Strategic alliances and M&A in creating strategic partnerships have been especially popular in the professional services industry in recent years because of the expanding tide of retiring Baby Boomers and a constantly changing economy and marketplace. The benefits and advantages of both strategies include a greater market share. Increase survival rate in the industry amplified market power and diversified labor and skills across industries. The successful activities of M&A and strategic alliances demonstrate. That both are essential organizational instruments that give significant benefits and advantages to companies.
Executives considering these two approaches may wonder about the benefits of embracing either approach. This article will serve as an additional resource for companies and executives aiming to implement an inorganic growth strategy. It will provide a brief overview of each strategy’s motives and advantages. This will assist in selecting of the approach that may be an excellent fit to accelerate growth and create opportunities.
The main motives for mergers and acquisitions can be divided into four categories. These factors are strategic motives, financial motives, managerial motives, and acquisition wave motives. Strategic motives are often associated with strengthening the firm’s competitive advantage through consolidation, and increased capabilities. Or expanding the firm’s presence in new or current markets, products, or geographical regions. Financial motives are relevant to optimizing the use of a firm’s financial resources by taking advantage of tax advantages. Asset stripping, unbundling or boosting economic performance. Managerial motives encompass any self-serving or hubristic objectives that serve exclusively the interests of managers rather than the interests of shareholders.
Access alliances are primarily concerned with acquiring access to the capabilities of a partner company. Complementary alliances are similar to access alliances in some ways. But they differ in that they focus on improving a business’s shortcomings with the strength of a partner firm.