Essay: Acquisition process for a company (cultural integration)

In the acquisition integration process, in the absence of good planning, it can affect the expected synergies of the acquisition process. 49% of the success factor weight of the entire acquisition process lies in the integration process of acquisition (Kearney, 1998). In addition to focusing on improving synergies from the hard competences side, another focus in the integration process of acquisition is in the management of soft factors that are often the main challenges. Management of soft factors, among others, in terms of integration of corporate culture, and coordination of processes and systems in it. Companies should be able to determine the appropriate type of cultural integration to apply in the integration process of acquisition based on an analysis of the strengths and weaknesses of each company. Based on the type of cultural integration chosen, it can be determined the integration strategy and implementation stages to achieve it. There are three different strategies for cultural integration: the monoculture strategy is a strategy whereby larger firms impose their corporate culture on smaller companies in the form of cultural colonization (Picot, 2002). Then a multicultural strategy, in which the acquisition preserves each of its culture and cultural coexistence is seen as enrichment; and the three mixed culture strategies in which the cultures of the two companies are unified so that a new culture is developed by each company.
Coercion of culture as well as monoculture strategy can lead to resistance from employees and an impact on the decline in the value of acquisition, especially if each partner has a different culture. However, the monoculture strategy can be successfully applied if in the process of changing the leadership role is effectively applied. The leader must effectively communicate the vision of change, maintain the vision’s vision, and provide optimum support to each employee during the transition process. Because one of the keys to success in the integration process is that its leaders consistently lead change and appreciate every process of change that takes place. In addition, open communication with stakeholders is also a factor of success in the transition process.
A multicultural strategy can be applied if firms in the acquisition process have little or no similarity in the business scope or have different patterns of industrial activity. In this case, each company chooses to preserve its corporate culture and the diversity of cultures is expected to provide potential value for a synergy. A multicultural strategy can usually work if the main motive of acquisition is growth, and the process is done with a small or new company. Some steps of change are made to create a successful integration of change. Changes made regarding how the merged company can achieve a positive impact with new vision, code of ethics and new strategic direction. The steps of the change process are based on internalization of leadership. The company tries to create a learning process between them by adopting the key to success of each company and instilling it in order to achieve higher growth rates and maintain the stability of the business position. Both companies treat each other as equal business partners and build a people-centered coherence and focus of knowledge.
The most common cultural integration in the acquisition process is a mixed culture strategy, which generally occurs on a horizontal merger. This integration strategy will result in a new culture with new vision, mission, and shared values ​​aligned with the structure, system, strategic direction that is expected to be realized from acquisition activities. This strategy has largely focused on finding a suitable working approach for the joint venture. A mixed culture strategy requires intensive effort and longer implementation because it has a higher degree of difficulty. Another reason, although mixed culture strategies have greater difficulty in the implementation process, they are an ideal integration strategy that balances the best elements of each company. A mixed culture strategy requires a manageable change process to achieve the full objectives of acquisition. New cultures, visions, and other alignment processes were created with due regard to recommendations of due diligence including HR due diligence. From the explanation of the three structures of cultural integration, it is concluded that the company is able to achieve the resulting synergy when effective leadership roles are carried out during the integration process of acquisition.