Acquiring Or Collaborating. Is There a Best Option Essay

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When do firms prefer to acquire rather than to collaborate? A comparison on the need to joint venture versus the need to wholly own. In the last few decades, globalization and thus external growth has become an issue of growing importance. The reasons underlying the need for expansion vary. Accordingly there are different ways to grow externally. Factors that play a role in choosing such an “entry strategy” are efficiency, costs or risk. In this essay, the focus will on two types of external growth. The focus will be on alliances versus acquisitions. While some characteristics will show to be in favor of acquisitions, alliances will be more practical in other situations. This paper will mainly distinguish between three characteristics. This paper will illustrate that decisions should be made on environmental characteristics, transactional characteristics and company characteristics. These characteristics will be analyzed closely, after which a favorable entry strategy related to those characteristics will be presented. Due to the globalization, the economic change accelerated rapidly. Along with this increase in economic change, connectivity between firms got more intense. Logically this increase in growth results in the necessity for firms to take an interest in ways to grow externally. Because these changes all happen so fast it is very difficult to develop the required resources internally. However collaborations or acquisitions can prove to be an answer. Kogut (1988) explains alliances as collaborations between companies that remain legally independent. The main goal of the collaboration is to gain competitive advantages as a result of sharing resources and services. Acquisitions are more serious and result from a firm that takes over another firm by

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