If an auto parts manufacturer merges with an automobile engine manufacturer, which strategy would help reduce technology investment costs?

The choice to move one firm into using the other’s system is a viable strategy for reducing technology investment costs in the context of a merger between an auto parts manufacturer and an automobile engine manufacturer. This approach allows for the consolidation of resources, minimizing redundancy in technology infrastructure, and streamlining operations across both companies.

By having one firm adopt the existing systems of the other, the merger can leverage already established processes and technologies, thus avoiding the need to invest heavily in new or additional systems. This can lead to significant cost savings in both the short and long term as it simplifies maintenance and training requirements and reduces the complexities involved in integrating completely different systems.

Choosing to develop a single ERP system for both firms might seem beneficial as well; however, it typically requires substantial investment in time and financial resources, including development and customization costs. Implementing web services or purchasing hosted, on-demand ERP systems can also involve additional expenses and may not provide the same level of integration and efficiency as transitioning one firm to the other’s system.

Therefore, moving one firm into using the other’s existing system effectively minimizes the financial burden associated with managing separate systems, facilitating a smoother and more cost-effective merger transition.