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to market 1–9 Acquisitions: Increased Market Power
• Market power is increased when:
– A firm’s size, resources and capabilities give it a superior
ability to compete.
ability • Market power is increased by:
– Horizontal acquisitions
• E.g., AT&T + T-mobile – Vertical acquisitions
• E.g., Oracle + Sun Microsystem – Related acquisitions
• E.g., Amazon + LOVEFiLM 1–10 Acquisitions: Overcoming Entry Barriers
• Overcome Entry Barriers
– Entry barriers are factors that increase expense and
difficulty in trying to enter new market largely due to
• Economies of scale
• Differentiated products • Overcome Geographic Entry Barriers
– Cross-Border Acquisitions are made between companies
with headquarters in different countries
– E.g., LDK Solar (NA market)
– E.g., Tata Motors + Jaguar & Land Rover
1–11 Acquisitions: Cost of NewProduct Development and Increased Speed to Market
• Internal development of new products is often
perceived as high-risk activity.
– Acquisitions allow a firm to gain access to new and
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This note was uploaded on 04/28/2013 for the course MGMT 491 taught by Professor S.cho during the Spring '12 term at Washington State University .
- Spring '12