Contemporary Management: Integration Challenges in Mergers

This case study examines the merger between DeWaal Pharmaceuticals and BioHealth Labs, highlighting the conflicting values and challenges in integrating the two organizations. The analysis reveals a lack of effective integration strategies, conflicting cultures, and leadership approaches. It identifies the absence of key management theories, such as Henri Fayol’s administrative theory, and the failure to adopt a contingency management approach. The report critiques the ineffective processes used for integration, particularly concerning structure and top management staffing, which were based on emotions and biases rather than strategic requirements. Recommendations include defining power structures, forming a core committee, making selective decisions at the top management level, and urgently focusing on integration to ensure the success of the merger. The study also emphasizes the importance of retaining key employees and providing job security to foster commitment and loyalty within the newly merged company. Desklib provides this and other solved assignments for students.

Contemporary Management
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Running head: CONTEMPORARY MANAGEMENT

CONTEMPORARY MANAGEMENT
Contents
Introduction......................................................................................................................................2
Analysis...........................................................................................................................................2
Conclusion.......................................................................................................................................8
References........................................................................................................................................9
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Introduction
The fate of a merger in the modern competitive world largely depends on the effective
integration of both the companies involved in the merger and therefore in order to ensure the
success of a merger, the organizations involved must focus on effectively integrating both the
companies without making any delay after the announcement of a merger as delaying the process
of integration creates various complexities for the merger which affects the fate of the merger. In
this report case study is analysed to understand managing environment, fundamentals and
challenges of mergers and acquisition.
Analysis
1. The conflicting values which are at stake in the case study organisation DeWaal
Pharmaceuticals and BioHealth Labs are conflicting cultures, leadership and conflicting
approaches which are evident from the reactions of the leaders of both the companies.
One of the most vital factors which determine the success of merger in the modern
competitive world is the effective integration of the human resources of the involved
companies to the new merged companies. As stated by Caiazza & Volpe (2015) due to
lack of effective integration of the human resources of both the companies, there would
be lack of co-operation among the human resources which would result in disruption of
the operations. The analysis of the case study reflects that there is no management theory
and concepts which is currently being followed in the case of merger. According to the
administrative theory of management by Henri Fayol, the success of an organization is
dependent on the manner the management of an organization interacts with the
employees. There are 14 administrative principles in administrative theory of
management which an organization must follow in order to ensure effective management
such as division of labour, authority to give orders, discipline, unity of command, unity of
direction, subordination of individual interests, centralization, remuneration, order,
equity, scalar chain, stability and tenure of the staffs, initiative and Esprit de corps.
In the analysis of the above case study there is lack of the above mentioned principles of
administrative theory and therefore various conflicting values are at stake in the company. The
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current case study also does not follow the various approaches of contemporary management and
therefore it is experiencing various types of issue. As stated by Fiocco & Guo (2015) the
contingency management approach which is applicable in context of the current case study is
contingency approach which states that the most appropriate style of management is highly
dependent on the context of the situation and therefore adopting a single rigid style proves in-
effective in the long run for organizations. As stated by Muralidharan, Wei & Liu (2017) in the
above case it is noticed that the executives of both DeWaal Pharmaceuticals and BioHealth Labs
are busy in “horse trading” and neither of them are taking an active role regarding the effective
integration of the human resources of both the companies. It is also observed that there is no
proper definition regarding who holds the maximum power in the new company and how the
power is exercised. It is very important that the executives of both the company focus on
enabling the principles of administrative management theory in their organization and adopt a
contingency approach of management in order to address the current issues of the company.
2. As stated by Warter & Warter (2017a) the process which is being applied to work out the
details of the integration particularly with regard to structure and top management
staffing is ineffective in nature as the process is more of ‘horse trading’ in nature as both
the companies are carrying out the process of integration based on emotions, values and
biasness and not based on the requirements and future of the new merger company. Also,
there is no proper vision which has been developed by both the participating companies
based on which the actions and strategies of the merger could be taken to achieve the
objectives of the merger. There were also no adequate actions which were taken by both
companies regarding integration after the merger decision was taken as both the
companies were busy in complying to the regulatory requirements which were associated
with the merger.
As opined by Duvall-Dickson (2016) in order to make a merger successful, involving companies
should focus on integrating the companies at the earliest possible stage of the merger as with the
passage of time, complexities regarding merger starts on increasing which eventually tends to
destroy the purpose of the merger. In the case study it was observed that there was no clear
definition regarding the power of authority in the merger and its implications and therefore
DeWaal Pharmaceuticals and BioHealth Labs were not aware of their individual roles and
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responsibilities regarding the merger. According to Henri Fayol’s administrative theory of
management the five basic ways regarding controlling and planning operations in an
organization are namely planning, organizing, commanding, co-ordinating and controlling and in
the current case study lack of application of the five ways of controlling the operations have been
observed. The approach which has been taken by participating company in the merger regarding
selection and recruitment of candidates for filling the top level and fixing them later in case any
issue arise has been completely wrong as it is very important to select eligible and qualified
candidates to the top management positions of the organization who would guide other
employees to the desired objective of new merger company and therefore selection and
recruitment of candidates to various higher posts without proper evaluation and further replacing
and fixing them in case of any sort of issues experienced led to complete disruption of the
organization structure and the operations (Chatterjee & Brueller 2015). In order to recruit the
vacant higher management positions after the merger, the top executives should have focused on
recruiting eligible and experienced candidates who would satisfy all the requirements and
obligations associated so that the vision of the company could be achieved. The executives of
both DeWaal Pharmaceuticals and BioHealth Labs also did not took in to account the cultural
differences of the employees during planning for the integration which also led to various issues
and challenges for the merger.
As stated by Henningsson & Øhrgaard (2016) one of the most vital factors which determine the
fate of merger is the involvement and participation of employees of both the companies involved
in merger because employees help in achieving the objectives and vision of a company.
Therefore, it is very necessary from the point of view of both the companies to actively involve
their employees for the success of the merger. According to Warter & Warter (2017b) in the
current case it was observed that the executives of participating companies failed to retain best
employees in the company as they left due to lack of job security. Hence, it is very important
from the point of view of an organization involved in merger to provide assurance to their
productive employees regarding their future in the new merger company either by promising
them higher job roles in the near future or by providing them with compensation and rewards so
that they remain loyal and commit their future to the company. As opined by Ilo (2016) the
contingency approach of management states that there is no particular leadership style or skill
which is considered to be effective in all situations as the style of management is dependent on
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the requirement of the situation. In the current case study it has been observed that the executives
of both the company did not take any initiative to resolve the issue regarding integration as both
of them were unaware regarding the approach that they should imitate and therefore it can be
recommended to the executives of both DeWaal Pharmaceuticals and BioHealth Labs to adopt
contingency approach of management.
3. In order to resolve the conflicting values which are evident in DeWaal Pharmaceuticals
and BioHealth Labs, the first and foremost recommendation is to define power and the
manner it would be utilized as it is very important for involved companies to negotiate
among themselves who would experience the maximum power and how the companies
would exercise their power in merger. It is also recommended that the executives of both
DeWaal Pharmaceuticals and BioHealth Labs do not let their cultural differences affect
the future of merger and accordingly devise policies and procedures regarding effective
management of merger. As stated by Öberg (2014) another recommendation to resolve
the conflicts is to form a core committee consisting of selected representatives of both the
company so as to develop a common vision for the new merger company upon which the
future objectives would depend further.
The top management of both DeWaal Pharmaceuticals and BioHealth Labs should mainly focus
on making effective selective decisions at top management rather than taking in-effective
decision and fixing them later. The executives should indulge in undertaking employee
appraisals in order to identify the ideal talent resources who can be part of top management of
new merger company and need to ensure that recruitment and selection process in the new
merger is not based on any kind of biases or preferences towards the preferred employees of both
the companies. The executives should also focus on benchmarking the performance requirements
of various top management job roles so that the ideal candidates get recruited in the new merger
company and if necessary should recruit candidates from outside the company to hire ideal
candidates. Also the executives of both DeWaal Pharmaceuticals and BioHealth Labs should
commit to resolve their indifferences without waiting for the appropriate time to approach to
each other so as to determine the future objectives and approaches of merger company. From the
analysis of the case study it had been observed that executives of both the companies were busy
in exchanging complement with each other and in studying and analysing each other properly
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instead of focusing properly. Rather they should come direct to the point and discuss the
strategies and approaches which would be used to integrate the human resources of both the
companies so as to avoid all issues and resolve their conflicts.
The other recommendation is to base recruitment and selection criteria on facts and information
through holding proper meetings rather than discussing hurriedly over lunch. The executives
should use data and insights for recruiting and selecting the best candidates in the higher
management and should conduct in depth analysis of cost, quality and service to make decisions
for objectives in the merger company which would help in driving the success of merger.
4. The first and foremost process which could be suggested to senior executives and HR
personnel regarding integration of the top level is to urgently focus on integration without
any further delays as the integration of the employees of both DeWaal Pharmaceuticals
and BioHealth Labs in merger company is one of the biggest challenges which is
associated and therefore the executives should focus on integration of their human
resources to ensure the success of merger.
The second recommendation to the senior executives of both DeWaal Pharmaceuticals and
BioHealth Labs and their HR is to focus on retaining their best employees so that they do not
leave. The executives and HR of both DeWaal Pharmaceuticals and BioHealth Labs should also
focus on assuring the qualified and productive employees regarding their future merger company
and should provide job security so that qualified and productive employees fully remain secure
regarding their future in the company. As stated by Lupina-Wegener (2013) the senior executives
of both the companies should even focus on providing rewards and incentives to their qualified
employees so that they remain motivated in committing their future to merger company.
The third recommendation to the senior executives and the HR of both DeWaal Pharmaceuticals
and BioHealth Labs is to conduct in-depth interviews of employees in order to recruit and select
the best talent for various top management posts in merger company based on job specifications
and job requirements. The companies should first focus on defining the requirements and
specifications of all the job positions in the merger company and accordingly should conduct in-
depth interviews to recruit candidates based on qualifications and experience.
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The fourth recommendation is to hire an external recruitment agency that would be responsible
for recruiting eligible and experienced candidates to top management posts of merger company
based on qualifications, experience and achievements and the process should be free from any
sort of bias. So external agencies can be enrolled for purpose to mitigate possibility of bias which
can be probable if HR representatives of participating company conduct recruitment and
selection in merger company.
As stated by De Alwis (2013) another recommendation to the senior executives is to focus on
addressing cultural differences among the human resources of both the company as it is very
essential for smooth operations. The presence cultural differences among the human resources
can lead to communication gap and mismanagement of the employees and therefore the senior
executives needs to focus on addressing their cultural differences.
5. As stated by Yao, Shang, & Yu (2016) the organizational and management theories and
practices which have been used in analysing the current cases study is effective in nature
as the organizational and management theories and practices which are used in the proper
understanding and analysis of the case study helped in addressing all the concerns which
were being observed during the case study are as follows. The effectiveness of the
various organizational and management theories and practices which were applied in the
case stud are as follows:
Contemporary management- The contemporary management practices involves planning,
leading, organizing and controlling of the operations of an organization According to
contemporary management practices the managers at each level of the organization is
responsible for using their resources effectively. In order to build contemporary management
skills, it requires the organizational managers to study the performance of the workers and to
make operational improvements. As stated by Nayak, Acharya & Mohanty (2016) the
organization should focus on providing training to their managers in order to develop their
capability in documenting various policies and procedures. The training provided by the
organization to their managers also helps them to select and reward proficient employees of the
organization. The development of contemporary management skills among the managers of the
organization also enable them to effectively interview and hire the best employees in the
organization. Contemporary management practices can be considered as effective as it focuses
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on working effectively in a global market place by managing diversity and differences in the
organization in an effective manner.
Administrative theory- The administrative theory of management by Henri Fayol is another
effective management theory which provides a simple model regarding how management of an
organization interacts with their employees. The administrative management theory of Henri
Fayol, acts as an effective guide to organizations regarding productively managing the
employees of an organization. The administrative theory of management suggests five basic
ways regarding controlling and planning operations in an organization. Firstly it states that the
management of an organization must focus on planning and scheduling every part of the
management process. As opined by Vazirani (2013) the theory also states that the management
of an organization must focus on organizing all resources which are required by the company for
its operations. The theory also states that the management of an organization must effectively
must encourage and direct personnel activity. The theory also states that the management of an
organization must ensure that the employees of the organization work in a co-operative manner.
The theory also states that the managers of the organizations must ensure that the employees of
the organization follow the instructions of the top management. The administrative theory of
management is highly effective in the case study as there was lack of planning, organizing,
commanding, co-ordination and controlling evident in the case study.
Conclusion
From the above report it is evident that the integration of human resources of both DeWaal
Pharmaceuticals and BioHealth Labs after merger process presented various challenges and
therefore the participating organizations must focus on developing a vision for the merger
company and accordingly should recruit eligible and qualified candidates to the various higher
management positions without any element of biases or preferences so as to achieve the vision
of new company and lead the merger towards its desired goals.
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