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Selecting the right growth mechanism: The choice between internal development, strategic alliances, and mergers & acquisitions

In: Balanced Growth

Author

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  • Markus Kreutzer

    (University of St.Gallen)

Abstract

When seeking to realize growth strategies, firms have three choices: internal development, alliances, and mergers & acquisitions. How to choose between these growth mechanisms is, however, not well-understood in practice. Managers seldom sufficiently strategically analyze this critical first step in any growth-related decision process. Instead, many managers commonly base their decision on “gut-feel” or simply follow successful traits. This chapter offers a framework to systematically guide managers in their choice of growth mechanisms. Four sets of factors should be simultaneously considered to decide on when to make, ally, or buy: the environment, the target, the growth strategy, and company-related factors. By systematically analyzing each growth mechanism’s context-specific advantages and disadvantages, firms may avoid mistakes that could not be compensated for in later implementation phases.

Suggested Citation

  • Markus Kreutzer, 2012. "Selecting the right growth mechanism: The choice between internal development, strategic alliances, and mergers & acquisitions," Management for Professionals, in: Giulia Mennillo & Thomas Schlenzig & Elmar Friedrich (ed.), Balanced Growth, pages 77-94, Springer.
    • Handle: RePEc:spr:mgmchp:978-3-642-24653-1_6
    DOI: 10.1007/978-3-642-24653-1_6
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    Citations

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    Cited by:

    1. van Rijnsoever, Frank J. & Kempkes, Sander N. & Chappin, Maryse M.H., 2017. "Seduced into collaboration: A resource-based choice experiment to explain make, buy or ally strategies of SMEs," Technological Forecasting and Social Change, Elsevier, vol. 120(C), pages 284-297.
    2. Abhishek Borah & Gerard J. Tellis, 2014. "Make, Buy, or Ally? Choice of and Payoff from Announcements of Alternate Strategies for Innovations," Marketing Science, INFORMS, vol. 33(1), pages 114-133, January.
    3. Fang, Yinhai & Xu, Haiyan & Perc, Matjaž & Tan, Qingmei, 2019. "Dynamic evolution of economic networks under the influence of mergers and divestitures," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 524(C), pages 89-99.

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