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Strategic Management

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You are part of a company who has made the strategic decision to acquire another company. There are two possible implementation strategies for this decision:

A. Merge the acquired company into your company. The result of this strategy will be one company containing the elements of both companies.

What are the pros and cons of this implementation strategy?
How will you know if the strategy is working?

B. Operate the acquired company as a separate business entity. The result of this strategy will be two separate companies under one senior management "umbrella" (the senior management team that is responsible for running both companies).

What are the pros and cons of this implementation strategy?
How will you know if the strategy is working?

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Solution Preview

A. The most obvious pros are a higher stock price, more capital, and using the advances and manpower of the company you acquire to advance your own company.

There are many problems with this however. First, if the company you choose is a lot lower in net worth than your own company and especially if it is in bad financial shape, this can lower your stock price with stockholders fearing that your company is going to lose value because of it. Also, integrating the staff of both companies can be challenging at best especially if one company has a very close knit staff and now you're bringing in a whole other group. I don't remember the case but it was where comp usa (I am not sure if it was exactly comp usa ...

Solution Summary

You are part of a company who has made the strategic decision to acquire another company. There are two possible implementation strategies for this decision:

A. Merge the acquired company into your company. The result of this strategy will be one company containing the elements of both companies.

What are the pros and cons of this implementation strategy?
How will you know if the strategy is working?

B. Operate the acquired company as a separate business entity. The result of this strategy will be two separate companies under one senior management "umbrella" (the senior management team that is responsible for running both companies).

What are the pros and cons of this implementation strategy?
How will you know if the strategy is working?

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