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In 1990, haspeslagh and Jemison discovered this acquisition integration approach. There are two criteria in which a company takes a integration. Firstly there is an urgent need of strategic interdependency which is very important in the long term scenario. Secondly, the ready need for an organizational autonomy. In strategic interdependence, the main goal is for any acquisition is to create a value.

Whenever the two companies are joined the value is enabled. We can have four different types of value creation. First and foremost being resource sharing. In resource sharing everything is done only at the operational level. In resource sharing the values are created by combining the various companies together. The second one is combinational benefits. In this case, the value depends on the market power, cash resources and cash flow, borrowing capacity, purchasing power. The third is the management skill transfer. The coordination and control measure marks the value. The last one is functional skill transfer. The sharing of information and financial knowledge and movement of people to and from different parts if the country marks the value.

The other important factor is the need of organizational autonomy. It can be answered using three questions.

Should autonomy be allowed and how much?

In which areas the autonomy be allowed?

Is it essential to keep autonomy to have strategic capability?

The other important acquisition approaches are preservation, absorption, holding, symbiosis. In preservation the management is keen and dedicated to keep the source of benefit. However, in absorption, the focus is on the management of the vision for acquisition. In holding the risk sharing decides the values. Integration is not done. The boundary permeability and preservation should be kept intact.

The companies assign a group of individuals that perform the acquisition process at a larger scale.

Written by: Matt

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Tagged as acquisition integration, borrowing capacity, cash resources, control measure, financial knowledge, functional skill, integration approach, interdependence, interdependency, jemison, main goal, management skill, operational level, organizational autonomy, permeability, skill transfer, strategic capability, symbiosis, value creation + Categorized as Business, Economy articles