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ArticleFile03 - Article File 3 Chapter 10 Corporate-Level...

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Article File 3 Chapter 10: Corporate-Level Strategy Formulating and Implementing Related and Unrelated Diversification Find an example of a diversified company that made an acquisition that apparently failed to create any value. Identify and critically evaluate the rationale that top management used to justify the acquisition when it was made. Explain why the acquisition subsequently failed. Since its inception in 1995, eBay.com has grown to become the world's largest online auction site. It went public in 1998 and began diversifying in 1999 with a range of acquisitions. It bought the auction house Butterfield in 1999, Half.com in 2000, PayPal in 2002. All of these acquisitions served the eBay core business of effective, customer-centered auctioning. In 2005, eBay acquired Skype, ostensibly because the latter grew virally like the former and because both use PayPal as a common payment method. Meg Whitman, Chief Executive Officer (CEO) of eBay, argued that Skype made an excellent acquisition because "it had some really nice synergies with PayPal and eBay. In the case of eBay, [there is] communication
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