Business Acquisitions and Problems affecting their Success
Mergers are situations where two or more businesses work together for the same strategic objectives. Sharing knowledge, technology, or other resources to improve the company’s overall capabilities is the most frequent justification for corporate mergers. Additionally, mergers can aid businesses in reducing their shortcomings, overcoming current obstacles, and gaining a competitive edge (Tamosiuniene & Duksaite, 2020). Companies that merge typically view one another as equals and work together to create synergy. Since mergers are typically concluded amicably. As a result, restructuring for directors and workers is made simpler.
The most recent acquisition involved Fitbit and Google. Fitbit’s stock price has fluctuated greatly to meet consumer demand. In 2015, the company had the biggest price increase of $53.91, followed by a decline of $2.81 in 2019 (Vande Walle, 2021).
Despite Apple’s market domination, Google Inc. struggled to establish itself in the wearable industry. Due to the hiring of Fitbit’s experienced staff and incorporating the best technology, software, and artificial intelligence, Google’s acquisition of Fitbit may increase competitiveness (Ko, 2020). The combination may significantly aid in expanding wearable technology, which would benefit the global market because Google is concerned about entering a wide range of health information while guaranteeing that Fitbit Users’ data is protected.
One issue that could prevent an acquisition from being successful is a communication issue. Information cannot be freely exchanged because of language barriers. It could be difficult for people who speak various languages to share knowledge. Language obstacles throughout the acquisition process hamper negotiations. Every time there is a breakdown in communication between the parties, the entire process is impeded. It is vital to justify an integration plan to members early to avoid linguistic roadblocks. Because of this, synchronization can begin as soon as they learn about the operations of a new company. In this situation, transitioning would take less time and resources because the materials would be well-planned and easy to understand.
Ko, C. Y. (2020). Why Did Google Buy Fitbit? The Propensity of Platform Businesses to Select Unrelated Acquisition Targets. https://s-space.snu.ac.kr/handle/10371/169079
Tamosiuniene, R., & Duksaite, E. (2020). The Importance of Mergers and Acquisitions in Today’s Economy. KSI Transactions on Knowledge Society, 2(4), 11-15. http://tksi.org/JOURNAL-KSI/PAPER-PDF-2009/2009-4-03.pdf
Vande Walle, S. (2021). The European Commission’s Approval of Google/Fitbit–A Case Note and Comment. Concurrences Competition Law Review, (3-2021). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3893079
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Using the Internet:
Research acquisitions currently underway and choose one of these acquisitions to discuss.
Based on the firms’ characteristics and experiences and the reasons cited to support the acquisition, do you think it will increase strategic competitiveness for the acquiring firm? Why or why not?
Of the problems that affect the success of an acquisition:
Which one do you believe is the most critical in the global economy? Why?
What should firms do to ensure they do not experience such a problem when using an acquisition strategy?
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