Merging OC

Source: http://managingthedragon.com/?cat=466

When we are talking about acquisitions it is important to talk about the process of merging. Obviously, in a competitive world this strategy to increase profitability and market share is becoming more and more seductive and immediate appeal. However, the acquisition should be analyzed and understood beyond as a simple transaction to buy a company to growth. When we talk about of the acquisition from a company to another, always there is going to have a process of merging different organizational cultures, implying the reconstruction of a new social identity.

Mergers and acquisitions in somehow allow companies to transform and shape organizations in a unique way giving some advantages as well as challenges that should be faced. It is more than just merging, in many cases of mergers and acquisition the main variable has been the integration process and the acculturation process. Depending in how these variables are conducted, merger could have success.

The value creation should be the main objective in successful acquisitions. Value creation is just going to be created until capabilities are transferred as people from both start to collaborate to create expected benefits and unpredicted opportunities. This shows the importance of managers to deal and cooperate to create real value by management, to get participation of people involved without compromising the strategic task.

But could be possible to have similar organizational cultures and management styles to allow a process of merger? In reality is too complicated and the bunch of options could vary. Considering the cultural compatibility could be criterion in the search for a potential candidate. But managing the cultural differences is a more realistic approach of the normal situations.

The effective integration can be understood as the mixture of firms into a new single unity which is going to be conducted by common goals of the new organization. This integration usually is obstructed with challenges of nationality and perceived cultural differences, values and beliefs, especially focus about the work place.

Other variables within the acquisition process that are relevant are the motive of acquisition and the process of implementation. The motive will determine the level of interaction among its members and the process of implementation should define strategies which should not go in detrimental of the organization to permit the acculturation process without losing competitiveness.

The acculturation process occurs among the conflictive subgroups desire for cultural differentiation and organizational forces for integration, which usually is time-consuming process. Some scholars say that is important for the manager during this process reconcile the need for strategic interdependence between the two firms and in somehow an organizational autonomy. After post-merger integration, the degree of assimilation is minimal.

Source: http://www.thevarguy.com/2009/02/26/comptia-where-are-the-ipos-mergers-and-acquisitions/

There are a lot of advantages from mergers and acquisition, but mainly are:

• Renewal speed of market position is master than through internal development
• Mixing together different skills and knowledge to create a unique learning opportunities
• Superior performance one there is an effective post-merger implementation strategies
• The new organization can take the best from both companies, using the best practices of each one and technologies. Research and development departments are the most benefitted from the transference of people and technology
• The new company can increase its attractiveness by a broader scope of products or services offered
• A sentiment of strength to compete is arisen

Nevertheless mergers and acquisitions can have some challenges as:

• The role of managers can be crucial to create value through the transference of capabilities. Relies in the will and capabilities of them
• Managing diversity and cultural awareness will appear as an issue during the merger
• Usually the implementation strategies could affect organizational effectiveness especially when they create acculturate tension and conflict
• Acculturate tension while the organizational forces tend to integration
• Time-consuming process of the integration and recognition of interdependence during the merger and organizational autonomy.
• Feelings of uncertainty experienced by employees
• HR Integration can become complex to achieve
• Workers might experience lose of identity once the process takes place

BIBLIOGRAPHY

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.

Robledo, Cristina; Organisations and Cultures; Class information; Universidad EAFIT, 2010