The acquisition helps most companies gain competitive advantages since capital increases. In South Korea, acquiring Greenfield operations is the major way of establishing a wholly-owned subsidiary. Effective management of wholly owned subsidiaries creates more value and increased profits.
In South Korea, cost-effectiveness and faster operational process are the key elements in acquiring existing companies (Kim, Kim & Lee, 2019). Companies incur fewer costs in due course, and it’s faster, unlike other countries. To get a significant market share and competitive advantages, the target company’s assets, distribution channels, and customer base are leveraged to achieve this objective. Due diligence is required to help identify the target company’s financial position, operations, and market share. This will significantly help remove all the constraints that might hinder the parent company’s operation and alignment to vision and mission. The parent company should also consider the business model, strategies, and the organization’s culture.
The most effective target acquisition involves small and medium enterprises with less financial resources. This is because they offer more profound knowledge about the current market positions, and developing them will be easier, unlike targeting well-off organizations. These small organizations are more dynamic are will easily adapt to changes, thus aligning with the parent company’s mission, leading to success. Greenfield operations involve creating a new business facility (Ha et al., 2021). This is ineffective because it consists of many financial resources to complete the entire project from the start until completion. It will take time to complete and attract more customers, creating more risks for the company. In South Korea, Greenfield operations are significant to new companies entering the market or creating new brands targeting a particular customer base.
South Korea provides a suitable environment for Greenfield operations with low tax rates and a skilled workforce, which could be a feasible option. As a result, companies get full ownership and control of management and all financial resources. Also, it allows companies to tailor specific needs and specifications, leading to increased flexibility and adaptability to economic variations. However, the disadvantage of starting new firms from scratch is increased competition leading to low market share.
Therefore, before deciding on the best approach, companies must analyze all the factors, benefits, and limitations to ensure they venture into viable strategies to create more returns. The significant factors that must be considered include economic, political, social, environmental, technological, and legal factors undermining businesses. Again, succeeding in the industry requires creating good company-stakeholder relationships.
Introduction about the country
South Korea is one of the most developed countries in Asia. The Yellow Sea and Japan surround the country. It has beautiful cities like Seoul, Daegu, and Busan with more population, creating a ready market for the product. Also, it is riched in mountains, river valleys, and coastal plains, which are the primary source of raw materials. Also, the country is known for welcoming nature, displayed by its population, creating a conducive environment that attracts foreign investors.
PESTLE
Economics is one of the Pestle elements associated with the entry. Under economic factors, South Korea is well known for having a strong and well-regulated economy resulting from advanced technological advancements. Consequently, high demand leads to increased consumer purchasing powers, making companies experience more sales revenue (Gereffi, Lim & Lee, 2021). Also, South Korea has signed various trade agreements with European Union to help reduce trade barriers, creating a large market for its products and services.
Company discussion
The company operates in the pickling industry, characterized by stiff competition. Therefore, as one way of promoting growth and competitive advantages, the company focuses on core competencies such as professionalism, trust, honesty, and integrity. Thus this significantly helps increase good customer-company relationships.
Entry method
The entry methods used to enter and dominate the South Korean economy include strategic alliances, which involve forming partnerships or mergers and acquisitions. Therefore, this will significantly help companies access a broader market, leading to more competitive advantages and sales. Also, the approach is essential to companies because there will be resource sharing, access to more finance options, and minimizing risks, thus promoting effectiveness.
Recommendation
Therefore, to compete effectively, some strategies need to be used. These include intensifying the market operations, thus increasing product awareness. Also, the company must lower the product prices. This will increase sales revenue and market dominance as more customers will be attracted and retained.
Question
The acquisition is one of the effective strategies companies use to enter and dominate the market. What critical considerations must the acquiring company consider to achieve a successful purchase?
References
Gereffi, G., Lim, H. C., & Lee, J. (2021). Trade policies, firm strategies, and adaptive reconfigurations of global value chains. Journal of International Business Policy, 1-17.
Ha, T. S., Chu, V. T., Nguyen, M. T. T., Nguyen, D. H. T., & Nguyen, A. N. T. (2021). The impact of Greenfield investment on domestic entrepreneurship. Journal of Innovation and Entrepreneurship, 10, 1-16.
Kim, D. W., Kim, Y. M., & Lee, S. E. (2019). Development of an energy benchmarking database based on cost-effective energy performance indicators: A case study on public buildings in South Korea. Energy and Buildings, 191, 104-116.
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