Mktg577 – Week 6 Case Study

I. Statement of the Problem The compend is found on the union and achievement between E. T Kearney and explosive detection system. E. T Kearney is the largest instruction consulting group while explosive detection system is a technology firm. The play alongs merged to form a new defining entity that could combine the synergies of near(prenominal) firms in the quest for improved efficiency. The conjugation created a cultural semiconsciousness which created problems that ar associated with organisational finis deviate . In this paper, we analyze the unification and learning as wellhead as the recommendations for better performance of the impertinently created entity. II. Summary of the FactsThe acquisition of the caution consulting firm A. T Kearney by an schooling technology firm EDS marked a signifi evoket make a motion by such a technology firm in acquiring one of the best anxiety firms in the corporeal world. EDS bought A. T Kearney for a total of $300 millio n in liquid capital and contingency payments as well as a stock inducing provision of s tied(p) million sh atomic number 18s. The total amount was more than $600 million. The union between the cardinal firms was smashing as a issue of the cooperative as well as complimentary industry, geographic as well as functional strength. The acquisition of A.T Kearney by EDS was one of EDS grand vision of becoming a Defining Entity. III. Analysis An analysis of the gaffe reveals that the merger and acquisition greatly impacts organisational performance and organisational socialisation. Our analysis covers the effects of mergers and acquisition on an organizational performance, success factors in M&A as well as organizational civilisation change and rampart that take place in a merger and acquisition. The strategies of a successful M& A For A. T Kearney by EDS to merge success amply, in that location is a need for the sue to be conducted smoothly. From the A. T Kearney by EDS case , we ealized that the desegregation of the firms that has been acquired should be carried out as an current solve that moldiness be initiated prior to the closing of the deal. During this period of acquisition negotiation as well as its subjection to regulatory review, the management of the companies that are tangled in the merger mustiness work together in drawing up a fire and proper integration strategy. Ravenscraft and Scherer (1987) indicated that even if a thorough investigation is carried out before the merger, some of the problems might never reveal themselves until at such a clock time that the deal has already been done.The integration management of the new entity must be appropriately recognized as a re completelyy distinct craft function having an experienced manager who is especially appointed to oversee the integration transition. Should uncomfortable changes such as restructuring and layoff be necessary, it is crucial that the management of the saucily fo rmed entity to announce as well as implement these as soon as practicable. This is necessary in sound out to avoid resistance to organizational change. The aim of such swiftness is to avoid the various uncertainties as well as anxieties that may demoralize the companys muckles in the newly formed entity.Another important lesson that we basis learn from this case is that it is important to integrate both the practical as well as business of the companys workforce as well as their cultures. An optimal strategy is the one that involves the degree to which the cultural difference crumb exist between the various organizations can retain their own culture as well as individuation as indicated by Appelbaum et al (2000). The merger between the two companies created synergies as well as totally new services like CoSourcing.Cultural shock is noteworthy in the make to be one of the main challenges that could make resulted as a result of the acquisition. A. T Kearney feared that on that point would be a mass exodus of most of its excellent and professional module. The potential loss of clients was also envisioned. Organization culture is a term that is used to refer to the collection of values, policies ,beliefs and attitudes is an important as well as critical element of all organizations (Mullins,2010). Armstrong (2009) indicated that change is the notwithstanding thing which is constant in any organization.The work of Kotter (1990) except noted that organizations are in a state of constant flux. The fact that organizational change is inevitable is a constant element of all organizations that research to adapt to new challenges as well as approaches (Mullins,2010). The significance of organizational change is captured by Sloan (1967) when he indicated that market situations like the dynamic personality of the product and services coupled with the dynamic nature of the market itself can scram down a given business entity if the given entity is not read y for the culture change.The work of Kanter (1992) defined organizational change as the behavior of the organization to a certain degree or other. organisational change has strategic and structural consequences within a given organization. This is because it involves the process of dismantling as well a restructuring of the various structures within a given organization. Several problems can arise due to organizational change (Czerniawska,2005). organizational change is a very critical and yet very inevitable process ofan organizations structure. It can create a lot of pressure from the workers as well as management as a result of fear of the unknown.Senior and Fleming (2006 ) noted that organizational change may affect the general operations of the company as well as business functions. The forces that result in organizational change The work of Mullins (2010) indicated that there are several factors that can trigger organizational change. Thy may implicate uncertainty in the co rporate economics, competition as well as globalization. The work of Kanter (1999) identified certain factors that may trigger organizational change. They acknowledge information technology, globalization as well as consolidation all of which are relevant in this case.One of the major arguments for mergers and acquisitions is the notion that synergies do exist, allowing the two firms to work more effectively as one than they would when separate. Such synergies enables the firms to fully exploit economies of scale, rule out the duplication of activities, share managerial expertise, and hiking larger revenues (Ravenscraft and Scherer 1987). Unfortunately, research depicts that the foreseen gains often smash to materialise after a merger (Hughes 1989). Horizontal mergers (between organizations operating at the same level, in the same industry) can be motivated by the quest of dominating their industry.In theory, bodies like Britains ambition Commission should not allow any tie-up t hat may bring virtually monopoly capable of misusing its powers. However, the decision to prevent such acquisitions and mergers are ever controversial and politicized. Different authors have claimed that mergers are unlikely to effect monopolies even in the absence of such rules and laws, as there is lack of attestment that mergers have led to increased concentration of market power (George, 1989), though there can be exceptions within certain industries (Ravenscraft and Scherer, 1987).In given instances, companies have derived tax advantages from mergers and acquisitions. This has however beendisputed by Auerbauch and Reishus, (1988), who argued that tax considerations do not do work an active role in encouraging companies to merge. Corporations on the other hand pursue mergers and acquisitions as a means of diversification, allowing them to explore new markets and select their risks. A firm may also seek to acquire another in belief that its target is undervalued, and becaus e abargain good enough to generate high returns for the acquiring firms shareholders.These acquisitions are encouraged by desires to build empires parent firmss managers (Ravenscraft and Scherer, 1987). Most of the time , acquisitions fail to generate returns for the acquiring company due to the fact that they bought it at a price higher than its value. Having been over-enthusiastic while buying, thebuyer may later find out that the premium paid duringthe acquisition for the shares (winners curse) eliminates all advantages made from the acquisition (Henry, 2002).However, it must be noted that even a deal that is financially toilsome may turn out to be disastrous, if it is implemented in a means that does not take into account the organizations staff and the difference in corporate civilizations. Extreme contrasts may exist in the attitudes and values of the two firms, specifically if the emerging partnership is international. A merger or acquisition becomes a stressful process for the people involved retrenchments, reorganization, and the imposition of a new corporate culture and identity brings about uncertainty, anxiety and hatred amongst a companys staff (Appelbaum et al,2000).Research has proven that a firms productiveness may drop by 25 to 50 percentduring a large-scale change demoralization of the firms workers is the main author for this (Tetenbaum, 1999). The companies attention are often paid to short term licit and financial goals rather than the implication of such mergers and acquisitions on corporate identity and communication, factors that may eventually prove to be important in the prospicient run due to their effect on the workforces morale and productivity (Balmer and Dinnie,1999)Huczynski and Buchanan (2001) indicated that organizational change can greatly affect organizational performance. It might however be necessary to change the culture of agiven firm in order to enhance its performance. It is therefore necessary for the process of o rganizational change to be managed well as well as controlled so as to get in the results that are desired (Hayes,2007). The reality of an organizational change is noted by Calvello & Seamon (1995) to be very painful since might cause resistance and put down the morale of the employees. IV. RecommendationsIn order for the change process to be seamlessly smooth, EDS must involve itself in changing the culture of the organization in a continuous and yet overlapping fashion. The resiliency of the employees must be fostered. The company must therefore concentrate its efforts in the the creation and fostering of resilience of the employees. It should therefore create acultural neutral zone. This is to say that some time must be set aside to allow the workers to effectively focus their synergies so that they may effectively cope with the organizational changes as well as uncertainties.The other alternative is change leadership. The newly created entity within EDS must embrace the proce ss of change leadership and acknowledge it as a important element of organizational success. The most crucial element that an organizational leader can supplement in ana changing organization are conviction, confidence and passion as noted by Kanter (2009). The change process must be incremental. Strategies for a successful merger and acquisition Tetenbaum (1999 presented sevensome strategies that can be employed for a successful merger and acquisition to be realized.They included a reason involvement of the human imagery managers in the process of acquisition. The building of an oreganizational capacity through the paying of close attention to the process of employee retention as well as recruitment, ensuring that the process of integration is properly focused on the effect that is desired, careful management of the cultural integration, quick completion of the acquisition process, effective communication as well as the development of a clear and yet standardised plan of integ ration. V. ConclusionThe merger between A. T Kearney and EDS is a clear example of the importance of proper management of organizational culture change. It is therefore crucial for merger and acquisitions to be carried out with a consideration of the possible culture shock that may affect the level of organizational performance. References Appelbaum, Steven H. , Gandell, Joy, Jobin, Francois, Proper, Shay, and Yortis, harry (2000), Anatomy of a merger behavior of organizational factors and processes throughout the pre- during- post-stages, trouble Decision, Vol. 8, Numbers 9 and 10 Balmer, John M. T. , and Dinnie, Keith (1999), Corporate identity and corporate communications the antidote to merger madness,Corporate Communications An transnational Journal, Vol. 4 Number 4 1999. Calvello, Mike and Seamon, Dan. (1995). Change wariness done Transition Teams The Carolina Power & Light Solution. Performance Improvement, v34 n4 pp 16-19. Czerniawska, F. (2005). From bottlenecks to blac kberries How the relationship between organisations and respective(prenominal) is changing. Managing consultancies organisation. , 8-16. George, Kenneth (1989), Do we need a merger policy? . In nuclear fusions and Merger Policy Henry, David (2002), Mergers Why Most Big Deals Dont Pay Off, argumentation Week, October 14, 2002. Huczynski, A. and Buchanan, D. (2001) Organizational Behaviour. 4th ed. England Prentice Hall. Kanter, R. M. (2009). Supercorp How Vanguard Companies Create Innovation, Profits, Growth, and Social Good. refreshful York Crown Business. Kanter, R. M. , Stein, B. A. and Jick, T. D. (1992). The Challenge of Organizational Change. New York Free Press Mullins, L. J. 2010) Management & Organizational Behavior 9th Ed. U. S. A. Pearson Prentice Hall Ravenscraft, David J. & Scherer, F. M. (1987),Mergers, Sell-offs and Economic Efficiency. Washington, DC The Brookings Institution. Senior, B. and Fleming, J. (2006) Organizational Change (3rd edn), Essex, Pearson Sloan,A P. (1967). My years in General Motors Taylor Cos, Jr. (1994) Cultural transition in Organizations U. S. A. Berrett- Koehler Publishers, Inc. Tetenbaum, Tony J. (1999), Beating the odds of merger and acquisition failure seven key practices that improve the chance for expected