Acquisition strategies in the plastic pipes industry - the case of Dissertation

Acquisition strategies in the plastic pipes industry - the case of Wavin Group - Dissertation Example One of the most important challenges for modern organizations has been the identification of the strategies that can help towards the stabilization of the organizational performance – either in the short or the long firm. Acquisitions have been proved an effective strategic tool for the support of a firm’s position in its market. However, the success of acquisitions is not always guaranteed; there is always the risk of failures especially if the relevant plans are not well designed or in case they are not effectively executed. For this reason, it would be wise for strategic managers to use acquisitions along with other strategic options in order to secure the stabilization (at a first level) and the growth of a particular organization. An indicative example of such methodology is the strategic framework used by AXA (Consultancy Firm) when handling the re-structuring of PWPipe – a leading firm in the plastic pipes industry of USA; in the case of PWPipe the consult ants of AXA decided to implement primarily a series of strategies for supporting the firm’s existing operations – this was mainly achieved through the update of the firm’s IT systems; at the next level, acquisitions were used in order to stabilize the firm’s growth (AMX International, 2011). The proposed study focuses on the use of acquisitions as strategic option by firms in the plastic pipes industry; reference is particularly made to Wavin Group, a key player in the global plastic pipes industry.... h firm, aiming to increase its influence within the global market (Builders Merchant Journal, 2007, Wavin Labko, 2008); in 2010, the expansion of the firm was continued through the acquisition of the Swedish firm KWH Pipe (European Plastic News, 2010). It is made clear that acquisitions has been extensively used by Wavin Group in order to improve its position in the global market; in accordance with ‘Michael Del Pero - vice president in FocalPoint Partners LLC - a lot of plastics M&A announcements were expected in the second half of 2010 because of the tax changes in USA’ (Esposito, 2010). However, in the case of Wavin, the tax rules cannot be considered as the only criterion for choosing acquisitions as a key strategic option – taking into consideration the firm’s relevant activities in the last decade, as explained above. In any case, the plastic pipes industry is a prominent market sector; in fact, in accordance with a relevant report, the specific indus try is expected ‘to advance at the fastest pace up to 2014’ (Bombourg, 2010). The identification of the potentials of acquisitions to support the further growth of the particular industry would be particularly important indicating the potential value of the specific strategic option for firms operating in other industries – which face severe pressures due to the expansion of the globalization and the recession. C. Literature Review The use of acquisitions as a strategy for achieving a continuous growth or for facing the strong market pressures has become a common phenomenon the last three decades (Hitt et al. 2009, 183). In practice, acquisitions can be described as ‘the use of cash outflows for purchasing the net assets or property plant, and equipment of the acquired business’ (Tortiorello 2008,