The Management of People in Mergers and Acquisitions
The Management of People in Mergers and Acquisitions
Cloetta and Fazer merger has been considered an example of a new culture. The two companies had a common ground and merged to form a new culture. The two companies merged to attain cost synergies in production and sales. They also wanted to attain cost synergies in other areas like marketing, administration and purchase. In addition, the companies wanted to combine their brand portfolios so as to develop a stronger brand that could overcome future challenges (Laufhu’tte, 2003).
Cloetta and Fazer had different organizational culture. The companies had different cultures as they were from different countries. However, the cultural differences did not affect the formation of the merger. Fazer culture and Cloetta culture were integrated into the new company (Laufhu’tte, 2003). The cultures were integrated in the new organization as brands and organizations. The companies added a third hierarchical level in the brand hierarchy to overcome the cultural differences. The two companies became one organization with a single culture and brand. The managers realized the importance of culture and how it affected the performance of the new organization (Metcalf, Metcalf & Daniel, 2001).
The managers managed people working in different departments well to ensure the organization attained its goals. The managers acknowledged the cultural differences and found ways to overcome the differences by forming a single culture. The Sweden culture and Finland culture influenced the recruitment of employees. Employees from the two countries perceived themselves to be higher. The managers used balance of power to overcome the problem. The balance of power made it easy for managers to sell the organization to stakeholders and also encourage nationalism. Organizational culture affects the success of mergers and acquisition. This is because employees are used to work in a different culture. Employees from Cloetta and Fazer worked in different cultures, and their cultural differences could have affected the success of the merger if managers did not find a common culture (Wagenf, 2011).
2. a. Daimler Benz and American Chrysler decided to merge in 1998 because of various reasons. Daimler-Benz had problems in selling its Mercedes and hence needed to merge with another company so as to improve its marketing. Daimler-Benz feared losing its competitive advantage after its Mercedes reached the limits. The company feared that the suppliers would not allow them to use the technological breakthroughs. The suppliers sold the technological breakthrough to General motors and VW.On the other Mercedes wanted to increase its revenue by almost 7%.
The Daimler Benz and American Chrysler merger is considered a failure. The merger between the two companies was not successful because of cultural differences. Daimler- Benz and Chrysler had different cultures. Chrysler considered itself the leader in innovation, in the industry. The company had a rich engineering and quality heritage. The Mercedes brand gave the company a competitive edge in the market. Also, the organization had a hierarchical and bureaucratic structure and leaders took a lot of time making decisions. The responsibilities in the organization were separated. On the other hand, Chrysler was a leader in new design.
Chrysler leaders encouraged charismatic leadership. Also, the leaders encouraged employees at the lower levels to make decisions and also work independently. Daimler executives emphasized on meeting the deadline and did not like working late hours. The dominant culture of Daimler affected the merger and acquisition. Daimler executives and Chrysler executives did not work together to develop new structures and culture as the Daimler executives dominated the organization (Stahl, 2005). The formation of the new company happened fast as the Daimler managers did not discuss the company’s culture with other leaders and subordinate. In most cases, Daimler leaders made decisions about the organization culture and structure.
Therefore, the new company did not have a single organizational culture, but the dominant Daimler culture. This forced Chrysler to work with the competitors and hence affected the merger negatively. The national culture also affected the merger by influencing the perception and behaviors of leaders and employees. The Germany culture and American culture differed a lot as evidenced by the leaders. Managers in Germany give commands and do not like discussing issues with subordinates. Conversely, managers in US involve the subordinate when making decisions. Therefore, failure to understand the differences between the organizational culture and national cultures affected the merger as leaders could not develop a single culture (Laufhu’tte, 2003).
b. The merger between Cloetta and Fazer is considered a success as the companies managed to achieve their goals. The merge was successful because the leaders understood the cultural differences and acknowledged the differences. Cloetta and Fazer had different organizational cultures. The organizational culture influenced the behavior of the workers and achievement of goals. The leaders were aware of the effect the organizational culture had on the employees and the organizations. Thus, the leaders did not ignore the organizational cultures. Instead, the leaders integrated the two cultures to form a single culture. The leaders worked together to integrate the two cultures into one.
The Cloetta and Fazer did not allow one culture to dominate as this would affect the mergers. They identified the organization culture and structure together. Lack of a dominant culture led to the success of the merger. Additionally, the leaders were familiar with the national cultures and their differences. The companies were from different countries. That is Finland and Sweden. The managers understood the national cultures and how they affected employee behaviors, recruitment and operation of various departments. The leaders developed strategies to prevent the cultural differences from affecting the merger. In addition, the merger was successful because the leaders did not make the change urgent.
The leaders ensured the change process was slow in order to accommodate similarities and overcome differences (Makhlouk & Shevchuk, 2008). The change process happened step by step as the leaders integrated the culture. The cultures of the two companies were integrated into a single culture through brand, structures among others. Therefore, Cloetta and Fazer merger shows the importance of culture in mergers and acquisition. It shows the importance of understanding cultural differences during mergers and acquisition. Understanding cultural differences helps in developing appropriate strategies for integration and ensures organizations achieve their goals (Bjursell, 2007).
Reference
Is this your assignment or some part of it?
We can do it for you! Click to Order!
