Sample Essay

Words 1,320

There are eight steps to checking the suitability of an acquisition (Steps to a successful acquisition 2005):

Step 1. Choose Target Spaces
After analyzing the company environment the company can understand where its strengths lie and where the weaknesses lie. A SWOT analysis can tell the company where they stand currently and where they should go form there. A gap analysis should be conducted to see the difference between where they are where they want to be. In Royal Numico’s case they were successful in their country but they wanted to expand to the United States. Henceforth, they settled in the idea of an acquisition that would give them a strong distribution channel and a larger product line.

Step 2. Develop Target Profiling Criteria
Once they company realized that they wanted to acquire another company they had to choose which one would be the best. The acquisition must be in line with the original goals, the mission and the vision of the company as a whole. The location of the company, it’s position in the market, and its supply and demand functions have to be analyzed to paint a clear picture of where the company is right now and where will it go after the acquisition.

Step 3. Collect Information and Rank Targets
Research and development is a big part of making decisions because it ends up being one of the most important tools. This aspect was already inscribed in Royal Numico, henceforth they could easily analyze their targets and calculate the risks. One aspect of collecting information should be consulting critics and taking outside advice. Rooji made three criticisms to the acquisition of the Rexall Sundown which were most likely ignored because later these factors come back and haunt Numico and result in the sale of Rexall Sundown.

Step 4. Approach Targets
Approaching targets is a difficult task because people react to things differently in different countries. Since Royal Numico’s acquisition was in the United States it would have to thoroughly analyze the American publics buying methods. As stated earlier the company knew that there were risks involved and reaching out to the target market would be quite vulnerable. Since they knew that reaching out to targets was quite venerable they should have created a strategy to eradicate that vulnerability or come up with a plan to handle it. The suitability of an acquisition also depends on its feasibility. Although a lot of the things sounds attractive and Numico had enough money to buy the both the companies they should have researched how this would affect the target markets.

Step 5. Investigate Targets
In order to minimize these risks they company had to analyze the target markets and they found that the American consumer had a health conscious mindset and they would nutritional supplements and related products. Once again paying attention to Rooji’s analysis would have been beneficial here because they failed to realize that dietary supplements were based on fads that would come and go and depended heavily on the economy. It is not wise to simply launch and idea or a strategy only because a few aspects seem positive. Each negative or incomplete area of information has to be completed and analyzed thoroughly.

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