Free Acquisition Deals by Google and Lenovo Essay Sample
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The competitiveness that characterizes the global market today necessitates the commitment of exhaustive efforts by the companies that aim at taking top positions. This happens as the companies involved strive to satisfy customers in the best way possible. It is this factor that has necessitated acquisition as a strategic plan. Acquisition refers to the business process in which an organization assumes control of a target company. When this is done strategically, the company taking charge of the process benefits by doubling its incomes considering the customers for both companies are directed to the single, now larger firm. This process often necessitates the incurrence of great sums of money, as the target company’s entire wealth has to be compensated during the process. This essay will address the acquisition processes engaged by Google and Lenovo. A critical analysis will lead to the realization that the acquisition process is relevant in meeting customer needs and requirements, which would otherwise take too long to be realized, or be unachievable after all.
Lenovo is a Chinese company that deals in the production and sale of computers. The main categories of computer that the company produces include desktops, laptops, netbooks and tablets. The multinational company came to the limelight in 1985 when it became the first Chinese company to launch a motherboard Information (Information Gatekeepers, 2007). This company further gained competitive advantage by “underpricing” international competitors, while making products with exceptional quality compared to local competitors.
Google has in the past been known for its international standard search engines and advanced advertising technologies. The company is lately engaged in cloud computing, a factor that has served to improve the diversity with which Google engages its market operations. Founded in 1996 as BackRub, the company outdid initial challenges that faced its operations to become greatest search engine it is today (Kirby, 2009).
The two companies have in the past engaged in acquisition deals, which have elevated their positions in their markets of operation. In 2005, Lenovo took a move that shaped the computer industry by acquiring IBM’s line of computers. IBM’s line of PCs was then popular for the ThinkPad technology, which now operates under Lenovo (Information Gatekeepers, 2007). This deal cost Lenovo $1.75 billion, a figure that was worth parting with, considering the need to meet customer demands. In the past, Google has been known for major acquisitions, a majority of which have increased its popularity among handset and PC users. One of the most popular of these was the 2006 acquisition of YouTube. This deal cost Google $1.65 billion and has earned the company much popularity, not to mention a $1 billion profit by 2011 (Kirby, 2009).
One common advantage attributable to the acquisition deals for both Google and Lenovo entails popularity. This is in line with Gamble’s idea that the central thrust of a company’s deal entails undertaking measures to improve its competitive position and financial position (2011). Before the 2005 deal, Lenovo primarily operated in Asia, making its greatest profits only within China. Purchasing the IBM line of PCs popularized the company among IBM customers globally. The company is currently popular for the “think” line of products including ThinkPad laptops and ThinkCenter desktops (Information Gatekeepers, 2007). YouTube is recognized by many users as the video giant of the internet. The website acts as the users’ avenue for sharing and watching videos about anything and everything. Meeting the social needs of users ensures that it popularizes its exclusive owner – Google. This has improved the reputation of the company against its competitors like Yahoo!, whose Yahoo! Video is unappealing to users.
The acquisition deals have served to raise the revenues of the two companies. Just two years into the acquisition deal, Lenovo recorded a 20% increase in revenue (Information Gatekeepers, 2007). Google does not publicize the financial benefits it gains from YouTube. However, the website acts as a channel for increasing the adverts Google is best known for. Lately, Google has increased the number of advertisements it makes on a single video in YouTube (Kirby, 2009). This is guaranteed to increase the possibility of appealing to the targeted audience of the advert, ensuring that the company makes more from advertisements.
The acquisition process is relevant in meeting customer needs and requirements, which would otherwise take too long to be realized, or be unachievable after all. Without the acquisition deal, Lenovo would possibly take decades to make it to the top ten largest PC producers. However, a deal that took the company just a few months has elevated the company to become the second largest producer of PC, a position that is bound to improve. Google’s acquisition of YouTube has largely contributed to the company’s top position, with the associated profits being utilized in other projects such as cloud computing (Kirby, 2009). With such previous clean records, Google is confident in trying other acquisition deals, such as the oncoming Motorola Mobility acquisition.