PRESENTED: 09 OCTOBER 2009
Syco Inc’s choice to enter the non-retail business through acquisition is because it aimed at increasing its market power and presence into their non-retail business by acquiring the already established companies. Acquisitions made it easier for Syco Inc to overcome the entry barriers that would have restricted its success in entering the non-retail industry and establishing its self in these industries. Acquisitions also reduced the costs and risks of new product development for Syco Inc which ultimately resulted to quick market entry and expansion. Because the various non-retail businesses were already in the market and were widely accepted, the businesses were less risky to acquire together with their network of customers. Returns were more predictable because the performance of the acquired firms was accessed prior to completing the acquisition. Acquisition as an entry strategy into the non-retail industry helped Syco Inc to increase/broaden its business scope into new markets. Acquisition made it easier to enter a market that Syco Inc had never operated in before as it had no experience on how to go about establishing itself, therefore acquisition eased its entry by acquiring the already established businesses. Lower risk compared to developing new products – outcomes were estimated more easily and accurately than the outcomes of an internal product development process, managers viewed acquisition as lowering risk.
Syco Inc had always been involved in retailing and that has been its primary business and focus, now the company wanted to broaden its competitive scope by entering into other markets where it can form a sustainable position in. Acquisition was the most viable choice as it offered Syco Inc a quick and large access into the non-retail business. Increased diversification – it was difficult for SI to develop products that work different from retailing and they lacked experience in...