6 - Methods of Strategic Development

Acquisition & Mergers

Acquisition:

An acquisition is when one company purchases most or all of another company’s shares to gain control of that company and become the new owner.

Acquisition is quicker to execute because it’s just acquisition of shares of another company.

Merger:

A merger is an agreement that unites two existing companies into one new company.

A merger is the voluntary fusion of two companies on broadly equal terms into one new legal entity.

Merger is Company A + Company B = Company AB

Organic Growth

Organic growth happens when business expands their operations by themselves and not by acquisition or mergers.

Joint Venture

A joint venture is formed through an agreement or legal partnership between firms. Companies will separately exist on their own and a new separate entity will be formed for a specific task or business venture.

Franchising

Franchising is an arrangement where franchisor grants or licenses some rights and authorities to franchisee. Franchising is a well-known marketing strategy for business expansion.

BCG Matrix

It’s a tool for portfolio analysis where we have to decide whether we should add/ invest in a company/ products to our existing portfolio or to divest any existing company/ product.

BCG Matrix will help us to make the above decision by analysing growth rate and current market share.

The public sector portfolio matrix

The public sector portfolio matrix classifies activities in terms of their popularity and all the resources available for them.

Ashridge Portfolio Display

Ashridge portfolio matrix is used to evaluate the attractiveness of potential acquisition target or existing business to the parent.

Below in the table you can see there are two things have been considered

Opportunity to add value = which means is there any kind of need or support is required by Subsidiary?

Ability to add value = Do we have anything which can add value to Subsidiary’s CSF?

6 – Methods of Strategic Development