What are the critical decisions that must be made during the justification stage of acquisitions? Explain

What will be an ideal response?

Several critical decisions must be made at this stage: strategic assessment, developing a widely shared view, a
degree of specificity, organizational conditions, implementation timing, and a walk-away price.
1. Strategic assessment is the process of determining how an acquisition will contribute to overall strategy and
competitive position. It should do more than analyze the target: It should address the issue of how the acquisition
will affect the acquiring firm's pursuit of its core objectives. Managers should also make sure that their assessment
isn't too static: It should consider the firm's future needs as its industry evolves.
2. Because many people will be involved in implementing acquisition and integrating the target firm into the
parent, it's important that the purpose and strategic logic of the acquisition be widely understood by members of
the organization.
3. Managers should be as specific as possible in identifying the possible benefits and problems of an acquisition
throughout the organization.
4. Understand condition required for creating synergies (e.g., skill transfer).
5. Control timing of implementation and integration.
6. Establish a maximum price for the firm.