Question

Question #4 – How are mergers and acquisitions, and strategic alliances used to achieve a company’s goals and objectives?

Meaning of the Question – Again, this is a strategic management question, and simply requires the presentation of how these various organizational actions and relationships are used to achieve their goals and objectives. This requires a presentation of what is a merger, acquisition, and a strategic alliance, since they are distinctly different in many ways. Each of these organizational processes have a number of supporting and related concepts and terms.

Answer 1

In today’s company world alliances became a very important strategy for organizations to expand. Statistics have verified that there has been associate degree increasing trend within the variety of alliances globally. Organizations ar sharply considering strategic alliances as a most well-liked style of growth together with alternative inorganic growth routes.

perceive the special options of every style of strategic alliance are-

1- Mergers:
A merger refers to the approaching along of 2 or additional firms to create a replacement entity or one or additional entities merging into alternative entity. therefore there's equal management over the combined entity & nobody company dominates the opposite. Usually, the management of each firms shares the management of the resultant company and names of each firms ar preserved for the ensuing firms. There ar several position samples of mergers – AOL Time Warner, GlaxoSmithKline (the second largest drug company within the world when Pfizer), Hero Honda (the leading bike complete in India).

2- Acquisitions:
Acquisitions, on the opposite hand, confer with processes during which one company buys the opposite company. In such a scenario the shopping for company absorbs the bought company into the prevailing company. Acquisitions will be applied either to eliminate competition by engrossing the competitive company or to expand {the company|the company} portfolio by holding the noninheritable company as associate degree freelance entity underneath the corporate management. This latter case is at the guts of the many conglomerates. News corporation Iraqi National Congress noninheritable MySpace, the leading on-line networking web site with associate degree calculable one hundred million registered users, not so as to merge it with the opposite news businesses, however to expand the company portfolio.

3- Alliances:
Alliance is associate degree approach during which 2 or additional firms conform to pool their resources along to create a combined force within the marketplace. in contrast to a merger, associate degree alliance doesn't involve the emergence of a replacement combined entity. every participant within the alliance retains their individual entity however like better to contend against competitors as a unified business force. The venture could be a very talked-about style of associate degree alliance. Recently, the world’s largest retail merchant Wal-Mart entered into a venture with India’s Bharti Enterprises to urge a toehold within the booming Indian retail market. This move was the sole approach Wal-Mart may have entered the Indian market as regulative restrictions disallow a completely in hand foreign chain to work within the Indian market. As such, this venture was a market entry strategy for Wal-Mart. contemplate another example – Costa occasional, the leading occasional complete across the united kingdom and Western Europe.

Mergers and acquisitions, and strategic alliances accustomed win a company’s goals and objectives such as-

- information and Resource Sharing
Pooling resources will continually increase the attractiveness of each partners. A information share will embody something from promoting skills to management to stigmatization to technical power. the mix of those shared resources will increase the worth {of every|of every} partner in an exceedingly approach that's inconceivable once each business acts alone. information and resource sharing typically will increase speed to promote, reduces operational quality and will increase price potency.

- Opportunities for Growth
A business will solely sustain and grow organically till they reach a definite ceiling, that is set by operational and money capability. This organic growth won't be adequate to satisfy the strategic growth needs of management or stakeholders, that means that a business cannot grow associate degreed extend itself enough while not the experience and support of an external partner.

- Access to focus on Markets
Entering a replacement market virtually actually involves overcoming localized risk and operational hurdles. Often, forming associate degree alliance with associate degree “on the ground” or native partner is that the solely thanks to enter a selected market. this can be very true once getting into developing countries or countries with restricted expertise managing foreign businesses.

-Economies of Scale
When firms pool their resources and permit one another to extend producing and distribution capabilities, economies of scale will be achieved. Forming strategic alliances with the proper partner and developing effective executional methods additionally permits smaller businesses to contend against larger competitors.