This case analysis is based on 3D Systems increased acquisition process of business involving in 3D technology and is compared critically with Stratasys in the same sector with fewer acquisitions. From the case study involving 3D systems (3DS), more than fifty acquisitions have occurred by 2015 with splendid consolidation in the 3D printing industry and a strong indication of aggressive acquisition culture (Stevenson 2015). Nevertheless, the business returns in comparison to Stratasys having less acquisitions have recorded higher purchasing investments. In light to these facts, there is need for 3DS to look into ways of consolidating and expanding its 3D printing business. The analysis is based on the need for increased growth and development of the company to acquire increased market share and expand its distribution channels. The evaluation looks into the merits of continued aggressive acquisition of smaller companies as a strategy and the type of merger partners necessary for 3DS to create greater global influence. Finally, the analysis will look into viable alternatives to merging in the sector with inclusion of relevant theories, concepts and models to support the arguments put forward.
Overview of the Study
Critical analysis of the 3DS operations brings up the aspect of 3D printing technologies which have revolutionized various sectors in the twenty first century promoting the systems and practices involved. The application of 3D technologies based on the creation of three dimensional images in various fields of application has seen the field grow from one level of excellence to another (Gross et al. 2014). Based on these factors, organizational strategies are increasingly inevitable to promote the acquisition of more market space to their products and increase company returns. According to Columbus (2015), manufacturers from various sectors are employing 3D printing technologies in the current dispensation. Thus, the concept of 3D technology is greatly acquiring market and subsequently the need for increased strategic moves to promote growth and development. Development of new products through innovations not only enhances competitions, but also promotes growth and development for any given organization (Chia & Wu 2015). In this context, there is need for organizational strategic overhaul whenever any strategic move does not amount to increased performance.
3DS continued acquisition of small company involves, a strategic move aimed at increasing its market share, as well as acquiring a wide scope of expertise held by the small companies seemed to have gained returns but not to the greater intended target. Innovations are very critical in start-ups and small companies mainly involve upcoming business aiming at increasingly acquiring breakthrough in their operations (Desai & Magliocca 2014). The need for creating more opportunities to expand the market space seems to be the push for 3DS embracing an aggressive massive acquisition of smaller business in its industry. Increased acquisition gives rise to a wider customer base, as well as an increased market share based on getting more points of contact to new ventures. New distribution channels are acquired with effective acquisitions coming into place and eventually the market space is enlarged with enhanced systems for building business success (Mertz 2013). The strategy undertaken by 3DS may not be giving in returns in the meantime, but eventually market domination will be acquired by the company with wide scope coverage and having diverse skills and expertise. From analysis of the case, 3DS is acquiring increased market and technology consolidation which may not be paying in the short term but will eventually bring greater prospects in the long run. Thus, long term benefits from the increased acquisition may propel the company to greater heights of excellence.
Acquisitions come with greater advantages of business growth based on acquiring of quality staff and more skills in the field of operation (Desai & Magliocca 2014). In the context of 3DS, increased acquisition has resulted to increased 3D software technology. This not only enhances the company’s grip of this concept of operation, but gives it an upper hand in respect to being better placed to get more proceeds in respect to increased innovations with 3D technological advancements. Further, acquisitions brings in knowledge of the industry from diverse perspectives based on the business intelligence entrenched in the companies entering into the acquisition. The absorbing of the smaller companies by 3DS comes with established unique strategies in the operationalization of targets, and intricate nature of the business (Stevenson 2015). When incorporated into the new business venture, greater prospects are made resulting to enhanced returns and greater growth prospects in the sector. In general, the chosen business venture involves acquiring systems that complement the existing company operations and in turn compliments the strategies of action to adapt to enhanced business operations.
The impact of new skills and diverse knowledge acquired by way of acquisition results to diversified products in the sector. Target business gets the capacity to hold important avenues for increased innovation and development of products quality which not only raises the level of engagement but also impact by increasing organizational returns (Grunewald 2016). With more acquisition of business having the same line of production, the new company acquires the capacity to offer diverse products that can be sold through the same distribution channels. Looking at 3DS, acquiring more acquisition results to increased software technology, more patents, improved 3D manufacturing strategies and more distribution channels (Stevenson 2015). This in context appears to be a foundational base of building a larger market share, as well as coming up with products to fulfill the same. Subsequently, by conglomerating the various small companies together, it results to shared expenses of marketing, innovations and development research, as well as increases purchasing power
Mergers and acquisitions are conducted in business strategic moves aimed at growing the business returns (Mertz 2014). Thus, in the event the said mergers and acquisitions are not bringing out the expected returns, there is a need to rethink the strategy to growth the business returns. On comparing the two cases involving 3DS and Stratasys acquisitions, it is evident that the latter has utilized on a strategic move of growing up the printer manufacturing power whereas the 3DS has concentrated on buying an all rounded ecosystem (Stevenson 2015). The strategic move by Stratasys may be working to its favor based on the analysis of the market needs for 3D printing technology rather a whole conglomerate industry of 3D concept. According to Lakhani and Lane (2014), 3DS involves boosting customer adoption of 3D printing through embracing a seamless context to print experience for users. This was aimed at growing sales of products involving cube printers and plastic filaments, with the latter becoming a very critical product in respect to 3D printing technology. Thus, increased acquisition without realizing increased growth calls for rethinking or restricting of the strategies employed to ensure increased growth and development of the sector.
Three-dimensional technologies have brought about increased development of models applications in various sectors expanding the market for 3D printing applications. The in vitro application of 3D printing technologies in the medical organ replacement is a good example to portray the increasingly growing market for 3D technology (Au, Huynh, Horowitz et al., 2013). With increased layered technology being put in place, tremendous growth and development through manufacturing technology has been floated. PWC indicates that 3D Printing industry is projected to growth exponentially from around $2.5bn in 2013 to $16.2bn by 2018 (Allan and Earl, 2014). With increased growth in the industry, there is an observed efficiency of 3D printers and affordability is also increasing. This has resulted to key industry players greatly dealing in process that promotes growth and development. Through increased research and development, diverse innovations have been floated with insights in technical and expertise consolidation resulting to mergers and acquisitions of various companies to bring together skills, resources and market share (Yang & Rivers 2009). To effectively understand the aspect of growth and acquiring stability with respect to mergers and acquisition, looking at a number of models and concepts brings out the processes effectively.
The benefits of mergers and acquisitions can be well described by equilibrium concept model. The Bayesian equilibrium arises from implausible equilibrium stemming from dynamic operations whereby players are taking turns to make things work out positively (Mertz 2013). This is in respect to ensuring promoting sustainability, growth and enhances returns of organizational performance. Synergy, hubris hypothesis and private benefits are concepts that indicate why companies engage in mergers and acquisition. Bayesian equilibrium concept critically gives a clear review of the takeover game, and then explains the motivations result that follows the mergers and acquisitions. The need for improved performance is supported by the private benefits concept with increased promoting increased mergers even in circumstances where target firms appear to resist (Osuji 2011). In situations that management of acquiring firm indefinitely knows the target firm is not in favor of a merger, the hubris and synergy hypothesis come in support of the strategy promoting the merger.
Looking at the merging parties, there is a dynamic process that emanate from a differential dilemma. Game theory plays a critical role in enhancing the operationalization of practices and engagement within the company goals to meet target goals (Chia & Wu 2015). Increased strategy and development of necessary attributes within the operations and strategic growth development of a given sector are critical. The resolving of an existing dilemma is closely related to the market value of merging partners within a given sector. The need for differential reward promotes the process of mergers to the point of resolving the difficult and contentious process (Osuji 2011). An improved process for merging is critical in order for 3DS to promote its capital base, improve market share and consolidate more skills and experiences. Merging of given entities bring rise to better performing entities with effectively and articulated strategies (Gross et al., 2014). The need for successive measures to ensure high performance or the merger break-even is necessary for consideration. In this context, evaluating the system theory gives a number of strategic moves that promote operations and creates a sense of improved business strategy.
System theory applies with interaction of various entities affecting the merger process. In the middle of the system structure, policy formulation arises with a view to strategizing how to effectively promote growth and development of the merger process (Bielecki & Stocki 2010). The demands made by the process involves coming up with a system of critical measures to articulate the actualization of the merger process and eventually fulfill the company goals and targets. The system theory is very important in the merger process as it takes little account of the cyclic and imperfect balance of power, while taking a neutral ground to influence the demands of the process (Desai & Magliocca 2014). Thus, in the merger process, promoting cohesiveness and cooperation among the different parties promotes the process of coming together and consolidating resources for business growth. System theory creates a framework describing the components of systems and relationships in line with the boundaries of strategies, goals of the systems, and the ability to change and adapt in respect to the internal and external forces arising from the merger process (Bielecki & Stocki 2010). The main advantage of the system theory in this context involves promoting the understanding of effectively how organizations merge by first allowing clear assessment, visualization of target goals, analyzing the merging process and journey, and propose the expected returns (Bielecki & Stocki 2010). This in general gives a clear view of the necessary steps towards enhancing efficiency in the process while at the same time promoting the synergistic effect of the various factors in play during the merging process
To promote growth and development, 3DS critically has the option of also evaluating other strategic business moves without necessarily dwelling on the aspect of mergers for growth. With the projected growth and development in the three dimensional promoting industry, there is a clear path for success for any given business entity (Chia & and Wu 2015). Nevertheless, there is need for strategic measures aimed at increasingly promoting the strategic business operationalization and eventually increase the organizational returns. Critical consideration should be put in place towards realizing the need for enhanced measures by evaluating the untapped sectors within the industry (Yang & Rivers 2009). With respect to 3DS model of acquisition, increased software technology has been acquired, thus, there is need to enhance the strategic move of acquiring more channels of distribution, improved manufacturing process and increased innovation. The aspects of distribution can be equally addressed by investing in the creation of channels of relaying the products coming from the company at hand (Lakhani & Lane 2014). Further, improved manufacturing and innovation can be improved by increasingly employing the acquired skills and investing in them by offering necessary resources to promote growth and develop. The main point in this context involves ensuring the organization acquires a strategic move that is unique and in line with the market needs.
Determination of market needs is vital for any growing business entity. This is in respect to ensuring that organizational growth targets coming up with products that not only enhances success in respect to production, but also getting market for the products which trickles down to promoting the overall organizational performance (Grunewald 2016). Having a clear market understanding coupled with a clear comprehension of the dynamics of the situations in place, merging entities are able to understand the needs in their market and get to merge with the right entities. For example, for 3DS, having acquired increased software technology but substantive low 3D printer manufacturers in comparison to Stratasys gives a clear strategy for embracing a new channel of activity (Stevenson 2015). This is in line with promoting increased growth of the existing portion of manufacturing technology, promoting growth and development, as well as increasingly improving distribution channels for the manufactured products.
3D printing technology is yet to reach its peak of growth and the dreams envisaged by various companies in the industry re yet to be achieved (Earls and Baya 2014). The predicting of given technology outcome in this regard requires precision and accuracy which can be realized with increased expertise and more resources being put in place. Increased acquisition and mergers if not well managed can result in poor business growth and thus, there is need for strategic operationalization of the 3D System goal of promoting its operations. The predicting the outcome of any venture in the 3D printing can be connected to the increased development and the growth of the industry (Desai & Magliocca 2014). Thus, to increasingly realize better results in this respect, there is need for increased innovation based on realigning innovation technologies, promoting success of technology and coming up with strategic measure to promote business sustenance. The attribute of business sustenance involves increased growth in market share, widespread distribution channels and widespread customer return and referrals.
Conclusion and Recommendations
In conclusion, from the evaluation acquisitions, mergers and alternative viable ways to merging, it imperative to indicate that 3DS is better placed to engage in mergers with other established 3D printing entity having a well distribution of market share, as well as expanded manufacturing technology. This is in respect to not only enhancing its skills in the industry, but also increasingly promoting engaging with partners that will compliments its skills and experiences. The need for a larger base of operation can be acquired via increased market consolidation coupled with improved distribution channels. There is projected growth of 3D technology and thus, the disruptive effect of 3D printing will continue. In this context, the need for increased and continued research and development on matters technology an innovation are paramount. Nevertheless, the acquisition of market base, distribution channels, manufacturing technology and improved technical expertise and resources can effectively be realized through mergers.
From the analysis, it is imperative to recommend that the acquisition processes may not realize better growth returns if not properly structured based on set goals and objectives in line with company mission. Thus, 3DS ought to come with strategic measures evaluating its target goals, as well as increasingly having a clear action plan with a view to realize better returns of the business operation. Merger process with an entity supplementing lacking or inefficient business operations like distribution channels and process, marketing strategies and innovation in manufacturing technology can be improved with following strategic processes. In this regard, having a clear goal target for 3D System will enhance it merger process by effectively establishing merging entities, as well as coming up with effective strategies to merge. Thus, improved business operations for 3DS will be realized with a strategic merging process targeting an entity with improved manufacturing technology and distribution channels.
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