Mergers, Acquisitions, and International Strategies
A well crafted strategy is crucial for business success in the both the local and the international market. Firms achieve this success by using business-level strategies or corporate-level strategies, or both. Business level strategies (such as cost leadership and differentiation) influence a firm's competitive advantage in its products and markets, while corporate-level strategies (such as mergers and acquisitions) affect the firm as a whole (Hill & Jones, 2012). Firms operating in the global market must also choose effective international business-level strategies and international corporate-level strategies. This paper compares an international company, Samsung, with a history of mergers and/or acquisitions, and a US-based company, Hibbert Sports, Inc., which is based solely in the US and does not have a history of any mergers or acquisitions. The paper specifically evaluates Samsung's acquisition strategy as well as its international business-level strategies and international corporate-level strategies. Also, the paper identifies one company that would be a profitable candidate for Hibbett Sports to acquire or merge with and proposes one business-level and one corporate level strategy the company should consider.
Mergers and Acquisitions
Mergers and acquisitions constitute important inorganic growth strategies for firms. A merger involves two autonomous firms joining to form a single entity, while an acquisition involves a firm purchasing another firm. Mergers and acquisitions are informed by numerous reasons, including financial synergy, economies of scale, growth acceleration, product and risk diversification, market share expansion, strategic realignment, as well as tax considerations (Johnson, Scholes & Whittington, 2010). For instance, for a banking firm contemplating venturing into the insurance industry, acquiring an already established insurance firm would enable the banking firm to enter the insurance industry more easily. As such, the banking firm would avoid the complexity of entering the insurance industry from scratch.
Mergers and acquisitions have been integral to the growth of Samsung. Samsung is a Korean multinational firm with interests in diverse industries, including consumer electronics, textiles, insurance, retail, food processing, chemicals, construction, ship building, and securities. Nonetheless, electronics represent the firm's major source of revenue, accounting for more than 70% of the firm's total revenues (Samsung, 2016). The firm designs, develops, manufactures, and markets a wide range of electronic...
The products are marketed in more than 100 countries around the world.
Founded as a trading company in 1938, Samsung has achieved tremendous growth over the years to become one of the most powerful business conglomerates globally (Samsung, 2016). Throughout its operational history, the firm has made several acquisitions. However, one important acquisition the firm made was the acquisition of Hanguk Jeonja Tongsin in 1980. The acquisition set the stage for Samsung's entry into the telecommunications hardware business. At the time of the acquisition, Hanguk Jeonja Tongsin was a major producer of telecommunications hardware in Korea. For Samsung, therefore, acquiring Hanguk Jeonja Tongsin was crucial for accelerating the firm's presence in the fiercely competitive electronics industry. In the 1980s and before, the global electronics industry was dominated by giants such as Nokia, Motorola, Sony, and Toshiba. With such intense rivalry, it would have been more difficult for Samsung to successfully gain considerable market share in the electronics industry.
Indeed, one of the major reasons why a firm makes an acquisition is to gain market share in a competitive industry (Hill & Jones, 2012). Rather than pursuing the target market from scratch, the firm acquires a firm already existing in the target market. With its expertise, technical knowledge, and market knowledge, the existing firm enables the acquirer to enter the market more easily. Hanguk Jeonja Tongsin would later become Samsung Electronics, which is today one of Samsung's major business divisions. Samsung Electronics embarked on a wide-ranging global strategy in the 1980s, setting up operations in Europe, Asia, and North America. Samsung Electronics is now the largest manufacturer of electronics in the world, especially smartphones, memory chips, and semiconductors. Clearly, the acquisition of Hanguk Jeonja Tongsin was a prudent choice for Samsung.
An acquisition may also be informed by the need to diversify product portfolio. Firms may diversify into different industries in order to spread risk and overcome product life cycle challenges (Hill & Jones, 2012). Samsung was originally established as a trading company, mainly focusing on groceries. By the 1950s, the firm already had interests in, among other industries, retail, securities, and insurance. In the 1960s, the company ventured into the electronics industry. The firm reinforced its presence in the electronics industry by acquiring Hanguk Jeonja Tongsin in 1980. Hanguk Jeonja Tongsin would soon become one of Samsung's main businesses, enabling the firm to have a more diversified product portfolio.
Whereas some firms use mergers and acquisitions as vehicles for growth, others elect to pursue organic growth. Organic growth is where a firm achieves growth by increasing output or customer base as opposed to mergers, acquisitions, and similar strategies (Hill & Jones, 2012). Hibbett Sports Inc., an American firm that retails sporting goods, is an ideal example of a firm that has grown without mergers or acquisitions. With its headquarters in Birmingham, Alabama, the retailer has operations in more than 30 states across the US. The retailer was founded in 1945, and mainly targets small and mid-sized markets in south, southwest, and mid-west US (Hibbett Sports Inc., 2017).
There are several candidates Hibbett can consider for an acquisition. First, it is important to note that a firm may acquire a…
Frainshmidt, S., Smith, A., & Judge, W. (2016). National competitiveness and Porter's diamond model: the role of MNE penetration and governance quality. Global Strategy Journal, 6(2), 81-104.
Hibbett Sports Inc. (2017). Investor relations. Retrieved from http://phx.corporate- ir.net/phoenix.zhtml?c=78137&p=irol-irhome
Hill, C., & Jones, G. (2012). Essentials of strategic management. 3rd edition. Boston: Cengage Learning.
Johnson, G., Scholes, K., & Whittington, R. (2010). Exploring corporate strategy. London: Prentice Hall.
Samsung. (2016). Consolidated financial statements of Samsung Electronics Co., Ltd. and subsidiaries. Retrieved from http://www.samsung.com/global/ir/financial- info/audited-financial-statements/
Acquisition Merger Acquisition International Strategies Merger, Acquisition, International Strategies Merger, Acquisition, International Strategies For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion. Corporation With around 12,000 employees, Yahoo is a multinational corporation that offers internet-based services. The company offers search engine,
Merger, Acquisition and International Strategies Mergers, Acquisitions and International Strategies A merger is a combination of two or more business entities with the aim of consolidating the resources that they have and creating a single entity with that. The process of merging is done through acquisition or direct pooling together of the resources available. Acquisition occurs when a firm buys a stake in another firm and assumes control of it. Acquisitions are
International Strategies Whole Foods Market (WFM) is a grocery store chain that has operations in the U.S., Canada and the UK. Competitor The Fresh Market (TFM) is based only in the United States at this point. While Whole Foods is substantially bigger, these two companies are close competitors of one another based on the similarity of their product lines and their target markets. This paper will analyze the strategic tactics of
Merger, Acquisition, And International Strategies Google, Inc.: From a humble beginning in 1998 of responding to about 10,000 queries by offering search engine services, Google, Inc. has grown to a gigantic multinational corporation providing immense and widely used, actually over 30, services with a search engine capacity that responds to more than 200 million queries daily. Using a combination of personal logging information and other information gathered from its spectrum of services and
Merger, Acquisition, And International Strategies Ford Corporation: The Volvo takeover It's imperative for the automotive companies to attain benefits of scale whilst developing latest products which is costing exceedingly high in the present business environment. Compared to the 90's the chances of attaining benefits of scale while saving costs has altered quite a bit. Model volumes have declined which creates difficulties for companies to attain economies of scale, while saving costs. Hence,
Mergers and Acquisitions The most recent worldwide economic meltdown that began in 2007 decimated the auto industry. Chrysler and GM were two of the 'big three' that did not escape without filing bankruptcy and restructuring; shedding thousands of jobs and debts in the process. Ford managed to escape this fate and the accompany government take-over but also suffered tremendous loss in terms of sales and employees. At the height of the