Business Aquisitions - Essay Example

Business Acquisitions AFFILIATION: Business Acquisitions Introduction Now-a-days, the corporations are trying to undertake acquisitions for enhancement of their business operations. Recently, a number of firms have acquired foreign firms to capitalize on their unique abilities and resources (Nguyen, Yung & Sun, 2012). Considering the situation, it is imperative for CEO to evaluate the deliberate decision from every aspect of the business. As a foreign firm is being acquired, the existing concern will have to assess the operations and business avenues of the new enterprise.

There is a huge difference between the business styles of the two companies and successful acquisition can take place when there is clarity about all aspects of the subsequent enterprise. Motive behind acquisition Whenever an acquisition takes place, there is a wide range of motives behind it but the three most important ones are managerial, synergy and hubristic (Du & Boetang, 2014). A detailed review of the situation highlights that CEO has made the decision for attaining synergy as it lacks few resources possessed by the foreign organization.

It is even mentioned that this decision will allow it to be the market leader and such initiative will prove to be beneficial for the entire company. Moreover, it appears that there is managerial motive behind this choice because the person is expecting an increase in salary coupled with bonuses and other fringe benefits. As a result, there will be ample growth opportunities for the existing employees as they will be allowed to enhance their competence. The latest trend in the market is of competence based acquisition as it is a source of competitive advantage for all the firms.

Hence, the synergy and managerial excellence are the main motives in this scenario. Theory applied Traditionally, the classical approaches have been followed in such type of corporate decisions. With the globalization and advent of developments in IT world, the companies are undertaking acquisitions on the basis of either resource-based view or institutional-based view (Malhotra & Gaur, 2014). The situation at hand is in alignment with the resource-related approach as the acquiring of the foreign company will offer the firm an opportunity of employing the proficient resources available with the enterprise.

The present decision is in accordance to this tactic as it will make sure that the company has access to those sources which were unavailable with the firm. Also, it will allow the resulting corporation to gain leading position within the industry. In addition to the capital sources, the company will have access to the competent management team and employees who will be able to share their international business experience. Moreover, CEO will be able to capture a huge market share in the respective industry.

Conclusion As the latest trend in the corporate world is of Mergers and Acquisitions, the CEO is making a wise and strategic choice. The decision of acquiring the foreign enterprise will allow the new corporation to employ competent resources in strategic way. It will even provide an opportunity of growing in new foreign markets where the acquired firm has its presence. References Du, M., & Boetang, A. (2012). Cross-border mergers and acquisitions by emerging market firms: A review and future direction.

ACRN Journal of Entrepreneurship Perspectives, 1(2), 24-54. Malhotra, S., & Gaur, A.S. (2014). Spatial geography and control in foreign acquisitions. Journal of International Business Studies, 45, 191-210. Nguyen, H.T., Yung, K., & Sun, Q. (2012). Motives for mergers and acquisitions: Ex-post market evidence from the US. Journal of Business Finance and Accounting, 39(9-10), 1357-1375.