Developing a Product Internally - Assignment Example

One of the disadvantages of entering a new market through internally developed products is that it is very time-consuming, costly and it is very difficult to estimate how that product is going to do. An advantage is that you don’t have to deal with all the legal expenses an acquisition or merger requires, among other things. 

Amazon.com acquired LoveFilm International, Ltd in early 2011. Amazon already owned 42% of its shares since 2008, but now has fully acquired the company. LOVEFilm International, Ltd is a DVD-rental company in Europe much like Netflix Inc here in the U.S.  LOVEFilm allows its members to stream “films on devices such as Sony Corp.'s PlayStation 3 consoles and Internet television sets made by Sony and Samsung Electronics Co.” This is a huge opportunity for both companies and will eventually expand their market.

Your comment here:

Yes, both strategies have their advantages and disadvantages. But legal expenses must not be a big drawback as mentioned. The expense of developing a product internally and entering a new market also is huge. And it also consumes a lot of time to break even. But with an acquisition or merger, it is possible to make a clear prediction.  Acquisition of LOVEFilm by Amazon is a great move as LOVEFilm has a customer base and so does Amazon, both of which can now be collaborated giving Amazon the majority of the market share.

Person #2

An acquisition is a strategy through which one firm buys a controlling, or 100% interest in another firm with the intent of making the acquired firm a subsidiary business within its portfolio. In the past three years, Dell has made 12 acquisitions to further expand its solutions portfolio and the company. Such as Kace, EqualLogic, ASAP Software,  Everdream, The Networked Storage Company, MessageOne, Microsoft IT, Perot Systems, Exanet, Scalent, Ocarina Networks, and Boomi. The advantages of these acquisitions are that the appliance came in significantly less expensive than its competitors. Dell shares have risen 7.5 percent in the past year, more evidence of its growing credibility with Wall Street.

I believe Dell’s score businesses will continue to grow and acquired companies and technologies will reach rapid acceptance in the market

Your comment here:

It is absolutely true that Dell will continue to grow. The acquisition adds diversity to its portfolio and offers its customers numerous services under one platform. The acquisition has helped Dell diversify its business while at the same time sticking to its core business. Acquisitions have now added extra value to the core business.

Person #3

In 2000, Phillip Morris which is the parent company of Kraft Foods acquired Nabisco Foods and merge them together. The advantage of this acquisition is it can result in lower costs for customers, and also the benefit of having more technology. The disadvantage is the companies does not always see returns as fast as they expected, however with companies like Kraft Foods, Phillip Morris, and Nabisco Food all going together I think there is more advantage than disadvantage. It worked out well because today their stocks are up 0.06%.

Your comment here:

The lower cost to the customer cannot be guaranteed as a result of the acquisition but it definitely offers better technology and services to the customer. The disadvantage of not being able to predict the ROI is true but in a long run the acquisition is definitely beneficial as it increases the customer base resulting in greater market share for the company.