Suppose that you are the CEO of a large internet hosting company. Your major revenue comes from website hosting and data storage. Your strategy so far has been to minimize your investment in hardware, so you lease data storage space. You currently operate as a mid-sized company with revenue of approximately $3 billion annually. However, your goal is to grow. You have three companies that you are looking to acquire: the first has similar customers and services, the second company manages data storage and has the physical hardware for hosting, the third company is an up and coming e-commerce company that focuses on selling music downloads directly to customers at a reduced price.
1. Tell me which of the three companies that you would buy and why you would buy them. Please include a discussion about diversification type (related/unrelated) and the factors (economies of scope, core competencies, market power, vertical integration, parenting advantage, etc.) that you are hoping to take advantage of with your acquisition.