Leadership and Change: Analyzing Mergers, Acquisitions, and Leadership

This report, prepared for a change consultant, critically evaluates the statement that most mergers and acquisitions (M&A) fail due to cultural differences. It defines M&A, explores reasons for their occurrence, and discusses factors influencing their success, including cultural differences, poor leadership, and external factors. The report also examines the role of leadership in M&A, considering individual, group, and organizational reactions to change. It analyzes transactional and transformational leadership styles and emphasizes the importance of communication, transparency, and employee relationships. The report provides a comprehensive overview of how leadership can influence M&A outcomes and manage the challenges of integrating two organizations.

LEADERSHIP AND
CHANGE

TABLE OF CONTENT
EXECUTIVE SUMMARY.............................................................................................................1
INTRODUCTION...........................................................................................................................2
TASK 1............................................................................................................................................2
Do mergers and acquisitions mostly fail because of cultural differences....................................2
TASK 2............................................................................................................................................5
Can leadership be implicated in merger and acquisition.............................................................5
CONCLUSION................................................................................................................................8
RECOMMENDATIONS.................................................................................................................9

EXECUTIVE SUMMARY
In the report there is an important of merger and acquisition which has been discussed so
that there is a better functioning of the company which is going to be very beneficial for the
company. Culture of two companies which can be very different for one another which has to be
worked on so that the company can have a better understanding of one another and accordingly
make decisions for the future.
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INTRODUCTION
Leadership is a very essential factor in an organization because only then the organization
will be able to function effectively and that will make the company have a good productivity for
themselves in market. Changes take place in organization all the time because of the change in
customers need and demands. Organizations have to have a strong leadership so that the changes
in the organization can come easily. Lot of factors can make the company get effected and the
functioning of the organization can reduce so that there is a better functioning for themselves.
The report consists of the cultural factors and other factors which are influencing the
working of the organization. There is a description of merger and acquisition (M&A) failure in
market because of the culture differences and the other factors which are influencing the working
of the organization. Communication and culture are the two factors which are very essential for
the organization so that the organization can have a better functioning for themselves.
TASK 1
Do mergers and acquisitions mostly fail because of cultural differences
Mergers: Merging is a process through which two businesses or organisations come together
voluntarily to combine their operations and functioning into a single organisation. Both
businesses have to mutually agree on the exact details of the merger in order to facilitate the
process. Mergers provide businesses with a great opportunity to grow and expand their
operations locally and globally.
Acquisitions: Acquisition is the process through which a business or organisation purchases a
majority of the ownership stakes of another business organisation in order to gain control over
the operations and functioning of that business. Acquisitions can be of voluntarily and
involuntary nature (Xu, 2017). In voluntary acquisitions target business's ownership consents to
idea of their business getting acquired. While in involuntary acquisitions, the feelings of
ownership of target business towards their business getting acquired are irrelevant, as they do not
have a majority of business's and can not control any facet of their business's operations.
Acquisitions are performed by large business for a plethora of reasons including the ability to
drive their competitors out of the market by acquiring their operations.
Businesses can try to expand their operations through mergers and acquisitions by
combining with other businesses in two ways- Horizontally and Vertically. Horizontal mergers
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and acquisitions are done between businesses that manufacture, produce and sell similar types of
products as each other in the market. For example the merger between HP and Compaq was a
horizontal merger as it was agreed upon by both businesses and both organisations offer similar
products and services to one other. Horizontal mergers and acquisitions are performed by
businesses with the objective to increase profits, customer base and market share. On the other
hand vertical mergers and acquisitions are performed between businesses that both operate
within the same industry but function at separate stages of the manufacturing process (Yılmaz
and Tanyeri, 2016). Vertical mergers and acquisitions are generally performed by businesses
with the intention to secure resourcing of raw materials and goods, avoid interruptions in supply
or to curtail the supply of essential raw materials and goods to competitors.
Businesses merge with and acquire other businesses in the hopes of gaining host of
strategic business advantages, but the primary reasons for business organisations to undergo
mergers and acquisitions are economical in nature. The main reasons for which businesses
perform mergers and acquisitions are as follows:
Increased Capabilities: Both mergers and acquisitions provide businesses with multiple
opportunities to increase their operational performance and expand, grow their operations in the
market. As mergers and acquisitions combine two productive businesses into one, it also
effectively increases the productivity and capabilities of their individual operations. This increase
in the operational capabilities of a business may result from the resultant increase in its research
and development projects or due to the recent growth of its manufacturing operations (Brueller,
Carmeli and Markman, 2018). Mergers and acquisitions do not simply increase capabilities of
particular operational departments, but can also increase a business's capabilities by the
acquisition of advanced proprietary technologies from other businesses.
Competition: Mergers and acquisitions both provide businesses with great opportunities to
obtain a competitive advantage in the market over their competitors. Mergers and acquisitions
can provide businesses with improved marketing and distribution networks through which they
can provide service to increased amount of customers thus increasing their potential market and
customer share, while also increasing their productivity and profitability. Acquisitions also
provide businesses with the strategy to eliminate their competitions from the market all together.
Diversifying goods and market: Mergers and acquisitions also provide businesses with
opportunities to diversify their operations and the market in which they operate in. Merging or
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acquiring a foreign business can allow the local businesses access to international customers and
foreign markets, which are ready to be captured. This is also advantageous to businesses as
markets are known to grow and shrink and servicing multiple global markets reduces underlying
risks involved.
According to Koi-Akrofi, 2016 the inherent success of businesses undergoing mergers
and acquisitions with other businesses in order to expand, grow their operations and increase
their market share, productivity and profitability depends on a variety of reasons. Some of these
factors are within the control of the business while other factors which decide the success and
failure of mergers and acquisitions are completely out of the control of participating
organisations. The most common reasons for failure of mergers and acquisitions between
businesses are as follows:
Cultural Differences: One of the most common reasons for failure of mergers and acquisitions
between businesses is due to the differences in culture between the two organisations (Shvindina,
2017). Integration of diverse cultures from two different organisations often becomes an arduous
task for the management of resulting organisation and failure to integrate employees and
operations of different culture together slows down the operations of parent business and
hampers their working environment which results in massive losses incurred to parent
businesses. Differences in culture between businesses becomes even more apparent and
problematic when mergers and acquisitions are of global nature.
Poor Leadership: Having a skilled and experienced leadership is instrumental in the success of
mergers and acquisitions and poor leadership is one of the most common ways they can result
into a failure. Mergers and acquisitions both require great planning and researching on the part of
businesses and their leaders and bad strategies will inevitably result in failure to increase
operations and increased losses incurred.
Wrong Valuation: Another major reason for failure of mergers and acquisitions is due to wrong
valuation on paper of the supposed advantages merging or acquiring would provide to a business
(Bhattacharya and Jacobsen, 2018). Administration only finds out that their valuation of the deal
was wrong only after closure of the deal.
External Factors: The success or failure of mergers and acquisitions also depend hugely on
various external factors such as collapse of the economy, inflation, technological advancement,
consumer and market trends etc.
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Through these reasons it can be observed that while cultural differences between
combining business does play a role in determining the success or failure of merger and
acquisition processes, there are other factors which the leadership of businesses need to consider
while performing mergers and acquisitions successfully.
TASK 2
Can leadership be implicated in merger and acquisition
There are a lot of factors which can influence the working of an organization so that they
can have a better functioning for themselves which makes it important to understand the internal
factors when as company is merging is very essential. The leadership of the organization is going
to make the organization function effectively and make the company have a better competitive
advantage for themselves (Chua and et.al., 2018). Leaders have to know their employees well
and understand them so that they can make the changes in the company come in effectively and
make them be implemented in the organization. There is a different reaction of team, individuals
and organization to merging.
Understanding of change management
Individuals would get motivated when there are different companies coming together but
there is a lot of culture and communication gap which comes in the organization which can make
the company not gain profit but loss instead (Hughes and Harris, 2017). Companies come
together so that they can have a profit but if there are a lot of factors which have to be considered
before any decision can be taken. Reaction of the individuals is positive because there will be
more people which means distribution of work will be more and the pressure will reduce.
Groups can increase their productivity in organization so that they can have an effective
functioning for themselves which is a very important factor for them (Northouse, 2015). There
will be groups getting more help to make the organization function better and the strategies can
be implemented so that they can achieve their objectives and goals which is going to be very
helpful. Communication in the groups will reduce but there will be a growth in the organization
if that factor is worked upon by the leaders of the two companies.
Organization can have a lot of profits when there is a company which comes together but
there are a lot of decisions which have to be taken so that the organization can function
effectively (Dumas and Beinecke, 2018). It is very important for the company to have an
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effective plan for themselves when they are merging with any other company and see if their
objectives are being met from time to time. There has to be a celebration of the death of old
company and the new journey which the organization is having so that the organization can
make the transparency increase and the organization can have a better functioning for themselves
(Jabri, 2017).
Leadership
Transactional leaders is focused on the working of the supervisor, group performance and
organization which is very important for the company specially when there is merging take
place. Transformational leaders are the enhancing motivation, engagement of followers so that
there is a better behaviour in the organization is also a very important factor which has to be
considered. Leaders of the merging companies will have to use both the methods in the company
so that they can make the employees get used to the changes which are taking place in the
company so that the company can function effectively. There is a different requirement of style
in different situations so that the organization can make the employees comfortable and make the
company have a better functioning and the understanding of the employees can get better by the
leaders of the company (Skendall and et.al., 2017). There is a lot of freedom which will be given
to the employees which is very important for organization so that they can get changes and
understand them which will make the changes be applicable for a long run in market.
Organizations must have strong leaders in the organization who have a strong trust bond
with them so that they can make the organization will be able to merge effectively which is a
very important factor for them. There are a lot of leaders who are taking decisions but without
having transparency and relationship with the employees there is going to be no improvement in
the company (Mutali, 2017). Merging has to get positivity in the organization and not be
negativity which is only positive when the organization makes changes accordingly.
Lewin Change model
This method can be very useful for the organizations when there is merging taking place
because this can make the employees get use to the changes which ware taking place so that the
company can profit from it. First stage is, unfreeze which is removing of the old methods so that
the new methods and strategies can be implemented. In this stage the leaders make the
employees get used to the fact that the changes will come in the organization when the
companies merge therefore it is very important for them to have an effective functioning for
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themselves. Second stage is the moving which is that there is a change which is implemented in
the organization so that the changes in the organization can come and the employees can accept
them properly (By, Hughes and Ford, 2016). It is very important that the employees of the
company can focus on the productivity so that the organization can benefit from it completely
but this is not possible when there are changes taking place in the organization. Leaders in the
organization play a very essential role which is making the company have a better functioning
for themselves in market. The third stage is freezing which is that the leaders have to make sure
that the changes have come in the organization and now that the new changes can be made
permanent in the organization so that the organization can have a better functioning for
themselves. It is very important to get the changes in the organization slowly so that the
organization can have a better functioning for themselves and there is a competitive advantage
which the company can have (Groves, 2020).
Organizations must have a better functioning for themselves so that they can get a
competitive advantage and this is one change model which the merging organizations can use so
that they can have a better working environment. This is a very simple model and it can be easily
implemented in any kind of organization which is a great benefit for the organizations. Chances
of errors are low and implementation which is a very important factor will be lesser risk taking
for the companies and they will be able to have a better functioning for a long run in market.
Importance of Communication
There are a lot of ideas which can come up in companies when there is a good
communication in the organization. All the employees must be included in the decision making
so that the company can have a better functioning and there are a lot of innovations and
creativity which can come out in the company. The motivation level in the organization will be
more and there will be a better functioning of the organization which is a very important factor
for them. This will make the company find more merges in the future and decision making in the
company will be easier and faster (Clarke and Higgs, 2016). There has to be a transparency with
the employees and the customers so that they can have a loyal set of people associated with the
company and the organization will be able to function better. The functioning of the organization
will be faster which will make the company achieve their goals faster and get a competitive
advantage faster in the market. Poor communication in organization will make the company have
a lack of sense of direction and the functioning of the company will fall. Frustration and pressure
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on the employees will increase because of the lack of communication which is taking place in the
company.
Human Resource involvement
The involvement of human resource in organization is high when there are two or more
companies merging which is a very important factor. Human resource will have to make sure
that they are making the employees have a motivation in them so that they can get the changes in
the organization easily. There have to be employees who accept and adapt to changes which are
taking place in the organization be it merging and change in tasks so that the organization can
reach their objectives and goals. Communication gap can be filled by the human resource in
organizations so that they can make the company have a better functioning for themselves. Tasks
will be monitored by the human resource so that the tasks are being completed on time and the
achievement which is being done by the employees they are being motivated and rewarded for
their hard work. A sense of motivation is given by the human resource involvement of the
companies merging so that they can make the productivity of the company be maintained and the
organization will be able to function effectively (Carberry and Cross, 2015). Training in the
organization is also given by the human resource which is why the organization will be able to
maintain their standards in market which is going to be very helpful for a long run in market. The
talent of people must be used accordingly so that the company can make a profit which is going
to help the company have a competitive advantage for a long run in market. There are a lot of
employees who work really hard to make the different cultural people work together so that the
organization can have a better portfolio for them but they must be appreciated by the human
resource so that they are motivated to work more.
CONCLUSION
From the above report is can be concluded that there are a lot of factors which have to be
considered when there are companies which are merging so that the organization can have a
better functioning. Merging has to get positivity in the organization so that the company can
function effectively and the company will be able to have a lot of profitability. There are a lot of
differences which come between two companies and out of those culture is a drawback for the
company. There have to be common strategies and methods which the company is using and all
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the employees must know those changes which are taking place so that the organization can
benefit from it.
RECOMMENDATIONS
Organizations must have a common understanding and internal factors so that the
employees do not have any communication gap in the organization. It is very important to have a
common goal and objective so that they can function together and the companies can have a
better productivity level. Leaders must have transparency in organization, involve all the
employees in decision making and understand them so that there are a lot of innovative ideas
which can come in the organization which is going to be very beneficial for a long run in market.
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REFERENCES
Books and Journals
Bhattacharya, U. and Jacobsen, S.E., 2018. Can Acquisition Failure Be Predicted?. SMU Cox
School of Business Research Paper, (18-14).
Brueller, N.N., Carmeli, A. and Markman, G.D., 2018. Linking merger and acquisition strategies
to postmerger integration: a configurational perspective of human resource
management. Journal of Management. 44(5). pp.1793-1818.
By, R.T., Hughes, M. and Ford, J., 2016. Change leadership: Oxymoron and myths.
Carberry, C and Cross, C (2015). Human Resource Development: A Concise Introduction.
London;
Palgrave.
Chua, P and et.al., 2018. Inductive leadership: Activating community-oriented student agency
towards school improvement.
Clarke, N. and Higgs, M., 2016. How strategic focus relates to the delivery of leadership training
and development. Human Resource Management. 55(4). pp.541-565.
Dumas, C. and Beinecke, R.H., 2018. Change leadership in the 21st century. Journal of
Organizational Change Management.
Groves, K.S., 2020. Testing a moderated mediation model of transformational leadership, values,
and organization change. Journal of Leadership & Organizational Studies. 27(1).
pp.35-48.
Hughes, P.J. and Harris, M.D., 2017. Organizational laundering: A case study of pseudo-
transformational leadership. Organizational Development Journal. 4. pp.1-20.
Jabri, M (2017). Managing Organizational Change: Process, Social Construction and Dialogue (2
nd Ed).
London. Palgrave.
Koi-Akrofi, G.Y., 2016. Mergers and acquisitions failure rates and perspectives on why they fail.
International Journal of Innovation and Applied Studies. 17(1). p.150.
Mutali, E., 2017. Strategic leadership and change management at Equity bank. International
Academic Journal of Human Resource and Business Administration. 2(4). pp.49-67.
Northouse, PG (2015). Leadership: Theory and Practice. 7th Ed. London; Sage Publications Ltd.
Shvindina, H.O., 2017. Leadership as a driver for organizational change.
Skendall, K.C and et.al., 2017. The social change model: Facilitating leadership development.
John Wiley & Sons.
Xu, J., 2017. Growing through the merger and acquisition. Journal of Economic Dynamics and
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Yılmaz, I.S. and Tanyeri, B., 2016. Global merger and acquisition (M&A) activity: 1992–2011.
Finance Research Letters. 17. pp.110-117.
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