes an effort to achieve a healthy atmosphere of cooperation among individuals and groups.

2. Characteristics of Consolidation

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In order to clarify the meaning of consolidation mentioned above, you need to understand its characteristics in the following example field. Consolidation is commonly done in business, when two or more companies merge. Here are the characteristics of business consolidation that you need to know.

1. Merger or combination of two or more companies to form a new company.

2. The old company is dissolved without liquidation process (payment to creditors and shareholders).

3. The merged company creates a new legal entity.

4. All assets and liabilities of each old company automatically transfer to the new company.

5. The consolidation plan has been approved by the General Meeting of Shareholders and will be documented in the consolidation deed before a notary.

6. The company has legal entity status on the date of issuance of the Minister of Law and Human Rights' decision regarding the merger without liquidation process.

3. Examples of Consolidation in Various Fields

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Consolidation can indeed be done in various fields. After understanding the characteristics and meaning of consolidation in the previous explanation, you also need to pay attention to some examples. Here are examples of consolidation in various fields that you need to know.

1. Business Consolidation

Business consolidation is an effort to merge two or more companies into a new company with a new legal entity. Business consolidation is done with the hope of expanding market share, profitability, and increasing the benefits from the merger of talents, expertise, and industrial technology owned by each company. Examples of companies resulting from consolidation include:

- Bank Mandiri, the result of the consolidation of Bank Bumi Daya (BBD), Bank Dagang Negara (BDN), Bank Ekspor Impor Indonesia (Bank Exim), Bank Pembangunan Indonesia (Bapindo).

- SmartFren, the result of the consolidation of PT.Mobile-8 Telecom Tbk (Mobile-8), PT. Smart Telecom (Cerdas).

2.Consolidation of Technology Knowledge

In technology knowledge, consolidation refers to the storage of data or server resources divided among many users and accessed by many applications.The goal of this consolidation is to achieve efficient computer resource utilization.In this way, servers and storage equipment can be more effectively utilized.

3.Consolidation of Mass Actions

The term consolidation is also often used during mass actions.Before taking action, the masses usually gather to discuss everything about the issue at hand.The masses need to combine their strengths to achieve common goals. An example of mass action consolidation is the Corrupted Reformation demonstration on September 23-24, 2019.

4.Consolidation in Accounting

Consolidation in accounting can provide a comprehensive picture of the financial position of the parent company and its subsidiaries, rather than the position of each individual company.The subsidiaries will be treated as if they come from a single entity.All cumulative assets of the business, as well as income or expenses, are recorded on the parent company's balance sheet.This information will also be included in the parent company's income statement.

KLovers, that is an explanation of the meaning of consolidation, its characteristics, and various examples in various fields.Listening to information like this will make it easier for you to apply it in your daily life.

(kpl/gen/ans)