Mergers and Acquisitions - Implementation Strategy
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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.
1. What are the pros and cons of this implementation strategy?
2. 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).
1. What are the pros and cons of this implementation strategy?
2. How will you know if the strategy is working?
APA Style must include a reference list and all research should be cited in the body of the discussion. 5-7 paragraphs.
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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.
1. What are the pros and cons of this implementation strategy?
The pros of this implementation strategy are there are reductions in the cost of production. In addition, the company can take advantage of economies of scale. Further, the company can eliminate duplication of efforts. Most importantly, the functional departments can be unified leading to cost reduction. Integration of markets leads to greater bargaining power with distributors and customers. Larger purchases mean better bargaining power with suppliers and lower cost purchases. Synergies of technology and employees skills can be realized. It also means a quick expansion in capacity and overall increase in profitability (Sherman. A.J, & Hart, M.A 2006).
The cons of this implementation strategy include conflict of culture of the two organizations. Moreover, large scale layoffs lead to low levels of motivation and decline in productivity. Most importantly, if diseconomies of scale set in because of large size, there will be increase in costs. Further, ...
Education
- BSc , University of Calcutta
- MBA, Eastern Institute for Integrated Learning in Management
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