For a business entity, operating without the support of a business partner is impossible. Therefore, opportunities for building cooperation and support are typically sought. Mergers and acquisitions are often viewed as the source of essential support and the means of expanding power, which is why they have been particularly popular recently.
The reasons for an organization to seek a merger with another company or to acquire it may vary. The main goals may include creating a competitive advantage, diversifying a product or service, or increasing the range of financial opportunities and assets (Dao et al., 2017). Dao et al. (2017) explain that, from a financial perspective, merging with a company or acquiring it may also help addressing tax-related complications. Additionally, a merger or an acquisition creates ample opportunities for expansion and the development of competitive power in the global market (Dao et al., 2017). Therefore, the popularity of mergers and acquisitions is justified.
A range of successful mergers have been made recently, proving the necessity of the specified strategy for building a competitive advantage. For instance, Microsoft, having acquired Nuance Corporation as the way of expanding the range of its AI services and AI-related research, has served as an example in successful acquisitions for a range of organizations (Microsoft Corporation, 2021). The merger in question was expected to expand the range of Microsoft’s reach and allow the company to venture into a new territory of AI development. Evaluating the merger and its effects, one can claim that Microsoft has secured a spot in the AI industry, thus, minimizing future rivalry and creating opportunities for fast development (Microsoft Corporation, 2021). Therefore, the merger in question can be considered a success.
Mergers and acquisitions allow companies to multiply the rage of their assets and create a powerful support system. Therefore, mergers and acquisitions must be deemed as a crucial part of the present-day global economic performance. Forwarding research and development, cooperation based on mergers and acquisitions will help companies to thrive and offer innovative and high-quality services to customers worldwide.
References
Dao, M. A., Strobl, A., Bauer, F., & Tarba, S. Y. (2017). Triggering innovation through mergers and acquisitions: The role of shared mental models. Group & Organization Management, 42(2), 195-236.
Microsoft Corporation. (2021). Microsoft accelerates industry cloud strategy for healthcare with the acquisition of Nuance.