Competing for ADVANTAGE 1 Chapter 9 Acquisition and Restructuring Strategies PART III CREATING COMPETITIVE ADVANTAGE
The Strategic Management Process
Merger and Acquisition Strategies Very popular strategies Especially cross-border acquisitions Offensive and defensive motives Problematic High failure rates Complex strategic decisions Impacted by economic volatility Uncertain returns
Mergers, Acquisitions, and Takeovers – The Differences Key Terms Merger Strategy through which two firms agree to integrate their operations on a relatively co-equal basis Acquisition Strategy through which one firm buys a controlling, 100 percent interest in another firm with the intent of making the acquired firm a subsidiary business within its portfolio or melding it with another division
Mergers, Acquisitions, and Takeovers – The Differences Key Terms Takeover Special type of acquisition strategy wherein the target firm did not solicit the acquiring firm's bid Hostile takeover Unfriendly takeover strategy that is unexpected and undesired by the target firm
Reasons for Acquisitions
Sources of Market Power Size of the firm Resources and capabilities to compete in the market Share of the market
Types of Acquisitions to Increase Market Power Horizontal Acquisitions Vertical Acquisitions Related Acquisitions
Horizontal Acquisitions Acquisition of a company competing in the same industry Increase market power by exploiting cost-based and revenue-based synergies Character similarities between the firms lead to smoother integration and higher performance
Vertical Acquisitions Acquisition of a supplier or distributor of one or more products or services Increase market power by controlling more of the value chain
Related Acquisitions Acquisition of a firm in a highly related industry Increase market power by leveraging core competencies to gain a competitive advantage
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