Running Head: STRATEGIC MANAGEMENT IN ORGANIZATIONS 1

Strategic Management in Organizations

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STRATEGIC MANAGEMENT IN ORGANIZATIONS 2

Strategic Management in Organizations

Question 1

The reason why Square Enix chose to establish alliances in some cases and acquisition in

others may be viewed as emanating from context-based situations. Alliances would work best in

those markets that are facing uncertainties, the competition level is considerably high and in

situations where there exist barriers to entry. Square Enix move to enter into an alliance in some

situations was due to the uncertainty in the new game markets. Alliances helped in reducing risks

as risks in alliances are evenly distributed among the players. Similarly, alliances helped to

achieve economies of scale through lowering costs which allowed Square Enix to approach the

market more positively and confident. Most importantly, Enix was able to access diverse game

markets present in these allied companies making them stronger and competitive.

Conversely, the reason for acquisition can be traced back to the needs, motives and the

immediate situation that enveloped the game developer company. Considering the cut-throat

competition in the games market and the ambition of the Square Enix to promote the company

into a renowned global player, centering their focus on the current single market was highly

inappropriate. Thus, the most effective way for Square Enix to realize their goals was to

diversify their market and expand their market base beyond local boundaries. This made

acquisition the best strategy to manage this market expansion. The acquisition was much

flexible, unlike the alliances which were somewhat inflexible and slow in facilitating market

expansion. Another reason why acquisition was much preferred in some situations over alliances

was due to its ease in governing and supervising a gained entity. For instance, when Square Enix

acquired the British Eidos Group Company, it became relatively easy to expand its market on
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global circles. Additionally, acquisition valuation of Eidos Group Company's studio real assets

was effortless which further allowed for an expansion of the market beyond Japan's borderline.

Question 2

One way Square Enix should manage its Eidos acquisition to maximize value creation is

for Enix to entirely take over the production of the games amongst their company. Doing this

would consolidate Square Enix's ability to control purchases and asset sales both within and

outside the company. In addition, Square Enix would be able to develop new competitive games

and exploit other potential opportunities. However, this might be time-consuming due to the

numerous adjustments involved with crystallizing Eidos organizational structures. The

management approach may change over time in terms of cultural values and the synergism. The

synergism of Square Enix and Eidos may be significantly affected as a result. Acquisition will be

more likely to fail as Eidos organizational autonomy would be compromised.

Question 3

The strengths of alliance strategy would include increased market share, widened global

scope, corporate identity and unlimited access to diversified brands and products. As a result of

these numerous opportunities, Square Enix would be more influenced to advance their

production technology to meet the demands of other customers in the international markets. This

would enable Square Enix to focus more on production at a global scale as an alliance strategy

helps in lowering production costs and in minimizing potential risks. On the other hand, alliance

strategy may be disadvantageous due to cultural barriers and uneven alliances. This would make

it hard for the companies in question to work towards a common goal due to varying

management styles and conflicting ideas. Similarly, in future Square Enix may be unable to
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coordinate operations in the spread out countries maybe as a result of the laws managing these

companies in those countries being too stringent and unfavorable for them.
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References