Merging organizational cultures is the result of the need of companies to acquire or merge to other companies in search of increasing market share and profitability a long with companies value creation. However, many of those processes do not end up as they were expected by the company’s top management and after a merger or acquisition has been implemented the new company end up with many cultural clashes between employees from both parts. According to a TowersPerrin report, 83 percent of 700 deals resulted in no increase in shareholder value with 53 percent actually destroying value, so these problems represent a hindrance for the original purpose of the companies. But not all aspects are negative, there are also many opportunities to be develop through this process. In this way organizational cultures become very important and critical aspect to be manage when two companies want to merge in order to minimize the negative outcomes and maximize the positive outcomes. That is way it is important to Identify through the experience of successful integrations what are the challenges and the opportunities when merging two organizational cultures.
Challenges:
- Cultural conflict between the companies involve in the merger or acquisition: As we are taking about companies, they all have different corporate cultures that make every company different from each another. Even though companies might shared some things in common, the way one corporation operates can be completely the opposite of the other. This differences can be even more visible when companies, which are undergoing one of this process are based on different countries, because to this corporate differences we can sum up the national culture differences. The problem with differences is that the first reaction to them is to reject them. So as the case of Deutsche Bank and Bankers Trust, were BT felt that DB was a very german company and based on stereotypes BT regard DB as bureaucratic, hierarchical and with slow decision making progress, or the case of Ford and Volvo in which many Volvo’s employees saw it’s proud strong corporate culture threatened by the american way of business that Ford has. As showed in this examples the clash of cultures are a very important challenge to overcome in order to avoid internal conflicts after a marge or acquisition has been carried out.
- Creating a new culture: When companies merge there is alway the feeling on one of the integrating parts that the other part’s culture has prevailed over them or the fear that it will prevailed. For example when talking about the of BT and Alexander Brown that even both being American companies employees from Alexander Brown felt with out identity after BT acquired it. To overcome this feeling is important to integrate both cultures in a way that employees feel they are being taken into account. This need explain the efforts done by British Petroleum and Amoco to gather managers from both companies together in order to share and learn from each other in order to stimulate the grow of a new corporate culture that integrate both parts and to set new future values that befit the company.
- Retention of Key Employees: When companies merged or go through an acquisition one of the problem that arose is that many employees can not get used to the new organizational culture so they chose to leave the company as they do not feel comfortable in it. This is a great deal when the people leaving the company are key players in it, so by losing this human capital this new organization is losing those competitive advantages for which they took the initiative to merge o to acquire another company. We see how DB saw this as a very important threat to the success for the acquisition of BT, so DB offer some bonus and incentives to key employees in order to retain them in the company.
Opportunities:
- Integration of best practices: Companies develop different types of practices according to their own identity. Because of this when two companies merge they are in a situation were the new company see that they have two different approaches to do the same. The advantage of this is that the new company now can compare both systems and choose the best one for the company taking advantages of each other practices. One example that arise in this matter is the decision in the merger of BP and Amoco to implement the performance management process of BP and the model for allocating capital of Amoco as this were the best practices for each area.
- Synergy: According to the Oxford dictionary synergy means: “The interaction or cooperation of two or more organizations, substances, or other agents to produce a combined effect greater than the sum of their separate effects”. This is reflected in the case of Toyota and Volvo where both companies started exchanges to each other in terms of technology, Marketing and R&D taking in this way the advantage of their human resources.
- Facility to enter to a new market: For many companies the motivation to acquired another company and to merge with it is the fact that the other corporation has the knowledge of how things are done in a given country and that this knowledge can be transfer to them in order to make a successful entrance into this new market. This is the reason way DB chose to acquired BT, because through it they would have access to Alexander Brown people and reputation,which was the oldest investment bank in the USA. So what they were looking was to obtain a well known name for the new company and market knowledge.
- 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 – 32
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