Week 8 Acquisition/restructuring and international strategy

Question 1 why are acquisition strategies popular in many firms competing in the global economy?
Because of globalization, deregulation of multiple industries in many different economies and favorable legislation, the number and size of domestic and cross-border acquisitions continues to increase. Also, the acquisition strategies might increase a firm’s strategic competitiveness as well as its returns to stakeholder.

Question 2 what reasons account for firm’s decision to use acquisition strategies as one of means of achieving strategic competitiveness? Firms use acquisition strategies to: Increased market power, Overcoming entry barriers, Cost of new product development, Increased speed to market, Lower risk compared to developing new products, Increased diversification, Reshaping the firm’s competitive scope. Question 3 what are the seven primary problems that affect a firm’s efforts to successfully use an acquisition strategy?
Integration difficulties, Inadequate evaluation of the target, Large or extraordinary debt, Inability to achieve synergy, Too much diversification, Managers overly focused on acquisitions, Too large.

Question 4 what are the attributes associated with a successful acquisition strategy? 1. Acquired firm has assets or resources that are complementary to the acquiring firm’s core business.
2 Acquisition is friendly.
3 Acquiring firm conducts effective due diligence to select target firms and evaluate target firm’s health (financial, cultural and human resources.)
4 Acquiring firm has financial slack (cash or a favourable debt position.)
5 Merged firm maintains low to moderate debt position.
6 Acquiring firm has sustained and consistent emphasis on R&D and innovation.
7 Acquiring firm manages change well and is flexible and adaptable.