CASE STUDY

Gear Active Case Study

Gear Active Case Study

Q1. Evaluate the commercial logic of acquiring Mandrake Footwear, and discuss whether it is an appropriate target for Gear Active?

Business Acquisition and its benefits

Acquisition of a business is a process of acquiring another business to overcome hurdles and gaining profit in your own business. The benefits of the process of business acquisition are listed below:

Through business acquisition a business can gain quality staff and their talents along with industry knowledge and data that they have collected plus other strategic approaches that will help a business flourish.

It also opens doors for funds and assets for new business development because good production and distribution facilities are extremely expensive hence it is better to buy them than to develop them from scratch less.

If your business is not performing up to the mark a business acquisition may help improve its performance and revenues (Fleuriet,2008). 

It also helps widen your customer base and augment your market share. The business you are targeting should have tremendous distribution systems which you can use for your benefits.

An acquisition may gain you a range of products, services and future prospects of growth for your business. A business that you are targeting may offer you a wide range of established products and services that you can easily sell through your own distribution network and augment your profits like never before.

By acquiring another business you can actually reduce your costs and overheads via a common marketing budget, greater than before purchasing power at extremely low costs.

Acquiring another business will diminish your competition as well. Purchasing new property, products and services may be less costly for you than developing you own (Straub, 2007) .

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Commercial Logic of Acquiring Mandrake Footwear

John Linton, is the head of business development of a private foot wear organization namely Gear Active Ltd. The company had been seeking out for a brilliant acquisition opportunity for many good reasons. Though the company was running a small scale business unlike most of its competitors, Gear Active was a profitable firm of the footwear industry. But it provoked many people from the top management of the company that its size was turning to be its competitive disadvantage in the times when the competition had strategies and distribution systems to take over the footwear industry( King, Slotegraaf, Kesner, 2008).The recent trend of utilizing Chinese manufacturers on contractual basis also added on to the pressure to augment capacity utilization; which was a trend that would favor huge firms for which longer production runs was not at all an issue (Scott, 2008).

Hence, John Linton decided to acquire Mandrake Footwear assuming that it would double its revenue, augment its influence on manufacturers, and widely extend its image and presence with the most important retailers and distributors in the market, hence giving its business a tremendous boost.

Winkler Fashions which was a huge designer of men's and women's wear decided to plan a strategic re-organisation in the year 2011. The plan was to divest those assets of its which weren't that core ...