Organizations in different sectors have realized the advantages of company acquisition. Companies are appreciative of the benefits of acquisition such as product diversification, location diversification, growth in market share and business survival in light of the recent adverse tends in global financial markets.
Energizer Acquisition of Schick-Wilkinson Sword
Energizer holdings acquired Schick-Wilkinson Sword (SWS) in March 2003 from the Pfizer Company. Energy holdings specialize in battery manufacture while SWS is a safety razor manufacturer. The company aimed to diversify its product line. The factors that influenced the company’s decision on the acquisition were several as explained by Pat Mulcahy, the CEO of energizer. He stated that SWS was in a highly attractive business in an industry that was experiencing dollar sales growth and stable margins. These attributes would leverage Energizer’s core competencies. The CEO explained that both companies were compatible as they both had similar corporate cultures, distribution channels and customers. They also both had high speed manufacturing and product innovation capabilities. The acquisition was a success and the results were reflected in the company’s financial statements over the next few years. The acquisition was a major boost for the company as it was able to increase its wet shave sales by 11% in the period 2009 to 2010. The company was now able to sell batteries and razors through the distribution channels that SWS used to use. The operating margins and top line growth were highly enhanced.
Energizer used to operate in 80 countries only before the acquisition. SWS enabled the company to diversify its business to more than 140 countries. The cash flow of the company was also greatly enhanced improving its liquidity (Ketchen, Snow & Hoover, 2004).
Wal-Mart International Acquisition Strategy
Wal-Mart is a company that has specialized in expanding internationally through requisitions. It has been successful in some countries while in others the road has been rough. The country entered in Germany in 1998. It entered the market through a takeover strategy where it took over 100 hypermarkets in less than a year. The company also took over two companies in the country known as Wertkauf and Interspar. The company changed the names of the company in order to get them to align to the brand of Wal-mart. The culture in the organizations had to be changed. It took some time for the organizational culture to change, a period of two years.
Employees from Wal-Mart United States had to travel to the country to train the German employees. The company made the employees feel respected and valued. Their ideas on the business were treasured. With the employees having high morale, they were able to serve the customers well. There was the development of the singles shopping night, an idea that had been proposed by two employees in the company. It was a night for the singles to meet and find partners. The events have been so successful that the profits of the company have increased by 25%. There were even flirt points for the singles nights where the company offers free chocolate. Wal-mart Korea and Wal-mart Canada have even come to the point where they contact Wal-Mart Germany for operational advice and ideas. The Wal-Mart company has been successful in its acquisitions throughout the world by investing in their diverse staffs and empowering them (Rugman & Verbeke, 2004).
Acquisitions are important as they offer different strategies for the company to enter into foreign markets. Companies have found it cheaper to acquire companies that are already operating in the product line or geographical area that they want to diversify into.
Ketchen, D., Snow, C. & Hoover, V.(2004). Research on Competitive Dynamics: Recent
Accomplishments and Future Challenges. Journal of Management, 30, 779-804.
Rugman, A. & Verbeke, A. (2004). A Perspective on regional and global strategies of
multinational enterprises. Journal of International Business Studies, 35, 3-18.