Acquisition of technology can be an effective strategy for companies to enhance their competitive advantage. When they acquire new technologies, businesses can develop innovative products or services that meet the ever-changing demands of their customers. However, it is essential to follow several best practices when pursuing acquisition of technology, which includes conducting thorough due diligence, creating an efficient integration plan and establishing a clear communication with employees.
1. Finding the Right Technology
The most challenging aspect of technology acquisition is determining which technology will benefit your company most. This requires a thorough understanding of the objectives and needs of your company. Once you have the information then you can begin analyzing and evaluating various technologies. You should also consider the method of purchasing technology including licensing, joint ventures, acquisitions, or alliances depending on the amount of control and ownership you wish to have over the technology that you purchase.
2. Expanding market reach
By leveraging the technology or products of acquired companies, companies are able to gain access to new markets. Google’s acquisition by Nest Labs, for example provided the company with an advantage in the rapidly growing market for smart home automation systems. Another instance is the acquisition by Facebook of Instagram, which enhanced the social networking and capabilities for sharing photos on the platform.
3. Enhancing Core Capabilities
It is vital to embrace innovation for growth and profitability, but it can be expensive and time-consuming. Companies that are not in the field of technology can benefit from technology acquisition to stay ahead of competitors. They gain access to innovative technologies that they otherwise would not have the funds to purchase.