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Acquisition Strategy

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Acquisition Strategy

An acquisition strategy consists of a company having the agenda to further its success through acquiring other companies. Through acquisitions companies are oftentimes able to enhance resource strengths to gain a competitive advantage in their respective industries. We are seeing more and more companies with acquisition strategies in recent decades, fast becoming one of the major driving forces in many industries in America. Although acquisition relates more to the management, ownership, and financial arrangements than to corporate strategy, a successful acquisition will result in added or combined resources that lead to substantial competitive capabilities (Gamble 2010, p. 118). There are several reasons for a company to adopt an acquisition strategy: • To fill gaps in its product line • To obtain new technologies as opposed to developing the existing company in order to compete effectively • To expand its geographic coverage • To reduce supply chain costs and become a efficient organization • To lead the industry with a stronger position with combined products and /or resources (Gamble 2010, p. 120)

In addition, there are several positive outcomes that an acquiring company might see after acquisition: • Lower costs due to combined personnel and resources • Gained technological knowledge • More or better capabilities which enhance competitiveness • The ability to expand geographically • More capital to invest in further research and development, to add to capacity, and/or expand product or service portfolios (Gamble 2010, p. 151-152)

Michael Dell demonstrates how Dell’s acquisition strategy enabled the company to reach all of the above mentioned goals

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