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Business acquisitions are among the most important strategic investment decisions - Essay Example

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Pfizer’s presence in the UK is evident in its European R&D headquarters in Sandwich, with a workforce of approximately 3,500 people (Pfizer,…
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Business acquisitions are among the most important strategic investment decisions
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Download file to see previous pages The location of businesses in other countries, either in the form of greenfield FDIs, crossborder M&As or other forms of direct investment, entails a set of challenges and risks which impact on the business that seeks to gain entry into another country. One of this is the risk associated with currency exchange rates, which will be discussed in the succeeding section of this report. At this point, more attention shall be devoted to discussing the other sources of organisation risk.
Economic nationalism. In a report by the Economist Intelligence Unite (Chance, 2006), certain events the author chose to call “backlash” after decades of liberalisation and openness to FEI and crossborder M&As (more pronounced against M&As). Recent resurgence in protectionism against FDIs and M&As, for instance, is seen in the attempt to block the acquisition by Lenovo (China) of the personal computer (PC) division of IBM (US), and the takeover bid by Mittal Steel (Netherlands) for Arcelor (Luxembourg). Both of these deals, despite the attempts to prevent them, were consummated. Some deals, however, failed because they were successfully blocked by the local elements: CNOOC (China) of Unocal (US); Dubai Ports World of P&O Steam Navigation Company (UK), and Pepsi (US) of Danone (France). Behind some of these cases is the negative sentiment with which developed countries perceive takeover bids by companies in emerging markets, because of the impression (not necessarily justified) that these less-developed countries were more prone to undesirable behaviour such as poor standards of governance and less socially responsible behaviour. The shock of seeing Chinese and Asian companies, for instance, take control of prominent brand names, acquire technology, or securing natural resources has prompted a German politician to compare such investors to “the biblical plague of locusts” (Chance, ...Download file to see next pagesRead More
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