Case Study on Contemporary Management

This report analyzes a case study on the merger of two pharmaceutical companies, DeWaal Pharmaceuticals and BioHealthLabs, to form DeWaalBioHealth. It discusses the challenges of integrating the two companies, cultural issues, and solutions. The report also compares the merger with successful mergers of other companies. The case study highlights the importance of efficiency theory and value creation theory in mergers and acquisitions.

Running Head : CASE STUDY ON CONTEMPORARY MANAGEMENT
CASE STUDY ON CONTEMPORARY MANAGEMENT
Name of the Student
Name of the University
Author Note

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Executive Summary
The report presents an analysis of the case study of the two pharmaceutical companies named
DeWaal Pharmaceuticals and BioHealthLabs and their resultant merger DeWaalBioHealth.
The report explains the concept of Mergers and Acquisitions along with providing a brief
introduction of Contemporary Management. The major problem regarding the two
companies has been focused on that seeks to explain the reasons of which company should
prevail in the market. This problem has been discussed in the light of some common
management theories such as efficiency theory and value creation theory. The report
discusses the cultural issues of both companies and their mutual conflicts along with
solutions to be implemented to solve these issues. Moreover, the three step model of Merger
and Acquisition is discussed to find ways in which senior executives can integrate the above
processes with the top management. The report compares the given merger in the case study
DeWaalBioHealth with the top two successful Merger and Acquisition companies of the
world namely Vodafone &Mannesmann and America Online &Time Warner so that the
given merger can follow in their footsteps to achieve similar success in future.

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Table of Contents
INTRODUCTION......................................................................................................................3
DISCUSSION............................................................................................................................4
Problem Statement.................................................................................................................4
Background of the Problem...................................................................................................4
Conflicting Values and Management Theories......................................................................6
Integration Processes with regard to top management...........................................................7
What processes could the two senior executives and their HR should follow to work out
integration details with regard to top structure?.....................................................................8
Evaluation of usefulness of management and organisational theories and practices from the
subject to analyse the case study..........................................................................................10
RECOMMENDATIONS.........................................................................................................12
Comparison of DeWaalBioHealth with other mergers........................................................12
CONCLUSION........................................................................................................................13
REFERENCES.........................................................................................................................14

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INTRODUCTION
Contemporary Management is a branch of Management that involves planning,
organizing and controlling operations to achieve goals of the concerned organization. The
term denotes the administration of people in business companies, government concerns and
non-profit organizations by the use of modern techniques. (Yılmaz& Tanyeri 2016). As the
term Contemporary indicates, these management techniques are used relevantly in the
context of present day scenarios. The people involved in Contemporary Management should
be well aware of recent changes in Management Theories and should be capable of
implementing these changes to benefit the organization as a whole. The two basic entities
utilised in this type of management are Mergers and Acquisitions. These are basically
agreements between two or more companies where two separate entities are either joined to
form a new company (Merger) or one entity is taken over by another entity (Acquisition).
The report discusses a case study in which two companies join together to form a new mega
company, thus resulting in a Merger formation. De Waal Pharmaceuticals and BioHealth
Labs are the two companies referred to in the case study which combine together to form
another company De Waal Bio Health , which acts as a merger company of the two. The
report analyses identification and background of the problems as well as causes and solutions
to be offered to the problems. (Yoo, Lee & Heo 2013).

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DISCUSSION
The report discusses a CASE STUDY of two pharmaceutical companies De Waal
Pharmaceuticals and Bio Health Labs and the merger company thus formed called De Waal
Bio Health. The key people involved in this case study are Steve Lindeel ,the CEO and
Karspar Van de Velde ,the chairman .This merger announcement was front page news in the
newspapers and press as well as common media were eager to know the future of this
decision taken jointly by the two companies . Both companies have a history of selling
pharmaceutical drugs and Lindeel as well as Velde seem to be long-lost friends. In the
beginning, both companies were thinking that the merger formed was a fruitful approach
taken by both. But, as of now, the merger company is facing difficulties in managerial issues.
(Xing et al., 2017).
Problem Statement
The major problem encountered by Steve Lindeel was selecting the top layers of
management. He knew that it would be difficult for the two companies to bring their cultures
together. Both De Waal and Bio Health have several foreign plants and Lindeel was in a
dilemma as to which company should be kept open and who would be able to lead it.
(Phillips & Zhdanov 2013). It was decided that the Indonesian De Waal unit be closed as it
was unnecessary and instead open the BioHealth plant in Shanghai .Thus, the crux problem
described by Steve Lindeel was as follows:
Who should stay in the market and who should be fired?

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Background of the Problem
Steve Lindell has shown short-sightedness by allowing talented executives to leave
the company as it would be difficult to replace them later. Both Steve and Kasper should
make a plan to execute an appraisal process due to the following reasons:
Executive competencies will be required by DeWaalBioHealth to deliver a good
performance.
In any merger, the tendency is to favour the people one knows. The process of appraisal
would remove bias out of the selection process and ensure that the most qualified people are
chosen.
The appraisal process provides a sense of fairness so that executives can present their
credentials to the merger company.
The appraisal process compares and benchmarks all executives against their peers outside the
firm.(Lee, 2013).
The success of any merger or acquisition starts with an understanding of power. Steve, along
with Kasper needs to integrate top chosen people and make them work as a team together for
the success of the merger company DeWaalBioHealth. While selecting individuals, Steve and
Kasper should emphasize on business success, communication and relationship skills. The
selected team needs to lay out projections to the employees and explain opportunities that
need to be grabbed at the first sight to help the merger company achieve success in the
market. Moreover, there are certain integration problems in mergers and acquisitions as
follows:
Loss of team mentality: In a small set-up, company culture means being part of a team. But
as soon as the firm becomes more attractive, the advent of acquisitions changes all that.
When one company takes over another company,the team mentality is damaged heavily and

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employees no longer feel that they are working for something they have a stake in. (Kansal&
Chandani 2014).
Dangers of inflating value: Wrapping up sales and erasing expenses can inflate the business
value .That would instead mean exhaustive, stressful extra work for employees.
Dishonesty in Relationships: honesty is important at the workplace as it can make or break
relationships .Triggering dishonesty in relationships can lead to problems between mergers
and companies.
Ignoring integration: lack of planning in integration is one of the biggest problems in
mergers and acquisitions. This includes no centralized database for access , unavailability of
accurate client lists. (Holburn& Bergh2014)
Conflicting Values and Management Theories
Mergers and acquisitions are means by which companies enter new markets.
Important issues regarding these are leadership skills, organization structure and design,
processes followed and retention of key talents. Good leaders should be selected and
practices and policies should be formulated for knowledge sharing. This case study has some
value conflicts as well which are caused by virtual or actual systems of
beliefs .DeWaalBioHealth, being a merger company of De Waal Pharmaceuticals and Bio
Health Labs has cultural challenges as employees from both sides find it hard to work
together due to linguistic differences. Another conflict was inefficiency of human resource
department that hired inefficient and incompetent manpower .Unavailability of 360 degree
feedbacks within the HR system led to the problem of not retaining talented employees. As
Steve Lindell brought a softball to the hardball game, he could not execute power in a proper
manner. Thus, both Steve and Kasper failed to rise above cultural differences. Two major

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management theories can be applied to the conflicting values at stake in the given case
study .These are Efficiency Theory and Value Creating Theory .(Greve & Man 2017).
The efficiency theory of mergers states that occurrence of mergers is possible only when
they are able to generate enough synergies to make the deal advantageous to both
parties .Thus, there should be sufficient synergy between the two companies De Waal
Pharmaceuticals and Bio Health Labs in the given case study which will benefit both
parties and help in the growth of the merger company De Waal Bio Lab. (Horwitz &
Budhwar 2015).
The value creating theory of mergers states that the management of the two companies
should put all their efforts into creating value for the firms by concentrating on the interests
of shareholders. To resolve issues in the integration process, the management of both
companies must apply this theory to create effective value for the merger thus formed
(Dikova & Sahib 2013).
Integration Processes with regard to top management
A major issue of the two companies in the case study is absence of an effective HR
system. As there are no appraisal systems and no 360-degree feedback systems, therefore the
planning and implementation of management theories by the top management affects the
merger company as well. In the given case study, the CEO Steve Lindeel has made improper
decisions due to ineffective planning. He did not feel it necessary to implement a HR
department within the companies which would help in taking fair decisions , making proper
financial policies and providing a safe and secure environment for employees. To rectify
these problems, the management theory of Value Creation can be applied. This would help
in increasing the values of the two companies by implementing effective strategies such as
hiring competitive executives , forming an effective HR department and addressing

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challenges of intercultural issues .This can result in increase of executives at the top
management level in the merger company De Waal Bio Health. (Cherry & Jacob 2016).
Intercultural conflicts and turmoils existed due to cultural differences. Moreover, there were
ego clashes and power conflicts between the two companies, which made it important for
both parties to co-ordinate together and work collaborately to generate new ideas and transfer
knowledge and power. In this regard , efficiency theory of management can be applied to
both companies which will improve their synergy and enhance their productivity and
efficiency.
How can the conflicting values be resolved?
To resolve the conflicting values of the two companies in the case study as mentioned
above, the following steps need to be taken:
A proper appraisal system must be set up to include a 360 degree feedback which will let
both parties understand goals and objectives of the companies.
Companies should consider time management to be an effective issue and try to complete
assigned tasks within the provided deadlines, which is very essential in Merger and
Acquisitions. (Chang, Chang & Wang 2014).
Effective communication should exist in business operations of Merger and Acquisitions. The
case study explains that effective communication was highly absent between individuals in
the two pharmaceutical companies .Due to cultural barriers between the two companies,
angry conflicts and disagreements were there between individuals.(Cartwright & Cooper
2014).

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What processes could the two senior executives and their HR should follow to work out
integration details with regard to top structure?
To implement effective merger and acquisition, the three stage model of merger and
acquisition should be followed. The first step is pre-combination where various human
resource issues are identified. There was lack of communication and lack of co-ordination
between executives .To overcome these issues, there should be knowledge transfer and
learning and a systematic team should exist to recruit the best possible team for the merger.
The second step is combination where integration of companies is done. Senior executives
design a team and implements it on the merger. No knowledge transfer takes place in order to
ensure success of the merger. The third step is solidification and assessment where staffing
and leadership abilities are identified in the merger. Key factors affecting HR policies are
cost of stakeholders and profits gained, as per the business regulations. The different cultural
backgrounds of both companies are considered for the development of new policies.
(CARTWRIGHT & Cooper 2016).

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Evaluation of usefulness of management and organisational theories and practices from
the subject to analyse the case study.
To analyse the given case study of the merger company DeWaalBioHealth, the
management and organizational theories that can be applied are as follows:
1. SCIENTIFIC MANAGEMENT THEORY: this theory analyses and synthesizes
workflows to improve economic efficiency and labour productivity. This theory states
that money is a key incentive to work and there should be efficient collaboration
between employers and employees to maintain efficient team performance. This
theory can be applied in the case study to analyse the manpower of DeWaalBioHealth
.By implementing coexistence between workers and managers, the challenges of
integrating mergers can be met successfully.
2. SYSTEMS MANAGEMENT THEORY: it offers an alternative approach to the
planning and management of firms. This theory states that the success of any
organization depends on factors such as synergy, interdependence and interrelations
between the subsystems. DeWaalBioHealth can apply this theory to maintain and
foster relationships between its parent companies De Waal Pharmaceuticals and
BioHealth Labs.
3. CONTINGENCY MANAGEMENT THEORY: it states that every organization has
different approaches to management and hence, needs a different management
approach. It identifies three different variables that influence a firm’s structure which
are size of the firm, technology applied and style of leadership. DeWaalBioHealth can
use innovative technologies and a distinct style of leadership to get ahead of its
competitors in the market.
4. THEORY X and THEORY Y: these are two theories of management regarding
human work motivation. Created by Management professor Douglas Murray

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Mc .Gregor describe contrasting forces of work motivation in human resource
management , organizational behaviour ,communication and development .Theory X
describes the importance of supervision ,external rewards and penalties. Theory Y
explains job satisfaction as a motivating factor to encourage workers to approach
tasks without direct supervision. DeWaalBioHealth can reward employees for good
performances by providing bonuses to them but can also impose penalties for
unethical behaviour and performances.

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RECOMMENDATIONS
Comparison of DeWaalBioHealth with other mergers.
The merger given in the case study named DeWaalBioHealth needs to be analysed by
applying proper management theories stated above and comparison needs to be done with
other mergers as follows as follows:
 DeWaalBioHealth can make use of Contingent Management Theory to be at par with
other merger companies such as Vodafone &Mannesmann .It can use better
technologies and a more distinctive leadership style to get ahead of this competitor
which is the largest merger and acquisition company in the world. The merger company DeWaalBioHealth mentioned in the case study can make use of
Theory X and Theory Y to combat the competition offered by another merger
company called America Online & Time Warner. This model is the second largest
merger and acquisition company in the world. The merger DeWaalBioHealth can
introduce the system of giving rewards and bonuses to its employees for good and
efficient performance. This can motivate their employees to improve their
performance and eye to overtake the given merger company in future.

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CONCLUSION
The given case study highlights the different conflicting issues regarding the two
pharmaceutical companies De Waal Pharmaceuticals and BioHealthLabs and the merger
company formed from them named DeWaalBioHealth. Problems of integration in Merger
and Acquisition are discussed such as loss of team mentality, dangers of inflating value and
dishonesty in relationships. Conflicting values and related management theories are discussed
in relation to the companies and their merger in the case study. The various measures taken to
remove these conflicting issues are introduction of a new appraisal system having 360 degree
feedback systems, management of time in a proper manner and effective communication
between mergers and acquisitions. The report discusses four management theories in relation
to the two given companies which are Scientific Management Theory, Systems Management
Theory, Contingency Management Theory and Theory X &Theory Y. The integration
processes are discussed with regard to the top management and solutions are provided as to
how the conflicting issues can be solved. The report further discusses the three –stage model
of merger and acquisition which the two executives Steve and Kaspar should implement on
the two pharmaceutical companies mentioned in the case study. Last, but not the least, the
usefulness of the management and theoretical practices used to evaluate the companies along
with the merger are analysed. (Ahammad et al., 2016)

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