The Analysis of the Recent Microsoft's Acquisition of Skype - Research Paper Example

Acquisition is also used as a strategic tool for entering a foreign market, when other methods for achieving the specific target are not available (Coffey et al. 2001, p.52). In the above context, acquisition can highly enhance the organizational performance, under the terms that all its phases are carefully monitored; the readiness of the buyer to acquire an organization, with all the consequences of such initiative, needs to be evaluated in advance. The level of success of acquisition, as described above, is high and it is for this reason that managers of organizations worldwide prefer the specific strategy.

In any case, the use of acquisition for covering various organizational needs to meet specific requirements: if the cost of the process is estimated to be significantly higher from the expected benefits, then another strategy of this type would be preferred (Frankel 2005). Moreover, if the acquired firm is of different culture/ industry, then time would be required for aligning the aims of the two organizations. Under certain terms, the acquired company cannot support the activities of the new owner – probably because the cultural or operational differences between the two firms are so high that acquisition would not benefit the company that initiated the above process.

In accordance with Darby (2006) the successful completion of an acquisition process requires that accurate information are exchanged between the buyer and the seller in order for the assets of the acquired company to be effectively managed. Moreover, Coffey et al. (2001) note that every acquisition plan need to be carefully in advance regarding its costs; it is explained that if not all costs are estimated with accuracy - reference is made to the ‘purchase costs, administrative costs and integration costs’ (Coffey et al. 2001, p.52) – then the process is likely to fail, in the short or the long term.

From a similar point of view, Rock et al. (1994) noted that the key target of an acquisition should be ‘the creation of a strategic advantage’ (Rock et al. 1994, p.5), meaning that the specific process would help the firm to improve its position towards its competitors. Particular emphasis is also given on the successful integration of the acquired company within the business entity of the buyer (Rock et al. 1994, p.5). The decision of Microsoft to acquire Skype would be evaluated by referring to the issues discussed above.

Microsoft is a firm well established in the global market; in fact the organization is considered as one of the key competitors in the software industry – along with Apple (Yahoo Finance, 2011). The tools that Microsoft had already developed in regard to the direct – online communication, such as the Live Messenger and Xbox & Kinect, have performed quite well in the global market. However, still the firm did not have the control of the market, regarding products of such characteristics. Apple with a series of products/ software of advanced technology, such as iPhone and iMessage, had managed to get an important share of the market (Yahoo Finance 2011, Huo 2011).

In the above context, the acquisition of Skype would offer to Microsoft a key strategic advantage towards its competitors – especially Apple; such perspective is among the main causes of acquisition as a business strategy, as explained above (Microsoft News Center 2011). At the next level, Microsoft is a firm quite powerful, in terms of funds available for the