Strategic Management: Business & Marketing Essay

Student Name
Instructor
Course
Date
Strategic Management
Question 1
Eli Lilly and Co (Lilly) is initiating a horizontal corporate level strategy to buy a direct competitor, Prevail Therapeutics Inc. (Hitt et al., 178). The later firm is being acquired through acquisition, thereby strengthening Eli Lily Co in the field of gene therapy. The Prevail Therapeutics is being acquired 100 percent fully in a $1 billion deal (Reuters Staff).
Question 2
Horizontal acquisition strategy provides Eli Lilly and Co the full right to take control of Prevail Therapeutics Inc. This allows Eli Lilly to adopt the technology and programs used by Prevail’s in conducting experimental treatments. This type of acquisition effectively integrates the objectives of the two firms. Integration of the assets and technological capacity of both firms will reduce the cost of new drug development for Parkinson’s disease. It will also accelerate the speed of entry to the market for the new developed drugs. Lilly will also have the option of diversifying to other areas of research in genetics. The horizontal acquisition process will increase the financial capacity and assets of the company, which gives it a competitive advantage in the market and increases growth rate of the business (Hitt et al., 214).
Entry into the market through horizontal acquisition will increase the high performance of Lilly Company with projected growth in 2021 to be between $26.5 billion and $28 billion. Being that these firms have different backgrounds of conducting medical researches, the management may not be able to fully realize the projected growth in case the functionalities of the two companies are not well integrated. Nevertheless, the deal is a good move for Lilly since it increases their stock by 3.8% and $4 per share which is quite good for a company of such size (Hitt et al., 220).
Question 3
Lilly and Prevail Therapeutics Inc. should have considered adopting either a strategic alliance or a merger. In a merger, both firms could have agreed to integrate their operations on a relatively co-equal basis. Because both were under pressure to strengthen gene therapy, this could have allowed them to improve their products through consolidation (Hitt et al., 211). However, mergers have some shortcomings. Research has it that finalizing a deal between two firms might be hard to achieve due to equality. The process of reaching an agreement between the firms might also create a huge stumbling block on a co-equal basis (212).
In a strategic alliance, the two firms could have remained intact and thus worked towards achieving a common goal. Therefore, each firm would bring their resources together and share the risks involved, which will in turn facilitate the development of ne...