Once a company has settled on which of the five generic competitive strategies to employ, attention turns to what other strategic actions it can take to complement its competitive approach and maximize the power of its overall strategy. One such decision is whether to bolster the companys market position by merging with or acquiring another company in the same industry. In this activity you will examine the merger and acquisition strategy of Live Nation, a live entertainment and e-commerce company.

Mergers and acquisitions are much-used strategic options to strengthen a companys market position. A merger is the combining of two or more companies into a single corporate entity, with the newly created company often taking on a new name. An acquisition is a combination in which one company, the acquirer, purchases and absorbs the operations of another, the acquired. The difference between a merger and an acquisition relates more to the details of ownership, management control, and financial arrangements than to strategy and competitive advantage. The resources and competitive capabilities of the newly created enterprise end up much the same whether the combination is the result of an acquisition or merger.

Merger and acquisition strategies typically set sights on achieving any of five objectives:

1. Extending the companys business into new product categories.

2. Creating a more cost-efficient operation out of the combined companies.

3. Expanding a companys geographic coverage.

4. Gaining quick access to new technologies or complementary resources and capabilities.

5. Leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities.

Case:

Before beginning this activity, review the textbook information in Chapter 6 on horizontal merger and acquisition strategies. Read the information below about Live Nation, and respond to the questions.

Live Nation (http://www.livenation.com/) operates music venues, provides management services to music artists, and promotes more than 23,000 live music events annually. The company merged with Ticketmaster and acquired concert and festival promoters in the United States, Australia, and Great Britain.

How has the company used horizontal mergers and acquisitions to strengthen its competitive position? Are these moves primarily offensive or defensive? Explain.

Has either Live Nation or Ticketmaster achieved any type of advantage based on the timing of its strategic moves? Explain.