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Home > Mergers and Acquisitions Best Practice > In Search of Growth: Choosing Between Organic, M&A, and Strategic Alliance Strategies

Mergers and Acquisitions Best Practice

In Search of Growth: Choosing Between Organic, M&A, and Strategic Alliance Strategies

by Duncan Angwin

Executive Summary

This chapter details:

  • the three main growth strategies available to companies;

  • organic growth strategies;

  • mergers and acquisition strategies;

  • strategic alliance strategies;

  • and how to choose between these growth strategies.


Blockbuster movies are key to success in Hollywood. But in 2012 a single superhero film beat all others with US$1.5 billion global ticket sales, becoming the third-highest grossing title of all time. The Avengers, from Disney’s Marvel unit, stormed the box office, bringing Iron Man, The Incredible Hulk, and Thor together. The Avengers’ success largely overturned analysts’ criticisms of Disney’s 2009 US$4 billion acquisition of Marvel as overpayment. But why would Disney risk so much on an acquisition when most acquisitions are doomed to fail?

This chapter examines one of the big strategic issues facing CEOs and boards of directors: deciding among strategies for successful growth. Many companies often have strong preferences with respect to growth strategies. For example, Cisco Systems relies heavily on growth through acquisitions, while others, such as car and aerospace companies, often engage in alliances and joint ventures. In September 2013, Microsoft acquired part of Nokia for US$7.2 billion and its share price fell 5.5%, suggesting that analysts are not fully convinced about the deal. Why, rather like the Disney example above, would Microsoft pay so much for this acquisition rather than engaging in a strategic alliance that would have been cheaper? Alternatively, should Microsoft have tried to “do it itself”—organically?

These issues are examined in this chapter by examining a series of questions: What growth strategies are open to companies? How should they choose between them? Which is best for business? First we review the classic growth strategies of organic growth, mergers and acquisitions, and strategic alliances, and then contrast their advantages and disadvantages in order to show whether growth through one means or another is the best strategy for a company.

Organic Growth Strategies

Often perceived as the default growth option for companies, an organic growth strategy relies on developing a company’s internal resources and capabilities. This “do it yourself” strategy has five main advantages.

  • First, organic growth strategies improve the company’s knowledge through direct involvement in a new market or technology, thus providing deeper first-hand knowledge that is likely to be internalized in the company rather than it working through a partner in a hands-off strategic alliance.

  • Second, these strategies help to spread investment over time, which allows a reduction of upfront commitment, making it easier to reverse or adjust a strategy if conditions change.

  • A third advantage is that there are no availability constraints, which means that the company is not dependent on the availability of suitable acquisition targets or potential alliance partners. Organic developers also do not have to wait for a perfectly matched acquisition target to come on to the market.

  • A fourth advantage is strategic independence through organic development. This means that a company does not need to make the same compromises as might be necessary in an alliance, for example, which is likely to involve constraints on certain activities and may limit future strategic choices.

  • Finally, a fifth advantage is culture management. This allows new activities to be created in the existing cultural environment, which reduces the risk of culture clash—a common difficulty with mergers, acquisitions, and alliances.

Organic growth strategies have drawbacks. For instance, developing internal capabilities can be slow, expensive, and risky. It is not easy to use existing capabilities as the platform for major leaps in terms of innovation, diversification, or internationalization. However, this is not to say that organic development cannot be radical. Indeed, Amazon’s Kindle is a good example of a successful radical entrepreneurial step, through organic growth, which has taken the company from retailing into the design of innovative consumer electronic products. This sort of “corporate entrepreneurship”—radical change driven principally by the company’s own capabilities—is valuable because it encourages an entrepreneurial attitude inside the firm. There are many examples of corporate entrepreneurship, such as the creation of the low-cost airline Ryanair from inside the aircraft-leasing company Guinness Peat. Often, however, companies have to go beyond their own internal capabilities to find growth, and two popular strategies are mergers and acquisitions and joint ventures.

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Further reading


  • Angwin, Duncan N. (ed.). Mergers and Acquisitions. Oxford, UK: Wiley-Blackwell, 2007.
  • Capron, Laurence, and Will Mitchell. Build, Buy, Or Borrow: Solving the Growth Dilemma. Boston, MA: Harvard Business School Publishing, 2012.
  • Child, John, David Faulkner, and Stephen B. Tallman. Cooperative Strategy: Managing Alliances, Networks, and Joint Ventures. Oxford, UK: Oxford University Press, 2005.
  • Sudarsanam, Sudi. Creating Value from Mergers and Acquisitions: The Challenges. 2nd ed. Upper Saddle River, NJ: Financial Times Prentice Hall, 2010.
  • ul-Haq, Rehan. Alliances and Co-Evolution: Insights from the Banking Sector. New York: Palgrave Macmillan, 2005.


  • Angwin, Duncan. “Speed in M&A integration: The first 100 days.” European Management Journal 22:4 (2004): 418–430.
  • Angwin, Duncan. “Motive archetypes in mergers and acquisitions (M&A): The implications of a configurational approach to performance.” Advances in Mergers and Acquisitions 6 (2007): 77–105.
  • Angwin, Duncan. “Merger and acquisition typologies: A review.” Chapter 3 in Faulkner, David, Satu Teerikangas, and Richard J. Joseph (eds), The Handbook of Mergers and Acquisitions. Oxford, UK: Oxford University Press, 2012.
  • Angwin, Duncan, and Maureen Meadows. “The choice of insider or outsider top executives in acquired companies.” Long Range Planning 42:3 (2009): 359–389.
  • Angwin, Duncan, and Maureen Meadows. “Acquiring poorly performing companies during economic recession: Insights into post-acquisition management.” Journal of General Management 38:1 (2012): 1-24.
  • Angwin, Duncan, and Maureen Meadows. “New integration strategies for post-acquisition management.” Forthcoming in Long Range Planning 2014.
  • Angwin, Duncan, and Eero Vaara (eds). “‘Connectivity’ in merging organizations: Beyond traditional cultural perspectives.” Special issue, Organization Studies 26:10 (2005): 1445–1572. Online (issue contents):
  • Angwin, Duncan, Philip Stern, and Sarah Bradley. “Agent or steward: The target CEO in a hostile takeover: Can a condemned agent be redeemed?” Long Range Planning 37:3 (2004): 239–257.
  • Angwin, Duncan, Basak Yakis-Douglas, and Maureen Meadows. “Analysis: Reputation in strategic communications.” Reputation 4 (2012): 3. Online:
  • Arino, Africa, José de la Torre, and Peter S. Ring. “Relational quality: Managing trust in corporate alliances.” California Management Review 44:1 (2001): 109–131. Online:
  • Bower, Joseph L. “Not all M&As are alike—and that matters.” Harvard Business Review 79:3 (2001): 93–101. Online:
  • Dyer, Jeffrey H., Prashant Kale, and Harbir Singh. “When to ally and when to acquire.” Harvard Business Review 82:7/8 (2004): 109–115. Online (in two parts): and
  • Gomes, Emanuel, Duncan Angwin, Emmanuel Peter, and Kamel Mellahi. “HRM issues and outcomes in African mergers and acquisitions: A study of the Nigerian banking industry.” International Journal of Human Resource Management (special issue on managing human resources in Africa) 23:14 (2012): 2874–2900.
  • Gomes, Emanuel, Duncan N. Angwin, Yaakov Weber, and Shlomo Yedidia Tarba. “Critical success factors through the mergers and acquisitions process: Revealing pre- and post-M&A connections for improved performance.” Thunderbird International Business Review 55:1 (2013): 13–35.
  • Inkpen, Andrew C., and Steven C. Curral. “The coevolution of trust, control, and learning in joint ventures.” Organization Science 15:5 (2004): 586–599. Online:
  • Kim, Ji-Yub, Jerayr Haleblian, and Sydney Finkelstein. “When firms are desperate to grow via acquisition: The effect of growth patterns and acquisition experience on acquisition premiums.” Administrative Science Quarterly 56:1 (2011): 26–60. Online:
  • Stahl, Günter K., et al. “Sociocultural integration in mergers and acquisitions: Unresolved paradoxes and directions for future research.” Feature article, Thunderbird International Business Review 55:4 (2013): 333–356.
  • Yin, XiaoLi. and Mark Shanley. “Industry determinants of the ‘merger versus alliance’ decision.” Academy of Management Review 33:2 (2008): 473–491. Online: vs alliances.pdf


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