Challenges and Strategies in the DeWall-BioHealth Merger

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MGT 501: Assessment 2
CASE ANALYSIS BUSINESS REPORT
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Executive Summary
This report emphasises the steps which a company undertakes during the process of
amalgamation and acquisitions. It provides the challenges faced by the company DeWall
Pharmaceuticals and BioHealth Labs while undergoing merger process. It further outlines the
management and functional theories applied by the company and its advantages. It also states
the upcoming barriers, most importantly cultural diversity in the organisation and suggests
solutions to deal with these barriers. It also focuses on the steps which a company adopts
during the process of merging. At last, the report suggests the advantages of the applied
theories and principles and also provides recommendations to implement these theories into
action.
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Table of Contents
Introduction................................................................................................................................4
Question 1..................................................................................................................................5
Meeting the challenge of cultural diversity............................................................................5
Risk of losing loyal employs and experts..............................................................................5
Management theories and concept.........................................................................................5
Question 2..................................................................................................................................7
Steps and process of merging companies...............................................................................7
Cultural issues in merging and amalgamations......................................................................8
Question 3..................................................................................................................................9
Suggestions and recommendations to resolve conflicting issues during acquisition.............9
Question 4................................................................................................................................10
Question 5................................................................................................................................11
The importance of management and functioning theories...................................................11
Conclusion................................................................................................................................12
References................................................................................................................................13
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Introduction
In the growing business era of the computing world, one of the most faced challenges by
various organisations in the process of undergoing merging and collaborating. The process of
collaboration is considered as the most commonly used tool and technique for the purpose of
growing productivity. But along with the positive side of development, there is a negative
side and challenges as well awaiting at the doorstep. The most common challenge faced
while undergoing the process of collaboration is the establishment of integration among
various cultural diversities. Further, it also becomes contesting to establish peaceful
integration among various structures of people in both the merging corporations. Hence the
best decision-making process shall be adopted in order to ensure a healthy relationship
among people and also to acquire the greatest productivity.
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Question 1:
In the provided context, the two major pharmaceutical companies have planned their
collaboration in their manufacturing and distribution process in order to gain more
productivity and profits. This collaboration and amalgamation are between two companies
namely DeWall Pharmaceuticals and BioHealth Labs. Both the companies are at a major
stand in the global market as they are dealing with the manufacturing of various drugs
ranging from pain reliefs to AIDS suppositories. The authorities of both corporations are
concerned regarding the opting of the best employ and management team for their new
company. But there are certain aspects of the companies which are at stake in the process of
amalgamation.
Meeting the challenge of cultural diversity:
The very first aspect which is a pole in the merging procedure is the cultural values of the
merging companies. Both the companies are functioning and operating as diversified cultural
values and ongoing for the collaboration process, both the company shall be left with a
challenge to meet the cultural needs of employs. The companies have to ensure as soon as
possible that the cultural diversity of the corporation is maintained without any conflict in
interest and that there is an establishment of healthy relations between different groups of
people.
Risk of losing loyal employs and experts:
Further, with the process of amalgamation, the company has to make every possible attempt
in order to ensure that its loyal and expert employs remain with it and does not quit their jobs.
Hence the companies have to adopt such rewarding schemes in order to remain in connection
with the expert employs (Handel, 2014).
Management theories and concept:
There are various management theories which are required to be taken into consideration by
both the companies in order to effectively implement their target of amalgamation. These
theories are as follows:
 Efficiency theory: Under this theory when two companies or firm plan their merging
process and one form is lea efficient than the other firm, the former comes up to the
level of the latter on the process of amalgamation.
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 The theory of synergy: This is the theory under which it is observed that the
combination of two companies or firm to produce greater effects is better and
effective as compared to their individual contributions.
 The theory of adoption or alignment: Under this theory, the merging companies are
required to adopt the upcoming changes in no time in order to maintain diversification
within internal as well as external factors of the corporations (Handel, 2014).
According to the view of Haucap, J. and Stiebale, J. the adoption of innovative ideas is the
key to economic growth and success. Further, it has also been emphasised that the merging
process of the companies also affect the innovations of the company at a great extent. The
process of merging and amalgamation does not centrally focus on the gaining of profits but
shall also keep in consideration the innovative aspect of the company (Haucap and Stiebale,
2016).
As per the view of Rahman, M., and Lambkin, M. the main reason behind the process of
amalgamation and merging is that it is directly efficiency related and involves rise in
production, marketing and distribution, and also other synergies which in a long run assist the
companies to build a strong market power and hence, increasing the companies concentration
(Rahman and Lambkin, 2015).
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Question 2:
Merging and amalgamation, if done in a proper way, leads to greater profits and outcomes as
compared to individual striving. This is a process which requires a well-conceived and
properly executed plan for the delivery of greater value. The most important requirement of
this process is the making of a correct decision at the right time. Hence, proper and cautious
steps shall be followed for undertaking the process of merging of companies (Killen, et. al.,
2012).
Steps and process of merging companies:
The process of merging companies requires expert decision making and implementing
strategy and hence the following steps can be adopted while undergoing this process:
 Track the money: This is the step where the company has to see which is the core
area of generating profits. The companies undergoing merging has to work out and
evaluate strategies to attract more customers and analyse from where money can be
generated. Along with this the companies shall also evaluate the amount of risk
involved in that particular field and find solutions of that risk with accurate decisions
for the same (Hitt, et. al., 2016).
 Planning of actions as per the company’s deal: Before going for the process of
merging the companies are required to see whether they are planning to expand the
current business or opting for the establishment of a completely new area of business.
This is the scope or scale question which is to be determined by the experts of the
companies.
 Resolving issues relating to people and power: The company has a responsibility of
hiring the expert team at the top level from both the companies. Hence this issue of
people shall be resolved quickly for better performance. Further, there shall also be
an issue of power which is a matter of concern to decide as to who is to be hired at
what position. Hence, both these issues should be resolved to ensure healthy working.
 Management through a decision: The company under this step shall appoint a
management decision team which shall evaluate the financial as well as non-financial
results. This will help in identifying the perfect decisions to be taken to achieve the
best results (Hibbert and Cunliffe, 2015).
 Choosing the leaders of integration team: The process of integration and merging
requires a strong team for decision management. This team shall be construed with
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the power of making quick decisions, coordinate the task of others and maintain the
flow or pace. The chosen team should be a strong strategy planner and have the
required skill and expertise for the same. The leaders of this team shall be formed to
spend their maximum time in the process of integration.
 Maintaining cultural diversity: This is one of the most important steps of the process
of integration as this proves to be the most challenging step during the entire
procedure. The company shall maintain cultural diversity among the internal
management of the organisation. Usually, the company with larger efficiency tries to
establish its culture over the less efficient company in the process of merging which
leads to the rise of conflicts in interest. Hence, a proper diagnosis is required
regarding the culture of both the companies in order to accomplish the integration
process (Stahl, et. al., 2017)
 To win minds and hearts: During the process of amalgamation, the people at both the
side are in a feeling of risk and nervousness and thus it is required by the company to
ensure the security. The company can achieve this goal by spreading positive
messages amongst people and assuring them better results in the near future.
 Monitor performance and maintain motion: The integration team is responsible for
the new jobs available in the new company after merging and they are the future
shapers of the company. Hence, it is the sole and utmost responsibility of the team to
maintain smooth motion and performance in the company.
 Revaluation: Once the integration process and target are achieved, it is important to
evaluate the shortcomings of the process so that it can be avoided the next time. And
also, a revaluation of some new techniques shall be done in order to ensure better
performance.
Cultural issues in merging and amalgamations:
The most frequent hurdle in this process is the rising of the cultural issues which needs an
urgent resolution for the continuation of the process. This process is a process where the
company suddenly have access to new resources which spread a feeling of anxiety among the
employs of the company. Hence, there is a rise of cultural issues as people are conscious
about the adoption of a new culture (Stahl, et. al., 2017).
Hence, in this situation, the company is required to make the people aware of the new
benefits of the changing culture and ensure the security of employment. Further, the company
shall celebrate new ideas and encourage the employs for a better outcome to be achieved. The
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company shall also remain transparent and welcome the opinions of the employees and make
provisions for the implementation of new ideas.
Question 3:
Merger an amalgamation are business expansion strategies which are adopted by a company
for its growth and success. This strategy allows the company to combine with other
companies in order to accelerate its growth and expansion. Every organisation and company
have to face certain challenges within its internal as well as external framework for which it
has to evaluate solutions for its resolving. The most important value which is affected during
the merger of the companies is the culture of both the companies. Hence the companies are
required to properly implement their merging strategies in order to overcome these challenges
and cheer their people to proceed towards the new change (Comanor and Scherer, 2013).
Suggestions and recommendations to resolve conflicting issues during acquisition:
Defining of corporate culture: The company is required to define its corporate culture first in
order to plan a strategy for maintenance of its cultural diversity. This will enable the company
to understand its cultural values and draw the best results for its planning and
implementation. Every organisation has a distinctive culture which defines its relations with
its employees, customers, suppliers and creditors. Hence, it is mandatory for organisations to
draw their requirements and needs in order to maintain their diversity.
To review the organisational structure: It is also important for the organisation to review its
strategic plans and harmonize its operational structure immediately after the merging process.
The company is required to reframe its mission and vision, objectives and aims along with
the company with which it has merged. This will help in eliminating conflicts in interest and
both the companies shall succeed in operating as one.
Create a transition period: The new company is required to create a transitional period for
the operations of the company and the working of the employees. This will enable the
company to adopt new strategies and changes in the prescribed time. The company shall set
dates and communicate it to its people stating that from such dates the old structure shall
cease to operate and the new modifications shall come into effect (Handel, 2014).
Orientation and training: Orientation and training of the new strategies shall be given to the
employees in order to make them aware of the new business protocols. Further, adequate time
shall be given to the employees to adopt the new strategies and implement them in their work
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performance. It is also a matter of consideration that along with the new employees, the
existing employees shall also be given training and time for the adoption of the strategic
changes.
Celebrate change through encouragement: The company shall welcome the opinions of the
employees and address their queries if any regarding the new techniques and structure. The
company shall make the employees feel comfortable with the new change and shall
encourage them by to adopt change by educating them about the benefits of the new methods
(Graebner, et. al., 2017).
Hence, in the given scenario both the pharmaceutical companies, DeWall Pharmaceuticals
and BioHealth Labs shall also adopt the above-mentioned strategies in order to avoid
conflicts post-merger.
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Question 4:
The integration of the organisation takes place when the company's external as well as
internal factors tie together. The internal factors of the company include the style of
management, their structure and strategies, systems and organisations and the external factors
include the company's mission and the business models, input and output of the company and
other social factors. Identifying the degree of integration is a technique to evaluate the
company’s success and how the company has discovered new ways to improve (Graebner, et.
al., 2017).
The HR and other superior authority of both the pharmaceutical companies are facing
challenges to draw out the minute points of integration in order to successfully implement
their amalgamation process. The following are the recommendations which the companies
can adapt to meet the upcoming challenges.
Frame a responsible business model for external factors: The HR of both the companies are
required to frame the best possible business models as per their needs and requirements. This
business model shall be of such nature that it responds to the external factors affecting the
companies. The companies shall further make modifications and amendments in the existing
strategy if required. The company shall keep its new demands into consideration while
framing the new business models (Stahl, et. al., 2013).
Aligning with internal factors: For the companies to achieve organisational integration, it is
required that they align with the internal factors like staff skills, technologies available,
resources available, company culture, etc. Align with these factors mean every department of
the company, as well as employees, understand the strategic direction of the company. It also
involves an explanation for the stakeholders regarding the rising of the costs and its reasons.
It also involves the maintenance of the communicating and the training systems.
Focus on strategy rather than on technology: The company's prime focus shall be on the
development of strategies rather than on the development of technologies. This will enable
the company to understand the reason for the change before proceeding with the available
technique. Thus, the development of a strategic base is more important so that the technology
can be further developed on that basis (Comanor and Scherer, 2013).
Creation of an assisting environment: The company shall create a supportive and assistive
environment for its employees through various rewarding schemes and boost their
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performance by monetary rewards. This will enable and encourage the employees to give
greater contributions to the teamwork and give their best performance. A supporting and
assisting environment also means that education and training resources are easily made
available to the employees.
Making quick decisions: For the merging process, the authorities of both companies are
required to make quick decisions regarding the formation of the new teams and structures.
Further, the company shall ensure that its existing and loyal experts remain with it post
merging so that the company can utilize their expertise and experience for the new beginning.
The integration process shall be in the hands of these experienced employees as they are well
aware of the company’s details and specifications (Killen, et. al., 2012).
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