Mergers and Acquisitions: An Integral Part of Business Strategy

This essay analyzes the manner in which the mergers and acquisitions have become an integral part of the business strategy used by the different contemporary business firms.

Running head: STRATEGIC BUSINESS ANALYSIS
Mergers and Acquisitions
Mergers and acquisitions should be an essential part of a company’s
business strategy
Name of the Student:
Name of the University:
Author’s Note:

1STRATEGIC BUSINESS ANALYSIS
As opined by Deng and Yang (2015), the extensive usage of different kinds of
innovative technologies and also the process of globalisation had significantly changed the
nature of the modern business world. Thompson, Strickland and Gamble (2015) are of the
viewpoint that one of the most important trends which is being seen within the framework of
the present business world is the fact that the firms are increasingly resorting to the usage of
the process of foreign expansion in a bid to earn a higher amount of profitability. In this
regard, it needs to be said that one of the most important measures which is being used by the
contemporary firms for entering into the business markets of the different host nations is
merger and acquisitions. The resultant effect of this is that the mergers and acquisitions have
become an integral part of the business strategy used by the different modern firms. This
essay will analyse the manner in which the mergers and acquisitions have become an integral
part of the business strategy used by the different contemporary business firms.
Angwin et al. (2016) are of the viewpoint that the mergers and acquisitions can be
defined as the consolidation of the different business firms or their assets through the usage
of diverse kinds of financial transactions. On the other hand, Uhlenbruck et al. (2017) have
noted that the process of mergers and acquisitions are the one in which the ownership of
business firms or companies or for that matter certain sections of their firms are being
transferred to other firms for the purpose of consolidation or entering into the business market
of other nations. Furthermore, from the legal perspective it can be said that the process of
merger and acquisition is the process of consolidation of two business firms into one with the
inherent objective of enhancing the profitability as well as the prospects of the firms involved
in the process (Tarba et al. 2016). More importantly, the effective usage of the process of
mergers and acquisitions offers the business firms the opportunity to expand the scope of
their business into the business markets of other host nations or for that matter reduce the
scope of their business or downsize.
Lohrke, Frownfelter-Lohrke and Ketchen Jr. (2016) have articulated the viewpoint the
primary purpose of the different business strategies which are being used by the
contemporary business firms is to enable them to take full advantage of the business
opportunities and mitigate the adverse effects of the threats presented by the business market.
More importantly, it is seen that the different business strategies which are being used by the
contemporary firms are intended to enhance their customers, their market prospects, earn a
higher amount of profitability, competitive advantage, sustainability and others (Tarba et al.
2016). However, at the same time it is seen that because of the dynamicity of the modern

2STRATEGIC BUSINESS ANALYSIS
business world and also the changing expectations or the needs of the customers the firms are
finding it very difficult to attain the above-mentioned objectives in an effective manner in the
business markets of their operations. It is precisely here that the process of mergers and
acquisitions become important since they not offer growth or expansion opportunities to the
business firms but at the same time help them to attain their different business objectives in
an effective manner.
Sarala et al. (2016) have noted that one of the major business objectives of the
different business firms is to attain a certain minimum level of growth so as to earn a higher
amount of profitability. However, the fierce business competition that the business firms
often face in the business markets of their operation pose a significant amount of threat for
the attainment of this business objective and the process of merger and acquisition becomes
an especially beneficial one for the firms since it helps them to attain this business objective
(Thompson, Strickland and Gamble 2015). In this regard, mention needs to be made of the
merger between the Indian online retail firms Flipkart and Myntra both of which were
competing in the earlier times in the Indian e-commerce retail industry for gaining
competitive advantage and because of the intense competition within the same neither of
them, were being able to gain competitive advantage (Benitez, Ray and Henseler 2018).
However, post the merger it had been seen that both the firms have benefited significantly
from the deal and have been able to earn a higher amount of profitability and competitive
advantage within the e-commerce retail industry of India.
Another important benefit offered by the process of merger and acquisition is the fact
that it offers the opportunity to the firms to significant increase their customer base and also
product portfolio through the usage of the resources of the other firms which are involved in
the process (Angwin et al. 2016). For example, for the past few years it was seen that the firm
Coke was suffering because of its lack of product diversity however to overcome this issue
the concerned firm undertook an acquisition of the firms Vitamin Water, Honest Tea, Fuze
Beverage and Core Power and this turn enabled the concerned firm to significantly enhance
its product portfolio (Benitez, Ray and Henseler 2018). This in turn not only helped the firm
to earn a higher profitability through the enhancement of its customer base by offering
different kinds of products in alignment with the needs of the customers but also to gain
competitive advantage as well in the beverage industry. In addition to these, it is seen that the
process of mergers and acquisitions also helps the firms to downsize the scope of their
business as well when they are unable to manage the diverse aspects of their business or

3STRATEGIC BUSINESS ANALYSIS
facing huge losses (Deng and Yang 2015). On the score of these facts, it can be said that
mergers and acquisitions are an essential part of a firm’s business strategy.
To conclude, the effective usage of the process of merger and acquisition offers
different benefits to the modern business firms. For example, they not only enable the firms
to enhance the scope of their business by facilitating their entry into the host business markets
but also offer them the opportunity to downsize the scope of their business in the face of
losses or their inability to manage the different aspects of their business in an effective
manner. Thus, it can be said that the mergers and acquisitions have become an integral part of
the business strategies used by the different firms. These aspects of the process of merger and
acquisitions become apparent from the above analysis.

4STRATEGIC BUSINESS ANALYSIS
References
Angwin, D.N., Mellahi, K., Gomes, E. and Peter, E., 2016. How communication approaches
impact mergers and acquisitions outcomes. The International Journal of Human Resource
Management, 27(20), pp.2370-2397.
Benitez, J., Ray, G. and Henseler, J., 2018. Impact of information technology infrastructure
flexibility on mergers and acquisitions. MIS Quarterly, 42(1), pp.25-43.
Deng, P. and Yang, M., 2015. Cross-border mergers and acquisitions by emerging market
firms: A comparative investigation. International Business Review, 24(1), pp.157-172.
Lohrke, F.T., Frownfelter-Lohrke, C. and Ketchen Jr, D.J., 2016. The role of information
technology systems in the performance of mergers and acquisitions. Business
Horizons, 59(1), pp.7-12.
Sarala, R.M., Junni, P., Cooper, C.L. and Tarba, S.Y., 2016. A sociocultural perspective on
knowledge transfer in mergers and acquisitions. Journal of Management, 42(5), pp.1230-
1249.
Tarba, S.Y., Cooper, C.L., Sarala, R.M. and Ahammad, M.F. eds., 2016. Mergers and
Acquisitions in practice. Taylor & Francis.
Thompson, A., Strickland, A.J. and Gamble, J., 2015. Crafting and executing strategy:
Concepts and readings. McGraw-Hill Education.
Uhlenbruck, K., Hughes-Morgan, M., Hitt, M.A., Ferrier, W.J. and Brymer, R., 2017. Rivals’
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