One of the prime objectives which drive the firms to go for the acquisition strategy is the enlargement of the brand portfolio as by making the acquisitions product line and depth can be increased in a very short span of time; without bearing the hardships of the research and development process, marketing etc., this is sometimes necessary for the firms who have a huge stake in the market as they are concerned about catering all the segments of the markets; because if they do not do so then the competitors are left with a wide room to make flank attacks which can be very dangerous, secondly by broadening the product range these big firms further strengthens their grip on the industry and makes the attainment of market share even harder for the other contestants in the industry.

Another major objective for which drives the companies to acquire other business entities is to gain or increase their existing market share in the industry, as making the acquisitions is the fastest strategy to gain the market share if such a company is acquired whose market share is high. Secondly this kind of acquisition decreases the intensity of the competition in the market which is obviously beneficial for the firm which has taken over. One significant motive in acquiring a company is to increase the percentage of sales and revenues, because this in return will increase the brand equity of the firm, in addition to this the increased percentage of the sales means that the market on the whole is liking the offerings of a certain firm; this as a result makes it tougher for the contestants to fight for their share in the market. Another advantage of acquiring a well known brand is that it takes no effort whatsoever in positioning it in the minds of the consumer. Wonder how you will write such an essay.....we are here to assist you. Just call us saying, "Can you help write my essay?"Some other drivers hat lead a firm to pursue with the acquisition strategy include the increase in economies of scale, reduction of overfilling in the market, reach for new businesses and markets, product development etc. Behind the cross border takeovers one significant motive is that sometimes the people of the target market do not perceive the firm as to be their own and so they do not own the company is not good for the business; so to make the firm acceptable to the target market acquisitions are made.

There is no doubt that many firms that many big multinational companies are following this acquisition strategy but this does not mean that this strategy always pay back, there are many disadvantages too of pursuing with this strategy. All these cons must be taken into consideration before deciding to acquire any firm. One such disadvantage is that when a firm carries on with the acquisition strategy for longtime; a slightly negative perception gets created in the minds of the consumers and they think as if the firm wants to get hold of the whole market and wants to establish a monopoly by discouraging oligopoly. This can be deteriorating for the image of the organization and has the potential to affect the sales and profits as well. If you want to know more about the pros and cons of buyouts, we have essay writers for hire available with us, you can contact us anytime. Another disadvantage of making acquisitions is that, once a firm is acquired then the new management does some changes which are in accordance with the strategic goals of the company, these changes are not usually welcomed by the staff and they create a feeling of resentment and opposition in themselves against the new management especially in the case of hostile takeovers. This can get at times very difficult to handle for the managers. A prime change in this regard can be firing of some employees or downsizing of the firm on the whole, as the jobs cut down the media and the human rights activist organization create a hype of such issue which has the potential to hurt the stature of the company in the market. In addition to this all the trap of the hidden liabilities is a nightmare for any company who takes over, because these are the inherited liabilities, and can cost a lot. This probability of facing this trap is more when a hostile buyout is made because of the unavailability of the vital confidential financial minutes of the target firm. It is analyzed that in case of hostile buyouts the cooperation of the staff of the target company is minimal as they do not think that the management is sincere to them. Sometimes when the cross border acquisitions are made the lack of the knowledge of foreign managers about the culture of the country and its affect on the organizational setup can too cause problems and can be deadly as in this case the communication gap between the managers and the staff gets widened; therefore it is important that whenever such cross border acquisitions are made the management that is deployed has to be local especially the middle management as it has to interact more to the staff . While making cross border takeovers one disadvantage can be caused by lack of knowledge of the local laws and regulations. Another major issue in making the acquisitions is that sometimes if the acquisitions do not turn out to be successful then the acquirer backs up the decision and cover the losses by investing the money from the profits gained by the other firm, this kind of financing can be damaging if done on huge scale and for longer duration of time; because this can cause two sided damage if the expedition finally fails. Therefore the financial managers must be very efficient in this regard and must know the sources of funds; because mismanagement of the funds can be self damaging. All these disadvantages affect the future of both the firms; acquirer and the one that has been bought. Therefore such important decisions like making acquisitions must be made after closely analyzing all the pros and cons and their effects on the future of both the companies. Any kind of misjudgment in this regard can be disastrous.