Marketing Competencies Based M&A Framework

Abstract

In globalization setting the M&As becomes increasingly an important means to achieve market expansion, access to the global resources (e.g. technologies, products, distribution channels) and strengthen firm’s global market position (Schweizer 2005). Unfortunately, the understanding of such an important strategy is insufficient because of the lack of marketing based view, which at least involves three aspects of M&A: (1) the marketing related evaluation of the target (e.g. marketing due diligence); (2) the post- acquisition business plan (e.g. marketing strategies); and (3) the assessment of post- acquisition performance (e.g. marketing competencies and marketing positions).

So, it is an obvious need that marketing literature should participate in and make its unique contribution to the study of M&A on the one hand. On the other hand, marketing literature, more specifically international marketing, will also benefit from studying international M&A. It is especially true in the cases that a complete post-acquisition integration is needed. The integration directly triggers and accelerates the evolution of organizational learning process, and thus provides a unique lens through which study how firm specific competencies, such as the capability of implementing localization, have evolved and been strengthened throughout an international M&A.

This paper contributes to both M&A and marketing literature in three aspects. Firstly, to the best of our knowledge, except Homburg and Bucerius’s (2005) and Lee, Lee and Wu’s, it is the only M&A study mainly based on marketing perspective. As marketing strategy driven M&As account for a half of the total deals, a marketing based view will be helpful in understanding the keys to a successful M&A, e.g. MDD, post-acquisition business plan, and long-term performance assessment.

Secondly, this paper combines competencies/capabilities literature with M&A literature and provides a new conceptual framework of understanding the relationships of M&A, competencies and performance. On the one hand, this conceptual model supplements the extant literature by adopting a more realistic approach of assessing the mid- and long- term post-acquisition outcome, bridging the gap between insiders’ and outsiders’ evaluation on M&A. On the other hand and most importantly, the conceptual framework provides additional perspective to explain why and how international M&As benefit the firm involved although the risk is high.

Finally, this paper sheds light on how to improve the decision of international M&As which focus on marketing competencies expansion. The conceptual framework herein links the strategic means, M&As, with marketing competencies, motive of M&As, and with long term performance evaluation, which combines the traditional financial indicators with marketing metrics. Therefore, makes the evaluation of post-acquisition performance of an M&A compatible to its motives, increasing the accuracy. Meanwhile the marketing metrics give a specific clue of conduction MDD that is the key to the success of an acquisition.