Analysis of Case: Who goes, Who stays?

This report presents the analysis of case–“Who goes, Who stays?”, with particular focus on people and culture. It evaluates conflicting values using relevant theories, analyzes the approaches applied to work out the details of the merger, and provides recommendations for resolving conflicting values and outstanding issues related to integration.

Running head: CONTEMPORARY MANAGEMENT
Contemporary Management

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Executive Summary
In this report analysis of case titled–“Who goes, Who stays?”, has been presents. The
analysis of the case offered valuable insights and understanding about the issues that are
faced by companies during cross-border M&As. Combining DeWaal Pharmaceuticals and
BioHealth Labs is more likely to result several conflicting values such as leadership,
teamwork and accountability which are more likely to negatively influence during the
integration process of merger between the two companies which has been further elaborated
using social identity theory and acculturation. At the same time, the reports depicts that the
process that has been applied by the two leaders t work out integration has several drawbacks
such as it fails to recognise the cultural differences aspect of the two companies. Nonetheless,
it this reports, it is recommended to both leaders of the two companies to engage in open
communication and negotiate carefully to resolve the conflicting values and to ensure
successful merger between the two companies. In addition, it has also been suggested to
follow due diligence approach to deal with the issues relates to structure and top management
staffing. Moreover, all theories that have been applied including social identity theory anxiety
theory and acculturation theory along with the due diligence practices are analysed to be
critical for the successful cross-border merger of the two companies.

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Introduction
This report presents the analysis of case–“Who goes, Who stays?”, with particular
focus on people and culture. At the onset, the report presents the evaluation of conflicting
values with reference to the given case using appropriate theories. Next, the report presents
critical analysis of the process implemented to work out the details of the merger between the
two companies. Thereafter, this report provides resolving conflicting values as well as to
work out the details of the merger with regard to the organisation structure and managerial
staffing. Finally, this report presents the evaluation the suitability of the management and
organisational models as well as practices applied in the analysis of the case along with the
conclusion.
Evaluating Conflicting Values at Stake Using Relevant Theories
Based on the careful analysis of the case, it has been observed that there are numbers
of core values which are at stake that can have long lasting impact on the new megacompany,
DeWaal BioHealth, which is likely to be formed after combining DeWaal Pharmaceuticals
and BioHealth Labs. In this regard, leadership, teamwork, accountability, passion and quality
are identified as some of the main conflicting values at stake. In order to explain these
conflicting values, it would be vital to reflect on some important theories that have been often
applied to discuss the integration challenges of merger and acquisition. Accordingly, social
identity theory and acculturation theory are identified to be relevant to discuss and analyse
the conflicting values with respect DeWaal Pharmaceuticals and BioHealth Labs merger (Seo
and Hill, 2005).
Social identity theory relates with element of individuals’ identity, which is obtained
from membership organisation (Ashforth and Mael, 1989; Hogg and Terry, 2000). Notably,
combining DeWaal Pharmaceuticals and BioHealth Labs, creates requirement for the two
organizations to abandon exiting identity and embracing to a new identity. As per this theory
during M&A process employees are more likely to attain top position in the new
organisations which is apparent in the given case where CEO Steve Lindell and
chairman Kaspar van de Velde both are seen to be willing to take the

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leadership role in the new megacompany, DeWaal BioHealth (Haunschild, Moreland,
& Murrell, 1994). However, such situation can have severe impact leading to
ingroup/outgroup biases, which in turn have the tendency to serious inter-organizational
conflicts and put core values such as leadership, team work, accountability and quality at
stake (Marks & Mirvis, 1985).
In the similar context, acculturation theory states that changes occur due to the contact
between the groups from different culture. The given case provides a suitable example of
acculturation, wherein two companies DeWaal Pharmaceuticals (Dutch) and BioHealth Labs
(American) are identified to have agreed to merge to form new company DeWaal BioHealth.
As per this theory, it is stated that integration of two organisations from different culture
often results in integration problem as in the case of companies DeWaal Pharmaceuticals and
BioHealth Labs. Moreover, failure to agree on the integration mode by the members of two
organisations often create, acculturative stress among the organizational members, which can
be a source of inter-organizational conflict. Such conflict is further ascertained to have severe
impact on the corporate values (leadership, teamwork, passion, and quality), organization
structure and decision making processes (Seo and Hill, 2005).
Critical analysis of the approaches Applied to Work out the Details of the Merger
In the given case, the two leaders have agreed for appraisal process in which
the performance of all the top level managers of the two companies well
be evaluated in the formal manner. The formal appraisal process involved
measuring the performance of the all the top executives of the two
companies based on criteria such as executive competencies, objectivity
and fairness and benchmarking. Moreover, in order evaluate the
performance top level managers for the integration purpose, it was
decided to take help from external consultants.
Accordingly, this approach implemented to resolve the outstanding issue related to the
integration with respect to top managerial staffing and organisational structure can be
criticised using different theories. In this regard, it would be ideal to reflect upon anxiety
theory. According to this theory, M&A process usually is characterised by large scale change
in the organisations and hence it can be an important source of anxiety. In general, during the

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M&A integration, the employees including top level executives often faces anxiety and they
often try to deal with these challenges by anticipating the worst circumstances. More
importantly, the perceived risk of job loss during the M&A integration often generates
feelings of distress (Appelbaum, Lefrancois, Tonna, and Shapiro, 2007). Notably, such
concern can also create self-survival feelings and the employees particularly the top level
managers can resort on political manoeuvring in order to defend their status and prestige.
This can be result in unhealthy competition which in turn adversely influences organizational
performance. In relation to the given case where the two leaders have agreed to
conduct performance appraisal for the employees in the two organisations
by hiring external experts can lead to greater degree of anxiety amount
the employees in the organisations, which in turn can be adverse impact
on the organisational performance (Badrtalei and Bates, 2007).
Another theory that can be applied in this context is acculturation
theory. As stated earlier, this theory relates with the changes in organisations arising from
cultural contact of the two or more organisations. This theory states that when two
organisations from different culture agreed to merge as in the given case, there is a high
propensity of cultural clash which intron is argued to contribute in acculturative stress. In this
regard, the theory strongly advocates that for successful merger, it is important to address
acculturation problems. Reflecting on this theory, Marks (1997); Sarala (2009) argued that
during merger integration related organisational structure and top managerial staffing, it is
more suitable to foster fostering multiculturalism. Correspondingly, cultural due diligence is
claimed to be an effective way of acculturation problems (Marks, 1999). Moreover, it has
been contended that structure and top management staffing during the M&A integration
process that is based on good and bad performance as seen in the given case is argued to be
less effective in ensuring the successful M&A and can have negative impact on the employee
performance due low morale, absenteeism, turnover, and decreased productivity. Rather it is
critical recognise the dynamics of culture clash for n combining organizational members.
Accordingly, adoption of cultural due diligence process is thus claimed to result
multiculturalism, wherein the culture of both the organisations are
integrated, valued and respected (Marks, 1999).
Recommendations for Resolving Conflicting Values

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In the current business environment, cross-border merger is quite common. In fact
cross-border merger is widely viewed as a popular strategic action that allows organisations
to pool together their resources and expertise to compete effectively and sustain business
profitably. Even though M&A offers several benefits to organisation engaged in merger, rate
of successful merger is quite. One of the key reasons behind the high failure rate of cross
border merger is related with the complexities and conflicting values of the organisations. It
is also apparent in the given case, that the two organisations including DeWaal
Pharmaceuticals and BioHealth Labs is faced with several conflicting values which has the
potential to negatively influence the successful merger between the two. Hence, it is
important to resolves those conflicting values for realising successful merger between the two
organisations.
In this regard, numbers of recommendations can be made to resolve the conflicting
values arising during the integration of M&A. In this regard, one of the most usually and
practice way to solve this problem is to engage in careful negotiation. Notably, it has been
observed that the two leaders are faced complicated issue, and both the leaders are seen to
worry as merger between the two organisations would require them sacrificing the long-
standing values. Accordingly, it can be argued that there is no straightforward answer or
solution to this problem and issues being faced by the two leaders with regard to merger of
the two companies. The only solution that can be identified to help them to solve this
problem is to work together and engage in careful negotiation. By working together and
careful negotiation between the two leaders can be thus argued to help them to determine
creative solutions that would help them uncover new possibilities (Bligh, 2006).
Besides, one of the major causes of the conflicting value is related with the
differences in the culture of both the companies. In this regard, it can be recommended that
the both leaders should place adequate importance on recognising the significance of the
cultural differences (Bligh, 2006). In other words, both leaders to introduced changes in the
new mega company and foster multiculturalism, where both culture are valued and respected.
The diversity in the new company can further help them to cater the needs of customers in
two different continents more effectively (Shermon, 2014). Moreover, engaging in open
communication and creating mutual trust between the management of the two organisations
would also help them to understand other’s perspective in better way and respond effectively
in a way that would lead to win-win situation for the organisation (Brodbeck, 2012).

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Recommendations to resolve outstanding issues related to integration
It is recommended to the two leaders and their HR personnel to pursue due diligence
process for resolving the outstanding issues related to integration. Accordingly, in order to
efficient merger of the two companies and make the correct decision, it is important to obtain
as much information as possible about the companies about the companies that have agreed
to merged. Correspondingly, this process that involves investigation and collection of
essential information for making correct information and assists in successful merger of the
companies is referred as due diligence (Savovic, S. & Pokrajcic, 2013).
Notably, this process is suggested to both the leaders as it represents thorough
evaluation of the operations of the merging companies, its strengths, weaknesses, as well as it
strategic and competitive position within the concerned industry. The effectiveness of this
process for two senior executives can be identified from the fact that this process can be
applied across different areas of the companies such as financial, legal, operational, market
strategic and more importantly in culture and human resource (Savovic, S. & Pokrajcic,
2013). For example, in an attempt to integrate the organisational culture of both the
companies, the two leaders can implement cultural due diligence. The application of this
approach can facilitate in cultural work out in which the merging companies leaders can
discuss disparity in organizational culture and create plans to assimilate culture effectively.
Moreover, members from both the companies can be assigned for identifying and addressing
the culture and human resource related issues. Such action would also allow both leaders to
observe the value people coming together to address the issue (Seo and Hill, 2005).
Nonetheless, it can be argued that two leaders should ensure that the implementation
of due diligence process leads to quick and rigorous analysis of the two companies. The key
purpose of the implementation of this process to assess benefits as well as constraints
affecting the proposed merger by examining the past, present and the future performance of
the merging companies. The detailed and comprehensive examination of various aspects like
human resource and culture thus help in securing transparency and help in making more
effective decision without any bias. Besides, the implementation of due diligence process by
the two leaders would also allow them to minimise the possible risks and ensure successful
merger of the two companies (Perry and Herd, 2002).
Evaluation the suitability of the theories and practices

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For the analysis of the case, 3 models including social identity theory, acculturation
theory and anxiety theory were applied. In addition, due diligence practice has also been
suggested during the case analysis. Accordingly, these theories and practices can be argued to
be highly useful due to numbers of reasons. Accordingly, social identify theory can be argued
to be useful because this theory deals with role of conflict and intergroup relations within the
organisation. Besides, this theory also attempts to explain how an individual identify with the
organisation. Accordingly, it can be argued that M&As does not involves the merger of two
companies or organisation rather it also represent the merger of two groups which can be
source of competitive advantage or conflict. Besides how they identify with the new company
during the integration of merger also have considerable impact on the post-merger operation
of the company (Ashforth and Fredmael, 1989).
In the similar context, acculturation theory deals with the aspect of cultural
differences. Notably, during merger culture tends to play an important role. Failure to
recognise cultural differences result in acculturated stress which in turn can have negative
impact on integration process of merger. Hence, to avoid cultural clash during M&As
understanding of acculturation theory is critical (Kabanoff and Daly, 2002; Thiele, 2018).
Another theory that was applied in the analysis of the case is anxiety theory. As per this
theory during cross- border M&As employees usually have to deal with psychological stress
which have considerable impact on their performance and motivation. Correspondingly,
understanding of this theory is crucial to reduce psychological strain experienced by the staff
members during the merger (Thiele, 2018).
Finally, due diligence practice has been suggested during the analysis of the case.
This practice can be argued to be useful because majority of merger fails owing to poor
decision making and lack of understanding about those organisations in merger process.
However, the use of this practice enables leaders of both companies to obtained detailed
information about various aspects of the merging companies like legal, financial, culture and
human resources. This information thus helps the leaders to make most effective decisions
which in turn reduce the risk failure (Perry and Herd, 2004).
Conclusion
The analysis of the case demonstrates that combining DeWaal Pharmaceuticals and
BioHealth Labs has the potential to contribute in conflicting values like leadership, teamwork

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and accountability. Moreover, the approach implemented to resolve the outstanding issues
related to merger has been analysed to be less effective particularly in addressing the issue of
cultural differences which in turn complicate the issues related staffing and organisational
structure. It has been recommended to engage in careful negotiation and open communication
address the issues of conflicting values. It has further recommended the two leaders to follow
due diligence process to work out the details of integration in regard to the top structure.
Finally, the evaluation of the theories implemented in the study including social identity
theory, anxiety theory and acculturation theory indicates that these theories along with the
due diligence practice is highly useful in addressing issue related to cross-border M&As.

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