Organizational knowledge, or intellectual capital, is nowadays recognized as a key factor not only for growth, but for survival of organizations in dynamic, disturbed, uncertain and highly innovative and competitive environments, such as the ones in the current scenario of rising global economies. Organizational knowledge management (KM) is introduced, therefore, as one of the necessary conditions for competitive strategies success. However, of course, it is not enough, and the need for external knowledge, through merger and acquisition (M&A), is recognized as an essential management process, an alternative for innovative P&D procedure, normally slow and burdensome. Anyway, researches have assured that, worldwide, only 30% of M&A cases have reached success in their business goals. Nevertheless, this kind of business have been considered essential for the expansion of worldwide companies, since mere organic growth is insufficient, which is a paradox. This case study aims to describe and explain the causes for the failure phenomena in Xerox|MHW company strategy performance, combined when Xerox acquired MHW, with knowledge management as its key component. The literature consulted to comprehend these basic concerning concepts encompasses topics about organizational models, strategies, knowledge management and results of company merger and acquisition processes. The gathering of evidences, adopting triangulation procedures, has been performed using documents, interviews and two surveys. The second survey aimed to validate the data collected previously. Based on MACEDO-SOARES (2000) GI systemic-integrative model, the reality revealed by the research is contradictory in relation to the requirements, presuppositions and suppositions implicit in the strategy conception, resulting, from this, its nonadjustment to the organization performance, trying to pursuit its strategic objective. The conclusion is that an acquisition process is far from being something trivial, and the problems of organizational non- adjustment - mainly cultural, in cases of scope acquisition, particularly involving a major bureaucratic company and a minor one with flexible organization model - are the responsible factors for this high percentage. About organizational knowledge, it is clear that understanding it as an essential resource in the current business scenario is not enough. It is crucial the implementation of practices and procedures to its management. However, building this new and complex process requires, because of it, solid support from high level management in the companies and the development of a proper culture, fitting its accomplishment.