The Merger Of Companies Creates Value By Increasing Profits And Capturing Market Share

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Assignment 1 Literature Review: Task 2 Introduction The merger of companies creates value by increasing profits and capturing market share in a time unachievable by natural growth (Salama, Holland & Vinten, 2003). This has caused M&A to be very popular with companies thus causing a huge activity in M&A. However this optimistic view of M&A does not match the success rate of M&A where a large amount end in failure (Weber & Tarba, 2012). It is often not the shortfalls of the proposed strengths and benefits a merger may provide a company that causes failure but rather it is where the acquiring company is unable to successfully merger the acquired company’s culture into their own (Vuuren, 2012). Organizational culture is often overlooked by…show more content…
The acculturation process, unlike the cultural fit model, joins cultures through the development of a common organizational language, mutual consideration and values promoting shared interests between the merging organisations (Stahl & Voigt, 2004). Acculturation looks at factors that can impact cultural differences and how to positively impact the post-acquisition integration outcome. Through the research review Stahl and Voigt (2004) found that the most important factor for a successful merger and acquisition performance was the degree of relatedness between the two firms. This was due to the fact that it increased the degree of retained autonomy that may otherwise be lost as the cultural differences were similar and so change was minimal. Showing the importance of a cultural fit. It was also found that cultural differences was not a critical problem when acquiring firms with minimal interdependencies as low levels of integration were needed for the two to run side by side. This research review however was limited by the fact that it was basing its research on other available research, restricting itself to already known research. Thus one of the problems that arose was the fact that it was unable to find much research focusing specifically on the

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