Question

In order to address the course learning objective. "...demonstrate your ability to justify if current Corporate Strategies work to achieve competitive advantage'..."

An eBay executive was once asked a question about some of the firm's new acquisitions. The question and his answer follows:

Q - With your other acquisitions, what have you learned about how to make them work, how to integrate them into the culture?

A - We think about acquisitions in three categories: acquisitions to strengthen our core, adjacent acquisitions, and capability acquisitions. The easiest are the first kind, like the acquisition two years ago of (the Korean auction site) Gmarket. We’re letting adjacent acquisitions, such as StubHub and Bill Me Later, run relatively independently. With Bill Me Later we’ve integrated core capabilities into PayPal and eBay. Positronic, a small search company, is in the third category. In many cases we’re buying the people—Christopher Payne, who’s running eBay North America now, was a founder of Positronic—which helps us integrate faster and acquire great talent.

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Now it is your turn. Please address the following questions:

1. What benefits would eBay have from allowing an acquired firm, such as "Bill Me Later" to function relatively independently?
2. Is it a good idea to impose the acquiring firm’s culture onto the acquired firms? Why? Why not?   

Answer 1

1. By allowing an acquired firm, such as "Bill Me Later" to function relatively independently, eBay would not have to put additional resources to carry out the operations and functions of the firm and also display trust on the acquired firm. This would motivate the employees of the acquired firm to perform even better and show their dedication to the parent company. Also the competitive advantage of the acquired firm remains intact by letting it function relatively independently and the productivity of employees increases as well.

2. No, in my opinion it is not a good idea to impose the acquiring firm’s culture onto the acquired firms because the employees of the acquired firm come under pressure to settle themselves quickly into the acquiring firm's culture and it affects their productivity and motivational levels as well. In my opinion, it is best to give complete freedom to the acquired firm to work and perform as per their own culture and not pressurise the employees to perform as per the culture of acquiring firm.