Sample Business Paper on Mergers and Acquisitions as a Strategy Tool

Using mergers and acquisitions as a strategy tool in this case would require a consideration of various factors. The objective of the M&A would be to ensure to improve organizational performance by leveraging the core competencies of the different organizations involved. From Figure 1 below, an analysis of a possible merger or acquisition is presented.

Figure 1: NHS Hospitals Scores for Hernia Operations

The best partners for a possible merger among the organizations shown are Hexham General Hospital and Furness General Hospital. The selection of a candidate for a merger or acquisition is based on several factors. The two companies should be able to complement each other in terms of their core competencies and capabilities by first being able to compete for market share, as well as for opportunity share (Saxena 48-49). Figure 2 below has been developed to show the possible outcomes that can be gained through combining different businesses in terms of performances in patient waiting time and the ratings on PostopQRS.

Figure 2: Merger or Acquisition between Furness General Hospital and Hexham General Hospital

Businesses White Space

·       Additional patient care capacity

Mega Opportunities

·       Post-operative patient care

·       Limited waiting time

Current Competencies

·       Furness General Hospital – Under-used capacity

·       Hexham General Hospital – High efficacy

Unexplored Areas

·       Other post-surgical care procedures

Core Competencies

Among all the organizations listed, the Hexham General Hospital and Furness General Hospital are the core competitors in terms of performance as indicated by the PostopQRS ratings. The other hospitals each have their competencies but without the corresponding competitive scores. Bothe Edgware Community Hospital and Royal Free Hospital service sufficiently large number of patients each year yet have a relatively low performance in terms of the PostopQRS score. Additionally, they both have a slightly high patient waiting time, indicating capacity overutilization. Any merger or acquisition involving them would, therefore, require organizations that have very strong performances in terms of both patient waiting time and the PostopQRS given that the objective of such a merger or acquisition would cater for the present and future growth of the company.

A merger or acquisition involving Hexham General Hospital and Furness General Hospital will enable the use of a business strategy for positioning as well as foresight. The use of strategy as positioning and strategy as foresight indicates that the present characteristics of the two organizations, specifically the market shares, are strengthened by a merger or acquisition for both the current and future needs (Ghosh and Dutta Dr 400). For Hexham and Furness General Hospitals, a merger would result in greater utilization. Notably, Hexham has capacity constraints as indicated by the waiting time, while Furness exhibits underutilization. Therefore, combining them will result in better performance in terms of waiting time for patients who would visit Hexham. Similarly, Furness would benefit mostly in terms of market shares. Both outcomes are also projective of the future growth of the resultant organization. Analyzing the other organizations based on this context indicates that there are potential benefits to be accrued through mergers or acquisitions between other hospitals. This would result in positive outcomes in market shares, albeit of a weaker magnitude.

Another feature to be examined is that the candidates selected ought to be competing in core competencies, as well as in products. Competition in products in this context can be taken to imply competition in terms of the number of patients who undergo operations in a year. While Hexham General Hospital serves a large number of patients, 726, Furness serves only 607 patients. This is an indication that Furness is probably an upcoming hospital that is bound to cut into the market shares of Hexham, especially considering their competition in terms of core competencies. Furness scores higher than all other hospitals in the PostopQRS, indicating that the competencies in patient care at the hospital are high, competing favorably with those at Hexham General Hospital. The merger or acquisition will, therefore, help the two hospitals to reduce competition by leveraging their core competencies and market shares for the benefits of both of them. This outcome is described by Srivastava for healthcare industry M&As (12). Furness will be contributing to the combined organization through incremental capacity, while Hexham will contribute through incremental operational competency as shown in Figure 2.

Differences between organizations entering into a merger or acquisition transaction can significantly influence the challenges faced during the post-transaction integration. According to Brueller, Carmelli, and Markman, the cultural differences between organizations result in perceived integration challenges (1793). From Figure 1 above, most of the hospitals within the PostopQRS ratings of 3.2 to 3.8 exhibit close organizational cultures since the PostopQRS is a reflection of common patient care practices following surgical procedures. Various combinations of hospitals also appear to be suitable candidates for mergers and acquisitions based on their relative performances in patient waiting time. For instance, Berwick Infirmary could enter a merger or acquisition with North Tyneside General Hospital to realize the same outcomes that can be realized through the merger between Furness General Hospital and Hexham General Hospital with limited challenges in integration.

Hexham General Hospital is an outlier in terms of the PostopQRS performance, and the closest culturally-aligned hospital is Furness General Hospital. These two also exhibit a large difference in terms of the numbers of patients served, indicating a large capacity potential, which is an opportunity for growth given that Furness is already serving a larger number of patients, and both are expected to grow. Their relative competitiveness in strategy, market shares, and resources also make them ideal candidates for a merger or acquisition.

Works Cited

Brueller, Nir N., Abraham Carmeli, and Gideon D. Markman. “Linking Merger and Acquisition Strategies to Postmerger Integration: A Configurational Perspective of Human Resource Management.” Journal of Management, vol. 44, no. 5, 2018, pp. 1793-1818. https://journals.sagepub.com/doi/abs/10.1177/0149206315626270. Accessed 28 June 2020.

Ghosh, Sohini and Sarboni Dutta Dr. “Mergers and Acquisitions: A Strategic Tool for Restructuring in the Indian Telecom Sector.” Procedia – Economics and Finance, vol. 11, 2014, pp. 396-409. www.sciencedirect.com/science/article/pii/S221256711400207X. Accessed 28 June 2020.

Saxena, Swami. Mergers and Acquisitions as a Strategic Tool to Gain Competitive Advantage by Exploiting Synergies: A Study of Merging & Non Merging Firms in Indian Aluminium Industry. In Bakhar, S.S and Pandey, V.K. (Eds.). Innovation and Adaptability: Twin Engines of Sustained Growth. New Delhi: Excel Books, 2010, pp. 48-61. papers.ssrn.com/sol3/papers.cfm?abstract_id=2086114#:~:text=Mergers%20and%20acquisitions%20(M%26As)%20are,new%20market%20or%20product%20segment. Accessed 28 June 2020.

Srivastava, Rajesh. “Managing Mergers and Acquisitions in Health Care: A Case Study in the Pharmaceutical Sector.” International Journal of Healthcare Management, 2018. https://www.researchgate.net/publication/322681248_Managing_mergers_and_acquisitions_in_health_care_A_case_study_in_the_pharmaceutical_sector. Accessed 28 June 2020.