Final answer:
Mergers and acquisitions should be considered as a 'buy' option when extreme closeness to a resource partner is essential for understanding and transferring knowledge, and after evaluating that internal development cannot achieve the strategic objectives efficiently.
Step-by-step explanation:
Mergers and acquisitions (M&A) should be considered as a “buy” option for a strategist when extreme closeness to the resource partner is necessary to understand and obtain its underlying knowledge. This scenario may occur when the knowledge or capability is deeply embedded within the partner's organization, and a simple contractual arrangement or strategic alliance is insufficient to transfer the required competencies.
When a company is considering M&A, it is essential to evaluate internal resources to ascertain if the firm is capable of developing the necessary skills or products through organic growth. Only after establishing that internal development is inadequate or suboptimal, should M&A be pursued as a means to achieve strategic objectives.
Moreover, corporate mergers and acquisitions involve significant integration challenges, including blending organizational cultures, consolidating overlapping departments, and managing employee reactions to change. Therefore, these options are usually considered when the benefits of a merger or acquisition—such as increased market share, efficiency gains, or the acquisition of new product lines—outweigh these challenges and align with the firm's strategic goals.