★ Will the acquisition help in the improvement of margins? If yes, then why?

If not,
then what alternate strategy should the company follow?
- Yes, the acquisition will help in the improvement of margins.
- There are 2 ways of improving profit margins
1. Increasing revenue
2. Reducing costs
➔ Increasing revenue - This particular IT company’s main business is providing IT
services, solutions and annual maintenance services. 46% of their revenue
comes from the BFSI sector, 21% is from the Healthcare sector and the rest from
other sectors like Retail, Public sector, Manufacturing, Travel, Entertainment etc.
The IT company can leverage its existing products and services for their newly
acquired customer market. The market will be interested in such
initiatives/offerings by the company. According to Ansoff Matrix, this can be also
called market penetration wherein a company launches existing products in a
brand new market.
➔ Reducing costs - The company can use its resources efficiently and cut down
costs on trivial things like rent, and utilities. The company can outsource
infrastructure services or follow a rent-based model to reduce costs.
➔ The company can sell more of its goods and services to the acquired company's
customers if it has more clients. Without incurring significant costs, this raises
revenue. Second, the company can bargain better pricing with suppliers and
make better use of its resources if it has more employees and clients. All of
these will result in higher profit margins.

★ The root problem in the above case study is the company’s struggle to keep at
par with its competitor's margin improvement rate and to achieve competitive
margins.
★ USING MECE

★ Growth in the US and Europe:

Since the company has customers across 35 countries with 32% in the US
and 20% in Europe, the company should focus on expanding its market to
a higher percentage. It can do so by introducing new products in the
market, improving the sales & service and also by focussing on improving
marketing so more customers are aware of the company.
★ This company has a margin of 42% from BFSI and 39% from Retail sectors
and also from business in the US (48%) and Europe (44%) region. The
margin is very low in business in India (9%) and other Asia Pacific
countries (14%). The company needs to look for opportunities in these
 sectors in India in order to get a good margin. This may be achieved by
launching specialised products depending on the requirements of the
customers in that particular area.

Recommendations for acquisition:

★ The investment must be made in research and development. As
technology is evolving day by day, it is necessary to keep up with the new
trends in the IT sector as well.
★ In today's world, digital marketing serves as the driving force for any
business. Making a significant presence on various social media
platforms will further help in acquiring a new target audience.
★ Since the company is planning on acquiring smaller organisations, they
should target start-ups as startup culture is growing day by day and is
need of various tech products and services.