Flevy Management Insights Q&A
What strategies can companies adopt to align their core competencies with newly acquired assets for competitive advantage?
     David Tang    |    M&A (Mergers & Acquisitions)


This article provides a detailed response to: What strategies can companies adopt to align their core competencies with newly acquired assets for competitive advantage? For a comprehensive understanding of M&A (Mergers & Acquisitions), we also include relevant case studies for further reading and links to M&A (Mergers & Acquisitions) best practice resources.

TLDR Aligning core competencies with newly acquired assets involves conducting a Comprehensive Asset Audit, developing a Strategic Integration Plan, and meticulously executing and monitoring the integration.

Reading time: 4 minutes

Before we begin, let's review some important management concepts, as they related to this question.

What does Asset Audit mean?
What does Strategic Integration mean?
What does Performance Monitoring mean?


In the rapidly evolving market landscape, organizations continuously seek strategic avenues to maintain and enhance their competitive edge. One such strategy involves aligning core competencies with newly acquired assets. This alignment is crucial for leveraging synergies, enhancing operational efficiency, and driving sustainable growth. The following sections delineate actionable strategies for achieving this alignment.

Conducting a Comprehensive Asset Audit

The initial step in aligning core competencies with newly acquired assets involves conducting a thorough audit of these assets. This audit should assess the strategic value, operational capabilities, and potential synergies of the acquired assets with the existing core competencies of the organization. A detailed audit enables the identification of gaps, overlaps, and opportunities for integration that can enhance competitive advantage. For instance, a McKinsey report highlights the importance of due diligence in mergers and acquisitions, emphasizing that a deep understanding of the acquired assets can lead to 8% higher returns than the industry average.

Organizations should focus on evaluating the technological, human, and process-oriented aspects of the acquired assets. This involves analyzing how the technology stack of the acquired entity complements the organization's digital transformation goals, assessing the skill sets of new team members, and understanding the operational processes that can be optimized for better performance.

Moreover, this audit should extend beyond the tangible assets to include intangible assets such as brand value, customer relationships, and intellectual property. These elements often hold significant strategic value and can be pivotal in achieving a competitive advantage when properly integrated with the organization's core competencies.

Are you familiar with Flevy? We are you shortcut to immediate value.
Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Strategic Integration Planning

Following the asset audit, the next step is to develop a Strategic Integration Plan. This plan should outline the roadmap for aligning the newly acquired assets with the organization's core competencies. It must include clear objectives, timelines, and key performance indicators (KPIs) to measure success. Effective integration planning ensures that the organization can leverage the full potential of the acquired assets while minimizing disruption to existing operations.

The plan should prioritize initiatives based on their strategic importance and feasibility. For example, integrating a cutting-edge technology platform from the acquired assets to enhance the organization's product offering should be prioritized if it aligns with the core competency of innovation. Accenture's research on digital transformations suggests that organizations that effectively integrate digital assets can achieve up to a 26% increase in operational efficiency.

Additionally, the Strategic Integration Plan should include a detailed risk management strategy. This involves identifying potential challenges in the integration process, such as cultural clashes, technology integration hurdles, and customer retention issues, and developing mitigation strategies for each identified risk.

Executing and Monitoring the Integration

Execution of the Strategic Integration Plan requires meticulous attention to detail and strong leadership. The organization should establish a dedicated integration team comprising members from both the acquiring and acquired entities. This team should be empowered with the necessary resources and authority to drive the integration process. Regular communication and stakeholder engagement are critical during this phase to ensure alignment and buy-in across the organization.

Monitoring the progress of integration efforts is equally important. This involves tracking the performance against the predefined KPIs and making necessary adjustments to the integration plan based on real-time feedback and emerging challenges. For instance, if customer satisfaction levels begin to decline during the integration process, immediate action should be taken to address the underlying issues.

Real-world examples of successful integration include Google's acquisition of Android and Facebook's acquisition of Instagram. Both organizations were able to align these newly acquired assets with their core competencies in innovation and social connectivity, respectively, thereby significantly enhancing their market position and value proposition.

In conclusion, aligning core competencies with newly acquired assets is a complex but rewarding strategy for organizations aiming to enhance their competitive advantage. By conducting a comprehensive asset audit, developing a strategic integration plan, and executing and monitoring the integration meticulously, organizations can unlock synergies, enhance operational efficiency, and drive sustainable growth. This strategic alignment not only leverages the strengths of both entities but also positions the organization for long-term success in the competitive market landscape.

Best Practices in M&A (Mergers & Acquisitions)

Here are best practices relevant to M&A (Mergers & Acquisitions) from the Flevy Marketplace. View all our M&A (Mergers & Acquisitions) materials here.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Explore all of our best practices in: M&A (Mergers & Acquisitions)

M&A (Mergers & Acquisitions) Case Studies

For a practical understanding of M&A (Mergers & Acquisitions), take a look at these case studies.

Global Market Penetration Strategy for Semiconductor Manufacturer

Scenario: A leading semiconductor manufacturer is facing strategic challenges related to market saturation and intense competition, necessitating a focus on M&A to secure growth.

Read Full Case Study

Telecom M&A Strategy: Optimizing Synergy Capture in Infrastructure Consolidation

Scenario: A mid-sized telecom infrastructure provider is aggressively pursuing mergers and acquisitions to expand its market presence and capabilities.

Read Full Case Study

Maximizing Telecom M&A Synergy Capture: Merger Acquisition Strategies in Digital Services

Scenario: A leading telecom firm, positioned within the digital services sector, seeks to strengthen its market foothold through strategic mergers and acquisitions.

Read Full Case Study

Merger and Acquisition Optimization for a Large Pharmaceutical Firm

Scenario: A multinational pharmaceutical firm is grappling with integrating its recent acquisition —a biotechnology company specializing in the development of innovative oncology drugs.

Read Full Case Study

Mergers & Acquisitions Strategy for Semiconductor Firm in High-Tech Sector

Scenario: A firm in the semiconductor industry is grappling with the challenges posed by rapid consolidation and technological evolution in the market.

Read Full Case Study

Post-Merger Integration for Ecommerce Platform in Competitive Market

Scenario: The company is a mid-sized ecommerce platform that has recently acquired a smaller competitor to consolidate its market position and diversify its product offerings.

Read Full Case Study

Explore all Flevy Management Case Studies

Related Questions

Here are our additional questions you may be interested in.

How can companies leverage AI and machine learning to enhance the accuracy of their cash flow predictions in valuation models?
Companies can enhance cash flow prediction accuracy in valuation models by integrating AI and ML to analyze vast data, identify patterns, and adapt forecasts dynamically, leading to more informed Strategic Planning and decision-making. [Read full explanation]
What are the latest methodologies in valuing companies with significant investments in AI and machine learning technologies?
Valuing companies with significant AI and machine learning investments demands blending traditional methods with innovative approaches, considering their impact on business models, strategic value, and adjusting for unique risks and opportunities. [Read full explanation]
What role does environmental, social, and governance (ESG) criteria play in the valuation of companies today?
ESG criteria significantly influence company valuations today by affecting investment decisions, consumer and employee attraction, regulatory compliance, and operational efficiency, with companies excelling in ESG likely to achieve higher valuations. [Read full explanation]
How can valuation techniques be adapted to better reflect the digital assets and intellectual property of a company?
Adapting valuation techniques for digital assets and IP involves blending traditional methods with innovative approaches, considering unique asset characteristics, leveraging market and income-based methods, and utilizing advanced analytics and expert judgment for a comprehensive valuation. [Read full explanation]
What strategies can companies adopt to accurately value startups and tech companies with predominantly intangible assets?
Companies should adopt a comprehensive valuation approach for startups and tech firms with intangible assets, incorporating both traditional and innovative methods, qualitative insights, and future-oriented metrics to capture their true potential and innovation capacity. [Read full explanation]
How is artificial intelligence (AI) changing the landscape of business valuation?
AI is transforming Business Valuation by improving accuracy, efficiency, and scope, incorporating intangible assets and real-time data, thereby enhancing Strategic Decision-Making and Digital Transformation. [Read full explanation]

 
David Tang, New York

Strategy & Operations, Digital Transformation, Management Consulting

This Q&A article was reviewed by David Tang.

To cite this article, please use:

Source: "What strategies can companies adopt to align their core competencies with newly acquired assets for competitive advantage?," Flevy Management Insights, David Tang, 2024




Flevy is the world's largest knowledge base of best practices.


Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.




Read Customer Testimonials



Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.