Hostile Takeovers Unethical? Why ? 2. What

¶ … hostile takeovers unethical? Why ? 2. What strategies turbulent, high-Velocity markets?

Do you think hostile takeovers are unethical? Why or why not?

A hostile takeover, unlike a willing merger or acquisition, is a takeover of one company by another company that is openly resisted by the board of directors of the targeted firm (Hostile takeover definition, 2011, Investopedia). The problematic ethics of hostile takeovers can be seen in the recent war between the American-based Kraft Foods and old, stalwart British chocolate manufacturing company Cadbury. Cadbury's chief executive criticized Kraft's takeover bid, citing the lack of ethics of "large, heavily indebted firms" like Kraft that were in stark contrast to Cadbury's independent spirit (Carrell 2010). Cadbury's CEO said "principled capitalism [was] woven into the very fabric" of his company, in contrast to Kraft (Carrell 2011). Without upholding long-standing corporate principles "you risk destroying what makes Cadbury a great company" (Carrell 2011). The merger with Kraft, he said, would destroy those principles.

One specific point of contention between Kraft and Cadbury was that Cadbury is committed to fair trade with Africa, a very important ethical ideal of the relatively small, family-founded company. Kraft, in contrast, is not committed to fair trade. This highlights the unethical nature of hostile takeovers. When firms do not agree to merge, the acquired firm's culture and business principles are subsumed to those of the other firm.

In some instances, it is difficult to condemn a hostile takeover, if the acquired firm is being managed poorly, and many workers are likely to lose their jobs if some substantial reworking of the firm's business practices does not take place. But because of the animosity generated by the move, and the fact that jobs are often lost as a result of the merger, "these types of takeovers are usually bad news, affecting employee morale at the targeted firm, which can quickly turn to animosity against the acquiring firm" (Hostile takeover definition, 2011, Investopedia). Few usually profit from hostile takeovers, according to history, including the acquiring firm.

Q2. What strategies are best for turbulent, high-velocity markets?

In volatile markets, the two dominant approaches used by firms are strategies of agility or absorption. In an agility strategy of nimbleness, an organization tries to "quickly spot and exploit market changes and shift resources from struggling divisions to more promising ones" to generate more revenue (Sull 2009). Investment in R&D, a liquid financial portfolio that facilitates reallocation and seizing 'game-changing' opportunities are all linked to an agility strategy. Agility is often favored because today, high velocity markets are characterized by swift advances in technology, low barriers to entry, "short product life-cycles and "frequent launches of new competitive moves "and" rapidly evolving customer expectations: (Kuzmicki 2010).

Agile strategies to cope with such volatility in the high-profit, high-technology sectors of the economy include aggressive investment in research and development; new marketing initiatives and product variations and creating an organizational structure in which it is easy to shift resources from one department to another, respond to the market environment, and develop a wide range of competencies. Using strategic partnerships further facilitates adaptability, as the organization can use the competencies of other entities. Collaborations makes becoming a 'first mover' in the market easier and more feasible, even for small organizations (Kuzmicki 2010).