Accounting help on:Acquisition Strategy

Accounting help on:Acquisition Strategy 

Equity Alliances take care center stage Peter Pekar Jr. and Marc S. Marguli Essay Writing Tutor SydneyIntroduction The suggested strategy for Hero cycle to enter Canada particularly British Columbia is through an acquisition strategy. Her Hero cycles intend to purchase Crown west steel fabricators so that it can get steel as a raw material reducing its costs drastically. This article briefly compares the acquisition strategy to the joint venture strategy. Acquisition strategy is opposite to that of Joint venture strategy hence using this article we will compare the advantages and disadvantages in order to analyses the benefit or harm of Hero cycles to enter the market through the acquisition strategy Discussion Assignment Help Australia According to Peter and Mark when the opportunity is very large and the window time for exploitation is narrow a company needs to quickly move and form some kind of an alliance. There are ways to do so either by getting into a joint venture or acquisition or buying a stake in the company. It is considered that to be a market leader it is necessary to join hands with another company to gain power and dominance in a new market. There is also a pressure on the companies of reducing costs and gain maximum profits. Acquisition requires a huge capital and managerial resource to enter a new market. Hence this strategy is a very disadvantageous for Hero Cycles to enter the market with a huge capital. This means that it will take more time for the company to cover up the investment costs and show profits. By entering the market with an acquisition strategy, Hero cycles have an advantage of reducing its cost of purchasing steel from local manufacturers and can use that material in making their own cycles. When a company enters a new market there are a few barriers that it has to pass. They are particularly capital and managerial resources. One cannot be successful in all the markets unless he has sufficient time money and personnel, hence to enter such a market it is important to get into an alliance which are formed on shared risks and shared resources. This means that the company himself is not responsible for the upliftment or down fall of the alliance in a certain market. An alliance increases shareholders value and helps gain competitive advantage. In case of hero cycles as it is acquiring a steel manufacturing company it will not have the advantage to Assignment Writing Tutor AustraliaAcquisition Strategy

Equity Alliances take care center stage

Peter Pekar Jr. and Marc S. Margulis

share its risks or managerial resources with another company. Though by acquiring a steel

manufacturing company it may fulfill its competitive advantage and may establish a stronger

foot hold in the market as the barrier to entry is low (discussed in the earlier analysis), it will be

solely responsible for the profits or losses it makes.

By not entering into the joint venture strategy Hero cycle has an advantage to protect its

technology that it has or has acquired through the acquisition (reference). This means that hero

cycles will force its competitors to spend money on research and development to test their

technology while they can enjoy the advantage of competing on low cost.

Compared to alliances, acquisitions are much simpler and less time consuming. Their main

concern is price, structure, representations and warranties, and indemnification while alliances

also have to deal with other things such as limitations, capitalization of ownership, governance,

etc. This point works in favour for hero cycles as they can enter the market by acquisition

strategy as it is less complicated and has no fear of losing its competitive advantage to its partner

as well as the decisions can be made by themselves much faster without the approval of any

other company.

Buy Sample AssignmentThe advantage of Hero cycle when using an acquisition strategy will be that it will not have to

undergo the time and effort that will be required to form a sustainable alliance(see exhibit

below). Time and effort used in the right direction will help them establish their goals and

implementation plans quicker.

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