Analysis of Company A's Acquisition Strategy or Alternative Solutions for Greater University Presenc

Overview of Company A and Company G's Business Models

Company A is hiring consultants to produce a new strategy based on pieces of advice and guidance on its current situation and future plans.

Company A is a firm that owns a platform to sell second-hand objects online. The platform is hosted in a web site called WWW.R3US3.CO.UK. R3US3 is preset with an app of Android and iOS as well, but it is not that popular.

The business model is fairly simple. The customers that want to sell something and those who want to buy something must be registered in the platform to be able to sell or buy. Per each transaction that occurs through R3US3, a tiny percentage (e.g. 0.2% in 2019) of the price of the products sold is held by Company A. That is the primary source of Company A's income. On R3US3, a premium service is offered to sellers. It consists of less expensive shipments and insurance on products sold. Similarly, the buyers can have a premium service to get the free return of product in the first 30 days of usage. Both the buyers and the sellers can access this service via an annual fee.

The revenues of the most relevant companies operating in the sector are in Figure 1 and Table 1. At the same time, Table 2 reports the number of transactions occurred along the years via those companies, and Table 3 contains data about the active customers (sellers or buyers) per reported companies.

Table 4 contains the fixed costs of the companies in the market sector, and Table 5 reports the variable costs. Table 6 includes Marketing costs as part of the variable costs (Table 5 already include these costs).

Jasmine is an undergraduate IT student at LSBU. After developing her IT skills, Jasmine created a freecycling app available to students and staff members within the university that allows them to recycle, exchange and/or give away unwanted and unused items. Also, the app aims to reduce the university's environmental impact by promoting freecycling as an alternative to throwing unused things away.

With this idea, Jasmine founded Company G. The firm owns app and website. The app was launched in December 2011 and is available for Android and iOS users. Since then, the app gained many users and has received very positive feedback. Furthermore, it has expanded in many universities in the UK; some of them became official partners. To promote the app, Jasmine and her associates have used posters (during exam season), as well as having marketing stalls during the university's Sustainability Fortnight. It was also promoted in staff and student newsletters, and it has a dedicated page on the university website.

Company A is deciding if it is convenient to acquire Company G or if it is more efficient to find a different solution to partially take over the business of Company G, becoming more present in the universities.

To analyse the customers' moods and to assess the quality of the service offered by Company G, Company A has survived a sample of Company G's costumers. The results are reported in Table 7.

They have asked the service of our consultancy company to understand better the strategy to be adopted. We have to present a plan to lead Company A in exploring costs and benefit of the acquisition as well as different / more efficient solutions.

These are the questions asked by the Client to the Consultancy company. Your objective - as a consultant - is not to respond to the questions but, instead, you must propose a consultancy plan to satisfy the Client's needs behind these questions. Namely, you must propose a plan to step in Company A and satisfy the Client.

Is it convenient for Company A to try to acquire Company G? How much would that cost? Which bargaining power does Company A have?

Which are the alternative strategies to the acquisition? How can Company A become more present in universities?