Question

Analysis of Potential Purchase of Erickson by Lockheed Martin. Will you advise Lockheed to purchase components or the entire company? Give valid economic and strategic reasons

Answer 1

I would encourage Lockheed Martin to purchase components of the Erickson company. I am recommending this because purchasing the whole business would be pricey indicates a billion-dollar investment while purchasing those components of Erickson which can complement the core service and possessions of Lockheed martin would be a tactical choice as well as economic.

for example- Erickson is understood for the manufacturing of aviation like helicopters and Lockheed Martin operates in four service segments: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS), and Space and 78% of Lockheed Martin's incomes came from military sales.

Acquiring the manufacturing part of the business will assist Lockheed Martin to increase economies of scale, in house production and sales to the federal government and earn the profit.

another strategic factor for this recommendation is that it can restrict its liabilities since acquiring the whole company implies all liabilities but purchasing a part will restrict liabilities on Lockheed martin.

The Evergreen purchase was funded partly with debt, and (together with challenging service conditions) caused Erickson to declare Chapter 11 bankruptcy in November 2016 to rearrange while keeping the business running. During insolvency, the business returned to private ownership and emerged from bankruptcy protection in May 2017. (Manning, Jeff,2017).

this reveals that having control over all organizations means taking financial obligation as well of the business so it is tactical to get an organization area that pays and not in debt.

reference-.
Manning, Jeff (May 16, 2017). "Leaner, privately held Erickson emerges from bankruptcy". OregonLive.