Acquisition strategy

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In business, there are myriad strategies that are applicable in a bid to increase the market share of a firm. Irrespective of the industry a firm is involved in, business acquisitions are slowly shaping up to be the trend of choice amongst various firms gearing up for a bigger market share. This paper seeks to prove that business acquisitions do help businesses in terms of revenue generation, and general business expansion.

A company that has adopted this form of expansion strategy is the Livedoor Company, a Japanese firm that has its base on the internet industry. In the years after its inception, Livedoor has bought a massive 4 companies valued at about ¥ 10 billion. The million dollar question is what are the benefits the company sought to achieve in such a bold move? The answer is market dominance and greater revenues. By its acquisition of the companies, Livewire has transformed its revenues from ¥32 billion and is now valued at about ¥50 billion (Dodd, 2004).

Previously called Edge Company, the CEO states that the acquisition of Livewire was mainly motivated by the need for brand recognition, one which the greater Japanese community and who form the bulk of the clients can identify with. Further, an acquisition meant that the Company has access to many more clients that were part of the acquired company thus boosting sales and by extension, boosting profits. The company is adopting buyouts as a toll by which traffic to livewire may be increased. This was the rationale behind the purchase of ValueClick Japan.

Livewire further has its eyes set on the merger of Rakuten and ANA. Since an acquisition is not an option in this scenario, Livewire is planning a merger so that it can have a part of the market as a dominant player in the online sale of online tickets by Nippon Airways (Dodd, 2004).

Another case of business acquisition is that by Thompsons Hospitality in its purchase of Marvelous markets. The Herdon, Virginia based company in food-service that is also the largest in terms of minority ownership has also been associated with other purchases including that of the Maryland, Washington, and Virginia based chain of restaurants Tex-Mex. While the values of these purchases remain undisclosed, what is clear is that all the purchases have a marked business strategy that underlies them.

What is evident in all the purchases by Thompson Hospital is that all the acquired businesses have a chain of stores across the country in different states and cities. Thompson Warren, the companies president discloses that the acquisitions are meant to serve three crucial functions; business diversification, revenue increment, and to serve as an encouragement to boost consideration of franchising opportunities by other minority owned businesses (Townes, 2008).

The move was meant to market business ownership by the minority through franchising. By buying out other business involved in a different form of services in the good they provide means acquiring a diversified consumer base and in turns translate to greater sales, even greater revenues in the long run.

Further business acquisition by the Thompson Hospitals means that they acquire as well all assets and financial accounts of the acquired businesses. This means that they not only have an increased revenue through enhanced sales generation but their net worth is also substantially increased if looked upon from the perspective of acquired property (Townes, 2008).

In conclusion, this paper sought to prove that business acquisitions do help businesses in terms of revenue generation, and general business expansion. From the analysis of the two companies discussed, Livewire and Thompsons Hospitals, it is evident that businesses do have a substantial chance of boosting their market dominance and sales through the adoption of acquisition as its acquisition strategy.

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  1. Dodd, J. (2004). livedoor CEO Takafumi Horie. J@pan Inc.; Jun2004, Issue 56, , 24-27.
  2. Townes, G. (2008). THOMPSON HOSPITALITY BUYS MARVELOUS MARKETS. Black Enterprise;Vol. 39 Issue 4 , 30-30.
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