Why are acquisitions such a popular method of strategic development despite the evidence that they are often unsuccessful?

The think for immediate objective of an acquisition is self - plain growth and expansion of the prep atomic number 18rs assets, gross sales and market sh ar. For example, the aim of integration of Salora and Luxor by Nokia was to arrange carrefourion in a to a greater extent optimal management and to utilise more than effectively altogether the possibilities of synergy, including integrating yield plants in a total product planning and turnout system BMW thought about acquiring bird of passageway as it was to small to survive on its own. However, a more fundamental objective whitethorn be the enhancement of shareholders riches by means of acquisitions aimed at accessing or creating sustainable rivalrous elect for taker. Such an advantage whitethorn stem from economies of scale, market strength or access to unique strengths, which the acquired company may possess. For example, BMW through acquisition of Rover was able to offer a rage of cars in every categor y. Basically, a company decide to acquire another company in raise to gain competitive advantage for the firm that could raise profits and speed the uptake to new markets. Acquisitions involve bringing together of two organisations with ofttimes disparate corporate personalities, cultures and value systems. This often centres around the problems of ethnic fit. Where acquisition is being used to acquire new competences this collision of cultures may arise because the organisational routines are so different in each organisation.

Cultural differences reflected the way that the decisions were made in the merchant bank and target compan ies. From the above discussion might be reas! on that success of acquisitions depend on how well the organisations are integrated. Sometimes, the desegregation process might be more difficult if acquisitions are driven by managerial ego or dear for power. Acquisitions driven by managerial self - interest may fail and cause wealth losses for shareholders. Successful acquisitions are wondrous from failed ones... If you want to get a full essay, order it on our website: BestEssayCheap.com

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