Answer To: TaskIn the contemporary management environment, mergers and acquisitions are hot topics;...
Parul answered on May 18 2020
Q1. What conflicting values are at stake in the case? Identify and explain, using relevant management theory and concepts. Contextualise your answer with reference to literature on integration problem in mergers and acquisitions, with specific reference to people issues.
Ans 1) Conflicting Values at Stake in the case: -
With reference to the case, “Who Goes, Who Stays?” (Light, David A.; Kidd, David; De Monaco, Lawrence J., 2001) is based on the merger of two big pharmaceutical companies - DeWaal Pharmaceuticals and BioHealth Labs and the issues that spirals from the major decisions taken by the top management and impact of those decisions on every stakeholder involved - employees, customers, middle level managers and the top management. Taking reference from “Cultural Conflict and Merger Failure: An Experimental Approach tick”, (Weber, R. A. & Camerer, C. F., 2003), the cord of the conflict was the difference in the management style and process of making decisions. Due to no clear resolution of the conflicts that emerged the performance of the organization as a whole suffered. This was also reflected by declining performance of the organization in the stock market.
Along with this, conflicts emerged from the amalgamation of different cultures. Bringing together two different cultures was the real challenge that created a lot of conflicts since neither of the two companies were sensitive to the cultural differences and attempted to resolve it at the ground level.
Another reason of the conflict was how to resolve the problem of integration was witnessed by the DeWaal Bio Health after merging the businesses of two big continents spanning New York and Netherlands. Many regulatory hurdles were presented by the FTC and the European Commission.
The new organization so formed had conflicts in selecting who would be in the top-management and who won’t. This issue was catching fire and was like a ticking bomb since there were approximately 2 people for each senior level executive for the organization, to be specific from the case 120 people has applied for senior level job while vacancies in the new dynamics were only around 65. Hence, there was a grave problem of high attrition as talented employees were leaving the organization and joining the competition.
Applying Management Concept to Conflicts faced in DeWaal BioHealth
Mergers or Acquisition of two or more companies engage in number of negotiations that generates huge number of transactions. Taking reference from the article, “Post‐merger integration and change processes from a complexity perspective” (Lauser, B.,2010) Specifically, merger is the integration of two or more companies that brings with it different style of management, beliefs values, cultures and imposes all of them to become as one unit. The case in point, “Who Goes, Who Stays?” (Light, David A.; Kidd, David; De Monaco, Lawrence J., 2001) merger of DeWaal BioHealth is an example of a horizontal merger. As observed in the case and explicitly explained above this union of two different companies brought with itself few anomalies. Essentially there is grave issue of integration of two different culture and exiting workflow management in two companies.
System Dynamics - Each companies have its own system in place and is accustomed to exchange views with each other in certain way. Interesting details were mentioned in the article that erupts when merger takes place, “Organizational Change Management for Merger and Acquisition Integration”, (Powers, L., 2017) Hidden factors like politics, admin, IT and other systems like accounting gets affected when merger takes place. How would business unit be aligned and employees orient such that they behave in a certain way.
Structure-Focused Differences - At the time when two companies merge it may spiral up in downsizing of employees and decentralization of many units. This occurs because the organization as a whole urge to minimize on expense and advance the productivity and efficiency. Any companies who merge should be sensitive to the laws that prevails in that part of the world rather than conflicting them
People-focused change - This change is focused more with employees and workforce planning such that merger could enhance the competence and performance of the employees. This demands to redefine the organization mission, targets and goals. Also, making sure that other functions like recruitment, selection, performance management policies, grievance handling and employee training be re-worked by blending the existing procedures
Q2. Critique the process that is being applied to work out the details of the integration, particularly with regard to structure and top management staffing using relevant management theory...