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Acquisition of Motorola
The year 2011, on 15th August witnessed the potential of Google acquiring Motorola Mobility Inc. (MMI) (Kumar, 2012). This agreement for the merger was a total of about $12.5 million offer from Google Company. The merger happens to be vertical in nature since it is the software provider or supplier, acquiring Motorola Company that is the hardware client (Melka & Shabi, 2013).
Circumstances leading to the merger
The merger or acquisition of Motorola by Google took place due to a number of potential circumstances. Firstly, the android operating system of Google had a pending case in court filed by Microsoft and apple due to pertinent infringement. As a result, Google decided to seek access to MMI patents to ensure the independence of the company as a separate entity.
The other reason for the merger is that Motorola happens to be a big player in the market for manufacturing phone hardware. Their android phones made a significant positive impact in the market in terms of success achievement. Therefore, the decision to join hands with Google had a potential impact of increasing its rank in the business industry (Kumar, 2012).
The year before the acquisition, Motorola witnessed very high sales in the smart phone sector.
The increase attracted Google to for a number of reasons. The major reason however is that Google Company had a great chance of increasing its smart phone share market (Kumar, 2012).
The Motorola Company had made a development and launched numerous breakthrough products over time. It was the first company to bring portable phones to the market. Therefore, Google hoped to benefit from the technological advancement and innovations. This realization was a major push factor to the acquisition of MMI. Finally, the integration of the two companies will have the opportunity for the provision of complete quality mobile phones in the market. Thus, they will be able to compete favorably in the market with other top key players in the industry.
Impact of the deal
The two companies working together had to accelerate the innovation factor and choice in mobile computation. The two companies had a potential in their respective sectors before the merge. Motorola for instance is good at mobile devices, whereas Google is best at soft wares. Therefore, the customers will tend to have maximum benefit in cost as they are likely to enjoy low cost products (Melka & Shabi, 2013). In addition, they will also get high quality products since the combination of both companies’ ideas will bring high quality products in the market. Google alone earns many profits from the advertising business. Concerning this, the acquisition of MMI will be profitable as MMI also earned quite well before the merging took place.
The accruing benefits such as the development of the next generation mobile phone computing were also a potential expectation. This included the delivery of services such as Motorola cables and TV boxes (Kumar, 2012). The main intention was to compete with other phone development companies and bringing advertising services to the reach of most people. The move also aimed at the development of designs to comply with the government institutions regulations and the company needs. The objective would enable Google to compete favorably with competitor firms like Apple and Samsung with the emphasis being on Apple.
Structure of the deal
Differences between the two companies combined and the merger company
Whereas the two companies were initially independent, the merger company has the element of dep.............
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