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Acquisitions

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1. Indicate and justify your choice of 5 (five) of the Strongest rationale for acquisitions.

2. Indicate and justify your choice of 5 (five) of the Weakest rationale for acquisitions.

3. Give 3 (three) examples of real-world acquisitions that were Successful because they used strong rationale (Must Indicate companies involved, year, and WHY the acquisition is considered Successful).

4. Give 3 (three) examples of real-world acquisitions that were Unsuccessful because they used weak rationale (Must Indicate companies involved, year, AND why the acquisition is considered Unsuccessful).

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1. Indicate and justify your choice of 5 (five) of the Strongest rationale for acquisitions.
The first strongest rationale for acquisition is that acquisitions help bring economies of scale. This is the most important rationale. When the acquiring company increases its production, economies of scale enable it to decrease its average costs. There are different ways in which economies of scale can help reduce costs. The organizational costs get reduced, for example, a lower number of administrative staff is required for running the new company. There are lower financial costs because a larger company enjoys lower rates of interest. In addition, there are economies in purchasing. Larger purchases mean larger discounts and relatively lower logistical costs for bringing in the raw materials. Most important if there are large fixed costs, the larger firm after acquisition will have lower average costs. The second strongest rationale for acquisition is that after acquisition, the joint firm will have a larger research and development budget and will be able to invent better products. The third strongest rationale for acquisition is that it provides a fast access to resources ...

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