Acquisition Strategy Paper

Acquisition Strategy Paper

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Introduction

Mergers and acquisitions have become crucial strategies for many companies, especially when they do not have access to the necessary resources and supplies. Acquisition strategies serve as checklists for company owners to ascertain that all crucial issues are properly addressed, and the possible alternatives considered thoroughly, prior to the mergers. Acquisitions refer to a blend in which a certain company takes over another firm’s operations. This presents companies with favorable and  strategic options for attaining economies in their operations, thereby strengthening the competitiveness and competencies of the resulting company. In addition, it opens up other avenues for the company to operate in new markets.

TATA GROUP acquisition

The TATA group of companies has been one of the major players in the automobile industry. The group has been engaging in substantial acquisitions to such an extent that it has more than 90 companies in its fold. It has interests in various fields such as tea, automobile, telecommunications and steel among others. One of its most recent and significant acquisition was in January 2007 when it pulled of the largest takeover in India. It acquired an overseas company called Corus, an Anglo-Dutch steel maker. The acquisition, which cost the group $12 billion, propped the group to a prestigious position as the fifth largest producer of steel in the world. One year prior to the acquisition, the group had acquired NatSteel a Singaporean company, which has considerable presence in China, Thailand, the Philippines, Vietnam and Australia.

Cisco Systems Inc acquisition of Cerent Corporation and Monterey Networks Inc

In 1999, Cisco Systems Inc announced that definitive agreements had been reached to acquire the two companies for $7.4 billion in stock. The acquisitions allowed the company to enter a new market, optical transport market, which analysts predicted would be a more than $10 billion market. The acquisitions were considered significant since they broadened the optical product portfolio of Cisco, thereby helping customers to optimize on New World solutions. They also provided the service providers with a fast migration from the conventional circuit-based networks to packet-based networks and New World cells.

There are varied reasons and benefits that companies hope to achieve through the acquisition of other firms. All in all, the acquisitions are aimed at enhancing the competitive capabilities and strengths of the acquiring company.

Acquisitions increase the market power of the acquiring company. The acquisition of the steel maker by the TATA group increased its market power, propelling it to a pronounced position as the fifth largest steel producer in the world. This is the same case with Cisco, whose acquisition of the two companies enhanced its position in the market (Sam 2007). This is especially having in mind that Cerent is a leading next-generation optical transport products developer, while Monterey is a significant player in the innovation of infrastructure-class, optical cross-connect tec.............