Business Report: Analyzing the Acquisition of Company A by Company B

This business report analyzes the acquisition of Company A by Company B, focusing on the challenges and opportunities that arose during the integration process. The report examines the shift in leadership styles from democratic to autocratic, the impact on employee morale and performance, and the issues related to the SPEAR team. It delves into the challenges of integrated leadership, operational management, and the importance of considering factors beyond financial aspects. The report uses models like the Kaleidoscope model and Cultural Web model to understand the organizational changes. The analysis covers co-evolution, strategic fit, and organizational fit, offering recommendations to address issues such as job security, training, and leadership styles. The report suggests the acquiring firm should focus on the people and culture aspects beyond financial considerations. The report also includes an analysis of the challenges faced by stakeholders and the strategies employed to achieve the desired results. The report concludes by specifying the consequences that are unbearable for existing human resources along with their behavioral study and includes a critical analysis and evaluation of the strategy towards shareholder value.

Business report

EXECUTIVE SUMMARY
The trend of acquiring new company is increasing the business environment. Company A
is being acquired by Company B. In the cases of mergers and acquisitions, there are some
problems like integrated leadership. Employees of Company A are habitual of working in a
democratic leadership style but now they have to work under autocratic leadership. Terminations
in the organisations are happening because some employees are not fitting in the company. They
are crucial part of firm and sending them out in the name of redundancy may bring down the
morale of existing employees.
The company have shifted from transformative approaches to autocratic leadership styles
which have resulted in declining of performance and employee leaving organisation due to
unsatisfactory culture in the business. The alteration in the leadership style without any support
and guidance to employees have led to the fall in the performance and are unclear of role and
responsibility which are to be fulfilled by them. It is extremely important for acquiree to focus
beyond financial aspects such as people, culture etc. SPEAR team is one thing about which
Company B should rethink again. In present situation acquiring firm is not facing much issue but
they have to change their attitude because being proactive can assure them smooth functioning.
Job security of employees and proper training to them are two issues which can be solved by
making immediate and radical changes in leadership style.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
ANALYSIS......................................................................................................................................2
Challenges and opportunities in the integrated leadership and operational management......3
Model and approaches to manage acquisition........................................................................4
CONCLUSIONS..............................................................................................................................7
RECOMMENDATIONS.................................................................................................................8
REFERENCES..............................................................................................................................10

To – Board of director (Company B)
From – Senior Manager
Date – 10 march, 2018
INTRODUCTION
Acquisition is defined to be a concept in which assets and resources of another
organisation is bought or obtained as a strategy for growth. Given scenario revolves around two
corporations; A and B. Co A has been surviving worldwide for past 200 years in the field of
heavy engineering. It has made its presence in Asian countries like India, China and have
locations in three different sites of UK. Company was accustomed to effective leadership
strategy especially situational which in turn resulted in competent workforce. It majorly believed
in innovation using personnel development. Basically, company improvises flexibility in their
management operations with a belief in staff development. Kaleidoscope model is effective tool
for understand the process of transformation of an organisation. It mainly focus on four elements
i.e. power, scope, capabilities, time, capacity, preservation, diversity and readiness for change.
Furthermore, in order to analyse the organisation culture, the Cultural Web model has been use.
SPEAR team was created to execute projects with a assigned duration of six months. This
strategy responded in positive manner and resulted in delivery of innovative products and
services. With a huge success in every aspect of business an uncertain event happened. Co A gets
acquired by Co B in the year 2017 and changed every functioning unit of business.
This acquisition occurred due to expansion that Co B holds with a mindset of increasing
revenues and shareholders in the market (Mergers and Acquisitions, 2015). With acquisition
basic functioning of Co A changes i.e. their leadership strategy is now being switched to
autocratic. SPEAR team is now resolved due to cultural change which has created insecurity in
existing employees. Changes adopted has created redundancy in global workforce and also
voluntarily renunciation. Co B holds a vision of diversifying business into larger segments with
the help of competent workforce which Co A already holds. Quality and innovation were two
criteria that Co A has worked upon for past centuries. It is now responsibility of Co B to abide
existing human resources and determine consequences of organisational fit in given situation.
This report is constructed with an aim to comprehend and rectify acquisition process.
Major focus have been done on four sectors; finance, operations, leadership and technology.
During acquisition, major challenges were encountered such as leadership implementation,
1

operation management, etc. Thorough study of these challenges and their impact on global and
local audience has been done. Along with this, deep analysis of strategic fit, organisational fit,
co-evolution and integration has also been performed which has further helped in understanding
acquisition process. This project objectifies need of acquisition and its impact upon personnel.
Acquisition has lead cultural change, policy change, conflict in objective, etc. which can have
negative impact upon business. Though Co B see workforce of acquired company as a profit to
its stock but its strategies are acting as a barrier in their optimum utilisation. This project shows
what leadership and management strategies can be applied to minimize all complications.
Though primary purpose of this report is to understand certain aspects of acquisition but it is also
necessary to go through its results that can be pragmatic or idealistic. This report specify
consequences that are unbearable for existing human resource along with their behavioural
study. It also include critical analysis and evaluation of strategy towards shareholder value and
also helps to determine whether this approach was a success or failure.
ANALYSIS
Merger and acquisition is referred to as a combination of major assets of two organisation which
mostly results in improved scale and functionality. This case study takes into consideration of
acquisition of company A by a much larger organisation catering function in the same segment.
The major reason which have been stated by the company mentioned as Company B are quicker
business deliverables and creation of shareholder's value. The major challenge which is
encountered by is to manage acquisition in the right manner so that business is able to achieve its
desired results. This present growth strategy needs to create a right fit to the organisation so that
better results could be achieved.
It is extremely important to consider the below mentioned elements so that better overview of the
proceeding could be identified. Below mentioned are the major element in managing acquisition
such as. Co-evolution is defined to outcomes which are assessed through joint efforts of
intention of managers along with organisational efforts and changes which take place in the
environment. It states that changes in external environment of business affect manner in which
business organisations are carried out. The interaction between environment and organisation is
defined to be bi-directional. The changes in environment of Company A carries significant
impact on capabilities of manager working with the company. The efforts to adapt and external
2

environment tend to be simultaneous in which a business sometimes succeeds and attain failures
numerous times.
Challenges and opportunities in the integrated leadership and operational management
There are several leadership styles which company can implement for their smooth working and
generating revenue some of them are autocratic, democratic, situational, operational and many
more. These are applied for motivating employees working in company A the major leadership
approach that company can implement is operational leadership. Because it is an engineering
company working from last 200 years having its presence internationally in India, China, US and
in three sites of UK well having global enterprises across 7 locations. This style is applied
because there is SPEAR team created by company A for 6 months to work on a specific project
related to innovative products and services development. For this they want that each and every
person of their business give suggestions and idea regarding that.
Operational leadership is best for producing innovative things it is that kind of frame
work who look how an individual fit for company as well work for generating outcomes which is
desired for creativity (Tony, 2005). It involves that process of production effectively carry out on
daily basis, watching performance, confirm that whatever is going in organisation should be
understandable by each and every person working. Every kind of business whatever it is in shape
and size have to focus on operational leadership. Apart from this company A can apply
situational approach also this first introduced as “life cycle theory of leadership”. This is an
flexible style it's not based on the particular skills and knowledge of the individual. It changes
according to different conditions and way of handling these situations also get modified. This
model encourage leader to identify a specific situation in deep and then solve this in proper
manner which suits that situation (Hunter, 2011). Some aspects that should be considered
complexity of project, maturity of personnel, employees competences so on. Every thing comes
with some challenges same this also have like:-
 Resistance from the side of employees: when leadership styles changes then employees
working in company have wide impact on them as well they can raise voice against
because as per their leader style workers also have to change their way of working. This
removes comfort zone of people because they have to change their way of working.
 Confusion and problems with stakeholders: in the situation of acquire the way of
doing work and procedure, process of working. It mainly happen because every
3

organisation have different culture and philosophy. Modification in operation department
because of leadership styles it gives negative result on stake holders and company
relationship (Cameron, 2011). Problems covered in this are modification in values,
alteration in technologies etc.
Strategies are design or framed by company to decide how they have to work on particular
project and after that implement the same in their day to day working for achieving targets or
objectives of business. But strategies also have some challenges some of them are stated below:-
 lack of leadership- when leader of company don't support the strategy that is designed
by the business if they don't support that then it will definitely fail because he/ she is the
person who work on various task assigned to them.
 Lack of Consensus- it is totally about building consensus this enhance communication,
collaboration and participation. If it is not done properly then strategies implemented in
company will face many challenges.
As per the given information company A is dealing globally and locally so they have to maintain
communication way because with the help of this only business can run smoothly and achieve
pre determined task and their goals. This is an large enterprise so form them maintaining quality
is necessary to attract as well also for satisfying customers which is necessary for survival of
industry.
Model and approaches to manage acquisition
For managing change more effectually and attaining success company B should lay focus
on the adoption of Kaleidoscope model. On the basis of such model, there are several design
choices that can be selected for change management such path, role changes etc. For coping up
with the change focus needs to be placed on power element (Castells, 2010). On the basis of such
factor or element company B should focus on the delegation of power among the stakeholders
such as employees.
Power: On the basis of given case situation, business operations of company B were acquired by
A. It has found from evaluation that after acquisition several changes were made by the
management team of company B. Hence, parent company such as B has fired 10% global
workforce. Besides this, such business unit also avoided the aspects of team work. In addition to
this, company B started to employ autocratic leadership style over transactional (Cameron,
2011). All such changes place direct and negative impact on the organizational growth as well as
4

performance. Hence, for achieving success and gaining competitive edge over others parent
company needs to make some changes in the existing framework. Hence, through undertaking
participative leadership style management team of B can motivate personnel and encourage them
to some up with innovative ideas and solutions (Woods, 2005). Hence, through practising such
leadership approach or style B company can achieve success and manage change in the best
possible way.
There are several theories which assist company in decision making and improving
performance. One of them is kaleidoscope model which is a diagnostic framework model. It can
be particularly useful in a context sensitive change process, which one can argue is the case in
this management project (Phee and E. , 2010). The kaleidoscope contains an outer ring
concerned with the organisational strategic context (Renz and Herman, 2016).
Diversity: From the analysis of the case study, it was identified that work culture has been
greatly affected after the acquisition of CO A. Earlier, where workforce of the organisation work
diligently because of effective management and leadership style, after the acquisition, it become
completely opposite. The new management of CO B has different style of leadership and
management which impact negatively on the previous employees. Management of Co. B disband
the SPEAR team and redundant 10% of global workforce from the organisation. This implies
that change in managing diversity is required in the organisation as many employees leaving the
organisation and other applied for voluntary scheme. Because of the unable to handle and
manage diversity, Co B haemorrhaging talent.
Scope: From the analysis of the case, it was identified that the acquisition process affects the
whole organisation (Hunter, 2011). Employees were not comfortable with transformations as all
the activities and business processes were not realigned appropriately. Furthermore, existing
employees of all the division were not ready to accept the change due to autocratic leadership
style and managers dominations.
Time: Changes are required in the newly acquired organisation rapidly. Employees are leaving
the organisation which impacts on the stakeholders associated with the company. In order to
prevent long term crisis in the organisation, the company needs to formulate and implement the
changes effectively and efficiently.
Preservation: After the acquisition of Co A, the assets of the organisation got transferred to Co
B. Co. B disband SPEAR team which was formulated for specific task by Co A (Castells, 2010).
5

This impacts on the existing employees. Further, the most precious assets of organisation
“employees”, got redundant by the management. Management of Co. B needs to understand
which asset they needs to preserve and which they have to remove.
Capability: Capability refers to the ability of managing change in the organisation. From the
analysis of the case, it was identified that Co B acquired Co A and the employees resists the
change due to inappropriate leadership style and management style.
Capacity: There is enormous amount of cash and human resource available at Co B. They can
able to bring transformation in the organisation after the acquisition process effectively and
efficiently (Lewis, 2011).
Readiness: After the acquisition, staff and previous employees of the organisation were not
ready to accept change. Here the management of Co B needs to focus on the needs and
expectations of employees in order make staff ready to accept change in the organisation.
Organisational Culture
In order to assess the organisational culture of Co B after acquisition, The Cultural Web
model will be use. The Cultural Web identifies six interrelated elements that help to make up
what Johnson and Scholes call the "paradigm" – the pattern or model – of the work environment.
By analysing the factors in each, one can begin to see the bigger picture of organisational
culture: what is working, what isn't working, and what needs to be changed (Tony, 2005). The
six elements are:
1. Stories: It refers to the past events and people who talked about the organisation. Co B
has enormous amount of market share in many different parts of world. It is known for
providing high quality equipment and machineries to their clients. The company values
are to provide high quality products and services to the clients and customers. After
acquiring company A, the management strucutre got more robust and management will
be able to generate more amount of profits.
2. Rituals: The new CEO of Co A is an autocratic leader which influences the employees
through dominations. This impacts on the employee behaviour and many employee left
the organisation. Earlier in Co A., situational leadership style has been followed which
helps in keeping employees satisfied and motivated.
3. Symbols: The company has formal dress code which is mandatory to be wear by all the
employees of the organisation. Co. B has formal dress code in order to make company
6

looks like professional organisation. Furthermore, formal dress code define the
employees of the company.
4. Organisational Structure: After acquisition, new company has to follow hierarchical
organisational structure where flow of communication is top to down and vice versa.
Hierarchical structure is top – down and bottom – up approach where communication is
structured and formal.
5. Control Systems: Top management and managers control the organisation after the
acquisition. Autocratic leadership style has been followed in the organisation. Earlier in
Co A, managers and employees posses rights to participate in the decision making
process.
6. Power Structure: CEO of the new Co A has the power to control and make decision in
the organisation.
Contemporary Approaches to Leadership
Contemporary approaches to leadership includes transformational leadership, servant
leadership and authentic leadership. From the analysis of the case it was identified that in Co A,
transformational leadership style was followed in the organisation. Situational leadership helps in
making decision according to the situations (Woods, 2005). After the acquisition of Co A, the
leadership style transformed to autocratic one. Here employees have limited or no right to
participate in the decision making and they have to follow the orders of top management and
leaders of the new organisation. This impacts on the behaviour of employees and many
employees left the organisation, remaining one applied for voluntary scheme.
CONCLUSIONS
From the above report, it can be concluded that Company A agreed for acquisition
because they know that it will be beneficial for them in long run. Shareholders support
acquisition because they know that it will increase total valuation of this company. In this case,
Company A is operating in different countries, their stakeholders like suppliers, employees,
customer are key part of their business. Customers want better products, timely delivery and
competitive price for a products.
Every company understand this and in order to complete the demand of customers they
put an additional pressure on the employees to perform well. This approach was working in past
7

because workers were ready to listen cooperate with top level management. They were given due
important from the side of management and senior manager have faith of workers. But
acquisitions bring new culture in Company A and they autocratic leadership started creating
more challenges to the employees. Some people in the organisation have to leave the company
because of autocratic leadership. Another thing which become reason of their termination is that
they were not fitting in the organisation. The aim of this project was to identify challenges and
scope of acquisition. Kaleidoscope model is effective tool for understand the process of
transformation of an organisation. It mainly focus on four elements i.e. power, scope,
capabilities, time, capacity, preservation, diversity and readiness for change. Furthermore, in
order to analyse the organisation culture, the Cultural Web model has been used.
Company B acquired Company A because they knew that it is important human resource
of this firm is reason behind their past success. This enterprise had a positive and productive
culture. Fitting in the organisation is important for every company because it directly affect the
performance of employees. An employee give his/her best when he/she give suitable culture and
environment. An important thing which one can learn from above research is that they
employees are equally important compare to any other stakeholders like shareholders and
customers. Company A attained success in past because of their quality workforce. Company B
is not focusing on the key asset of acquired firm and this may hamper their growth in upcoming
time. Company B will face the challenge of Company A, both local and global problems. Quality
of products is very important for Company A but maintaining old quality is not possible by
terminating significant number of employees.
RECOMMENDATIONS
At the time of merger and acquisition, both organisation has to go through many changes.
The most important think which they should keep in mind is to keep patient and try to resolve
every problem by adopting the approach ''one step at a time''. In order to improve the
organisational performance, behaviour and leadership style, the management of Co B needs to
follow the below recommendations.
Managing Diversity: Managing diversity in the organisation is important and crucial
aspect. Failing to do so can lead the organisation towards dissolution and degradation. From the
analysis of the case study, it was identified that many of previous employees were dissatisfied
with the managing style of acquiring company, thus it is recommended to the management to
8

manage the diversity in the organisation in effective and efficient manner, focusing on the needs
and expectations of the employees so that desired goals and objectives can be accomplished.
Using Appropriate leadership style: An important thing where both firms should focus in
adopting right kind of leadership in the organisation. They should not switch from democratic
leadership style to autocratic in such a short period of time. Even if Company B want to follow
autocratic style of leadership, they must fit switch to situational leadership and then gradually to
autocratic. This process will ensure smooth transition of power and culture. It is recommended to
the management to use appropriate leadership style in order to boost up the motivation and
morale of the employees. Company B may feel that they can reduce cost of business by using
termination but this is not the right approach. They should adopt situational leadership style in
the organisation, specially in initial period. Autocratic is not the right approach in present
situation because new employees would not fit in this culture and they leave organisation or their
performance may go down.
Provide training to employees: Instead of declaring employees of Company A redundant,
acquiring enterprise should give them proper training and time so they can understand new tasks
which they have to do in upcoming time. Every worker has some set of skills, they can be fit for
another post if the problems of overlapping of candidates happen after acquisition.
Set Time for making change: Time scale is very important part of every acquisition.
Managers of this Company B has to give proper time to the workers of acquired company so
they can understanding new system of working. The process of fitting in new firm include
various steps, these steps should be followed according to a time-scale.
Changing managing style: Top level management of Company B has to take
responsibility for managing things because if they will not adopt the approach of resolving
problem at the point of its generation then they may fail to attain desired result. Company
acquire Company A because they have faith in the human resource of later firm but if they would
not know right strategy to manage them then they cannot assure optimum utilisation of available
resources.
Managing Assets of organisation: SPEAR teams should be formed again in the
organisation because they have delivery fine result in past and they can ensure smooth working.
They are known for delivering expected results so using them at this point of acquisition can
reduce most of the problems which Company B is currently facing or they may face in upcoming
9

time. Management of Company B should not touch the core culture of acquired company.
Company A is a people focused firm so they should not compromise of that level.
10

REFERENCES
Books and Journals
Cameron, K. S., 2011. Diagnosing and changing organizational culture: based on the competing
values framework. 3rd edition. John Wiley.
Castells, M., 2010. The rise of the network society. 2nd edition. Wiley Blackwell.
Hunter, M., 2011. The transformational CIO: leadership and innovation strategies for IT
executives in a rapidly changing world / Hunter Muller. John Wiley.
Lewis, L. K., 2011. Organizational change: creating change through strategic communication.
Oxford : Wiley-Blackwell.
Phee, M. and E. J., 2010. Mastering strategic risk: a framework for leading and transforming
organizations. John Wiley & Sons.
Tony, M., 2005. Corporate risk management. John Wiley.
Woods, P. A., 2005. Democratic leadership in education. Paul Chapman.
Online
Mergers and Acquisitions. 2015. [Online]. Available through:
<https://www.edupristine.com/blog/mergers-acquisitions>.
11