The term Merging Organizational Cultures was born as the result from the need of the companies to increase their profitability and market share linked to the 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. Even though not all aspects are negative, there are also some positive opportunities that can be developed through the process. In this way organizational cultures become an 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’s why you have to identify the challenges and opportunities from successful integrations/ merging cases.
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.
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.
Source:
- http://www.nma.gov.au/exhibitions/behind_the_lines_2007_the_years_best_cartoons/news_of_the_day/slideshow_1_2.html
- http://www.flexibleresources.co.uk/business-consulting/market-entry-penetration-strategy.html
- 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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