INSEAD Case Study: McKinsey & Company and LUNAR Acquisition Analysis

This case study analyzes the acquisition of LUNAR, a design firm, by McKinsey & Company. The analysis covers several key aspects, including the creation of value post-acquisition, the strategic rationale behind McKinsey's desire to bring design capabilities in-house, and LUNAR's motivations for joining a larger management consulting firm. The study also explores alternative options for McKinsey to develop its design capabilities, weighing the pros and cons of each approach. Furthermore, it delves into the organizational, tactical, and cultural issues that McKinsey and LUNAR need to address to ensure the success of the acquisition. Finally, the case examines how LUNAR's management and career paths could be integrated into McKinsey's structured organizational structure, or whether it should remain a separate entity. The analysis draws on various references to support the findings.

Running head: CASE STUDY ANALYSIS
McKinsey &Company and LUNAR Case Study
Name of the Student
Name of the University
Author’s Note:

1
CASE STUDY ANALYSIS
1. McKinsey and Company and LUNAR succeeding in Creation of Value Post Acquisition
Both the organizations of McKinsey and Company and LUNAR have been successful in
creating value post acquisition. It has been quite vital and noteworthy to be sure that maximum
effectiveness as well as efficiency is being obtained under every possible circumstance and also
reduce the chance of failure of the business eventually (Wanke, Maredza and Gupta 2017).
McKinsey even comprised of a clear hierarchy of the major values, which were the foundation of
the main source of the company. The most common form of this valuation analysis is being
combed through distinct listing of the acquisition transaction, only to be accomplished within
few years. Every consultant absorbed these values that are required to be considered for the
client’s interest on top priority. The organization had successfully built a service line, called the
Design to Value that amalgamated the value engineering with different customer insights for
redesigning the products of the clients (Abdulazeez, Suleiman and Yahaya 2016). As a result,
McKinsey and Company and LUNAR were successful in creation of value post acquisition.
2. Reason of McKinsey and Company bringing a Designing Capability in house
The organization McKinsey and Company has brought a designing capability called
Design to Value in their organization for combining value engineering with different customer
insights and hence re designing the respective customers’ products. Design to value service line
has provided the consultants the core experience as well as toolset for re designing their clients’
existing products and services and therefore bringing out the latest in consumer insight tools
from the subsequent marketing as well as sales practice or deeper technical knowledge from the
bench of engineering experts of the organization (Aik et al. 2015). A proper strategic architecture
is hence made by the company within their business and ensuring maximum effectiveness and
efficiency within the business without much complexity.

2
CASE STUDY ANALYSIS
3. Reason of LUNAR wanting to be a part of a large established management consultant
firm like McKinsey and Company
LUNAR was founded in the year of 1984 as a distinct product and development
consultancy in San Francisco. It had the core capabilities of industrial designing,
communications designing, video story telling, electrical as well as mechanical engineering,
support to the manufacturing aspect, users’ validation, design and research and many more
(Gupta and Banerjee 2017). They have worked with several popular and significant
organizations previously, which include Apple Inc., HP, Johnson and Johnson, Oral B and many
more. Since, McKinsey wanted to expand their activities into designing, they joined with
LUNAR. The organization of LUNAR was interested in this type of acquisition, since they
wanted to remain connected with one of the most significant and successful organizations. As a
result, they got the client project of McKinsey to re design the storage for the laptop computers.
LUNAR was able to transform the cabinet into an exciting innovation journey.
4. Options of McKinsey and Company in developing its own Design Capability with pros
and cons
McKinsey and Company has considered LUNAR for development of their design
capability. One of the major reasons for such consideration was that LUNAR’s approach in
designing the projects was not only for considering the assignment through the users’ eyes; but
also to have a look on the product from the perspective of a brand. Although, McKinsey and
Company is a larger organization, there could be certain issues in their development of their
design capability (Tripathi and Lamba 2015). They comprise of the ability to develop their own
design capability. They could have not involved any other organization in such development and
could have made it all by themselves. One of the major advantages that the organization might

3
CASE STUDY ANALYSIS
have got from such aspect was that the costs would had been lowered and they would not have to
pay extra to the other companies for such purpose. On the contrary, it might even have a
disadvantage as well. Although, McKinsey and Company has major resources, they are lacking
designing innovation, as compared to LUNAR and hence the design capability might not would
be as effective as it became.
5. Organizational, Tactical and Cultural Issues that McKinsey and Company and LUNAR
requiring in ensuring acquisition succeeds
There could be some of the most distinct and important organizational, tactical and
cultural issues that are needed to be considered while considering acquisition of McKinsey and
Company and LUNAR. The main organizational issue that can occur with such acquisition is
that due to organizational changes, there might be major role conflicts within the business and
the respective organizational management might not be able to manage them eventually. It is an
extremely common issue for such acquisition (Bany-Ariffin, Hisham and McGowan 2016). The
major tactical issue that might take place for such acquisition is that there would be subsequent
reshaping of corporate strategy within the business and this is needed to be considered on top
priority for understanding the organizational approach towards such distinct strategy.
One of the main cultural issues that might take place for such acquisition of McKinsey
and Company and LUNAR is that since these are two different organizations, the working
cultures are different and as a result, there might arise a chance for acquisition issue and the
implications for employees would be different (Gupta 2015). Since, McKinsey would be
acquiring LUNAR in their business, they should have a combined organizational structure for
both of them.

4
CASE STUDY ANALYSIS
6. Process of management of LUNAR being incorporated into the Strict Career structure of
McKinsey and Company
The organization of McKinsey was de centralized that had offices in various parts of the
world. The career path of the organization followed a stricter procedure from analysts to
associates, through the partners. They even required to develop a long standing relationship with
the customer for delivering the most impactful projects (Green 2016). The management of
LUNAR can practice the policy of up or out, which was quite common for the organization of
McKinsey. They have started from internship, business analyst, junior associate, MBA
graduates, associates, engagement manager, associate principal and partner. By following this
particular career path, it would easier for them to be incorporated within the career structure of
McKinsey.

5
CASE STUDY ANALYSIS
References
Abdulazeez, D.A., Suleiman, O. and Yahaya, A., 2016. Impact of merger and acquisitions on the
financial performance of deposit money banks in Nigeria. Arabian Journal of Business and
Management Review, 6(4), pp.1-5.
Aik, N.C., Hassan, M.K., Hassan, T. and Mohamed, S., 2015. Productivity and Spillover effect
of merger and acquisitions in Malaysia. Management Research Review.
Bany-Ariffin, A.N., Hisham, M. and McGowan, C.B., 2016. Macroeconomic factors and firm’s
cross-border merger and acquisitions. Journal of Economics and Finance, 40(2), pp.277-298.
Green, M.B., 2016. Mergers and acquisitions. International Encyclopedia of Geography:
People, the Earth, Environment and Technology, pp.1-9.
Gupta, B. and Banerjee, P., 2017. Impact of merger and acquisitions on financial performance:
Evidence from selected companies in India. International Journal of Commerce and
Management Research, pp.14-19.
Gupta, K., 2015. Mergers and acquisitions in the Indian banking sector: A study of selected
banks. International Journal of Advanced Research in Management and Social Sciences, 4(3),
pp.94-107.
Tripathi, V. and Lamba, A., 2015. Does Financial Performance Improve Post Cross Border
Merger and Acquisitions?: A Detailed Study of Indian Acquirer Firms' Financial Performance
Across Target Economy's Development Status and Financial Crisis. Research Journal of Social
Science & Management ISSN, pp.2251-1571.

6
CASE STUDY ANALYSIS
Wanke, P., Maredza, A. and Gupta, R., 2017. Merger and acquisitions in South African banking:
A network DEA model. Research in International Business and Finance, 41, pp.362-376.