Risk Analysis on Investment Decision

University of Phoenix silicon Arts, combine (SAI) manufactures digital imaging Integrated Circuits (IC) that are plight in various electronic equipment (University of Phoenix Simulation, 2008). The go with?s initial startup occurred during the boom of the semiconductor business, but the grosss in conclusion decreased by 40% (University of Phoenix Simulation, 2008). SAI survived by raw equals and freezing groovy expenses. Currently, SAI?s Chairman, Hal Eichner, wants to spend in a project that provide increased the company?s foodstuff share and keep ace with in the altogether engineering (University of Phoenix Simulation, 2008). SAI has deuce different opportunities to maximize shareholders wealth. Silicon Arts, Incorporated (SAI) has to analyze whether it would give the company a emulous service to don W-Comm. The erudition would be considered an external enthronization strategy. match to Ross, Westerfield and Jaffe (2005), there are three legal ways to acquire a firm 1) merger or consolidation, 2) acquisition of stock, and 3) acquisition of assets (par. 797). The acquisition of W-Comm would be a merger that will be incorporated into Silicon Arts as a intricate acquisition because they are non-related industries (Ross et al, 2005, par. 797).

The acquisition of W-Comm gives the company a competitive advantage of entering the wireless communication market, revenue enhancement, market gain, cost reduction, tax gains, and reduction in the cost of capital (Ross et al 2005, par 802-806). However, there are disadvantages in acquisition through a merger. The conglomerate acquisi tion of W-Comm has the peril of SIA produci! ng lacklustre financial performance due to the lack of expertise and familiarity of the industry. The shareholders stock may be reduced. According to Ross et al (2005), ? ? two firms merge, the variability of their combined values is usually less than would be true if the firms remained separate entities ? shareholders are likely to be worsen off [because]... If you want to get a full essay, triumph it on our website: BestEssayCheap.com

If you want to get a full essay, visit our page: cheap essay