When The Acquired Firm Has A Weak Culture, It Is Best To Use The Merger Strategy

(Solved) – 72.When the acquired firm has a weak culture, it is best to use. (1 Answer)

It is better to employ the merger approach when the acquired company has a weak culture. A.disambiguationB.separationC.deculturationD.assimilationE.integration When employees at the acquired firm voluntarily accept the cultural values of the acquiring corporation, this is referred to as 73. . A.DeculturationB.AssimilationC.SeparationD.IntegrationE.Negotiation As part of which approach does the acquiring firm attempt to imbed its culture and business practices into the acquired organization? 74.

75.When combining two business cultures, it is necessary to employ a deculturation plan.

In the event that both companies are successful in their respective areas, B.

D.when the cultures of both companies are deficient.

  • A.DeculturationB.AssimilationC.SeparationD.IntegrationE.Negotiation 77.Which of the following statements is correct regarding the use of the integration strategy for integrating distinct corporate cultures?
  • The approach is the most efficient method of integrating multiple company cultures.
  • The use of this method should be explored when the merging organizations have strong cultures as well as separate cultures (D).
  • Because the most acceptable cultural values tend to differ by industry and national culture, which technique for combining two separate cultures is the most appropriate when the two merging firms are in unrelated industries or operate in different countries?
  • It is possible that employees at one firm have a successful culture, and employees at the other company would welcome that culture if it were applied to them.
  • D.the culture of the acquired firm is ineffective, but the culture of the acquiring firm is effective.
  • 80.The of an organization is the starting point for its culture.
  • In accordance with the theory of attraction, selection, and attrition (ASA), which of the following propositions is true?
  • In order to maintain their own culture, organizations have a natural propensity to attract, select, and retain people who have values that are compatible with the organization39;s own ideals.

D.Employees get emotionally engaged to companies that satisfy their compensation expectations. It is certain that attraction will be followed by selection, which will lead to attrition in the future.

Managing Organizational Culture during Mergers in Principles of Management Tutorial 03 February 2022 – Learn Managing Organizational Culture during Mergers in Principles of Management Tutorial (9411)

As part of the process of altering and enhancing a company’s culture, managers must also maintain a close eye on the culture of the organization during the merger and acquisition process. Because of opposing organizational cultures, the business world is riddled with mergers that have either failed or had a tough gestation period. Various studies have found that between 60 and 75 percent of all mergers fail to generate a favorable return on investment for the parties involved (Figure below). Most of the time, business executives are so preoccupied with the financial or marketing logistics of a merger that they fail to do a cultural audit of their separate companies.

  1. Theoretically, the world’s largest merger provided enormous prospects for combining AOL’s supremacy in Internet services with Time Warner’s extensive expertise and holdings in conventional media.
  2. Merger mania has swept the nation.
  3. AOL’s culture emphasized being young, high-flying, and quick to close deals.
  4. For its part, Time Warner had a culture that was hierarchical and disciplined in its approach to business.
  5. By performing a bicultural audit, organizational leaders may reduce the likelihood of cultural clashes and ensure that their due diligence obligations are met.
  6. The bicultural audit process begins by recognizing cultural disparities that exist between the merging organizations and their respective target markets.
  7. The third stage is formulating solutions and developing action plans for bridging the cultural differences between the two companies.
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Strategies for Merging Different Organizational Cultures

As part of the process of altering and enhancing a company’s culture, managers must also keep a close eye on the culture of the business during the merger and acquisitions process. Fusions that failed or had a tough gestation period due of competing organizational cultures may be seen all across the business world. The majority of mergers, according to various research, fail to provide a favorable return on investment (between 60 and 75 percent) (Figure below). In many cases, business executives are so preoccupied with the financial or marketing logistics of a merger that they overlook to conduct a cultural audit of their individual companies.

  1. It was thought that the world’s largest merger would create enormous synergies by combining AOL’s supremacy in Internet services with Time Warner’s extensive expertise and holdings in conventional media.
  2. Manic Expansion of Mergers The two corporate cultures blended together instead, much like oil and water do when mixing oil and water.
  3. The stock options were given to the employees.
  4. In addition to a generous retirement plan (affectionately known as the “golden rubber band” since those who left often returned later in their careers to take advantage of the retirement benefits), executives were expected to work long hours.
  5. It is possible to conduct an abicultural audit to diagnose the cultural relationships that exist between firms and to assess the likelihood of cultural disputes occurring.
  6. Afterwards, the bicultural audit data is reviewed to identify which discrepancies between the two organizations will result in conflict and which cultural values will serve as a common ground on which to construct a cultural foundation in the newly combined company.

Finding methods and developing action plans to connect the cultures of the two firms will be part of the final step.

From Competitive Advantage to Corporate Strategy

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Employee engagement challenges with mergers & acquisitions

Mergers are frequently motivated by the wrong motivation: fear. Globalization, the introduction of new technology breakthroughs, and a rapidly changing economic environment all have an influence on the decisions of CEOs to combine or buy other businesses. It is common for firms to be purchased or combined based on a product or market fit, but staff distinctions are sometimes overlooked in these transactions. It is a mistake to believe that staff concerns are simple to resolve, and CEOs who fail to recognize and address them may come to regret their decision.

Communication challenges

Companies that have undertaken mergers and acquisitions were the subject of a survey performed by PWC in 2010. Communication difficulties were identified as one of the most significant elements contributing to the failure of corporate synergy. Communicating with workers, enabling them, and cultivating a culture that allows them to thrive are all essential components of successful integration efforts. Employees and management are frequently left in the dark when mergers and acquisitions take place.

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Rumors fill in the gaps left by the merger, leaving employees with concerns such as “Why is the organization merging?” “How will the merger effect my work?” and “What assistance will I receive during the merger process?” This lack of communication fosters distrust and uncertainty in the workplace, ultimately resulting in decreased levels of employee engagement and productivity.

  1. When managing a critical project, such as a merger or acquisition, it is critical to keep the personnel from both sides up to date at all times on the progress of the project.
  2. Being aware of the questions, worries, and anxieties that workers may have, and conveying answers in a timely manner, can help to foster openness and trust, which will ultimately lead to a successful merger.
  3. The items that the new amalgamated firm was expected to make would be a perfect marriage of Asian perceptual design and German rational workmanship.
  4. However, due to communication difficulties and cultural differences between the West and the East, the venture was a disaster, with the firm suffering a loss of 800 million euros.
  5. Employees at both organizations were dissatisfied with the decision to hand over Siemans to such a business entity.
  6. Employees at the newly amalgamated firm were filled with a sense of betrayal, and they believed that they would never be able to instill trust in their hearts and thoughts for one another.
  7. BenQ should have devised an efficient communication plan before the transaction was completed, taking into consideration the contrasts in corporate cultures between the two companies.
  8. When BenQ completed the acquisition, the company undertook a number of strategic reforms, which they expected their German colleagues to instantly comprehend and apply.
  9. As soon as the BenQ board of directors became aware that their German colleagues were not following their directions, they would seek financial assistance from the Siemens corporation.
  10. According to the findings of this BenQ study, if an adequate communication strategy had been created well in advance, taking into consideration the differences in the corporate cultures of the two companies, the purchase would have gone far more smoothly.

Employees who are not part of such a strategy will feel misled, undervalued, and uninspired to perform their jobs. As a result, there was a high percentage of staff turnover in the long run.

Employee retention challenges

Companies that have undertaken mergers and acquisitions were polled by PWC in 2010 for their responses. It was shown that one of the most significant elements contributing to the failure of business synergy was communication difficulties. It is essential to communicate effectively with employees as well as empower them and create an environment in which they may flourish. Employees and management are frequently left in the dark when mergers and acquisitions take place. High-level executives are deterred from providing employees with the knowledge they require to redirect their activities in the newly amalgamated organization by fear and a lack of answers.

  1. In the workplace, this lack of communication fosters distrust and uncertainty, which contributes to decreased levels of employee engagement.
  2. When managing a critical project, such as a merger or acquisition, it is critical to keep the staff from both sides up to date at all times on the progress of the undertaking.
  3. Being aware of the questions, worries, and anxieties that workers may have, and conveying answers in a timely manner, can help to foster openness and confidence, which will ultimately lead to a successful consolidation.
  4. A perfect fusion of Asian perceptual design and German rational workmanship would be produced by the new amalgamated corporation, and the items would be sold worldwide.
  5. When it came to mobile business, BenQ had no prior expertise, and the company was simply unqualified to manage foreign transactions.
  6. According to the annual shareholders’ meeting of Siemens in 2007, the transaction was regarded an economic failure.
  7. Employees would have been better prepared for a circumstance like this if they had been informed about it in advance.
  8. As early as the commencement of the development process for new goods, there were apparently disagreements between German management and the Taipei headquarters headquarters.
  9. They believed that staff would comply with the new implementations, but the large number of interruptions caused by the changes resulted in uncertainty, misunderstanding, and widespread mistrust among employees.
  10. Despite the fact that this was perceived as harsh and insensitive in Germany, it would have been regarded a reasonable option in Taiwan.

Employees who do not have a strategy for their work feel misled, unloved, and discouraged to do their jobs properly. A significant percentage of staff turnover eventually emerged as a result of this situation over time.

Cultural Challenges

Mergers and acquisitions are often carried out because the financial and economic rationales line up, but the cultural consequences of such transactions are often overlooked. Various research undertaken on the outcomes of M A’s have revealed that 30% of them fail within three years, with the bulk of these failures being attributed to differences in corporate culture. During the course of the procedure, it is tempting to think of a prospective transaction as a simply mechanical and scientific endeavor.

  • If two firms’ cultures are compatible, it may be determined whether a merger makes sense.
  • A combined company’s ability to carry over the culture of the prior organizations is limited, because people seldom abandon their basic principles and beliefs over the long term.
  • A abrupt alteration in these procedures causes disarray and anxiety inside a company’s environment.
  • Cultural influences have the potential to be wide and far-reaching in their effects.
  • It was referred to as a merger of equals when Daimler announced that it would combine with Chrysler since both companies worked in the same industry and produced a product that was essentially the same.
  • It was declared a failure some months after the merger took place.
  • They were profoundly different on every level, including formality, philosophy, and operational techniques, between the two organizations.
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Employee satisfaction had plummeted to all-time lows by 2000, and the firm was experiencing significant losses.

Employees on both sides expressed reluctance to collaborate with one another.

These two elements resulted in instructions and goals in various departments that were at odds with one another.

From the beginning, the newly amalgamated corporation was headed in diametrically opposed paths.

Employees at Chrysler were unimpressed by the scenario, which raised major questions about the company’s communication practices.

He began laying off personnel shortly after being appointed, in order to reduce overall losses at the corporation.

The anticipated benefits failed to materialize, and the merger ultimately resulted in the collapse of both firms. When Chrysler was sold to Daimler in 2007, the deal was worth $6 billion.

Solutions

Whatever the rationale for a merger or acquisition, it is critical that the intangible components be taken into consideration by the decision makers. It is difficult to measure the human aspect of mergers, and as a result, they are frequently neglected. Typically, CEOs would disregard this issue because they believe they would be able to rehire staff and management in the future. However, in the long run, this will have a negative impact on the outcome of the combined organization. The development of a cultural plan is essential for CEOs, executives, and managers in order to fully comprehend how the merger would influence the organization’s culture and how it will effect them.

Because of the continual input, managers will be able to better grasp their workers’ problems and difficulties before they become a long-term danger to the company’s operations.

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Uncovering neglected success factors in post-acquisition reverse capability transfer: Evidence from Chinese multinational corporations in Europe

Open access is granted under a Creative Commons license.

Abstract

Open access is granted under the Creative Commons license.

Keywords

Acquisitions and mergers are common in business. Following the acquisition, the procedure is called “post-acquisition.” Transfer of capacity in the reverse direction Multinational firms based in emerging markets The Authors of China in 2019. Elsevier Inc. is the publisher.

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