Business Report: Integrated Approaches and Merger Control Analysis

This report provides an in-depth analysis of integrated approaches to mergers and acquisitions, focusing on absorption, preservation, and symbiosis strategies. The absorption approach emphasizes high interdependence with a low need for organizational autonomy, illustrated by the Electrolux-Zanussi acquisition. The preservation approach, exemplified by British Petroleum's handling of Hendrix, prioritizes maintaining the acquired firm's autonomy. The symbiosis approach, aimed at creating value, is also discussed. The report covers the key tasks and considerations for each approach, including preparing blueprints, managing combinations, and ensuring organizational championing. Furthermore, it briefly explains about issues related to merger policy and merger control regulations.

REPORT

Table of Contents
INTRODUCTION...........................................................................................................................1
1. INTEGRATED APPROACHES.................................................................................................1
Absorption integrated approach..................................................................................................1
Preservation Integrated Approach...............................................................................................4
Simbiosis integrated approach....................................................................................................6
2. MERGER CONTROL ................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Present study is based on integrated approaches and merger control elements. It will
describe about absorption, preservation and Symbiosis integrated approaches. Furthermore, study
will briefly explain about issues related to merger policy and merger control regulations.
1. INTEGRATED APPROACHES
Absorption integrated approach
It is the type of integrated approach which is taken into consideration by the managers at
the time of merger and acquisition of two firms. It is beneficial in the situation when entity is
able to get interdependence from merger and acquisition. Absorption integrated approach has
various characterized: drawing up a blueprint, managing combinations, move towards best
practices and harnessing (Haspeslagh and Jemison, 1991).
The rationale behind formulation of absorption integrated approach is to analyses need
for strategic interdependence and identify need for organizational autonomy. Drawing up a
blueprint for consolidation pays attention on the fact that mangers are required to plan things
properly before implementing it into the real workplace environment. It is essential to collect
information about the firm with whom firm is going to acquire before completion of acquisition
process (M&A integration, 2017). It is very important that managers from both companies
participate in the integration process so that future complications can be minimized. Managing
combinations are another essential task of this integrated approach in which companies create
values through leveraging cash resources and increasing purchasing powers. Sharing of resources
is the essential tool that can create value for both these firm and support in functional skills
transfer so that desired results can come out. But in the acquisition process mangers are required
to ensure that vision of the company will get fulfilled through this acquisition. It is beneficial in
eliminating duplication of resources thus, effective utilization of resources will be done in the
corporation (Making acquisitions work, 1991). Furthermore, another task of absorption
integrated approach is combining firm in such a manner so that this can move towards the best
practices. This skill transfer for moving towards best practice help the entity in effectively utilize
resources and avoiding duplications of resources. It tries to improve situation of the company
after this acquisition. Absorption acquisition is the type of integrated approach that concentrates
more on high degree of interdependence but have low need of organizational autonomy. It is the
approach that concentrates more on changes in culture, operations of the acquired firm so that
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positive results can come out. It is essential to have courage in the acquiring firm so that vision
and mission of the entity can get fulfilled (Dao and et.al, 2017).
Acquisition of Zanussi is the popular acquisition in which cited firm has overlap the
acquired firm significantly and shave adopted its outstanding qualities. Initially Electrolux was
the small firm with narrow product line. The main issues was faced by the cited firm that it was
using out dated technologies but later on entity grown well and has become the leading
corporation in the field of household appliance manufacturer. Zanussi was the leading brand in
Italy which has employed approx 30000 employees. Post acquisition action of the company was
effective (Masoumi, Yu and Nagurney, 2017). The main action that have been taken by
Electrolux of changing in the top management in Zanussi. Higher authorities have appointed
chairman and CEO of Italians those who have long-term experience of working in the
organizations. Several changes have been made in the short and long term functional areas of the
firm, some actions that have been taken by the entity has supported in improving capacity of the
brand and reducing purchasing cost as well. After that in the February, management of the
company has decided to reduce number of employees (Sarala, Vaara and Junni, 2017).
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Illustration 1: Type of integrated Approaches
Source: (Making acquisitions work, 1991)

Acquisition approach is the critical task to implement because success of the acquisition
depends upon the skills of the mangers. It also depends upon the organizational capabilities and
strategic position of the main firm. The success of transactions highly depends upon the extent to
which managers are able to leverage them in the organization. Electrolux did not adopt weakness
of Zanussi but it has realised the important aspects that can gives benefit or can create value for
the entity. It has changed structure and strategies of the Zanussi completely (Haspeslagh and
Jemison, 1991).
Prepare the Blueprint for consolidation
Absorption integrated approach is based on four major tasks, the first task is to prepare
blueprint for consolidation. It is essential to make clear plan whenever firm plans to acquire any
other organization. Managers are responsible to look at the actions and its impact that have been
taken in the acquisition process. In the absence of effective plan entire process can get failed to
give positive results to the business unit (M&A integration, 20170. It is essential to chose a
single leader for entire process and managers have to involve skilled team members in the
integration process. Furthermore, it is also essential to set a transition structure and manages
integration calendar and then communicate it to the employees effectively (Haspeslagh and
Jemison, 1991). Electrolux has taken support of this approach in which single manager had been
chosen and then tough choices were made because of changing practices. Setting up transition
structure is another main step of the integration process. It emphases that current firm take
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Illustration 2: Absorption approach

responsibilities of the business practices and ensure effective budget performance. After that
management has to define temporary structure so that performance of the team members can be
measured effectively (Dao and et.al, 2017).
Illustration 3: Creating value in absorption
acquisition
Source: (M&A integration, 2017)
Select
The issues should be resolved by selecting on the basis of political nature or should be
left to management. Thus, it could be beneficial for making good choice.
Demonstrate
Merger benefits should be extracted so that it can be compatible for achieving merger
benefits.
Tackle
Compatible areas can be easily tackled and as such, managers must be selective so that
merger benefits can be extracted.
Avoid
If there is incompatibility between two approaches, then it is better to avoid the same.
Managing rationalization process
If in the planning process managers clearly look at the cost and benefits, or quantify it
properly then it supports in sales growth of the firm. In order to manage rationalization process
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well managers have to concentrate on real issue first. After that they have to do big discussion
and works on creating real improvements (M&A integration, 2017).
Moving to best practices
One of the main focus of absorption acquisition approach is to reduce cost by sharing
resource effectively. This supports in elimination of duplication of resources thus, cost can get
reduced to great extent. Moving towards the best practice is the major source of creating value
for the business unit (Masoumi, Yu and Nagurney, 2017).
Harnessing the complementarity
It is essential in the acquisition that to create maximum leverage so that complementaries
benefits can turn into permanent advantages. It is assumed that two homogenizes corporate
cultures can enhance productivity after acquisition. If there is uniform marketing and sales
approaches then they can get benefit out of it (Dao and et.al, 2017).
Preservation Integrated Approach
Preservation integrated approach is another type of integrated approach, in this type of
approach there is low need for interdependence among combining firms and high need for
autonomy. It emphasis that management is required to focus on keeping sources intact of the
acquired benefits (Haspeslagh and Jemison, 1991). The main reason of this intact is that practices
and management practices of the business unit can create danger to the success. It is the type of
approach in which needs of interdependence is very low. This looks upon the fact that money is
not the only matter, nurturing the acquired firm can help in creating value. It is difficult to
manage preservation acquisition throughout the process. There are four major tasks that need to
be managed by team and by the host structure (M&A integration, 2017).
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Continued boundary protection
It is the task in which gatekeeper is responsible for preserving distinct culture so that
capabilities can remain unchanged. In this task managers and employees are required to have
more tolerant capabilities so that continuous different within firm can be managed well (Making
acquisitions work, 1991).
Nurturing acquired company
It is the second most important task of preservation integrated approach, this supports in
creating value and development of business unit to great extent. It is considered as subtle process
in which acquirer uses resources and try to generate management skills so that company can get
positive results. It is essential for the manager that to ensure that corporate strategy can fulfil
objective of the corporation (Haspeslagh and Jemison, 1991). In this task management has to
lean about the industry and prospective of new business domains. Then they have to decide the
corporate strategy so that development of the acquired firm can be taken place effectively.
Domain exposures concentrates on the platform type acquisition rather than concentrating on
immediate acquisition of full- blown position. There are requirements to increase resource
commitments. B combining all the resources in effective manner internal development of the
projects can be taken place this can help in gaining broad business positions (Sarala, Vaara and
Junni, 2017).
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Illustration 3: Creating value in Preservation
approach

One of the great example of preservation integrated approach is British Petroleum. This is
the firm which has handled acquisition of Hendrix. After this acquisition cited firm has formed
BP Nutrition division. This case is the great example of preservation integrated approach. Oil
business have to face huge fluctuations that is why companies those which are operating in this
industry have to face complication that create difficulty for them in sustaining in the market for
longer duration (Masoumi, Yu and Nagurney, 2017). Prices of oil can get changed any time.
Thus, most of the oil firms adopt this preservation integrated approach, they nurture the acquired
firm so that company can grow well and can face business fluctuations. It is the main task in
which managers of the business unit ensure that they nurture to accelerate business development.
They take care of the fact hat company be clear with their vision and mission and involve
activities in such manner so that it can accomplish its business objectives (Dao and et.al, 2017).
Accumulating business learning
Third task in the preservation integrated technique is accumulating business learning.
This concentrates on learning about the business and learning from business as well. In the
learning about the firm involves gathering information about the experience of the firm, its host
structure and its strategy. On the bases of these elements managers can ensure effectiveness of
the process and can determine its future as well. Learning from business ensures that company
can get long term benefit from this acquisition (Making acquisitions work, 1991). Long term
benefit supports in becoming comfortable in the market and bringing positive change in the
entity.
Organizational championing
It demonstrates ability of the management to control over operational performance of the
business unit and ability of higher authorities to frame new development strategies. Furthermore,
it also looks upon the retaining skilled staff in the firm for longer duration after acquisition as
well by developing strong relationship with them. The acquisition case of BP nutrition explains
that British petroleum has provided extreme support to the staff members and has managed them
well (M&A integration, 2017). If the firm aims to make substantive progress then it would be
appropriate for the entity to adopt preservation integrated approach. Host structural managers
continuously work to minimize gap between fictions of corporation and helps in effective
utilization of existing corporate resources (Haspeslagh and Jemison, 1991).
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Symbiosis integrated approach
Acquisition is important aspect for growth and renewal purpose. Acquisitions help to
double the power of business and is essential aspect to initiate growth in effective way. With
respect to this, symbiotic acquisition is helpful for creating value in managing acquisition in
effectual way. This type of acquisition is regarded as the most complex for management to
handle challenges (Masoumi, Yu and Nagurney, 2017). This acquisition has enough of the
challenges for managers to accomplish it. Mainly, it includes two aspects such as strategic
interdependence and autonomy of company. The acquisition process is that two organisation
exist simultaneously and then eventually become dependent on each other. The process of
mutually dependent of companies slowly progresses. This is evident from the fact that symbiotic
acquisitions require boundary permeable and boundary preservation both on simultaneous basis.
Thus, gradual process can be achieved simultaneously of both the aspects.
The acquisition firms must take the qualities of each other so that benefits may be shared
and amalgamating may be successfully achieved. The interdependence feature of symbiotic
acquisition is the main essence for creating value quite effectually. Preservation is first initiated
by the company and as such, acquiring company implement changes so that it can be better deal
with acquisition. In the next stage, acquiring company makes interaction with organisations by
the acquired company's manager. Next strategic control is initiated and as such, managers'
responsibilities are maximised. Thus, stage is set up for amalgamating organisation which is the
main essence of symbiotic acquisitions.
Symbiotic acquisitions are helpful in creating value while amalgamating organisations.
Various stages are initiated for successful acquisitions.
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Illustration 4: Creating value in symbiosis approach
Preservation
Starting with first stage which begins with preservation and then forwards to process of
amalgamating between two companies. There are four stages such as preservation stage,
reaching out stage, next stage is initiating operating strategic control and last stage when
amalgamation takes place between two business. Expectations of preservation is somewhat
higher in symbiotic acquisitions. Intensive and proper attention needs to be paid to the
management's reactions (Cuypers, Cuypers and Martin, 2017). Patience need to be there as it can
be referred to example of ICI acquisition of Beatrice organisations. But ICI has effectively
overcome the hurdles and stuck to its budgets and concentrating to long-term growth in the best
possible way. It is essential that understanding is required between corporate level and
management related to the strategic goal, time frame required and correct path company has to
follow for accomplishing it quite easily.
Reaching out
Next stage is reaching out which focuses on monitoring and controlling on both sides so that
amalgamation procedure. The boundary should be changed into semipermeable element. This
help company to evaluate initial contacts and after subsequent contacts as well. Acquiring firm is
able to initiate experienced people so that issues related to amalgamations can be resolved
(Sarala, Vaara and Junni, 2017).
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Operating responsibility for strategic control
Next stage is related to operating responsibility for strategic control. This help to create value by
initiating contacts and interactions which help in extracting results. Symbiotic acquisitions
require stepping up over acquired company. Handling upon duties of acquirer's business to the
organisation who has acquired the same. This is evident from the fact that ICI has done the same
by making LNP responsible for marketing Victrex by implementing strategies in USA.
Amalgamating organisations
The last stage in this symbiotic acquisitions is amalgamating between organisations. This is the
main outcome which is required to form unique identity of the business. The ability of the
amalgamation depends upon quality of interface. After all stages are over, business has to
manage the interface so that benefits can be extracted out of it with much ease. It is the toughest
task for management to maintain balance between amalgamations. Thus, symbiotic acquisitions
are essentially required to create value.
2. MERGER CONTROL
Merger control has been regulated under Fair Trading Act 1973 and goes through various
stages. Director General is appointed under OFT (Office of Fair Trading) and as such, clarity
about the role of Director General, Monopolies and Mergers Commission (MMC) and also to
Secretary of State for Trade industry is provided. DG recommends Secretary of State and also to
the Commission and MMC recommends merging or not for public welfare (Gray and
McDermott, 1989).
OFT appoints small group of employees to strictly monitor merger activity so that fair
trading may be accomplished. OFT has total of 15 proposals having target of gross assets of
more than 1 billion and proposals have considerably increased in 1987 as compared to previous
years. It also has unique bidding procedure (Ahammad and et.al, 2017). On the other hand,
MMC includes members accountants, engineers, trade union members and other members. The
members of Commission include supporting staff as well. According to the table, there were
thirteen bids referred to Commission in the year 1986 which has also increased as compared to
previous years. The bids were also increased in the year 1988 and 1989 with almost twelve and
sixteen bids respectively.
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