Are Mergers the most appropriate method of strategic growth in todays Essay

Are Mergers the most appropriate method of strategic issue in todays business environment - Essay ExampleThis will be followed by an explanation of distinguish terms namely mergers, acquisitions, alliances and joint ventures. The main body of the paper will get a line the issues and challenges of external methods of strategic maturation as swell up as well as to attempt to put how these relate to todays business environment. According to BusinessDictionary (2013), strategic growth is growth aimed at winsome larger market sh be even at the expense of short term earnings. There are four broad growth strategies namely product information, diversification, market penetration and product development. Campbell, Gaule & Morrison (2005) also draw out that growth in profits buttocks come from improving the profitability of the subsisting revenue stream, expanding existing businesses by gaining market share or extending into unsanded markets or products, or entering one or more n ew businesses by acquisition, joint venture or greenfield investment. On the other hand, Liabotis (2007) posits to the effect that growth strategy can be achieved through growing the core business, growing by sub-segmenting the customers as well as growing adjustment opportunities. As a point of departure, it is imperative to explain the meaning of key terms highlighted above. Weinberg and Blank (1979) define merger as an arrangement whereby the assets of two companies become vested in or under the control of one company, (as cited in Marimuthu, 2008, p. 8). On the other hand, an acquisition can be delineate as any transaction where a buyer acquires the assets of the other company and eventually takes control of them (Scharf,1971 as cited in Marimuthu, 2008). A joint venture is a strategic alliance where two or more people or companies agree to open goods, services and or capital to a common moneymaking(prenominal) enterprise (Cook, 2010). The main advantage of joint ventures is related to access and sharing of resources among the partners which can also contribute to the joint ventures profitability. However, this paper will specifically focus on mergers and acquisitions and their contribution to strategic business growth during the contemporary period. There are different reasons why mergers are carried out by different companies. The confluence companies will be seeking to increase their market share since they may be joining operations with successful companies in the market. The other reason is that the merged companies may be seeking to gain the skills and expertise of the other employees from the other company as they will cross the floor when a major has taken place. Growth can be achieved through product development, diversification, market penetration or market development (Kotler, 2003). Ansoff suggests that the growth strategy of a company mainly depends on two variables, whether it is the desire to develop new products or new customers as sh own in appendix 1. More customers for a specific product can contribute to an increase in the companys market share. The major aim of various businesses is to reap customers who form the foundation of the organization. In order to attract new customers, there may also be need for developing the products so that they can appeal to a large number of the targeted customers. Product working out is mainly concerned with keeping the same market of customers while at the same time assay to increase sales through offering more products (Kotler, 2004). This can be achieved through identification of the changes in the customers