Question

After Amazon acquired Whole Foods in 2017, some argued that Amazon could have been better off acquiring another company that does not pursue a differentiation strategy. Others, however, claim that Amazon intentionally bought Whole Foods so that they can better differentiate themselves in the competition.

In line with this debate, some analysts and organizational researchers argue that firms are better off acquiring other firms that pursue the same business-level strategy. Do you agree? What are the advantages and disadvantages of acquiring a firm that pursues a different business-level strategy?

Answer 1

answer-

Yes, I agree with this statement that Firms are better off acquiring other firms having same business level strategy because business level strategy is that strategy which a firm adopt in order to achieve competitive advantage over its rivales and increas its profitability. A competitive advantage does not come easily so Firms like Amazon should focus on those firms which have different business level strategy because after acquiring firms with different business strategy then they able to increase their chances to have sustainable profitability.

If they acquire firms with same business level strategy then how they can show customers how their products and services are different. This is why Amazon put the Wholefoods company with differentiation strategy and integrate its low cost strategy with differentiation strategy of Wholefoods.

The advantages of acquiring a firm that puruses a different business level strategy that they are able to distinguish themselves from their rivals like Amazon was able to distinguish itself from Walmart by integrating prime service in Wholefoods.

second advantage s that Firm enjoy sustainable profitability coming from two different business level stratgey like cost leadership lower business cost and differentiation leads to unique position in the industry.

Third advantage is that Firm is able to create blue ocean stratgey like situation where competition become irrelvant.

The disadvantage of this that Firm need to incure extra investment in sustaing such different business level strategy for long term because having one type can be managed but managing different business level stratgey require more management and investment.