Effect of Business Acquisition to Get Competitive Advantage Based on the Case Study: Acquisition of Somerfield by Co-Operative Group

Mergers and takeovers are forms of external growth within a business. External growth occurs when one firm decides to expand by joining together with another. A takeover specifically refers to the gaining control of a firm by acquiring a controlling interest in its shares (51%). Merger, on the other hand, means the joining with another firm to form a new combined enterprise, shares in each firm are exchanged for shares in the other.

• Analysis of the target company—is the company a strategic fit as far as size, geographic location, business mix, operational capacity, financial strength and availability for takeover.

The qualitative aspects have also been analysed to find out if there is value from a qualitative perspective. Methods such as SWOT analysis have been utilized to check if there would be a ‘perfect fit’. A perfect fit is basically an analysis that the acquisition will bring synergy between the two

In this chapter, we first provide coverage of expansion through corporate takeovers and an overview of the consolidation process. Then we present the acquisition method of accounting for business combinations followed by limited coverage of the purchase method and pooling of interests provided in a separate sections.

Mergers and acquisitions have become a growing trend for companies to inorganically grow a business within its particular industry. There are many goals that companies may be looking to achieve by doing this, but the main reason is to guarantee long-term and profitable growth for their business. Companies have to keep up with a rapidly increasing global market and increased competition. With the struggle for competitive advantage becoming stronger and stronger, it is almost essential to achieve these mergers. Through research I will attempt to dissect the best practices for achieving merger success.

Haspeslagh and Jemison (1987), argue that what determines the success of a acquisition is not the actual purchase itself, but the development of the acquisition strategy the supports. Unfortunately, many executives face the acquisitions as an end, not a means to achieve that end. According to this author, the acquisition is only one strategy business growth. There are others as internal growth, joint venture, partnership, franchise and strategic alliance. All should be evaluated by the company before implementing a business development strategy. A proper analysis of the acquisition goes beyond the study's own candidate company. It must include a contribution from the analysis of potential acquisition for the strategic development, as well as

Now, I would like to clarify the concept of acquisition, which is defined as the process performed by a company when making operational control of another. The decision regarding the acquisition is fundamental for the acquiring firm, therefore; it should be done after a proper research and a deep analysis. In this case, the decision is taken faster than normal without an accurate assessment. The cash flows and growth rate have been calculated based on a projected value made by Mr Harry and Mr Jack. This is a wrong step since Harry could not take the Framingham’s own estimate; he needs to make a self-evaluation.

The advantages to an acquisition are immense. First, it offers a high level of control – the acquisition is subject to the leadership of Southern Company. In addition, the assets of the acquisition allow for a quick, large-scale market entry; Southern Company will benefit from inherited PP&E. Furthermore, an acquisition avoids entry barriers into a foreign market and gives access to acquired firm’s skills. Not to be overlooked, but the acquired firm’s expertise can have a large influence on the success of the acquisition; this will be discussed further in strategy. Overall, the new subsidiary will act as its own division under Southern Company – it will have its own functional divisions.

Mergers and acquisitions are the right practical choice for accelerating the development cycle for the companies because there are some advantages from broadening and market extension, such as enhancing business performance, increasing profits, and overall shareholders value. However, it may be there some negative impacts on the company. For example, team management can face some obstacles such as culture, legislation and laws and command-and-control. I believe if there are more beneficiaries and less losers then acquisition or merger is ethical model. The potential of failure for merger or acquisition is high; trying to integrate firms with two different cultures, legislation and laws is difficult. For example, if the company merged or acquired with another company in the same field, it is difficult to grow sales because there aren't really new potential customers. The key to growth through merger or acquisitions is a faster, less expensive, and a much less risky

As with IPOs, there are strengths, and weaknesses associated with acquisitions. Obviously, those strengths and weaknesses must be evaluated thoroughly prior to making the decision to seek an acquisition. Opportunities, although mainly positive, are also essential considerations. The opportunities associated with acquisitions are readily apparent and correspond with the strengths of this option for expansion. Acquisitions provide important opportunities for increased shareholder value, brand recognition, and profitability, in addition to certain tax benefits.

Once again, “A takeover is when one business buys another business. This tends to be more hostile as the buying business is the main one to benefit.” There are some advantages you can gain from this. Firstly, likewise to merging, there can be international growth. “Businesses can make their services or products available globally by acquiring businesses in various locations internationally. For instance, Belgium brewing company, InBev took over Budweiser for $52 billion in 2008 in order to expand its presence in the U.S. market and create one of the largest consumer beverage companies in the world, according to The Times. Due to the acquisition, profits of the company rose by 11 percent in 2011, according to France 24.” (http://smallbusiness.chron.com/)

I understood from this case that when you make an acquisition you really need to have the strategies and the objectives on the same page as the other company from the very beginning. Sharing the same visions and act with integrity are crucial skills in acquiring

Strategic backdrop and the rationale for the acquisition were articulated in great detail with a clear logic, emphasizing unique synergies. Another key aspect of the communication was the identification

This is a research assignment regarding the analysis of a friendly takeover example and a hostile takeover example in the year 2010 to 2011. As for the friendly takeover acquisition, it is still in process with a vertical business combination of building materials supper and peat moss distributor. As for the hostile takeover acquisition, this is a Horizontal Business Combination of two mineral mining companies.

|production, or other areas within the acquired company | |economies of scale and scope |