Big business diversifying through acquisitions

Investing in new departments and skill sets can be a slow and demanding process that drains both human and financial resources. But we're seeing a growing number of companies avoiding this problem by buying a business as a means of expansion.

One of the companies that has hijacked this trend to forge its way ahead in the technology sector is Salesforce. The SaaS business has put a lot of its efforts into acquisitions recently, buying up Radian6 and Buddy Media over the past couple of years. These businesses are focused on social media, both monitoring and marketing, and have taken their know-how, reputation and market share across to Salesforce giving the parent company new avenues of growth.

True, the acquisitions have cost Salesforce dearly. The firm's fourth quarter figures showed a loss of $20.8 million, compared with a $4.1 million loss in the same period a year earlier. But this doesn't seem to be deterring the company from continuing thanks to its long-term view on the benefits these acquisitions could bring.

Marc Benioff, chief executive, commented: “We need to buy more marketing companies. We want to be the company you turn to for sales, service, marketing and the platform. We want to grow organically and via acquisition.” He added that the business is “going to be aggressive and look at everything”, noting that it will buy “small and big”.

With big businesses like Salesforce taking such a proactive and aggressive approach to acquisitions, other buyers need to be on top of their game. Successful businesses aren't always available for expansion so when one comes up in the right sector, it's vital to have everything ready to move so that you can beat of the competition if needs be.

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