Global Business Strategy

Global Business Strategy

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Contents
Introduction............................................................................................................... 1
Background of the Acquisition process............................................................................. 1
Success of the strategy.................................................................................................. 1
Challenges in acquisition............................................................................................... 4
Recommendation for future........................................................................................... 4
Conclusion................................................................................................................ 4
REFERENCES........................................................................................................... 6

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Introduction
In various parts of the world, there are many mergers and acquisition going on in different
parts of the world. There have been several benefits of acquisitions done by the companies
and has helped them in creating a new set of values for themselves. Acquisitions have not
only allowed the companies to gain competitive advantage over the rivals but have also
helped the firm in terms of many resources and capabilities (Zahid and Shah, 2014). There is
negative side of the acquisition too when it comes to people not understanding the challenges
they might face due to cultural and management related dissimilarities. There are many
companies from the emerging countries that are trying to make their mark in the industry and
for this they have acquired well-established companies in other parts of the World. The case
of Geely a Chinese car makers acquiring Volvo from USA giant Ford has been discussed in
this report. It will analyse the strategy behind this acquisition and the way in which it has
helped Geely in gaining competitive advantage has been explained.
Background of the Acquisition process
In 2010, the Chinese carmaker Zhejiang Geely Holding Group signed a deal to purchase
Volvo from the US auto giant Ford. This was an acquisition that cost Geely a sum of US$1.8
billion. In this $1.3billion was paid in cash while $200 million was note payable to Ford. This
was one of the first of its kind where a firm from emerging country acquired the company
that is already a big name in the market (Fang and Chimenson, 2017). This was also a critical
case where the company from the eastern countries have acquired companies from western
part of the world. This proved that how there is emerging economies are becoming the power
centres. This is also an example of how Chinese firms are taking control of the market at the
international levels. It is also an example of how Chinese firms have expanded into global
markets through the help of the Foreign Direct Investments.
Success of the strategy
In today’s time, the companies that take risk seem to gain control of the market. At the same
time, in the today’s competitive environment, it is essential that companies find new sources
of income or adds to the capabilities they have. Acquiring Volvo was one of the biggest
decisions for this emerging firm from China (Nicholson, 2010). Volvo has a greater stake in