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Essay: Mergers and acquisitions

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  • Subject area(s): Business essays
  • Reading time: 4 minutes
  • Price: Free download
  • Published: 21 September 2015*
  • File format: Text
  • Words: 999 (approx)
  • Number of pages: 4 (approx)

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1.0 Summary of Recount Article
Mergers and acquisitions are increasing as organisations try to expand their operations and competitive advantage. This case study highlights that despite optimistic expectations, mergers and acquisitions repeatedly failed, in part because of differences in culture, underestimation of coordination failures and the different perception of languages used.
Such as the examples of Daimler-Chrysler merger and AOL-TimeWarner deal, differences in the two organisational cultures results in competition between employee groups and hostile ‘we-think’ attitudes. Both organisations have distinctive and valuable cultural elements. Rather than commanding one organisation’s culture on the other, the best of both organisations should be integrated into a common corporate culture that both sides can identify with.
Also, an organisational culture comprises ‘the patterns of shared beliefs and values that gives the member of an institution meaning, and providing them the rules for behaviour in their organisation. The culture is not normally recognised within the organisations, because basic assumptions and preferences channel the thought and intended actions operated at a preconscious stage. Nonetheless, this preconscious stage affects many areas within the organisation, including ‘performance, teamwork, decision making, control, communication, perception and rationalization of behaviour’.
In addition, the influence of language and culture is that, without language, a certain level of cultural awareness or cultural growth could never take place. As a result, in any cross-cultural communication, the occurrences of more opportunities for people from different cultures to assemble and communicate arise due to merger or acquisition of firms. It is possible that specialisation in function and skills leads to a high degree of specialisation in language that results in a blindspot toward the language of others which makes post-merger communication more complex.
Therefore, the results upon experimental methods on how the subjects from the ‘acquiring firm’ and ‘acquired firm’ perform before and after the merger has indeed proved that performances deceases after merging due to a few factors, such as, the underestimated extent of this decrease, cultural conflict, specialisation of skills and language.
2.0 Brief review of Case Study (It Seemed Like A Good Idea At The Time)
Templeton Hardware acquisition of two firms, The Great Outdoor and Lodestone Landscapes has unexpectedly faced a merger failure. The challenge of a change in business strategy with an insufficient knowledge of management system has led to a poorly constructed performance management system. As a result, issues start increasing.
The issues includes cultural conflicts, failure of in-depth research market, no contingency plans when strategies backfired, over confidence of leadership from CEO Jacquie Tudori, insufficient total quality management in products and services and manpower, lacking of the boards participation in decision making and the lack of control and command over outsourcing contracts.
The lack of human resource management has resulted in the high turnover rate where employees from the acquired firm felt inferior and experienced a loss of social standing as though they have been conquered. This has also affected on the customer services performance where employees face role ambiguity due to the shortage of manpower and the improper behaviour of insincerity while serving the customers hastily.
Due to a lack of the board’s participation role, Jacquie, acting as the CEO of the company was the sole leader with command and control in decision making. Yet, because the research information was insufficient and inaccurate, the decision made to focus on the baby boomers backfired as the perception of Templeton Caravans was too common and not luxurious enough. As a result, the domino effects of issues have indirectly affected the sales revenue to decline drastically.
3.0 Link between Article and Case Study
Clearly, both the article and case study indicates that the failure rate of mergers and acquisitions are relatively high. The common links of issues that lead to merger failure are cultural conflict, communication, unexpected extent of constant decrease performance for employees after merger, lack of management control and high turnover rate.
Solutions
Conducting a Cultural Audit. Both the acquiring and acquired organisations should conduct a cultural audit to ascertain the differences in cultural values, beliefs, norms, practices and procedures. This will allow both parties to assess the ‘goodness’ and ‘fitting’ and anticipate the possible obstacles to the acquisition. The closer the cultural fit is the lesser adversity when integration of acquisitions begins.
Creating and aligning new task. Creation of new task allows employees from both the acquiring and acquired are aligned to work together to get the job done. Employees are repressed from using the full extent of the familiarised culture habits and perceptions from previous tasks and are able to conciliate on a new shared way of doing things.
Simplicity Shared Communication. Management should share as much information as it can with employees before, during the process, and after the acquisition. The mere act of communication and showing of empathy towards employees indirectly causes a shift towards a positive attitude when learning different specialisation of skills in specialised functions. This will reduce the language conflict after merger.
Preparing and delivering a realistic preview of merger. A realistic preview of merger illustrates the job expectation adjusted through acquisition will prepare employees to manage new or modified job demands more rationally. Furthermore, the acquired organisation gain beneficial prospects as employees are provided with a clear perception of the acquiring goals, culture and work redesigning. This will allow employees to be more open and accepting to the organisation and management changes.
Perform a Talent Assessment. The probabilities of high employee turnover are caused by acquisition and mergers. It is crucial for the acquiring organisation to assess what kind of personnel talent it wishes to retain or employ if there is a shortage of manpower. This enables management to have precise control and command over the evaluation of employees’ quality performance.
In conclusion, management frequently fails to concede that culture and human resource issues can truly cause a merger to fail. Therefore, cautious proactive planning should be instigated by the acquiring organisation to reduce emotional consequences that alleviate the transition and reduce the risk of failure of acquisition and merger.

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