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Mergers and acquisition research paper
Mergers and acquisition research paper
Mergers and acquisition research paper
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A merger occurs when two or more companies combined their business and assets to convert them in a new company (or to one of themselves). On the other hand, an acquisition occurs when one company acquires no of shares in another to get control of that company. The shareholders of the acquired company are paid off and the acquirer becomes owner of all or a substantial part of the assets of the acquired company .In merger one of the two companies losses its old identity to make a new one (Kithinji and Waweru, 2007). The profitability and efficiency of merged organization is higher than non merged organizations and they are in strong position (Amir, Diamantoudi and Xue, 2008). Merger or acquisition creates real potential for explosive growth and enhanced profitability by making appreciation of people, who involved themselves in its success or failure through their contribution (Daniel and Metcalf, 2001) Barros (2003) identified through research study that almost 63 percent of M&A failed due to problems related to the management of people. As compared to dealing with systems and structural issues the ability to manage people may, in reality, be more important (Lindgren and Spangberg, 1981). The human-related problems has been attributed the cause of failure (Cartwright and Cooper 1990) also found that for one-third to one-half of all merger failures are due to employee problems. Successful management of people-related issues leads to value creation. To make HRM (Human resource Management) as an effective strategic partner there is a need to involve them in negotiation period and formulation of people management polices to overcome their resistance towards of M&A (Tanure, 2007).The changes in the general procedures and practices fo... ... middle of paper ... ...integration phase which are likely to affect the way employees react to the merger ( Shrivastava, 1986). Organizational culture has been treated as an important variable in the study of acquisition process, determining employee beliefs, attitudes, and behaviors (Pablo, 1994). Differences in organizational culture, management styles, systems and procedures can also create uncertainty, low commitment, distrust, conflict, hostility (Cartwright and Cooper, 1989; Ivancevich et al., 1987). Employees experience the negative effects of cultural shock by entering new organizational environment (Cartwright and Cooper, 1989). Older employees, who have long time attachment with company, are more likely to engage in passive behaviors, since their alternative opportunities are limited, while highly educated employees’ shows active behavior (Rusbolt et al., 1986).
fail (Cheng, 2012). Mergers and acquisitions are much common in these days and only a few of them are end up in successes. Even though mergers and acquisitions are not result much successes rate, many organizations are still preferring it because, it is used as a cooperative strategy but nowadays it is used for cooperative development. The cultural differences and merger integration can be considered as an important factor for the failure rate but this study mainly focused
Human Resource Management (HRM) is the administration and control of employees. Its purpose is to ensure that the workers and the employer cultivate a valuable relationship. As a result, the company will record an exceptional performance particularly with regard to employee productivity (Paauwe, 2004). Further, the workers will benefit in terms of job satisfaction and self-development (Paauwe, 2004). Some of the activities involved in managing workers include selection and recruitment, training, development, motivation, and appraisal (Sharma, 2009). This paper aims to analyse the role of human resource management in organisations and its linkage to the wider organizational strategy using Tesco and Harrods as illustrations.
Gaughan, P. A., 2002. Mergers, Acquisitions, and Corporate restructuring. 3rd ed.New York: John Wiley & Sons, Inc.
...dditionally, the merger can take place in smaller phases. For instance the first phase may include change of the physical look of the branches and the signage - – so as to convey a consistent view and experience for its customers. This phase may also include effective communication to the employees to educate them about the merger, ensure them of their positions and encourage them to participate in the merger. Second, the firm can totally combine the bank’s technology and the information systems which will allow the merged firm to operate as a single entity and to become fully operational. The management should implement the merger with care and prudence, aiming for minimal disruption for the customers and should communicate extensively to ensure all its stakeholders are kept fully informed as they make changes.
The soft factors can make or break a successful change process, since new structures and strategies are difficult to build upon inappropriate cultures and values. These problems often come up in the dissatisfying results of spectacular mega-mergers. The lack of success and synergies in such mergers is often based in a clash of completely different cultures, values, and styles, which make it difficult to establish effective common systems and structuresBased on the case study, extensive research and annual reports of AT&T the writer has mapped AT&T in the different domains. AT&T should strive to attain a perfect circle as close to the centre as possible, which indicates total synergy, order and equilibrium. Where the circle is skewed drastic change is needed as it moves closer to the outer ring of chaos:
In speaking with her staff, Anne needs to set very clear and obtainable goals to help motivate her employees. Kreitner and Kinicki (2010, p. 228), in speaking about how goals regulate effort, state that “Not only do goals make us selectively perceptive, they also motivate us to act…Generally, the level of effort expended is proportionate to the difficulty of the goal”. With this in mind, she should set challenging goals, and lead her organization to accept the merger with motivation.
Mergers and acquisitions are key choices taken to augment an organization's development by improving its creation and showcasing operations. They are constantly utilized within a wide show of fields, for example, data innovation, telecommunications, and business procedure outsourcing and in addition in universal organizations so as to increase quality, stretch the client base, cut rivalry or enter into another business or item section. What are the differences between mergers and acquisitions? M&A is a basic idea that is generally examined in literature. However, the contrasts between mergers and acquisitions are once in a while pondered.
Changing Roles. Traditionally, HR has been an administrative position-processing paperwork, benefits, hiring and firing, and compensation. However, recently HRM has moved from a traditional to a strategic role, the emphasis is on catering to the needs of consumers and workers. Before, HR was seen as the enemy and employees believed that HR’s main purpose was to protect management. Now, the position requires HRM to be more people oriented and protect their human capitol, the staff. In addition, human resource management has to be business savvy and think of themselves as strategic partners in the 21st century.
HRM in any company is a weighty issue that needs much attention where business performance is linked to a HR strategy (Caldwell 2008; Ulrich et al. 2008). In the recent past, competition has become stiff, such that organizations need to come up with other means to compete in the extremely dynamic market world. Thus, companies have shifted their emphasis to Strategic Human Resource Management (SHRM) where they enhance and empower their personnel in order to increase the productivity and the services offered into the market (Mello 2006). This goes against the traditional ways of increasing the means of competition where organizations place emphasis on tangible resources. In the past, organizations competed in terms of machinery and acquisitions. This has changed greatly due to the changing customer tastes and the diversity of the market in the present (Delery & Doty 1996; Lengnick-Hall et al. 2009).
At a macro level as a result of the acquisition the combined size of Turner & Townsend Thinc was considered to be of strategic benefit to both firms. While there have been no official mass redundancies, role duplication has resulted in early retirement and resignations. However, the common problem faced after the acquisition is power struggles, excessive overhead, bureaucracy, uncontrolled layering, and decision strangulation.
The role of human resource management is one of strategic partner, administrative expert, and consultant (managing all of the organization’s people related processes strategically). It is the job of hr management in to recognize that decreased turnover, higher employee morale, and involved employees in the decision making process are all optimal in providing key leverage in an organization’s strategic plan. Management integrate strategic hr management with the organization’s strategy formulation. This means that management has searched the organization and its environment for opportunities and initiated projects and decisions to bring about changes that are both advantageous and competitive for the organization. Through this integration, HR policies must “cohere and be accepted across all company policy areas and across all hierarchies in the company”. These same HR policies had to be turned into practices that were used by both managers and employees as part of their everyday work. The hr management role has changed tremendously from being a mostly personnel function, consisting primarily of a lot of paper pushing, hiring and firing, to being totally responsible for the maximization of “human capital effectiveness”. Which primarily creates a better-trained, more flexible workforce that will add more to the bottom line. Peoples’ Bank went through some organizational restructuring in order to stay competitive in the market. As a result of the changes that were made in the Bank’s System, HR Management had to do research and analysis in order to scan the banks new environment to see what types of employees would be needed with the “new strategy’s skill and organizational requirements. This was a use of HR’s information management skills, which was followed by HR’s integration and change skills to manage the organizational interfaces, assess the organizations skills (or the current values of the banks human resource investment), set priorities, anticipate the future, and facilitate the changes. This is an excellent example of HR Management’s role being at every level of the strategic planning process.
However you define the activities of management, and whatever the organisational processes are, an essential part of the process of management is that proper attention be given to the Human Resource function. The human element provides a major part in the overall success of the organisation. Therefore there must be an effective human resource function. In the past, most organisations viewed Human Resource Management (HRM) as an element function, that is an activity that is supportive of the task functions and does not normally have any accountability for the performance of a specific end task. Because of the emphasis on analysis and precision there is a tendency for strategists to concentrate on economic data and ignore the way in which human elements and values can influence the implementation of a strategy. 'Economic analysis of strategy fails to recognise the complex role which people play in the evolution of strategy - strategy is also a product of what people want an organisation to do or what they feel the organisation should be like.?(1).
I have assisted Dr. Whitsett of the University of Northern Iowa psychology department in the writing of his book on merging companies with different organizational cultures. For Dr. Whitsett, I selected and condensed pertinent information from audio-taped organizational interviews. Dr. Whitsett's book has not yet been submitted for publication. My research experience will be expanded during the spring, when I will be assisting Dr. Whitsett with a research endeavor on Vroom's Expectancy Theory. I will also be a teaching assistant for Dr. Whitsett's psychology research methods class.
Human Resource Management (HRM) is fundamentally another name for personnel management. It is the process of making sure the employees are as creative as they can be. HRM is a way of grouping the range of activities associated with managing people that are variously categorised under employee relations, industrial/labour relations, personnel management and organisational behaviour. Many academic departments where research and teaching in all these areas take place have adopted the title department of human resources management. HRM is a coordinated approach to managing people that seeks to integrate the various personnel activates so that they are compatible with each other. Therefore the key areas of employee resourcing, employee development, employee reward and employee involvement are considered to be interrelated. Policy-making and procedures in one of these areas will have an impact on other areas, therefore human resources management is an approach that takes a holistic view and considers how various areas can be integrated.
When entrepreneurs plan their business future they will consider how they can increase their business size or profit in a short period. Entrepreneurs may consider growing their business or company by using a merger or an acquisition. These methods can be a speed up tool and a short cut to enlarge their business. (Burns, 2011) Also they can reduce competition, make it easier for entrepreneurs to think about the market and product development and risk reduction. Furthermore, some lesser – known companies can improve their firm’s image and market power by using merger and acquisition with larger firms. However, there may be risks associated with merger and acquisition related to lack of finance and time. (Burns, 2011) This essay will discuss more deeply the advantages and disadvantages of using mergers and acquisitions, showing how it can affect firms and market with the case study.