Strategic Report: Merger and Acquisition Management Analysis

This report provides a comprehensive analysis of strategic issues in Merger and Acquisition Management. It addresses the challenges a company faces when considering mergers and acquisitions, including maintaining stable financial prospects amidst increasing capital expenditures. The report...Read More

Running head: MERGER AND ACQUISITION MANAGEMENT 1
Merger and Acquisition Management
Student’s Name
Institutional Affiliation

MERGER AND ACQUISITION MANAGEMENT 2
Merger and Acquisition Management
Executive Summary
The company is faced with various strategic issues at hand that would change its
operations. In this case, the company is confronted with maintenance of stable financial
prospects due to the increasing capital expenditures after the proposed acquisition and merger by
the rival companies. Essentially, mergers and acquisition are strategies that are applied by many
companies with the intention of enhancing market dominance and increasing the cash flow.
However, the capital expenditure associated with such acquisitions is huge, which depends on
the competitiveness of the rival company, its asset base, and the customer base. It should be
noted that the company has expressed the intention of being acquired by major competitors and
another smaller firm that has a significant market share in the wearable business. Upon the
approval by the CIO, the company will be bought or will merge with one sister companies
depending on the benefits acquired. Nonetheless, such a strategic issue needs careful planning
and proper forecasting due to the severity of the resource allocation and benefits. Despite the
prospects that the firm is set to improve the cash flow significantly, there is a threat that the firm
may suffer financially due to the long time taken to breakeven its operations in the acquired
entities. Further, the need to scrutinize the decision is attributed to the fact that the firm’s capital
expenditure against the revenue may rise significantly.
Achievability Chart

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As demonstrated by the figure above, the company’s capital expenditure against the
revenue should dictate the move towards the merge and acquisition process (P. M. B. O. K.,
2008). However, with the implementation of the right strategy issue of being acquired the sister
companies as well as the competitors, the capital expenditure will significantly drop, an aspect
that will impact positively the earnings per share of the company. If the acquisition is to be
effected using discontinuing the product line, the stakeholders might be compelled to forfeit the
dividends because the profits will be in the hands of the third part affecting the reputation of the
business (Cartwright & Cooper, 2012). Therefore, when making the strategic decision on the
weighty issue, the firm has to make a cost benefit analysis to make an appropriate decision. On a
positive note, the acquisition will see the firm gain market dominance Selling the product line to
a one of the industry giants that is interested in growing its market share in the wearable’s
market. This move will translate to increased customer base, increase the cash flow, enhance its

MERGER AND ACQUISITION MANAGEMENT 4
competitiveness, and improve on product diversification among other benefits. Importantly, the
consideration of vast expansion by the company is necessitated by the fact that the organization
could plunge into a bankruptcy situation. Therefore, it remains to be seen whether the firm will
take appropriate action and prevent the undesired effects if the CIO approves the acquisition.
Projects Outcome
On a different note, one of the strategic issues and an outcome that is faced by the
company entails the product restructuring that will see the firm use a different interface for its
products in a bid to cut on the capital cost as well as maintain its market potential. It should be
noted that the primary outcome of the arguments is they form the grounds for the approach that
the firm will apply to expand without experiencing vast effects on the company’s propensity. For
instance, the expansion issue through acquisition is worthy of analysis since it is from such
analysis that the firms projections are evaluated, the weaknesses, and the ability of the firm to
effectively implement such without strategies. Importantly, failure to analyses the issues would
make the company weaknesses be concealed, while the opportunities fail to be utilized hence
placing the entity at a disadvantaged point
Non-Monetary benefits
The main aim of analyzing the company’s strategic management strategy is to
comprehend the company better based on the business plan with the intention of understanding
the external and internal environment. Analyzing the strategic management processes would
enable the company to profile itself properly, achieve strategic competitiveness, increase its
market share, and earn high customer confidence (Shi, Sun & Prescott, 2012). The analysis is
particularly aimed at determining whether the firm is applying the best strategic plans that will
enable progression and market dominance. Besides this, acquisitions are intended to enhance

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market dominance, promote brand strength, increase sales and ultimately improve on the position
in the market. The company is seeking to acquire two renowned entities that hold significant
market share in the US market. However, this should be conducted after thorough analysis on the
strategy’s advantages against the cost implications. Through this analysis, it will be possible for
the firm to determine whether it is worthwhile to implement the acquisition strategy bearing in
mind the company reputation and customer satisfaction associated with such ventures and
management moves (Ferreira, Santos, de Almeida & Reis, 2014).
Benefit Map
On a different perspective, another analysis objective is to evaluate the company’s
product redefinition and restructuring as the key benefits that both the customer and the company
will get. Through this analysis, the firm will be able to determine whether making the
restructuring is the best approach to take to reduce the capital expenditure intensity. These
analyses are aimed at identifying available opportunities in the market place, threats to the
business, and hence delineate the best approach to utilize the presented opportunities while
avoiding the undesired effects. The firm is expected to utilize resources, capabilities, and human
competencies in the various approaches and strategies (Phillips & Zhdanov, 2013). Therefore,
the analysis herewith will demonstrate the resources available for each strategy, the capability of
the firm to utilize the resources, and the human resource to implement such strategies. In case
there are deficiencies in either of the stated aspects, the firm will seek alternative strategy for the
expansion or even lobby for more resources. Thus, the analysis will form the ground for
corrective action to ensure that the company remains competitive in its products and services.
Moreover, the analysis will gather data through various models to determine the suitability of the
company in the market while delineating on the appropriate way to resolve the weaknesses. As

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such, the firm can utilize the Porters Forces Model or SWOT analyses, which are influential in
establishing the strong point of an entity as well as revealing the weak points for subsequent
remedial actions to be instituted (Marks & Mirvis, 2011).
Weight and score of the benefits
Weighted value of options and ranking of each option
The Company is faced with a situation that compels it to make a decision whether to
partner with the sister company to support the upgrade of the device with a newer set of features
and Bluetooth technology, as well as cover the manufacturing costs for the device, while asking

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for 60% of any potential profits in the future or opt to Selling the product line to a one of the
industry giants that is interested in growing its market share in the wearable’s market but not to
Discontinue the product line. However, such a move will have implications as it is not clear
whether the customers will still be contented with the new arrangement. The impact on the
market competitiveness coupled with the need to have proper sustainability makes the strategic
issue worthy for proper analysis (Lubatkin, 2013). Additionally, the regulators are also expecting
the firm to expand the service footprint, which needs more subscribers to the service. In line with
this, it is certain that in the firm’s strategy of restructuring its products, proper analysis is
required to ensure that the firm remains competitive in the market, attains adequate returns,
diversifies its products, and gains improvement in the wearable technology.
Validation of the results in the context of your stakeholders and their potential concerns
The study has elaborated on the analysis of the strategic management that is applied by
our company. As demonstrated in the study, the firm’s intention of growth and expansion has
necessitated the acquisition by a rival company. Moreover, the company’s other major issue is
the product redefining in order to reduce the capital expenditure cost. The two strategic plans are
important hence warranting the firm to conduct analysis. The analysis results will include
comprehensive information about the positive and the negative attribute of each strategy. For
instance, the acquisition discontinuing the product line will have cost implications due to the
requirement of the high capital loss and customer base loss (Gambles, 2009).
The projected cash flows will be evaluated to determine if the strategy is worth for
consideration or implementation. Through analyzing the company’s projected cash flows, the
firm will be evaluated to see how long the firm will take to meet the initial cost of acquisition.
On an additional note, the impact on the market share possessed by the company will be out not

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perspective to determine whether the firm will gain market dominance after the acquisition by
the three entities.

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References
Cartwright, S., & Cooper, C. L. (2012). Managing mergers acquisitions and strategic alliances.
Routledge.
Ferreira, M. P., Santos, J. C., de Almeida, M. I. R., & Reis, N. R. (2014). Mergers & acquisitions
research: A bibliometric study of top strategy and international business journals, 1980–
2010. Journal of Business Research, 67(12), 2550-2558.
Gambles, I. (2009). Making the business case: Proposals that succeed for projects that work.
Gower Publishing, Ltd..
Gaughan, P. A. (2010). Mergers, acquisitions, and corporate restructurings. John Wiley & Sons.
Lubatkin, M. (2013). Merger strategies and stockholder value. In Mergers & Acquisitions (pp.
43-57). Routledge.
Marks, M. L., & Mirvis, P. H. (2011). Merge ahead: A research agenda to increase merger and
acquisition success. Journal of business and psychology, 26(2), 161-168.
P. M. B. O. K. (2008). A guide to the project management body of knowledge. In Project
Management Institute.
Phillips, G. M., & Zhdanov, A. (2013). R&D and the Incentives from Merger and Acquisition
Activity. The Review of Financial Studies, 26(1), 34-78.
Shi, W., Sun, J., & Prescott, J. E. (2012). A temporal perspective of merger and acquisition and
strategic alliance initiatives: Review and future direction. Journal of Management, 38(1),
164-209.