A large company has grown to its present size through a series of acquisitions. This has enabled
Question:
A large company has grown to its present size through a series of acquisitions. This has enabled the firm to diversify considerably from its initial product-market scope. So far the procedure following an acquisition has been to leave the acquired firm still in the hands of the previous managers and simply treat it as a subsidiary of the main firm.
These subsidiaries have their own board of directors and have unfettered power with respect to policy making. The main company, however, does own the majority of the shares in them and therefore has effective control via the medium of voting power at shareholder meetings.
Recently, some subsidiaries have shown inefficiency in setting their marketing policies, with the result that loss of market share and fall in profitability have ensued. In addition there has been some degree of cannibalisation taking place as a result of some of the subsidiaries, whose productmarket scope is not too different from one another, putting new products into the market which compete with one another in the same market segments. Then there is of course the not unusual problem of duplication of facilities offered by the subsidiary companies.
What options might the main company pursue to resolve all the identified difficulties?What other difficulties do you think there are? Use brainstorming or one of its variants to come up with some ideas using six thinking hats
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher