Question

firms use acquisition strategies to:

• Increase market power
• Overcome entry barriers to new markets or regions
• Avoid the costs of developing new products and increase the speed of new market entries
• Reduce the risk of entering a new business
• Become more diversified
• Reshape their competitive scope by developing a different portfolio of businesses
• Enhance their learning as the foundation for developing new capabilities

Think of College of business , Imagine they are to acquire another business. Answer the following:

1.What business should they acquire(could be an existing one or fictitious)?

2.Which of the above bullet-point strategies would explain/justify the acquisition?

Answer 1

Solution

1.Any business can acquire some businesses that are related to it.It is very important they do it because they can reap benefit(s) in the form of diversification of their income sources,synchronization benefits and also benefits from econoies of scope.

(Say) there exists a ficitious College,Humana College of Enginnering,which is presently functioning for profit.

Some of the different businesses it can acquire can be online classes (it can provide it's video lectures for a nominal fee to the global student community),it can acquire a consultancy that can provide advice to student about persuing higher studies in their own country and/or abroad , they can acquire the businesses whose products they are using on everyday basis like chalks,books manufacturing,presses,publications,etc.,

2.I would take one example from the above list of probable businesses that it can acquire - Acquiring the business that manufactures chalkpieces and/or other stationary.

The strategies that would majorly work out over here is :Reduce the risk of entering a new businesses and Become mre diversified.

Reasons:

- Since chalkpieces / and other stationary manufacturing is a high margin business and also that they themselves consume the end products in huge numbers on continuos so there will not be risk due to low sales and also they can reap the benfits of lower cost of these products as themselves are the manufacturers and also their supply is safeguarded.

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