ACCA Strategic Professional · Strategic Business Leader · Strategic choices

Dravin Retail acquired a competitor, Marlo Stores, to gain market share. Two years later, the expected synergies have not appeared. Marlo's managers were given little say, employee turnover is high and the two firms use incompatible IT systems and different management styles. Which assessment best explains the failure in terms of typical acquisition problems?

The failure is best explained by poor post-acquisition integration. Cultural mismatch, exclusion of Marlo's managers, staff turnover and incompatible IT systems prevented synergies from being realised. These are classic acquisition risks, and the facts do not indicate organic growth or an underpriced deal.

1. AThe acquisition failed because Dravin chose organic growth instead
2. BPoor post-acquisition integration, particularly cultural and systems fit, undermined the planned synergiesCorrect
3. CDravin should have used a franchise arrangement to avoid any integration issues, so the strategy criterion of suitability was breached
4. DThe purchase price was too low, which reduced employee motivation