Business Combination
Business Combination
When talking of business combination, it is common for individuals to thick about mergers and acquisition between two giant companies. This view is correct however; business combination efforts can also occur at a small-scale and an internal level. Business combination within an organization is the merging of two business segment or department. Organizations engage in the process of business combination for reasons such as to keep strategic technology or the perceived value of the business. When an organization engages in the process of business combination of some of its units, there occurs some degree of departmental restructuring like the determination of the individual that would lead the combined unit. Organizations engage in the process of business combination for departments that have similar business perspective (Martin, 2005). For instance, business department with almost similar marketing strategies can be combined so that the employee can work towards creating a formidable marketing strategy.
The production and marketing team can also be combined so as to create a strong brand of products and services. A sales and marketing department can also be combined to one so as to increase sales. An IT firm for instance, dealing with the manufacture of computers, cartridges, and printers can be merged so that customers access the IT products at the same time. This increases the chances of product sales as the customers may be attracted to purchase a computer and a printer at once. Companies also engage in the process business combination so as to cut cost. Cutting of cost is motivation for the business combination especially for an organization that has departments that have duplicate services. Cutting of costs involves reduction of general and administrative services which merge to one.
Overall, business combination is an excellent way to improve efficiency across an organization. This is possible as high performing departments are combined with low performing departments. The combined departments them get to work together. Business combination also enhances the theme of unity and team work. Employees from the combined segments get to work together towards steering the company towards success. Business combination also minimizes cross-rivalry across segments (Martin, 2005). This is especially so if the company has similar departments spread across a geographical region.
Prior to engaging in a business combination strategy, it is vital that the organization makes several considerations. First, the management should seek the perception of the employees on the impending combination. Involving the employees in plans for combination process eliminates fears of job loss that may hinder the process. Employee involvement also ensures that the employees understand the need for combining the business segments hence minimizes risk of resistance (Rosehill, 2012). Involvement of employees also guarantees that they are involved in determining how the new business unit shall function.
It is also vital that the organization combines business segments with similar policies, procedures and operational style. This minimizes conflict when the organization combines the two segments. Employees integrated into a combined business arrangement have to adapt to different working relations and procedures. The lesser the differences, the easier the transition, which alternatively means operations will get on well (Rosehill, 2012).
In conclusion, business combination involving company segments is a challenging occurrence that affects the employees, customers and organization in general. Organizations combine business segments in an effort to cut costs, revive brands or for purposes of downsizing. Regardless of the reason, factors such as employee concerns over job security, and the expectation of the organization after the process must be put into consideration.
Reference
Martin, J. (2005). Organizational behavior and management. Cengage learning
Rosehill, K. (2012). How to merge company segments. Retrieved from http://smallbusiness.chron.com/merge-company-segments-40525.html
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