As we know, mergers and acquisitions are strategic solutions used in order to improve the position that a company wants to have in the market. They can also be seen as a source of knowledge and learning. But there are also difficult decisions that have to be taken and when they are not managed on a proper way many issues can emerge. Such issues can affect the stability and the future of the organization. It is very important for a company that is having a merging or acquisition to have present the creation of values inside the company because without them there will not be a north or goal in order to achieve. The values can’t be created until capabilities are transferred. There is a concept or term that can describe what happens with mergers and acquisitions and the situation during the process of integration, the term is acculturation. The definition proposed in the document for acculturation is "the changes resulting from the interaction of one organizational culture with another, or the ways in which two groups adapt to each other resolve emergent conflict ". It is common for an organization that is going through the process of integration to have problems and conflicts during the process. It is hard for everyone inside the organization to adapt to all those instant changes.
In the text they explain the way in how two companies can merge on an effective way. It is possible to join two companies together and they can become one. A new organization is created and because of being new it also brings new ideas, objectives, a new cultural organization and a new environment. All of these are new facts that have to be taught to employees and it is very important to guide them through the process. The integration process is really important because this is where everyone has to start to adapt t the new ideas, projects, objectives, people, etc. this is the process where the two companies connect or join together as whole. It is important for the companies to create integration teams that work actively during the whole process. The executives play a really important role during integration because they have to show employees security and give example of commitment with the organization and the new transition. They are seen as guides for everyone in the company and they help to manage uncertainty, help others to understand the new goals and the reasons why merging will bring benefits to everyone. That is why the acculturation process is really important in order to have a successful integration.
QUESTIONS
Based on the required reading for this module, list and explain - using evidence from the cases presented in the reading - the main challenges and opportunities arising in processes of mergers and acquisitions from an organizational culture perspective. Include at least 3 challenges and 3 opportunities.
In the cases presented in the text assigned for this topic, one can see several opportunities and challenges, which I'll go looking for cases.
• Case 1: Integrating Deutsche Bank (DB) and Bankers Trust (BT)
In this integrating case three main challenges are clearly seen. The first and most important one is the conversion of a German bank in a global organization, in other words the integration process. The integration and the Bankers Trust helped the Deutsche Bank to have a wider and globally-orientated business. The Deutsche Bank has to start innovating in many aspects and guide its employees during the process.
The second challenge that can be seen is the internal conflict with the employees that think they are losing their identity. The company has to guide and support their employees during the process in order for them to not loose trust and confidence with the organization. The integration brought a new name and it was The Deutsche Bank - Alex Brown Investment Bank. They have to create an environment in which every employee feels comfortable and secure in the new organization. Employees need to feel love for the new brand and adapt to the new organization.
The last and third challenge was to defeat and understand what the Bankers Trust employees thought of the Deutsche Bank. They had the idea that the DB was a company with a strong and rigid bureaucracy that had problems when taking decisions. The leaders of this new organization had a great idea because they used this challenge in order to create new objectives for employees and the objectives where to improve the company having in mind all of those bad opinions.
The DB gained many good things with this integration. This bank gained a good reputation worldwide because of the integration with the oldest bank in U.S. because of the use of the good image of this institution.
• Case 2: Integrating British Petroleum (BP) and Amoco into a single organization.
In this case there is a clear and really hard challenge for any organization that is passing through a process of integration. In this case two companies are becoming one and when this happens the idea is to create one and only organizational culture. The hard thing is to unify different cultures into just one corporate culture. These two companies in order to unify and have a successful integration they had to have several meetings with all workers and managers in order to show and explain the new philosophy to everyone and guide employees with the socialization process with the other co-workers.
• Case 3: Volvo and Ford
For companies like Ford and Volvo having advanced technology is really important. Sometimes these companies get stuck in ideas and innovation and they have to try to search for partners that can help them keep growing, be better and offer new products with new features. Edge technology is one of the tools that make a big difference in an automotive brand. Volvo and Ford realized that each company was the best partner or allied in order to be bigger, better, to progress and endure through time. The integration process between these two companies required team work between engineers, managers, plant workers, etc. The idea was to learn from each other, share ideas and knowledge. With this integration process many challenges arise but the most difficult one was the challenge between the two different organizational cultures. The Volvo culture was team work oriented and decentralized and the Ford culture was hierarchical and structured. These companies had to create new cars and models in order to endure in the market and become competitive in the world market.
REFERENCES
• Alzira Salama, Wayne Holland, Gerald Vinten, (2003) "Challenges and Opportunities in Mergers and Acquisitions: Three International Case Studies – Deutsche Bank-Bankers Trust; British Petroleum-Amoco; Ford-Volvo", Journal of European Industrial Training, Vol. 27 Iss: 6, pp.313 – 321.
• http://en.wikipedia.org/wiki/Mergers_and_acquisitions
• http://www.bakerb.com/alexsaenger/Marketing/eMergerCS.pdf
• http://money.cnn.com/1999/01/27/deals/ford/
• http://en.wikipedia.org/wiki/Alex._Brown_%26_Sons
IMAGES TAKEN FROM
- http://dscedu.wordpress.com/
- http://www.pacificadventure.org/main/services/employment-engagement
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