Market Your Way to Growth: 8 Ways to Win

6 Grow by Mergers, Acquisitions, Alliances, and Joint Ventures

If you build up a business big enough, it's respectable.

—Will Rogers

Most companies strive to grow organically by winning more customer “votes”—usually as a result of offering better products, service, and customer care. The market serves as the forum for companies to prove themselves, since it's where customers compare competitors' offerings and make their decisions. Those companies with more insight into customer needs and preferences—and who utilize more innovative thinking—are likely to attain the growth that they seek.

Yet some companies also give thought to accelerating their growth and using their capital better by turning to acquisitions, mergers, strategic alliances, and joint ventures. Sometimes buying a competitor seems like a better solution than competing with it. Acquisitions are often essential for entry into related product categories. For example, BHP Billiton's acquisition of Petrohawk for $12.1 billion cash strengthens the mining giant's quest for natural gas assets. Companies frequently seek exclusive control of innovative components and systems that enhance their product or service line. Even more often, companies can gain exclusive or preferential accessibility to important distribution channels. The famous strategic alliance of Procter & Gamble and Walmart benefitted both companies: it gave brand status to Walmart, and granted P&G market access.

We discussed in Chapter 5 that going international ...