Business strategy
What is MSTR’s business strategy? Identify how the MSTR’s mission and objectives will be achieved to become a cost leader after acquiring Unisys. How the profitability will be achieved? How cost will be reduced and revenues increased? How synergy will be achieved?
Microstrategy Inc. is a business intelligence (BI) company that also offers cloud-based and mobile software services. The company translates big data and transforms it into tables, graphs, and charts. The business strategy of the company is to achieve its core objectives as well as better its services since the market is very competitive (Khan & Quadri 68). The BI market is growing due to improved technology and the company hopes to lure more customers into its industry (Sharda et al. 86). The mobile industry is very competitive considering competitors such as Apple and MSTR’s business strategy helps it in dealing with such competitors. The business strategy of MSTR is aimed at controlling the market regarding offering the best mobile software considering that technology is developing with each passing day. The goal of MSTR is to specialize in offering these services considering the marketplace for business intelligence may triple in the coming years (Sharda et al. 82).
By acquiring Unisys, Microstrategy Inc. will enhance its revenue since it will create cost efficiency and gain more market advantage. This can be achieved through economies of scale and the generation of tax gains (Sharda et al. 82). Considering that Unisys has been on the market, it has its loyal customers and thus the company will benefit from more sales as well as more customers. The objectives of the company can be achieved by acquiring Unisys since through the acquisition it will obtain additional skills and quality staff (Sharda et al. 85). The staff can bring better ideas into the company and better its services. The products and services being offered will also be diversified and the same business channels can be used. The company will attain synergy by producing more innovative products through its business strategy. Considering the increasing necessity for business intelligence, the acquisition will help the company venture into new markets (Khan & Quadri 70).
Implementation strategy
From a range of reasonable options (build or “go it alone” strategy, partner via a joint venture or less formal business alliance, license, minority investment, and acquisition), indicate which option would enable the acquiring firm to implement best its chosen business strategy.
The acquisition would help Microstrategy Inc. in achieving its business strategy. The company needs to improve its market share considering the level of competition in business intelligence, cloud-based services, and mobile software. An implementation strategy for an acquisition will help Microstrategy Inc. in diversifying its strategies. After the acquisition, the company will venture into new markets and generate cost efficiency due to tax gains and economies of scale.
By implementing the strategy, the company reduces the competition in the market and further gains synergy (Khan & Quadri 78). This is made possible by ensuring the connecting units work more efficiently. The company will implement its strategy through the acquisition by producing more products and improving its competitive position in the market and enhancing its financial position. Acquisitions may fail if they are poorly communicated, planned, or implemented. Microstrategy Inc. acquires Unisys to expand its control, gain more distribution channels, procure more resources and improve its technology. The company believes it can use the assets of Unisys to better its position in the market. When acquiring Unisys, Microstrategy Inc. has to acquire its goals without interfering with the company’s target structure (Calipha et al. 14).
Plan objectives
Identify the specific purpose of the acquisition. This should include what specific goals are to be achieved (e.g., cost reduction, access to new customers, distribution channels, proprietary technology, intellectual property, expanded production capacity, etc.) and how the achievement of these goals will better enable the acquiring firm to implement its business strategy (see (1) above).
The purpose of the acquisition by Microstrategy Inc. is to better its market position in business intelligence, cloud-based services, and mobile software. By acquiring Unisys, the company hopes to become more competitive and venture into new markets. There have been improvements in technology and considering the competition in this industry; Microstrategy Inc. finds it necessary to acquire Unisys. This will help the company in reducing the competition in the market as well as in generating economies of scale (Calipha et al. 17). The company thus will become capable of producing more diverse products at a lower cost.
The purpose of the acquisition is to also better its services regarding expertise and skills. Unisys has qualified staff and they can work together with the staff at Microstrategic Inc. to become more innovative and offer better services (Calipha et al. 14). In so doing, the company will gain more market share and beat its competitors in the market. The acquisition will help the company become more technological since it will acquire more skills and personnel. Its operations will be flexible, new personnel, skills, and learning and innovation would also be improved (Calipha et al. 14). Microstrategy Inc. is aware that by acquiring Unisys, there are chances that it will expand its market and favor its production. There will be more open markets in different localities and therefore the company will venture more internationally.
Search plan
Develop screening criteria for identifying potential target firms and explain plans for conducting the search, why the target ultimately selected (UIS) was chosen, and how you will make initial contact with the target firm. Explain why UIS is the best option.
Before engaging in an acquisition, companies have to use strategies to evaluate the best company. Considering that the main ideas behind an acquisition are to acquire more market share, become more innovative, venture into new markets and ultimately gain more customers, screening companies is necessary to minimize risks (Jansen 47). Companies may fear acquiring sinking companies but by using a sinking criterion, they can better understand the risks involved and consider the costs of uplifting the company. Companies have to screen potential acquisition candidates to eliminate companies that may lead to failure (Hagedoorn & Geert 12). It is important to have proper strategies in place to ensure that the screening process is implemented to note. The screening process is complicated. It is important to follow a criterion and reflect on the processes.
Management
It is important to consider the management of the company since poor management can lead to below-average performance. The company can sell at a low price because of poor management. Such a company can be revitalized by changing the management. The company can outsource management from the existing company or hire more capable staff (Hagedoorn & Geert 12).
Economic Factors
Companies can be destabilized by economic factors leading them to perform poorly in the market. The screening process should help identify companies that are on the verge of collapsing due to economic issues (Jansen 44). Such companies can be acquired at a low price and improve the economic factors to ride to higher values.
Cash Balances
Companies that have been undervalued may have hidden cash balances that can be managed by putting a focus on working capital (Schwert 158). Such a company can be acquired and its income can be boosted to gain more profits.
Synergy
Firms with greater production can choose to acquire firms that have a greater potential for sales. This helps companies obtain more market share. When screening the company to acquire, it is important to consider a company that can help better the existing company, not one that will fully depend on the existing company. The company may have weaknesses, but it must also have some strongholds.
Comparing Prices
Companies should anticipate prices in the market either from the buyers or the shareholders (Schwert 159). If the company feels it can acquire more market through an acquisition, then it can opt to conduct business by comparing prices.
Works Cited
Calipha, Rachel, Shlomo Tarba, and David Brock. “Mergers and acquisitions: a review of phases, motives, and success factors.” Advances in mergers and acquisitions 9.1 (2010): 1-24. Print.
Jansen, Stephan A. Mergers & Acquisitions, Springer Fachmedien, 2008. Print.
Khan, Rafi Ahmad, and S. M. K. Quadri. “Business intelligence: an integrated approach.” Business Intelligence Journal 5.1 (2012): 64-70. Print.
Schwert, G. William. “Markup pricing in mergers and acquisitions.” Journal of Financial economics 41.2 (1996): 153-192. Print.
Sharda, Ramesh, Jay E. Aronson, and David King. Business intelligence: A managerial approach, Upper Saddle River: Pearson Prentice Hall, 2008. Print.
Hagedoorn, John, and Geert Duysters. External Appropriation of Innovative Capabilities: The Choice Between Strategic Partnering and Mergers and Acuisitions. MERIT, 1996. Print.