Business Acquisitions and Problems affecting their Success
Mergers are events in which two or more companies decide to join forces with the same strategic goals. The most common reason for a company merger is to share information, technology, or other resources, thereby increasing the company’s overall strengths. Mergers can also help companies overcome existing challenges, reduce weaknesses, and gain a competitive advantage in the market (Tamosiuniene & Duksaite, 2020). Companies that merge usually regard each other as equals and thus assist each other in creating synergy. As a result, mergers are usually completed on amicable terms, making restructuring easier for directors and employees.
The latest acquisition was between Google and Fitbit. The value of Fitbit has been very volatile to adapt to the marketplace. The corporation faced the greatest price rise of $53.91 in 2015, followed by a $2.81 decrease in 2019 (Vande Walle, 2021).
Notwithstanding Apple’s market dominance, Google Inc. had difficulty making a name for itself in the wearable sector. Google’s acquisition of Fitbit could help boost competitiveness due to the hiring of Fitbit’s professional team and the integrating of the best artificial intelligence, software, and hardware (Ko, 2020). Because Google is concerned about entering a wide range of health information while ensuring that Fitbit Users’ data is protected, the merger might greatly aid in expanding wearable tech, which would profit the international market.
Among the problems that could undercut an acquisition’s achievement is a communication problem. Language barrier impedes the free exchange of information. Individuals that speak different languages could struggle to learn from each other. All through the process of acquisition, language barriers impede negotiations. The whole process gets hampered whenever communication among the parties involved breaks down. In this case, it’s necessary to justify an integration strategy to members early to prevent linguistic stumbling blocks. That enables synchronization to happen early when they learn about a new firm’s business. In this case, the materials would be well-planned, and comprehension would be straightforward, minimizing the time and resources spent on transitioning.
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 result in increased 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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