Why Do Companies Use Aggressive Forms Of Growth

Submitted By rohs
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Do you believe businesses should use aggressive forms of growth (such as takeovers) or should they rely on less hostile options? Justify your views with reference to your research data.
In today’s society businesses are harder to set up and more than 50% tend to fail before the 5 year mark. There are 3 ways in which a company can expand and that is by merging or taking over other company’s whether they are in their line or work or not. There is one other way which is organic growth but that will be excluded in today’s discussion. Should a company use aggressive forms of growth such as takeovers where you forcefully buy all the shares in a company or by merging which is more of a hostile option to choose from the two?
What is merging and taking over?
Takeovers- This can be done forcefully by buying more than 51% of another company’s shares which will give you control of the companies decisions.
Merger- This is when two companies mutually decide that they can be further successful if they are one.
One example of a takeover would be Microsoft buying Skype for 8.5 million. Msn had become unpopular due to all these new social networking sites such as Facebook and Twitter which left Msn slowly losing its popularity. When Skype had been brought for 8.5 billion Microsoft already had everything that it would need to advertise and publicise it and already being such a massive and well known company it would have got many more customers and Skype reportedly gained 50 million users and further down the line it was worth over 40 billion more to what it was previously.
That is one of the takeovers that have succeeded but does this mean that all takeovers succeed? The answer you’re looking for is no and this is because sometimes companies simply misunderstand and over evaluate another companies assets and potential, sometimes this may all be caused by the management being unable to work with each other which will also result in failure. A perfect example of this is the catastrophic takeover by RBS (as part of a conglomerate with Banco Santander and Fortis) of Dutch banking group ABN-Amro has become a defining case study of how to mess up a deal. The reason(s) this failed is because there was no clear plan in what they would do after they had won the bid which meant they were unable to fully integrate with the other and then furthermore the deal was driven more by managerial motives rather than genuine strategic motives. This lead to failure.
What makes a merger successful? Mergers are difficult processes that require very good leadership and communication skills, crystal clear objectives, very good planning, show cases and most importantly the best people in the organisations to accomplish a thorough job. Disney, a company well known for traditional animated films and theme parks, purchased Pixar, a company (created by Steve Jobs during the years he was out of the Apple CEO chair) that made computer-generated children's films. The link-up gave Disney the creative boost its cinematic output needed and gave Pixar