Businesses organisations expand as a result of hard work which involves ensuring that customers get satisfied and aggressive exploration of the market. Sometimes, old fashioned methods of marketing are used to increase sales. This approach is supported by many consultants and business experts.
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Although hard work is important for business growth, it is basically described as traditional wisdom. Both small and large business organisations can increase their growth through acquisitions. Goodman Fielder will enjoy many benefits of acquisitions in Asia as opposed to other entry modes.
The first benefit that he will enjoy is easy integration. Rapid business growth is associated with numerous risks. This has been witnessed in some business organisations where rapid growth has caused their decline because they have been forced to do many things at the same time.
Acquisitions will be beneficial to Goodman since they will provide enough procedures and systems to accommodate business growth. This will be done through the selling company that will provide the necessary facilities and human labour to ensure that the new business operates in a smooth manner.
The second benefit that Goodman will enjoy from acquisitions in Asia is ability to deal with entry barriers. Entry into new markets is often associated with numerous challenges that limit business growth. In some extreme circumstances, businesses may even collapse completely.
Acquisitions will enable him to use the resources of an existing organisation to stabilise his business. As a result, the risk of stiff competition from rival companies will be reduced. Without acquisitions, this will not be possible because of stiff competition (Gaughan 28).
The third benefit of acquisitions in Asia that Goodman will enjoy is market power. Market is very important in any business establishment since it enhances its growth. Most business organisations fail due to lack of a strong market.
Through acquisitions, Goodman will be able to establish a strong market presence in Asia. Consequently, this will enhance the rate of business growth. The market power will be strengthened by increased market share (Advantages and Disadvantages of Acquisition 3). In addition, there will be reduced competition due to capacity shut down. These are benefits that will only be achieved through acquisitions.
The fourth benefit that Goodman will enjoy from acquisitions in Asia is financial gains. The aim of establishing any business venture in a particular region is to make profits. Without making profits and generating the required revenue, businesses do not perform well. Acquisitions will make it possible for a company whose share value will be low to become part of a stronger company in order to strip assets and acquire short term benefits.
For example, getting finances from banks will not be difficult since there will be tangible assets that the banks could sell in case borrowers fail to pay back the borrowed money. This will not be possible without acquisitions since a company will be forced to rely on its limited resources (Growth through Acquisition 4).
The fifth benefit that Goodman will get from acquisitions in Asia is reduced marketing expenses and risks. Some companies attempt to initiate marketing campaigns in order to increase their sales since they think that it is easy.
However, the expectations of getting huge sales from marketing campaigns are not usually realistic. Marketing is a risky activity that can lead to losses instead of profits. Acquisitions will therefore be beneficial since marketing through an existing company will reduce the risks involved and increase the sales.
Advantages and Disadvantages of Acquisition 2012. Web.
Gaughan, Patrick. Mergers, Acquisitions, and Corporate Restructurings, New York: John Wiley & Sons, 2010. Print.
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Growth through Acquisition 2012. Web.