The absorbtion of a company is often a difficult task. Critical issues to consider, include organizational culture, technology, socio-culture, brand equity, and profitability of the firm. Organizational culture is the most important issue to consider when acquiring another company. While some cultures differ from others, that doesn’t necessarily make them weak cultures. Key questions to ask are; how well will the companies cultures mix with each other? If changes to either culture occur, what implications does this have on productivity and efficiency? Technology is and has been a key part of business and will continue to be. Technology increases productivity, efficiency, and in many times lowers the cost of making products. When looking to acquire another company one must compare the technology of that company to its industry. How much will a company have to invest in a company to get the technology updated and personnel trained on those machines? How much would the company gain by implementing this new technology? Socio-cultural factors are a mindset of customers and they play a major role in whether or not a customer purchases a product and how much of it they will purchase. Grapefruit, for example, was a very popular item during the craze of the Hollywood Diet. Carbohydrates were in low demand when the Adkins Diet was trendy, and now it’s no transaturated fats that are becoming the next style of diet. Fast food companies had to change their menus to fit some of these trends due to their popularity! The lesson to take away from this is that a company needs to look into current as well as future trends that occur before making the decision to make an investment into an absorption. Brand equity is an essential part of acquiring a company. For example, a customer enters a pharmacy and sees both Tylenol and the generic brand of acetaminophen at the same price; the customer will most likely pick the Tylenol because it has...
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