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Selecting the right growth mechanism: The choice between internal development, strategic alliances, and mergers & acquisitions

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Balanced Growth

Part of the book series: Management for Professionals ((MANAGPROF))

Abstract

When seeking to realize growth strategies, firms have three choices: internal development, alliances, and mergers & acquisitions. How to choose between these growth mechanisms is, however, not well-understood in practice. Managers seldom sufficiently strategically analyze this critical first step in any growth-related decision process. Instead, many managers commonly base their decision on “gut-feel” or simply follow successful traits. This chapter offers a framework to systematically guide managers in their choice of growth mechanisms. Four sets of factors should be simultaneously considered to decide on when to make, ally, or buy: the environment, the target, the growth strategy, and company-related factors. By systematically analyzing each growth mechanism’s context-specific advantages and disadvantages, firms may avoid mistakes that could not be compensated for in later implementation phases.

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Author information

Authors and Affiliations

  1. University of St.Gallen, St.Gallen, Switzerland

    Markus Kreutzer

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  1. Markus Kreutzer
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Editors and Affiliations

  1. , Institute of Economics, University of St. Gallen, Bodanstrasse 1, St. Gallen, 9000, Switzerland

    Giulia Mennillo

  2. , Institute of Management, University of St. Gallen, Dufourstrasse 40a, St. Gallen, 9000, Switzerland

    Thomas Schlenzig

  3. University of St. Gallen, Tigerbergstr. 2, St. Gallen, 9000, Switzerland

    Elmar Friedrich

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Kreutzer, M. (2012). Selecting the right growth mechanism: The choice between internal development, strategic alliances, and mergers & acquisitions. In: Mennillo, G., Schlenzig, T., Friedrich, E. (eds) Balanced Growth. Management for Professionals. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-24653-1_6

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