Mergers & Acquisitions: A Case Study on Management & Integration

This case study delves into the conflicting values and integration challenges arising from the merger and acquisition of DeWaal Pharmaceuticals and BioHealth Labs. It applies management theories and concepts to analyze the cultural differences, structural integration processes, and top management staffing decisions. The study critiques the integration process, highlighting the importance of considering people and culture issues. It further evaluates the usefulness of management and organizational theories in understanding and addressing the complexities of mergers and acquisitions, emphasizing the significance of human relations theory, division of work, discipline, and initiative in ensuring a successful integration and improving workplace dynamics. The analysis underscores the necessity for companies to methodically measure cultural differences and adapt leadership styles to mitigate resistance and foster a cohesive organizational culture.

Assessment Item 2 - Case Analysis Business Report
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Table of Contents
1. What conflicting values are at stake in the case? Identify and explain, using relevant
management theory and concepts. Contextualise your answer with reference to literature on
integration problems in mergers and acquisitions, with specific reference to people issues.....3
2. Critique the process that is being applied to work out the details of the integration,
particularly with regard to structure and top management staffing using relevant management
theory and concepts. Ground your answer in evidence regarding people and culture issues in
merger integration studies..........................................................................................................5
5. Evaluate the usefulness of the management and organisational theories and practices from
the subject that you have applied in analysing the case.............................................................8
References................................................................................................................................10
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1. What conflicting values are at stake in the case? Identify and explain, using relevant
management theory and concepts. Contextualise your answer with reference to
literature on integration problems in mergers and acquisitions, with specific reference
to people issues.
During the mergers and acquisition of DeWaal Pharmaceuticals and BioHealth Labs, there
are certain conflicting values have been recognised at the stake which is bringing together the
two different cultural values and formulating the group of top layers of management for the
new company. This is so because in case of merger and acquisition of both the companies the
leaders who are the top position so not want to leave their designation and continue with the
same post in the new company as well. It leads to creating cultural differences among both
the companies who belong to the different economies as well (Shettlewood, 2016).
Management theory and Concepts
Figure 1: Conceptual Model
Source: (Idris, et. al., 2015)
The above conceptual model reflects the management theory as well as concepts relating to
the cultural differences during mergers and acquisition. The above model shows the
relationship between corporate cultures integration and the performance of the acquiring
companies. The model suggests and recommends that the corporate cultural values impact a
lot on the performance of the acquiring company. This shows that the culture of both the
companies plays a vital role at the time of merger and acquisition (Idris, et. al., 2015).
In the context of the respective case scenario BioHealth Labs which is New York-based
company and on the other hand, DeWaal Pharmaceuticals which is European company have
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different cultural values and norms that have a great impact on the establishment of new
company. The cultural differences occur due to the employees because they resist changing
their current position and experience for new. The model represents some of the corporate
culture integration elements such as dominant characteristics, criteria for success,
organisational glue, strategic emphases, management of employees and others. It is observed
that many of the mergers and acquisition fail due to the lack of methodical as well as
thorough measurement of the cultural differences (Shettlewood, 2016).
According to the views and thoughts of Dixon (2018), it is believed that the cultural issues
lead to impacting on the decision making the process for the new organisation. In addition to
this, cultural integration is also related to the distinctive leadership styles for both the firms.
Also, the resistance of employees, different cultural background and others are some of the
issues faced and challenged during the cultural integration for mergers and acquisition. It
becomes necessary for the companies to consider some key points and attributes while
integrating cultures (Dixon, 2018).
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2. Critique the process that is being applied to work out the details of the integration,
particularly with regard to structure and top management staffing using relevant
management theory and concepts. Ground your answer to evidence regarding people
and culture issues in merger integration studies.
For integrating the new company structure as well as top management staffing the
management theory and concept has been applied. This includes the planning, organising,
directing and controlling functions of management. During the mergers and acquisition, the
top level management of both the company’s plans and decides of new strategies, personnel
and resources so that business process management can be executed appropriately (Light,
2001).
In regards to the respective case study which has the tagline “Who Goes, Who Stays” reflects
the clear indication of a selection of human resources that will be responsible for senior-level
jobs. The merger integration studies involve the integration of both the people as well as a
culture that each and every employee peruses. When, the CEO of both the companies i.e.,
Steve Lindell and Chairman Kaspar van de Velde has decided to plan strategic framework for
their new company. For such purpose, they have followed the modern school of management
thoughts and perform the managerial function that involves planning, organising, staffing,
directing and controlling (Light, 2001).
The CEO and Chairman of both the company has planned to hire some employees at the
topmost position for the new company but the HR of both the company does not agree to the
statement. This is so because each and every employee who is placed at the top managerial
position does not want to change their authority, roles and responsibilities. Because of merger
and acquisition some employees of the company has even left the current job due to which
the market share of company has been declined steadily. The employees are the assets for a
company and play a major role in the growth and development of the company. As, the
employees left the job this creates a pressure on the existing employees and majorly impacted
on the performance of the company in the market.
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Figure 2: Elements of Management process and Functions of Management
Source: (Akrani, 2010)
The above figure represents of the systematic management process that is adopted by the
CEO and Chairman of both the companies in order to integrate with the people and culture of
employees. In case of mergers and acquisition or establishing of new business the companies
went for practicing of such theory into real-life practices. These functions and elements are
the key to the management process which is basically adopted by each and every manager of
different levels. The culture is an implicit aspect of the company which states that people who
share common cultural values find it challenging and difficult to adopt the new one. It is so
because the culture influences the behaviour of the individual and the way in which they react
to the situations and actions. All of these elements are very significant when studying for
people and cultural issues in case of mergers and acquisition.
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Figure 3: Cultural and leadership issues
Source: (Baker & McKenzie, 2014)
It has been evidenced from the above figure also that the cultural and leadership issue has a
great impact on the company that is expanding its business operations may it be in the form
of mergers and acquisition. It is important to understand and study the cultural perspective of
the employees so that they can sustain and retain in the company for a longer period of time.
It becomes mandatory in case of mergers and acquisition especially when the two or more
companies are coming together in order to integrate their business process having different
cultural values and norms. The employees in such organisation may have varied perspective
of the cultural aspects as per the place of origin (Baker & McKenzie, 2014).
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5. Evaluate the usefulness of the management and organisational theories and practices
from the subject that you have applied in analysing the case.
The management and organisational theories, as well as practices, play a crucial and
significant role at the time of mergers and acquisition. Both of the theories and practices have
contributed to the maximum extent in the understanding of the cultural differences and
implementing the strategic framework for the new company. The management theories lead
to providing the understanding related to managerial skills, the technology used, expertise
knowledge and others. This is significant for the success and growth of the company and
workplace through enabling proper and systematic procedure. Understanding of management
and organisational theories helps in determining the suitable policies which are aimed at
beneficial to the workplace (Fuchs‐Schündeln & Schündeln, 2009).
In case of the respective scenario, the organisational theories and models used helps in
analysing the cultural and management perspective of the employees. The DeWaal
Pharmaceuticals and BioHealth Labs have been in contract to form a new company through
merger and acquisition. The company should aim to use the human relation theory of
management in order to analyse the needs and demand of the employees. This theory is
expected to work tremendously when it comes to the merger and acquisition (Fuchs‐
Schündeln & Schündeln, 2009). The usefulness of such theories and practices is mentioned
below:
 Division of Work – Through such management practices and theories the division
of work according to the skills, knowledge and experiences have been segregated
among the employees. It also leads to developing the practice and familiarity of the
staff members and also, it reduces the efforts or attention of a group or one person
(Educba, 2017).
 Discipline – The management theories and practices leads to creating the
discipline in the working condition and environment of the individuals. This also
includes a noticeable remark against the respect of informal and formal agreements in
between the employees and company.
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 Initiative – It is useful in encouraging and boosting employees to take initiative in
order to take corrective actions and measures. Moreover, it is also helpful in boosting
the staff at all the levels in an appropriate manner (Educba, 2017).
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References
 Baker & McKenzie. (2014). People Matters: Accounting for Culture in Mergers
and Acquisitions. [Online] digitalcommons. Available at:
https://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?referer=https://
www.google.co.in/&httpsredir=1&article=1107&context=lawfirms [Accessed: 09
May 2018].
 Dixon, I. (2018). Cultural issues in mergers and acquisitions. Deloitte. Retrieved
From: https://www2.deloitte.com/content/dam/Deloitte/us/Documents/mergers-
acqisitions/us-ma-consulting-cultural-issues-in-ma-010710.pdf
 Educba. (2017). How to Apply Management Theories At Workplace. [Online]
educba. Available at: https://www.educba.com/how-to-apply-management-theories-
at-workplace/ [Accessed: 09 May 2018].
 Fuchs‐Schündeln, N., & Schündeln, M. (2009). Who stays, who goes, who
returns?. Economics of Transition, 17(4), 703-738.
 Idris, S. A. M., Wahab, R. A., & Jaapar, A. (2015). Corporate cultures integration
and organizational performance: A conceptual model on the performance of acquiring
companies. Procedia-Social and Behavioral Sciences, 172, 591-595.
 Light, D. A. (2001). Who goes, who stays?. Harvard Business Review, 79(1), 35-
41.
 Shettlewood, H. M. (2016). Effects of Management Cultural Integration on
Merger and Acquisition Failures (Doctoral dissertation, Walden University).
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