Business strategy concepts and applications

Business Strategy: Acquisitions

There are many reasons why acquisitions take place and capturing new capabilities is often the most popular of those reasons. However, other reasons include issues like financial gain and securing a target market based on a name brand. Of these two reasons, financial gain is relatively strong, and branding is relatively weak. No matter what the reason for the change, there are five important lessons to be learned by companies and their employees when dealing with acquisitions (Stopper, 1999):

Start early. Develop a vision and create an integration plan. Identify talent.

Implement restructuring sooner rather than later. Make changes quickly.

Dedicate resources. Select an integration manager and assign accountability.

Integrate operations and culture by focusing on results. Determine strategy.

Communicate strategically. Clarify messages and identify constituencies.

By doing all of these things, and doing them well, the theory is that everything that could go wrong with an acquisition or merger will be discovered before it has a chance to become a real problem for the company. Naturally, this is not the case and there are always going to be possible problems arising, no matter how carefully one plans an acquisition. Some of the reasons behind acquisitions, however, have a lot to do with how well those acquisitions actually proceed and whether they are handled smoothly.

Where financial gain is concerned, most acquisitions go well. A company decides to acquire a competitor. As long as there is no monopoly taking place, there really is no strong reason why the government would object to one company being acquired by another. This is different from a merger, where two companies combine to make one. Acquisitions usually involve a 'buying out' of one company by another (Ledermark, 2001).

When one company buys another for financial gain there is a lot of money spent on something like that. Companies that do this know that they will be gaining a lot, so they are willing to spend a lot (Stopper, 1999). These acquisitions are serious business dealings that require a lot of forethought and a lot of work to get through, but they are well worth it in the end because they cause a great benefit to the company that made the acquisition. Often, any problematic conditions also improve for the company that was acquired, although this is not always the case.