Machiavelli – The Prince – Acquisition Strategy

The British food giant Tesco chooses its foreign markets based on the similarity of culture of the foreign market to that of its present markets. The company calls it psychic distance from the parent market. The factors comprising in the psychic distance are (Jody Evans, 2006) – Economic environment, legal and political environment, business practices, language and market structure. As per the Tesco management the psychic distance is one of key factor determining organizational performance. The company finds that it is relatively easier to position the products in the market where the psychic distance is less hence the learning curve for the company in these markets is relatively smaller compared to markets that have greater psychic distance.

Strategy of Force in Expansion and Acquisition

“One has to remark that men ought either to be well treated or crushed, because they can avenge themselves of lighter injuries, of more serious ones they cannot; therefore the injury that is to be done to a man ought to be of such a kind that one does not stand in fear of revenge” ( Machiavelli, Chapter 6)

One of the hard fact in the world of corporate Mergers and Acquisitions is that majority of them fail to deliver the promised value. The returns of the hostile take over are even worse. Most prominent reasons for a merger or acquisition failure are the failure on part of management to incorporate the employees of acquired organization into the new organization. More often than not the sword of retrenchment is always hanging over,resulting in poor performance.

The management should quickly retrench the people who are not needed and assure the rest that they are part of bigger scheme of things. As per Machiavelli it is the job of the leader to take hard decisions to secure the future of the kingdom. He should take them as soon as they appear on horizon rather than putting them on the back burner and hoping they will sort themselves out. Coca Cola often buy the leading player in the market they enter and destroy the brand so that it can focus all its energy on promoting Coke then fending off rivals.