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Business
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“Mergers and acquisitions are the key to an organization's
strategic development of knowledge.
Knowledge acquisition is what drives organizations to carry out these activities."
Critically evaluate this statement, using
academic literature and current business examples.
1.0
Introduction
In
principle, the increasing competition in the market environment has underlined
the importance of mergers and acquisitions (M&A) (Kanter, 2009, pp. 121). M&A
activities represent a channel that has helped various organizations to acquire
and maintain competitive advantage through the acquisition of valuable
knowledge. Kanter (2009, pp. 121) asserts that the global economic recession
that started in 2008 profoundly affected the implementation of M&A
activities leading to a decline of over 40% compared to other economic times.
The risks of recessionary environments, as well as limited access to syndicated
loans, can be attributed as one of the essential causes of a decline in the
M&A activities across the United States. Nonetheless, the recovery phase of
the economy has created situations that necessitate the activities and
implementation of M&A occasioned by the need for business organizations to
strengthen and streamline operations.
Even
so, the process of acquiring knowledge as a result of various M&A
activities has attracted significant interest in both industrial practice and
academic studies (Platt, 2009, pp. 52). Presently, different business
organizations have created platforms that promote the integration of knowledge
through the acquisition of better knowledge so that to spur strategic
development. Through the acquisition of knowledge, business organizations can
increase the value realized by the customers, boast synergy levels as well as
develop core competencies. Management researchers have increasingly focused on
knowledge acquisition courtesy of M&A activities. Nonetheless, most of the
existing literature on the topic can be described as explorative; thus various
critical factors concerning the acquisition of knowledge are unexploited; besides,
the subject cannot be theorized. For that reason, this paper-based essay aims
at investigating different core factors regarding the acquisition of knowledge
as a result of M&A activities.
2.0
Literature review
The business world
is characterized by M&A activities in a fundamental way based on the
efforts utilized during regrouping of firms based on their previous business
performance during the different phases of global economic development.
Consequently, this has led to the acquisition of knowledge as a result of
M&A activities being an extensively discussed topic by finance, accounting,
and economics researchers. Most of the analysis regarding the acquisition of
knowledge as a mean of strategic development revolves around discussions on
challenges and issues realized in the fields of financial performance after
M&A process, economic policy and so forth (Wang et al., 2009, pp. 1183).
For instance, most of the researchers focus much attention on discussing the
impact of M&A on industrial and global diversification as well as the
influence of the M&A process on financial performances of various
institutions.
Besides, the successful acquisition of knowledge is
dependent on many factors, for instance, the knowledge possessed by
individuals, interpersonal dependence, as well as the level of similarity
between the parties involved in the acquisition of knowledge. For example, the
M&A process involving the AT&T Inc. / Time Warner Inc. and Bayer AG /
Monsanto Company highlights the importance of stock knowledge, the need to
share knowledge, the motivation to acquire knowledge, and the importance of the
channels utilized during the transfer of knowledge (GLI, 2017). The merger
process between AT&T Inc. / Time Warner Inc. and Bayer AG / Monsanto
Company resulted in the two organizations gaining the competitive advantage by
demonstrating the acquisition of knowledge can be an element in the fostering
of competitive advantage. In consequence, knowledge acquisition can be a
difficult undertaking if it is embedded in the interactions of functions, tools
and people thus this makes it hard to be adopted first-hand.
Furthermore,
the basis of competitive advantage, as well as proper strategic development, is
supported by the acquisition of knowledge, a process that includes different
primary stages, for instance, integration, ramp-up, implementation, and
initiation. The acquisition of knowledge is
influenced by aspects that affect the opportunities to acquire knowledge thus
predicting the complexity of acquisition in the initial stages (Sherman, 2011,
pp. 234). Conversely, the elements that
affect the acquisition of knowledge predict the complexity of the
implementation stage. In the first steps of acquiring knowledge, the process is
influenced by the aspects of motivation, the features of the recipient entity,
for example, absorptive capacity are crucial in the implementation stage.
Barnett (2013, pp. 540) explains that the acquisition of knowledge as a result
of M&A activities in integrated procurement systems such public-private
partnerships are characterized by various stage, for example, feedback,
application, association, transformation, acquisition, and awareness.
Additionally, according to Erel et al. (2012, pp. 1046) as a result of extensive analysis of academic literature focusing on the acquisition of knowledge during M&A activities, it reveals that the practice is influenced by the process of integration during the M&A progression....
