Merger as a Method for Strategic Growth

2309 Words10 Pages
Mergers have become common method organisations with an aim to gain larger market share, gain synergies and increase efficiency (Roberts et. al., 2003). However, more and more failed mergers have been reported in the recent business news. Therefore, this essay aims to determine whether mergers are the most appropriate method of strategic growth. External factors such as the current business environment will be taken into consideration throughout the discussion. Contemporary examples within the existing business environment will also be used to demonstrate current events and to support existing literature. Firstly, it is important to understand the meaning of strategic growth prior to selecting a method in order to fully utilise its potential benefits. According to Kulatilaka and Enrico (1998), strategic growth is defined as a long-term initiative that organisations undertake to expand its source of revenue and achieve its desired strategic progress. There are a number of ways that organisations can strategically expand or grow. These include mergers, acquisition, strategic alliances and joint ventures, also known as strategic options. In today’s business environment, strategic growth is considered by many organisations due to the competitive business environment that is presently facing them. This competitive business environment is attracting the attention of many organisations because it concerns the capability of the organisation to compete with its competitors for survival. Therefore, organisations need to establish a long-term course of action to maintain its survival and this can be achieved through strategic development. Globalisation is one of the factors causing this competitive business environment (Chakravorty, 2012). Globalisation offers the opportunity for organisations to increase their market share and enter new markets internationally (Chakravorty,
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