Reference no: EM132399992
Q. Read the below paragraph and write your response with examples.
When a company is trying to strengthen its market position, the company might think of buying out another company which already has an established business or seems to promise good sales. This process of buying out a company can be referred to as an Acquisition. The strategic objectives behind an acquisition can be many such as enter/ extend into a new category, become more cost and operationally efficient, grow in different locations or access to new technologies or capabilities. Some examples of successful acquisitions are discussed below.
Instagram was bought by Facebook for $1 billion in 2012. At the time, Instagram was a unique photo sharing application. Facebook was very prevalent at the time but Instagram still had a competitive advantage in which it was strictly a picture and video sharing application whereas on Facebook people could share information with their family and friends. Both the apps had different age groups of growing followers; followers from different demographic locations, interests and with different phone platforms. To grow its presence amongst all different possible followers and strengthen its competitive strategy, Facebook acquired Instagram and it has proved to work very well. Instagram now has 500 million users as opposed to 30 million users in 2012.
Another successful acquisition has been Google buying Android. At the time, Android was a very well-known Operating system, especially in developing countries. One know issue with Android platform devices has been that the software and the hardware are developed by different companies, as opposed to Apple where both software and the hardware is developed by the same company. Due to this competitive advantage, Apple products have a better User Interface and experience. To compete with such companies, it was a smart move for Google to buy Android. Now Android platform is even more used and Google products also have a better user experience.