We will write a custom Term Paper on Diversification through Acquisition specifically for you
301 certified writers online
It is undeniable that the global business community is in the era of growth by mergers and acquisition. Many companies, corporations and organizations have recorded massive growth through either merging with or acquiring other companies. This is due to the benefits likely to be achieved in the process. Intel is one of such companies. Since its emergence, Intel has made acquisition of at least two companies. This paper discusses the concept of acquisition with reference to the recent acquisition of Telmap by Intel.
There are many ways in which a business organization can increase its market share and spur growth. This can either be done by creating new products and introducing them to the market or acquiring the already existing companies. Acquisition refers to the concept of buying of an already existing business, business idea, or a brand. For instance, Intel acquired McAfee and later acquired Wind River and made the brands their own. This brings about diversification since a company can diversify its products and services to meet market demands.
Intel Acquisition of Telmap
Intel is arguably the largest chip maker in the globe providing the world with a very wide variety of microchips for computers and other electronic components. Due to the rising need for security features in electronic components Intel acquired McAfee, an application Security Company and incorporated its technology in manufacture of chips, applications and other components.
As the demand for handheld devices sored up Intel acquired Wind River which deals with operating systems and softwares for cell phone applications. Now Intel is acquiring Telmap which deals with navigation systems. Intel sees this as a milestone step towards tapping to the rising market demand for handheld navigation systems (Reuters, 2011).
Creating value by Acquisition
Intel will certainly create value in different ways through acquisition of Telmap. First the company will be able to expand its core business to cover the rising usage of handheld navigation devices. This can be seen as diversification. Secondly the combination of two globally reputable companies will solidify the consumer confidence in the products created after the acquisition hence increasing brand loyalty.
Thirdly, Intel will benefit from the economy of scale since costs of production will reduce thus the company will be able to sell the products at a lower cost. Finally, Telmap has gained a high ranking in business performance and as such it can be assumed that its business confidence will be transferred to Intel hence boosting its operations.
Intel as an Example
There are pros and cons in acquisitions but Intel serves as one of the best examples of businesses which have greatly benefited from acquisitions. By investigating the current needs and trends in the global market, this company has been able to successfully make acquisition of two companies.
Hopefully, Intel will still reap the benefits of acquiring Telmap. Other companies have already learned a lesson from Intel careful and strategic acquisition in that they enable companies to remain relevant in times of changing market demands. However, this has not come without questions being raised. Some have argued that Intel is seeking monopoly in the chip industry though the management has totally refuted these claims (Reuters, 2011).
Business acquisition is one way of expanding market share, increasing productivity as well as maintaining business relevance during changing market conditions. Intel has served as an excellent example of a business which has benefited from acquisitions. Intel will greatly create value especially considering that Telmap is a well performing company. Acquisition is a good business concept but only when done with a careful approach.
Reuters. (2011). Corrected – Update 1-Intel acquires Israeli mobile navigation firm Telmap. Retrieved from https://www.reuters.com/article/intel-telmap/corrected-update-1-intel-acquires-israeli-mobile-navigation-firm-telmap-idUSN1E79327D20111005