In this chapter, we studied horizontal integration and the build-borrow-or-buy framework. One industry currenty consolidating is fumiture manufacturing, with thousands of manufacturers and suppliers. Manufacturers range from large rocognizable brands, such as Baker, Steelcase, and La-Z-Boy, to small family-ownod companies. Demand for both oflice furniture and residential furnitute is experiencing post-recossion growth. Analysts have observed that companies are shopping for acquisitions as consumers are shopping for furniture. Charter Capital Partners in Grand Rapids, Michigan, is a mergers and acquistions adviser helping companies inibate. negotiate, and close ceals on one company's purchase of another. To take advantage of the increase in M\&8 activity in the furnsure manufacturing industry. Charter recently launched a dedicated Surniture practice. Western Michigan is home to the top three office fumiture manufacturers, which is a key segment of the industry. The sales of the top three make up haif af the industry's $ to billion market. Charter Capital Parthers has hired your small consulting team to do the basic cosearch regarding a clent that has recently approached the group. The client is a small manufacturer of office fumiture in a medium-sized town in Mchigan. The mandgers are seeking advice as they decide whiether to uperade capabalitas in order to expand sales, to find a partner with complememary shills, or to soil to a larger oompany. The owner has stated that the firm is like a farmiy, and he feels a sense of iayaity to the workers and the community. The firm has had steady salos over ins history, almoegh it experienced a slght dip in sales during the recession. The compary is aware that other office furniture manufacturers are beginning to integrate technology into the fumiture. For example, one compeotor is bualding wireless technology inso deak surfaces to poiver several devices at cne time and avold the need to plieg them in. The owner wees the integration of technology as a game changer 1. Using the build-borrow-or-buy framework and other strategic concepts, develop a set of guestions to ask the managers of this amall besiness to help you gather information regarding whether to hire new employees with more sophisbicated technology expertise in erder to bulld capabalities in.house or whether to partner with another firm that aiready has these capabilities. Atternatively, consider information that could help the owner decide whether this is the time to sell to a larger company. Your consulting team will need adequate information to help put a value on the firm to advise Charter itwenen it initiates a seareh for a partner or buyer. 2. In Strategy Highlight 0.2 , Kraft is shown to be prone to using hostile takeovers. These acquisitions are completed over the objections of the acquired firm. As noted in the text, mergers and acquisitions sometimes have difficully creating enhanced competitive advantage. In your group discuss what additional burdens a hostile takeover must overcome to generate positive advantages for the acquiring company. How is a hostile takeover more difficuit than a cooperative merger or acquisition
