Impact of Culture on Mergers and Acquisitions

Our case study deals with Mass Merger. Since the 90s, together with the globalization of business, Mergers and Acquisitions have developed at an incredible pace. Thus, companies from all over the world can be lead to work together as one single corporation. Moreover, the world has become interdependent not only economically, but also culturally, that is to say one culture may influence another one or different cultures can be mixed. It is then obvious that intercultural issues have to be solved.

The modern business culture must, by necessity, be fluid if it is to succeed globally. There is interaction between employees, between stakeholders, and between global environments. In fact, this environment is formed through multiple interactions between the strengths, weaknesses and opportunities presented through the organization's unique culture. Since truly the one constant in business is change, it is how we adapt to such changes; as individuals and part of groups, that helps manifest behaviors as he culture evolves. Indeed, many believe that one of the templates that make up this fluidity is the concept, even more popular in the late 20th and early 21st centuries, of mergers and acquisitions (Horibe, 2001).

Mergers and acquisitions have become a growing trend for companies to inorganically grow a business within its particular industry. There are many goals that companies may be looking to achieve by doing this, but the main reason is to guarantee long-term and profitable growth for their business. Companies have to keep up with a rapidly increasing global market and increased competition. With the struggle for competitive advantage becoming stronger and stronger, it is almost essential to achieve these mergers. Through research I will attempt to dissect the best practices for achieving merger success.

Culture clashes in businesses can differ in many ways, and it is not understood why some cultures make it through a merger, while others appear not to make it through a merger at all. The merger within different businesses can be a major situation for everyone to go through, and when dealing with two of America’s biggest companies, the difficulty of the situation can only increase. Once businesses decide to merge, quite often it seems as though one company gains all the benefits and the other loses out. However, this paper will illustrate that is not the situation when it comes to Bank of America and MBNA.

The goals of mergers range from reducing the number of competitors, to access of new products (Belcourt et al., p 330). Statistics show that 80% of new product developments fail (Howells, 2011), partly due to challenges and conflicts with human resources functions. Mergers and acquisitions are the fastest way to enter new markets. “It is estimated that 1/3 of all mergers fail due to faulty integration of diverse operations and cultures,” (Chhinzer, 2013). Therefore, the success of a merger or acquisition lies in the ability to guide, motivate, retain, and effectively use

Jacobsen, Darcy. (2012). BIG MERGERS THAT WERE KILLED BY CULTURE (AND HOW TO STOP IT FROM KILLING YOURS). Retrieved from http://www.globoforce.com/ 2012/6-big-mergers-that-were-killed-by-culture/

Mergers and acquisition plays an important role in survival/vitalization of a corporation in today’s market. It continues to be a breakthrough strategy for improving innovation of a company’s product or services, market share, share price etc.

Many organizations will either experience a merger or acquisition to try to absorb the costs during unstable market times. Mergers and acquisitions to employee’s usual mean staff reductions and major changes, especially for an acquisition which, is when another company purchases a company and becomes a new company. (McClure, 2016)

In regards to acquisitions, it is important to distinguish between mergers and acquisitions. In a merger, two companies come together and create a new entity. In an acquisition, one company buys another one and manages it consistent with the acquirer’s needs. An acquisition that involves integration has greater staffing implications than one that involves separation (Rizvi, 2008). A combining of companies is a major change. Mergers and acquisitions represent the end of the gamut of options companies have in combining with each other. It is the mergers and acquisitions that are the combinations that have the greatest implications for size of investment, control, integration requirements, pains of separation, and people management issues

In this paper, I begin by describing and assessing the different criteria financial analysts within Fortune 500 companies use to evaluate merger success and acquisition rationale. I also discuss what these strategies can imply about the sources of gains and losses on each company’s stock price, and the factors that drive merger success in the long run. I then discuss the firsthand evidence of this merger and acquisition by examining transaction details from both parties and transitioning into an analysis of CB&I’s strategy for post-merger integration. Finally, I discuss the implications of

The integration phase is the final phase of a merger and acquisition. This is typically where managers underestimate the magnitude of issues. Problems arise due to over estimation of synergistic benefits, culture, and communication issues between departmental managers, employees, and customers. Culture clashes are a huge issue in mergers and acquisitions. From our research, we found many companies underestimate the severity of these clashes. Each company has its own environment and the smallest changes can upset a whole organization if it is not dealt with

natural route to success, but has tended to be a quick and easy way of

The inherent business practice of acquiring other , usually competitive, companies is part of a risky but potentially big payout for the risk taker. To understand the true and relative impacts of mergers and acquisitions, it is necessary to examine organizations that both avoid and undertake these types of financial deals. The purpose of this essay is to examine two distinct companies and their business strategies in order to understand the practicality and feasibility of corporate mergers.

Even mergers and acquisitions with high combination potential were more successful with robust organizational integration efforts (Larsson & Finkelstein, 1999). Malhotra and Sharma (2013) mentions that financial gain is often the crux of the matter when merger and/or acquisitions are considered. Corporations hardly consider the impact on the employees and related human resources changes, issues or outcomes. People and indeed their compensation is mostly placed in a marginal position with most of the due diligence done around financial and strategic planning.

Mergers and acquisitions have developed to be a widespread occurrence in modern era. A merger of the size like Adidas-Armani has repercussion for the labor force of these companies transversely to the world. Although the integration of units gives an immense arrangement of significance to monetary issues and the effects, there are still some issues are the most commonly ignored ones such as human resources, financial management, marketing, sales etc.. Ironically studies confirm that the majority of the mergers not succeed to convey the preferred results because of people associated concerns. The ambiguity resulted by badly handled management issues in mergers and acquisitions have been the foremost grounds for these collapses.