Question

Do you agree with Canon’s decision to allow the two acquired companies to continue to operate independently? What are the pros and cons?

Answer 1

Prons :-

1. Speed- Acquisition is one of the most time efficient growth strategies,it offers the opportunity to quickly acquire resources and core competencies not cuurently held by company.

2. Market Power :- An acquisition will build market presence for both companies,increasing market share while reducing the competetion 's stronghold.

3. Financial Gain:- Acquiring organizations with low share value or low price earning ratio can bring short term gains due to asset stripping.

4. Reduced Entry Barriers:- Acquiring an existing entity can often overcome formerly challenging market entry barriers while reducing risks of adverse competetive reactions.

Cons :-

1. Hefty Costs:- Under some circumstances, the cost of acquisition can climb steeply,well beyond earlier projections. This particularly true in case of hostile takeover bids.

2. Integration Issues:- company cultural clash can errupt and activities of old organizations may not mesh as well as anticipated when forming the newly combined entity.

3. Unrelated diversification:- When an acquisition bring together diverse product or service lines, there can be difficulty in managing resources and competencies.

4.Distraction from operations:- When the acquisition faces too many challenges or timeline for completion streches out longer than anticipated, too much of the managerical focus is diverted away from internal development and daily operations.