Page 3: Strategy
There are four major reasons why mergers take place:
- Diversification - to spread the interests of a company – moving into similar and related fields of business.
- The addition of new and profitable products to existing ones.
- The acquisition of management or technical personnel to increase the operating performance of existing businesses.
- The acquisition of businesses which can be made more profitable than their existing performance.
By acquiring Holiday Inn, the Bass Group was able to benefit, in some measure, from all of these. Holiday Inn has an established international reputation as a ‘top class’ chain of hotels. Bass was able to benefit immediately from this association and also acquire the skills and expertise of Holiday Inn’s pool of international human resources. The hotel business is a natural outlet and complement for the Bass Group’s existing range of product lines. There was also a number of powerful synergistic benefits to be gained from Holiday Inn in the areas of brand management, technological development and hospitality management.