Industry base analysis is an ongoing process with two main components, both based in part on information from program management. The first collects program-specific information on the industrial base to create the appropriate acquisition strategy for a program. The second mobilizes throughout the program lifecycle to provide feedback and updates. The goal is to ensure that the DoD: A company may have gradually built a large company in a particular geographic area and wants to roll out its concept in a new region. This can be a real problem if the company`s product range needs local support in the form of regional warehouses, sales representatives and/or local sales representatives. Adopting such product lines can be time-consuming, as the company has to build that infrastructure as it grows. The geographic growth strategy can be used to accelerate growth by finding another company that has the geographic support features the business needs, such as a regional distributor, and deploying the product line in the acquired business. Companies acquire other companies for a variety of reasons. They may be looking for economies of scale, diversification, greater market share, greater synergies, cost reductions, or new niche offerings. Other reasons for acquisitions are those listed below. Economies of scale can be important sources of value in acquisitions when the additional unit of capacity is large or when a large firm buys a sub-scale business. For example, the cost of developing a new automotive platform is huge, so automakers try to minimize the number of platforms they need.
The combination of Volkswagen, Audi and Porsche allows the three companies to share certain platforms. For example, the VW Toureg, Audi Q7 and Porsche Cayenne are all based on the same underlying platform. The most important factor to consider when developing a business formula in the marketplace is competition. A company that thrives at the same stage of production, capacity and customer class is considered a competitor in the market. If the company needs to grow in the market, it must constantly maximize its market share. Both companies must offer better quality products or eliminate competition by taking control of the competitor. This is called horizontal acquisition. The low-cost strategy is when a company acquires several companies in the hope of increasing its sales volume. With a sufficiently high sales volume, the company can then offer some of its products at an incredibly low price. Low price combined with high sales volume often maintains an efficient source of revenue that competitors cannot match.
When looking for acquisition opportunities, companies often look for companies that have many customers and products that could be manufactured and sold at low cost. Friendly acquisitions take place if the target company approves the acquisition; its board of directors (B or D or board) approves the acquisition. Friendly acquisitions often work in the mutual interest of acquiring and target companies. Both companies develop strategies to ensure that the acquiring company acquires the relevant assets, and they review the financial statements and other valuations for any obligations that may accompany the assets. As soon as both parties agree to the conditions and comply with all legal requirements, the purchase takes place. In addition to building your own strategy, there are common acquisition tactics that companies can use in certain situations. Most of the time, professionals rely on these tactics when an advantageous opportunity arises. However, they are also used to help companies achieve certain goals. These tactics include: Corporate executives have a fiduciary duty to conduct thorough due diligence on target companies before making an acquisition. In a diversification strategy, a company sells products or services in a sector other than its own. Companies can use diversification tactics for several reasons. Some may want to grow their business by expanding into different markets.
Other companies may be concerned about their performance in their own markets and want to find a way to save money or increase sales through new products. Let`s discuss in detail each of the four types of acquisitions – In our experience, the strategic logic of a value-creating acquisition generally corresponds to at least one of the following six archetypes: improve the performance of the target company, eliminate overcapacity from an industry, create market access for products, faster or cheaper acquisition of skills or technologies, that they could be built in-house, taking advantage of a company`s industry-specific scalability and early selection of winners and helping them grow their business.