Mergers and acquisitions as a strategy for competitive advantage: a case study of Total Kenya limited
The business strategy perspective argues that achieving competitive advantage hinges on the existence of a coherent competitive strategy. The world is in a state of flux, being influenced by the forces of globalization and fast technological changes and as a consequence firms are facing intense competition. To face the challenges and explore the opportunities, firms are going for inorganic growth through various strategic alternatives like mergers and acquisitions, strategic alliances and joint ventures. The mergers and acquisitions are arguably the most popular strategy among firms who seek to establish a competitive advantage over their rivals. The objective of this study was to establish how mergers and acquisitions are used as a source for competitive advantage by Total Kenya Limited. The research design was a case study of Total Kenya Limited. The data collection tool was an interview guide. Content analysis was used to analyze the qualitative primary data which had been collected by conducting interviews from the management team of TKL. These managers represent different functional areas of the company in an effort to capture the different roles that managers in different departments played which will be an eye oppener on the competitive advantage that TKL enjoys. The findings from the study was that as a result of the mergers and acquisistions, the company was able to achieve increased market share, improved distribution network, acquaition of stations located in strategic and profitable areas, acquisition of synergies and economies of scale and the Lubricants Blending Plant with a view of increasing sales in the lubricants sector which is highly profitable and also for business growth. The company achieved competititve advantage from the mergers and acquisition through economies of scale which is achieved by selling more of the same product, economies of scope resulting from sharing resources common to different products, better control of costs and thereby improve profit margin, increased entry barriers to potential competitors, if the firm can gain sole access to a scarce resource, increased dependability of the supply or quality of raw materials used as production inputs and improve the predictability of demand for its output through forward vertical integration. The conclusion from the study was that the management of the company should ensure that the acquisition of the company becomes a success by ensuring that the company achieves its intended objectives. The company's competitive advantage was derived from its ability to assemble and exploit an appropriate combination of resources.