Question

Strategic planning in a dynamic environment

12. What reasons account for firms’ decisions to use acquisition strategies as a means to achieving strategic competitiveness?

Answer 1

There are number of reasons why a firm would choose to opt for acquisition as a means to achieving strategic competitiveness.

1. Improving market reach and power : acquisition would allow firms to add to list of resources and capabilities and acquisition would come with a developed market base which would enhance a firm's reach. It'd also allow firms to lower down its costs which is what a firm would want in order to gain strategic competitiveness.

2. Facilitates market entry : there are markets which a firm can't enter due to some regulations or other issues but acquisition is a way which will result in firm entering a market which would otherwise be difficult.

3. Saving product development costs and time : acquisition can be a way to a firm gaining the rights to a new product which would save both time and costs of research and development for firm. A new product can help companies gain edge in the market.

4. Decrease dependency : by acquiring, firms can decrease their dependency on one product or service and diversify their product offering. In these uncertain times, this would help firms stay afloat even if one of the product or service fails.

5. Adding to capabilities : acquisition is one way by which a firm can benefit by learning capabilities from the firm they are acquiring which can help firms to strengthen their edge in the market.