BUS 346 Study Guide - Final Guide: Greenfield Project, Takeover, Country Risk
SchoolSimon Fraser University
Course CodeBUS 346
ProfessorChang H Oh
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Acquiring a company in the same industry holds specific advantages and
• (time gains and resource gains) A well-orchestrated acquisition is the
most time-efficient entry strategy. This strategy involves instant
market penetration by acquiring resources such as capital, labor, plant
and equipment from competitor. Acquisition of resource will allow
the acquiring company to begin business promptly.
• (cost gains) Because it acquires an existing firm’s resources,
acquisition is also a less expensive entry strategy than greenfield
investment, which involves starting a company overseas from scratch.
• (market gains) Acquiring a company in the same industry signifies a
large advantage in itself. By acquiring a similar company not only are
you eliminating a potential competitor, but you are also potentially
transferring over an existing client base and supply base
o This is significant as it can take many years to build a significant
o Likewise, by establishing a presence abroad it allows firms
better access to market knowledge, and existing distribution
• (Resource gain) Acquisition are a great way to have access to a
competitor’s core competencies and resources that you currently
don’t have. Trade secrets etc.
• (Economies of Scale) -[add this to both pop-up and acquisitions].
Expanding abroad will allow the company to increase sales and
produce goods more cost efficiently. This will result in falling fixed
costs, managerial resource efficiency, specialization of labor, volume
discounts and financial economies (cite textbook pg388/131)
The disadvantages of acquisitions is as follows:
• (integration) Integrating two organizations can be extremely difficult.
If labor is being transfer over to acquiring company they may
experience cultural clash that can disrupt activities and job
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