Mergers and Acquisitions: Strategic Development of Knowledge

This paper focuses on the importance of mergers and acquisitions in the strategic development of knowledge for organizations. It discusses how knowledge acquisition drives business activities and provides examples from the literature. The paper also highlights the role of mergers and acquisitions in gaining competitive advantage and expanding market share.

Mergers and Acquisitions
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"Mergers and acquisitions are the keys to an organisations strategic
development of knowledge. Knowledge acquisition is what drives
organisations to carry out these activities"
Mergers and acquisitions are the transactions in which ownership of the company with
the other corporate or their functioning units are majorly moved with the different other objects.
In this, the mergers are referred to like the combination of the two companies while on the other
hand acquisitions are one company is taken by others in terms of operations. In the present
corporate world, M&A is considered as major element due to which the companies are able to
grow in the competitive environment. This paper majorly focuses on the mergers and
acquisitions that are considered as important key for the company’s strategic development of
knowledge that is evident with the support of the literature and different examples. Further, the
paper also shows the way through which knowledge acquisition drives the companies to perform
their business activities.
According to the view of Lodden, 2012, an acquisition is considered as an outright
purchase of the business by another organisation that is performing the business in the market.
This has been found that majorly acquisition of the company takes place when one company
attain the maximum number of shares to get the gain on ownership. For example, US retail giant
Walmart Inc will preference up approx. 77% of the stake in India's largest online retailer Flipkart
for approx. $16 billion positively after doing talks for more than 20 months (Economic Times,
2018). This witnessed that acquiring shares is one of the effective ways of acquisition. This has
been found that the acquisition was considered as the world's biggest purchase of the e-
commerce company.

Further, the research reflects that merger is, in theory, a collaborative contract by two
businesses to get association with their interests, ownership, and structures into one business. In
the present world, most of the companies get to indulge in the merger or acquisition due to
economies of scale, economies of scope, knowledge, market share, research and development
(Deshler, 2018). This has been found that in overall, the mergers and acquisitions are accessible
as extremely balanced policies that have clear sort of purposes as well as goals.
In the last 20 years, this has been found that there is a tremendous boom in the mergers
and acquisitions strategy that are majorly adopted by the company with the motive to enhance
the knowledge that is further used by them in performing the business activities. In the high-
technology industry, the acquisitions are the only way through which the company can gain new
knowledge and expertise to be capable to keep up with the opponents (Nelson, 2018). Along
with this, the companies found that competitive advantage over the competitors, mergers and
acquisitions is the only way to get faster than to form new products internally. Mergers and
acquisitions are acceptable majorly by retrieving and forming the new knowledge because they
offer a chance for developing the knowledge.
In addition to this, the mergers and acquisitions are increasing because large companies
are facing the competition due to which they want to improve their market share and market
knowledge so that they can easily deal with their competitors that are present in the market
(Lebedev, Peng, Xie and Stevens, 2015). For example; In the year 2018 August, Vodafone's
Indian subsidiary and Idea Cellular has received the final approval for their merger from the
National Company Law Tribunal (NCLT). This deal has supported the company to work
together since last year. This offers the opportunity to form India's largest telecom operator by
the number of subscribers, which is 430 million, and revenue market share that is 37% (Dhillon,

2018). This has helped the two struggling companies fend off competition from major market
leaders that include Reliance Jio and Airtel. In this deal, this is very clear that both the
companies will share their knowledge, which helps them to conduct the activities against their
competitors.
This has been found in the research, that mergers and acquisition take place in every
industry that can be at increasing pace. The multinational companies are obtaining new product
line for diversification to complete a product range. For instance; Intel that was currently
overtaken by Samsung Company as one of the world’s major chipmaker which has been move
into the independent driving space with its purchase of Israeli visual sensor company Mobileye
in August. This merger and acquisition shows the way it brings the new outlets for the company
that helps them to deal with the competitors present in the world. In addition, this acquisition
leads to the knowledge about the changes that can leads to the effective operations of products.
In the research, this has been found that gaining the knowledge with the help of
acquisitions might allow the company to expand its products and services without any risk that is
involved in the internal innovation. This is the reason due to which it has been found that
acquisitions work as vehicles to access and handover tacit knowledge (Junni, Sarala, Tarba and
Weber, 2015). This clearly proves that Mergers and acquisitions is a key to an organisation-
planned development of the knowledge. In addition to this, many factors prove that these
strategies contribute effectively in enhancing the knowledge of the company. Mergers and
acquisitions lead to the flow of information between the two parties that leads to a share of
knowledge. This knowledge can be related to international knowledge transfer or the national
transfer of knowledge.

This has been found that earlier, the knowledge transfer was majorly considered as one-
way communication that was majorly done from the acquiring business and often is compulsory.
However, talking about present stage, the knowledge transfer is done both the habits. This
knowledge sharing includes making the company aware of the organisation's ability in terms of
shares, resources, expertise and many others. This knowledge helps the acquiring company to get
aware of the increasing competitive advantage of an organisation. This knowledge helps the
company to develop a strategic improvement in the operations that are conducted by them in the
present world. Knowledge acquisition leads to the implementation of the new product and
processes in the market that will help in improving the competitive advantage. In the research, it
is found that knowledge which one company share with the other company might be true or not
as it totally depends on the market research by the organisation. This means that the strategic
development of the knowledge can be done but the accuracy of the knowledge cannot be judged
as it totally depends on the company.
The mergers and acquisition of one company to another lead to the knowledge about the
country and its economy were they are operating the business. The development of this strategic
knowledge will further help the companies to expand their business operations and activities
with the motive to earn a profit. This has been witnessed with the current example: Wal-Mart
decision for acquiring Flipkart that is present in the Indian market is to attain more knowledge
about the Indian market. This has been found that acquisition helps the company to understand
and contribute to the Indian economy with the motive to form a strong local business. The
investment will also help Wal-Mart in understanding the skilled job and opportunities that can be
acquired by them for smooth activities (Nair, 2018). This shows that the Wal-Mart company
acquisition with Flipkart has offered the benefit of understanding more about the country.

Mergers and acquisition not only give the benefits to the company about the market and
country but it also helps the company to develop knowledge about the competitors that are
present in the market. This knowledge acquisition helps the companies to bring changes in the
activities so that they can easily deal with the competitors that are present in the market. In
addition to this, the merger is one of the strategic activities that are performed by the company to
deal with the competitors. This can be understood with the example of Wal-Mart who acquired
Flipkart, as the company found that Amazon is already able to maintain the strong position in
Indian with 35% market share comparing it with Flipkart group that has 45% of the share. This
has been found that if Amazon is able to extend this lead in the Indian market or builds an
indisputable position then the company will be capable enough to spread its overall lead over
Wal-Mart dramatically. Thus, this competition among the companies makes Walmart to acquire
Flipkart and to offer a promising position in the market (Levy, 2018). However, this is difficult
for every company to apply this strategic knowledge into the activities, as there is a need for the
huge capital, market share as well as brand value. This proves that few companies can acquire
other companies in a competitive market.
In the research, this has been found that mergers and acquisition is a key through which
the strategic development of knowledge can be attained by the company, which is further used
by them in performing the business activities. However, it has been found that management
support is required as a part of the post-acquisition course when it derives to the transfer of
knowledge (Angwin and Meadows, 2015). The management and employees support is must for
the company who is merging and acquiring. In the literature, the research reflects that top
management performs a vital role in mergers and acquisitions by safeguarding the way of

leadership and leading (Sarala, Junni, Cooper and Tarba, 2016). Thus, this is considered as the
negative factors that can affect the companies in terms of sharing knowledge.
Mergers and acquisitions lead to the development of organisational learning which is
possible with effective knowledge. The organisation-wide is the continuous process that
contributes effectively in enhancing the ability with the motive to receive, make sense of and to
reply effectively to the interior as well as the external change. In addition, this has been found
that organisational learning is more than the sum of the evidence that is held by the employees.
The organisation learning contributes effectively as a knowledge-based view for the companies.
The learning takes time as it is considered as a time-consuming process (Grigoriou and
Rothaermel, 2017). The time taken by the organisation in sharing knowledge takes the time that
leads to the impact on activities of the company. However, this has been found that the
knowledge acquisitions take time because in mergers and acquisitions the knowledge is
transported to and from the new personnel to and from the organisation.
This has been found that the human resource department can donate effectively to
information transfer by forming the atmosphere of knowledge sharing within the organisation.
For example, HR of the company can create a program at the time of training that helps the
company to learn and grab the knowledge at the same time majorly in the mergers and
acquisitions. Training contributes effectively in managing, sharing, and receiving the knowledge
that leads to a competitive atmosphere (Wang, 2019). Thus, this has been found that training is
one of the effective manners through which strategic knowledge can be developed within the
employees of the company. In the different studies, this has been analysed that the employee
retention is considered as one of the major factors for the mergers and acquisitions in high-tech
companies (Ahammad, Tarba, Liu and Glaister, 2016).

However, in several studies, this has been found that employee retention is one of the
important elements for high-tech companies. The knowledge transfer at the time of mergers and
acquisition is possible when employees retain within the organisation. The researcher says that
higher retention of key personnel throughout the learned organisation does result in the superior
handover of the knowledge-based resources to the acquirer (Ranucci and Souder, 2015). This has
been found that most of the valuable knowledge of the company resides in the individuals
because they are the one who deals with the functions and operations of the company. Moreover,
these employees can be from the upper level as well from the lower level. Different authors
shared the opinion about the research that employees who perform the process can give the
knowledge and suggestions for the changes that can further lead to the rise in the value to
customers and profit of the company.
Knowledge acquisitions come with the alliances that are intended with the motive to
enhance the knowledge that contains the valuable potential resource. However, it is essential for
companies to manage their alliances efficiently and effectively. The success factors which leads
to the effective knowledge acquisition and implementation in business us affected by fostering
trust, learning from the partner, effectively dealing the formation of knowledge that is applicable
to both the parties (Nair, Demirbag and Mellahi, 2016). In the mergers and acquisitions, the
knowledge transfer can be done through the personal exchange, common projects and different
other forms of steady communication with the effective use of technology. This has been found
that in the mergers and acquisitions, the companies attain the different knowledge that includes -
 The knowledge that is majorly received is related to the products,
suppliers and the market in which the company is dealing.

 Knowledge acquisitions can be related to understanding the capability of
the other company to perform the role in relation. This ability can be related to the
distribution, products, services, and different channels (Knowledge Management tools,
2018).
 It includes the knowledge that the partners have accumulated with the
motive of dealing with the organisation.
This knowledge helps the companies to deal in the mergers and acquisitions because
this has been found that it is extremely complex for the company to perform the different
number of the task which might get failed. This has been found that it is very challenging for
the companies to identify the valuable sources of knowledge of the company with whom we
are performing the mergers and acquisitions. It is considered as a very challenging procedure
because it includes the understanding of the business that is willing to target another
company's tacit and set in knowledge that is locked within the people present in the society,
processes, networks and communities (Weber and Tarba, 2016). The failures in mergers and
acquisitions take place at the time of restructuring process, key persons let go by mistake and
due to which the key communities are disrupted.
Further, the combination of the relevant knowledge with the organisation knowledge
assets and activities is difficult to be done in mergers and acquisitions. Thus, the issue
majorly arises when the acquisition takes place between the integrated acquired companies
that are a difficult task, heavy on the management of people and the formation of the
common culture. This is very difficult to analyse how many companies who are in mergers
and acquisitions are able to fall within the knowledge management (Grigoriou and
Rothaermel, 2017). This means that they were effective enough in acquiring knowledge from

the other company or not. This makes the company apply some of the principles that help
them in acquiring knowledge. These principles include knowledge-sharing, reuse, with the
emphasis on culture, networks, and incentives and at a diverse hostile environment.
In the end, this can be concluded that presently mergers and acquisitions are
increasing across the world. This leads to the rise in the strategic development of the
knowledge within the organisation because this knowledge drives the activities of the
company. Merger and acquisition help the managers of the company to attain knowledge
about the company, culture, country's economy, employee’s ability, and skills with the
different knowledge related to the company. The knowledge is also acquired by the company
related to the competitors to deal in a competitive environment. In the report, the examples,
which are supported with the topic, are the major mergers and acquisition, which include
Walmart acquisition with Flipkart and Vodafone merger with Idea. This has been found that
knowledge development is essential as it develops the knowledge of bringing the new
process and focuses on the products and services. However, this has been found that the
transfer of knowledge in mergers and acquisition is not easy to be done as it is linked with
the different issues that affect the flow of information. The transfer gets affected by high
turnover of employees, management support, time consumption and many others.

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