Strategic Market Expansion through Joint Ventures- Balancing Local Expertise and Shared Risk

Strategic Market Expansion through Joint Ventures- Balancing Local Expertise and Shared Risk

The acquisition market entry strategy will be used with Verizon Communication Inc.’s global expansion plan. According to Dringoli (2016), the acquisition strategy is a transaction between two companies whereby one company buys part of or all of another company’s assets or shares. The main aim of the acquisition plan is to take control of and profit from the target company’s strengths (Tielmann, 2010). The acquisition strategy is the best expansion strategy for Verizon Communication Inc. because the company has a history of successful strategic acquisitions, such as acquiring Terremark through a short merger. Subsequently, this helped Verizon Communication Inc. gain a competitive advantage by providing integrated cloud solutions that business enterprises could use. The company also acquired Alltel Corp in 2009, enabling it to become the largest wireless service provider in the United States.

One of the advantages of using the acquisition strategy to expand globally is reduced entry barriers. According to Tielmann (2010), acquisition reduces entry barriers by enabling a company to enter new markets through a brand already recognized in the market. Another advantage will be market power. Verizon Communications Inc. will increase its market share through the acquisition strategy to acquire the target company’s customers and its brand equity. However, the company may experience a clash of different cultures because the target company’s culture and the company’s culture are different.

Verizon Communication Inc. may also face the risk of integration issues. According to Young (2013), integration issues occur in acquisition due to differences in opinion, especially when there is no plan for handling operations after the acquisition. Integration issues may also arise from a lack of cultural fit, thus making it hard for a company to operate in the new market. For instance, a target company may be entrepreneurial while the acquiring company is innovation-focused, thus creating issues on the direction that should be followed to maintain operations

References

Dringoli, A. (2016). Merger and acquisition strategies. https://doi.org/10.4337/9781786430687

Tielmann, V. (2010). Market entry strategies. GRIN Verlag.

Young, G. R. (2013). Mergers and Acquisitions: Planning and action. Routledge.

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This week’s reading assignment introduced several foreign market entry strategies (e.g., FDI, Licensing, Franchising, Joint Ventures, and other contracting agreements). Global sourcing was also presented as a foreign market entry strategy during Week 6.

For this discussion, identify the foreign market entry strategy for your global expansion plan. Provide a brief description of the strategy and your rationale for the selection, including advantages, disadvantages, and risks.