Growing A Company By International Acquisition Case Study

Growing A Company By International Acquisition
Growing internationally is one of the most important goals of companies that has proven success through reaching their maturity point in their countries of origin. To reach the international level, there are several methods to apply and Davis Service Group has applied some of them to reach the European Union. The growth strategies and the Davis Service Group application of growing internationally will be explained briefly in this essay by answering some questions related to the case study “Growing a company by international acquisition”.
1. Describe two major ways in which a company can grow. Give examples to illustrate the two ways of growing.
Companies can grow using organic growth strategy
Inorganic growth could be through merging, which is when two companies cooperate together, or through a “takeover”, which is when a company buys 51% of another company or more.
Horizontal integration is one example of inorganic growth, where companies providing the same product or service cooperate together (or one acquire the other). This would apply if for example a company like Clear shampoo cooperated with Head & Shoulders.
Vertical integration is when the two companies are working on the same field but do not provide the same service. For example, this would apply if Clear Shampoo Company acquired a distribution company to facilitate reaching the stores.
2. Businesses grow when they have the resources to expand and opportunities exist for growth. Explain how the acquisition of Berendsen provided such a good opportunity for the Davis Service Group.
In order for Davis Service Group to grow and expend its operation to Europe, they had to either acquire or team up with another similar cooperation. The inorganic growth strategy was the most suitable idea for the company as they wanted to reach the new market but with the less risk
What aspects of European Union markets have particularly encouraged horizontal growth of the Davis Service Group? What aspects of European Union markets have particularly encouraged organic as opposed to inorganic growth?
One of the main aspects that encouraged the group to inter the European Union market is that the union includes 27 countries with easy mobility facilities between them and one currency. Those facts provide a great opportunity for the company to expand greatly and increase their profitability in one move.
Moreover, the fact that Europe is so close to the UK and that most of the business people in those countries speak English and used to the international work made it easier for the Davis Service Group to enter the Union. The culture was also a major factor to encourage the group to enter, as it is very similar to the culture in the UK.
One of the aspects that encouraged the organic growth is that there was already a big company that operate in the targeted market, and in several different countries. This company was facing some financial issues but had a good experience on the ground.
Furthermore, the decentralized strategy that the company was using encouraged acquiring a company that is already familiar with the business in that area and can take the control of its business