This book is licensed under a Creative Commons by-nc-sa 3.0 license. See the license for more details, but that basically means you can share this book as long as you credit the author (but see below), don't make money from it, and do make it available to everyone else under the same terms.
This content was accessible as of December 29, 2012, and it was downloaded then by Andy Schmitz in an effort to preserve the availability of this book.
Normally, the author and publisher would be credited here. However, the publisher has asked for the customary Creative Commons attribution to the original publisher, authors, title, and book URI to be removed. Additionally, per the publisher's request, their name has been removed in some passages. More information is available on this project's attribution page.
For more information on the source of this book, or why it is available for free, please see the project's home page. You can browse or download additional books there. To download a .zip file containing this book to use offline, simply click here.
New investments can interact positively or negatively with existing assets of the firm. For example, when Amazon started offering electronic books (Kindle) and electronic audio (Audible), there was an obvious and natural synergy with existing content and their core competencies. These investments improved Amazon’s strong performance because they complemented existing company assets. When Amazon began adding tools and a variety of other home improvement products and then started selling groceries in certain markets and branched out into cloud computing, there were concerns related to synergy. Part of the answer relates to Amazon’s core competencies. Amazon is good at online retailing and it is very good at maintaining a very scalable and robust server and processing infrastructure. They had core competencies that were transferable to those businesses.
There are numerous examples where an investment lacked synergy with existing assets. Many believed that eBay’s acquisition of Skype was ill conceived because there did not appear to be any positive synergies between the businesses.http://dealbook.blogs.nytimes.com/2010/03/15/skype-poised-for-a-big-initial-stock-offering/ The businesses did not appear to mesh and the executives at both eBay and Skype were constantly fighting. eBay eventually sold Skype at what was considered a very modest amount. In some ways, eBay’s competitive advantage was undermined because of the relationship. The interaction effects between eBay’s assets and Skype’s assets were negative.