Challenges and Opportunities in Mergers and Acquisitions: Three International Case Studies – Deutsche Bank-Bankers Trust; British Petroleum-Amoco; Ford-Volvo
The main objetive of a firm to merger or acquire another is to increase the profiatability and the market share,so is very important that the integration process create value, this value is not created until capabilities are transferred and people from both companies collaborate in order to create the expected benefit and unpredicted opportunities.The cultural compatibility is neccesary to consider when your are evaluation the candidates for merger or adquisitions, but also if you are evaluating and you look that are cultural differences you could determined a sucessful strategies in which you find or create a ideal culture fit in order to facilitate the unit to work together and integrative the practices to contraresting the corporate value or cultural differences, that means that merging implies the reconstruction of a new social identity. In the acquisition process is necessary to consider the motive for the acquisition that are the strategic fit and decisión making process and also you must consider the process of implementation that include the acculturation process( way in which two groups adapt to each other and resolve a emergent conflict).
Acquisition selection decisions are generally driven by financial and strategies consideration, many organisational alliances fail to meet expectations because of dificulties in the acculturation process which would comprimise the knowledge transfer and the learning to occur, that´s why is very important the manager´s ability to reconcile the need for strategic interdependence between the two firms and the need for organisational autonomy.
After determined the challenges and opportunities in mergers and adquisitions the autor evaluated three real cases: Deutsche Bank-Bankers Trust, British Petroleum-Amoco, Ford-Volvo, to demostrated how was the integration process of those companies and which benefits or problems must assumed.
In conclusión the top executives to lead the new entities into the future seems vital to minimise the uncertainties associated with the employee´s role and function direction. Also if you use appropiate integration strategies can overcome cultural diversity.
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 organisational culture perspective.
Case 1 integrating Deutsche bank(DB) and bankers trust(BT).
When Deutsche bank planned the intregation process had a favourable market situation seen as an opportunity, also the atractiveness from BT was that they going to work with Alex Brown that was a very recognized person in the financial market and also he is considered the oldest US investment bank, so the organization could be seen as a confidence and a serious firm.
but also this integration evidenced challenges such:
• Changing a German bank into a global organisation that implies that employess needs to have a more open perspective of the business, they must know better the moves of the market, so that means that the employees must be trained.
• Existed an internal conflict between BT and Alex Brown, in which Alex employees feeling that they had lost their identity, so the top management to solve this problem decided to name the merged company in the united state. The Deutsche bank – Alex Brown investment bank to reinforced the brand and to gain again the identities from those employees that thought that they had lost.
• BT felt that DB was a German company bureaucratic, hierarchical, with slow decisión making process, so that help them to started to implemented new working values and also they must decided which employees going to picked to have a better results in the merged company
Case 2.Integrating British Petroleum (BP) and Amoco into a single organization.
The challenges of merging the two international organization was focused firstable in establishing the management for the new company, in this decisión were conscious that everybody from both companies needs to have the same oppontunities to be chosen, also both companies were agree that BP accounted 60% to Amoco 40 % share for the merger,in this order of ideas 60 % of the employees came from BP and 40 from the other organisation, they did this for avoid the possibility of dominate exclusivily by one company.
Another challenged was the building of a new corporate culture for the new company, here managers explained the employees the philosophy operating of BP and also led them to socialise with Amoco personnel.
The main challenge that the integration of this two companies have to face was the cultural differences, for example volvo is a descentraliced firm, team group orientation, there is no hierarchy, participatory style of management prevails as a corporate culture. In the other hand the Ford industry is percived as a structured and hierarchical US operation. Also the way of dealing with the union´s issues is another different cultural factor for those organizations. In this order of ideas both companies to have a sucessful merged decided to be open in understand about each other´s value, beliefs to get a better behavior in business practices,also both companies decided to have equal numbers of participants of working to overcome the cultural differences.
These synergies also brings positive results for both companies such: easier possiblitity to transfer tecnology, knowledge, also some products could gain pride because after that synergies the products are regarded as the soul of the company.another opportunity is the financial power permitting volvo be more competitive in the market because with this integration it have more possibility to invest in research and development.
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.
