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Mergers and Acquisitions (M & A): Help a firm renew its market position at a speed not achievable through internal development (Haspeslagh and Jemison, 1991).
The study of this phenomenon is really important when we study the integration process of companies nowadays, which in some cases implies the reconstruction of a new social identity. Integration process is the real source of value creation in acquisitions.(Haspeslagh and Jemison, 1991).
· Economy of Scales
· Economy of Scope
· Increased revenue or market share
· Geographical or other diversification
· Resource transfer
It can also be possible that the integration process destroys value of companies. In the acquisition process there are two relevant variables:
· The motive for the acquisition
· The process of implementation
The success of a particular integration strategy depends primarily on: The manager’s ability to reconcile the need for strategic interdependence between the two firms.
Managers nowadays may want to focus on three particular cultural modifications:
· Support for a global view of business.
· Reinforcement of ethical behavior.
· Empowerment of employees to excel in product and service quality.
According to the case studies, what are the practical steps to minimize the feelings of uncertainty normally expected by employees, and also to facilitate the learning process to occur between the two groups of people in their process of cultural and behavioral integration?
Finding similar organizational cultures and management styles has become a common issue for avoiding employees’ dissatisfaction that could undermine Mergers and Acquisitions performance, but it doesn’t happen always. It is important to encourage employees’ diversity tolerance in order to make things easier and to create more benefits for both companies. One step to minimize the uncertainty of employees could be to undertake cultural assessment exercises in order to minimize cultural clashes between the two groups of people, other steps can be the implementation of incentive programs, introducing a job grading system and so on. To facilitate the learning process between the two companies it is important to integrate training, recruitment activities and make the necessary changes in the line of Human Relations. The impact of cultural differences can be minimized when the firms take the time to create a positive atmosphere for knowledge transfer before initiating any consolidation of people and physical assets.
· Alzira S., Wayne H., and Gerald V. (2003) “Challenges and opportunities in mergres and acquisitions: three international case studies –Deutsche Bank-Bankers Trust; British Petroleum-Amoco; Ford-Volvo”, Journal of European Industrial Training, Vol. 27 Iss:6, p. 313-321.
· Angwin, D. (2001) “Mergers and acquisitions across European borders: national perspectives on pre-acquisition due diligence and the use of professional advisers”, Journal of World business, Vol. 36 No.1, p. 2-57.
· Datta, D.K. and Grant, J.H. (1990), “Relationships between type of acquisition, the autonomy given to the acquired firm, and acquisition process: an empirical analysis”, Journal of Management, Vol. 16, p. 29-44.
· Elsaa, P.M. and Veiga, J.F. (1994), “Acculturation in acquired organizations: a force-field perspective”, Human Relations, Vol. 47 No. 4.
· Gitelson, G., Bing, J., Laroche, L (2001) Culture Shock, CMA Management.
· Haspeslagh, P.C. and Jemison, D.B. (1991) Managing Acquisitions, The Free Press, New York.
· Nahavandi, A. and Malekzadeh, A.R. (1998) “Acculturation in mergers and acquisitions”, Academy of Management Review, Vol.13, p.79-90.
· Nelson, D and Quick, J.C. (2009) Organizational culture. In Organisational Behavour: Science, the real world and you.