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Dear all,
I am confused by this question, as my understanding question 2b requires us to assess the appropriateness of Infotech acquisition in MMI’s portfolio, that means we have to use “strategy evaluation” which includes suitability, acceptability and feasibility. However, I was surprised when I read the examiner’s answer. It is clear that the examiner does not follow this sequence.
So, I have some questions:
1- The examiner analyzes the MMI failure in acquisition of Boatland and First Leisure: Could we consider these analysis as “Suitability”?
2- The examiner analyzes Info financial position and stresses on the “risky” acquisition: Could we consider these analysis as “Acceptability”?
3- In my opinion, the acquisition of Info is feasible because MMI has enough money to acquire Info
4- The examiner states that Info is as “question mark” or “problem child” because it has high market growth. I am really confused by this point because there is no clue of high market growth in the scenario (hope that i am right!!!!). In contrast, I could see that Info’s revenue had declined over years and it needs more investments, so it is as “Dogs” in BCG’s matrix.Any response would be appreciated.
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“Appropriateness” means “suitability”. You should not use the FAS model. Instead, you just need to justify the acquisition in light of “suitability”. I don’t want to repeat the model answer here. I would analyse the suitability from the following 2 perspectives: the completeness of product portfolio under BCG, and the synergies (further sub-divide into cost synergy and economies of scope).
Finally, the examiner considered InfoTech as a “problem child” because it diminishes both in market share and margin but its market is growing.
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