As demonstrated by the figure above, the company’s capital expenditure against the revenue should dictate the move towards the merge and acquisition process (P. M. B. O. K., 2008). However, with the implementation of the right strategy issue of being acquired the sister companies as well as the competitors, the capital expenditure will significantly drop, an aspect that will impact positively the earnings per share of the company. If the acquisition is to be effected using discontinuing the product line, the stakeholders might be compelled to forfeit the dividends because the profits will be in the hands of the third part affecting the reputation of the business (Cartwright & Cooper, 2012). Therefore, when making the strategic decision on the weighty issue, the firm has to make a cost benefit analysis to make an appropriate decision. On a positive note, the acquisition will see the firm gain market dominance Selling the product line to a one of the industry giants that is interested in growing its market share in the wearable’s market. This move will translate to increased customer base, increase the cash flow, enhance its competitiveness, and improve on product diversification among other benefits. Importantly, the consideration of vast expansion by the company is necessitated by the fact that the organization could plunge into a bankruptcy situation. Therefore, it remains to be seen whether the firm will take appropriate action and prevent the undesired effects if the CIO approves the acquisition.
On a different note, one of the strategic issues and an outcome that is faced by the company entails the product restructuring that will see the firm use a different interface for its products in a bid to cut on the capital cost as well as maintain its market potential. It should be noted that the primary outcome of the arguments is they form the grounds for the approach that the firm will apply to expand without experiencing vast effects on the company’s propensity. For instance, the expansion issue through acquisition is worthy of analysis since it is from such analysis that the firms projections are evaluated, the weaknesses, and the ability of the firm to effectively implement such without strategies. Importantly, failure to analyses the issues would make the company weaknesses be concealed, while the opportunities fail to be utilized hence placing the entity at a disadvantaged point
The main aim of analyzing the company’s strategic management strategy is to comprehend the company better based on the business plan with the intention of understanding the external and internal environment. Analyzing the strategic management processes would enable the company to profile itself properly, achieve strategic competitiveness, increase its market share, and earn high customer confidence (Shi, Sun & Prescott, 2012). The analysis is particularly aimed at determining whether the firm is applying the best strategic plans that will enable progression and market dominance. Besides this, acquisitions are intended to enhance market dominance, promote brand strength, increase sales and ultimately improve on the position in the market. The company is seeking to acquire two renowned entities that hold significant market share in the US market. However, this should be conducted after thorough analysis on the strategy’s advantages against the cost implications. Through this analysis, it will be possible for the firm to determine whether it is worthwhile to implement the acquisition strategy bearing in mind the company reputation and customer satisfaction associated with such ventures and management moves (Ferreira, Santos, de Almeida & Reis, 2014).
On a different perspective, another analysis objective is to evaluate the company’s product redefinition and restructuring as the key benefits that both the customer and the company will get. Through this analysis, the firm will be able to determine whether making the restructuring is the best approach to take to reduce the capital expenditure intensity. These analyses are aimed at identifying available opportunities in the market place, threats to the business, and hence delineate the best approach to utilize the presented opportunities while avoiding the undesired effects. The firm is expected to utilize resources, capabilities, and human competencies in the various approaches and strategies (Phillips & Zhdanov, 2013). Therefore, the analysis herewith will demonstrate the resources available for each strategy, the capability of the firm to utilize the resources, and the human resource to implement such strategies. In case there are deficiencies in either of the stated aspects, the firm will seek alternative strategy for the expansion or even lobby for more resources. Thus, the analysis will form the ground for corrective action to ensure that the company remains competitive in its products and services. Moreover, the analysis will gather data through various models to determine the suitability of the company in the market while delineating on the appropriate way to resolve the weaknesses. As such, the firm can utilize the Porters Forces Model or SWOT analyses, which are influential in establishing the strong point of an entity as well as revealing the weak points for subsequent remedial actions to be instituted (Marks & Mirvis, 2011).
The Company is faced with a situation that compels it to make a decision whether to partner with the sister company to support the upgrade of the device with a newer set of features and Bluetooth technology, as well as cover the manufacturing costs for the device, while asking for 60% of any potential profits in the future or opt to Selling the product line to a one of the industry giants that is interested in growing its market share in the wearable’s market but not to Discontinue the product line. However, such a move will have implications as it is not clear whether the customers will still be contented with the new arrangement. The impact on the market competitiveness coupled with the need to have proper sustainability makes the strategic issue worthy for proper analysis (Lubatkin, 2013). Additionally, the regulators are also expecting the firm to expand the service footprint, which needs more subscribers to the service. In line with this, it is certain that in the firm’s strategy of restructuring its products, proper analysis is required to ensure that the firm remains competitive in the market, attains adequate returns, diversifies its products, and gains improvement in the wearable technology.
The study has elaborated on the analysis of the strategic management that is applied by our company. As demonstrated in the study, the firm’s intention of growth and expansion has necessitated the acquisition by a rival company. Moreover, the company’s other major issue is the product redefining in order to reduce the capital expenditure cost. The two strategic plans are important hence warranting the firm to conduct analysis. The analysis results will include comprehensive information about the positive and the negative attribute of each strategy. For instance, the acquisition discontinuing the product line will have cost implications due to the requirement of the high capital loss and customer base loss (Gambles, 2009).
The projected cash flows will be evaluated to determine if the strategy is worth for consideration or implementation. Through analyzing the company’s projected cash flows, the firm will be evaluated to see how long the firm will take to meet the initial cost of acquisition. On an additional note, the impact on the market share possessed by the company will be out not perspective to determine whether the firm will gain market dominance after the acquisition by the three entities.
References
Cartwright, S., & Cooper, C. L. (2012). Managing mergers acquisitions and strategic alliances. Routledge.
Ferreira, M. P., Santos, J. C., de Almeida, M. I. R., & Reis, N. R. (2014). Mergers & acquisitions research: A bibliometric study of top strategy and international business journals, 1980–2010. Journal of Business Research, 67(12), 2550-2558.
Gambles, I. (2009). Making the business case: Proposals that succeed for projects that work. Gower Publishing, Ltd..
Gaughan, P. A. (2010). Mergers, acquisitions, and corporate restructurings. John Wiley & Sons.
Lubatkin, M. (2013). Merger strategies and stockholder value. In Mergers & Acquisitions (pp. 43-57). Routledge.
Marks, M. L., & Mirvis, P. H. (2011). Merge ahead: A research agenda to increase merger and acquisition success. Journal of business and psychology, 26(2), 161-168.
P. M. B. O. K. (2008). A guide to the project management body of knowledge. In Project Management Institute.
Phillips, G. M., & Zhdanov, A. (2013). R&D and the Incentives from Merger and Acquisition Activity. The Review of Financial Studies, 26(1), 34-78.
Shi, W., Sun, J., & Prescott, J. E. (2012). A temporal perspective of merger and acquisition and strategic alliance initiatives: Review and future direction. Journal of Management, 38(1), 164-209.
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