Week 16

In your own words and using referenced quotes describe the difference between organic growth, merger & acquisition and strategic alliance.

  

Organic development or growth refers to any company who has developed its own it house strategy by its own capability. They do not take any help of other firm for its development . The main reason for firms opting for organic development is

•       Knowledge can be enhanced
•      No need to search for suitable partner to merge
•       It enjoys independence and no need to make compromise

Merger is the coming of two different firm and joining as one. Both of the firm that mergers are more or less equal partners .  In the case of acquisition it is the taking over of total ownership of the other firm by more dominant company. Hence in acquisition there is no such thing as equal partner, but a total control by the company who just both a smaller company. The main reason for merger and acquisition are

•       Extension of market in terms of geography , products etc
•     Increasing efficiency
•        Enchaining its own capabilities 

Strategic alliance is when two or more firms comes together to form a positive partnership relationship to pursue its strategies. Strategic alliance are formed when different firms share its resources and activities to meet their common goal  The main reason firms that firms opt for strategic alliance are

•     Scale of economics , by reducing costs
•    Accessing alliances enabling them a wider distribution channel and brand name
•    Complementary alliances, hence all the firms can use their strength to helps its partner to overcome their weakness

Give an example of a company that has grown through organic growth , merger & acquisition and strategic alliance .

fig :- Kindle Ebook reader

Organic growth :- Kindle , Amazon used its vast resources to develop kindle to for e-book reader instead of asking Samsung or other company for development . Instead they used their in house resources to develop kindle tablet

Fig:- Merger of 2big giants

Merger & Acquisition:-  Compaq and HP merger together to compete against IBM in the laptop market, this merger was successful and it forced IBM to shift away from laptop market.

SPSS itself was a very good product but due to its limited resources it was not able to promote itself, IBM acquired SPSS then used IBM resources and its brand image to sell SPSS product

Fig:- Alliance of Nokia and Microsoft

 Strategic Alliance :-   Nokia and Microsoft has come together to compete in the smartphone market. Nokia has a vast experience in making mobile hardware and Microsoft has great experience in developing software. Both are using their best point to full advantage

Briefly discuss the merger between Britvic and AG Barr. What advice would you give to the new board?

My advice to the board is that since Barr has already good sales and good customer base, the merged company should use the brand name of Barr in its drink as it already a proven brand.  If they try to use a new brand name the old customers may be confused and not buy their products, and the new customers will not be ready to by a new brand drink from the market.

The newly merged can take advantage of its Britvic partnership with pespi for better distribution.  The newly formed company should also be able to utilized Britvic’s strength of lower  cost on margin bottling in order to have a better scales of economies.

References 
Johnson, Whittington and Scholes (2011) Exploring Strategy, 9 th Edition, Pearson Education, Chapter 6

Johnson, Whittington and Scholes (2011) Exploring Strategy, 9 th Edition, Pearson Education, Chapter 10

Phillippe Haspeslagh, 1999, FT Mastering Strategy