Contemporary Management Case Study: Who Goes, Who Stays?

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CHARLES STRUT UNIVERSITY
MASTERS OF INFORMATION TECHNOLOGY
SUBJECT – (MGT 501) CONTEMPORARY MANAGEMENT
LECTURER – MRS. DONNA MACK
ASSIGNMENT – 2
CASE ANALYSIS BUSINESS REPORT
CASE STUDY – WHO GOES, WHO STAYS?
WORD COUNT – (Actual Content i.e. Apart from Cover Sheet, Table of
Contents and References)
BY,

2 Who Goes, Who Stays? Case Analysis Business Report
Name of the Student
STUDENT ID –
E-MAIL –
Executive Summary
There are several issues faced by the companies in the process of acquisition and
amalgamation. The report discusses such issues and challenges faced by two pharmaceutical
companies named DeWall Pharmaceuticals and BioHealth Lab. The repost further summaries
the functional and management theories used by the companies. It further discusses the
obstacles, significantly the cultural gaps at workplace and recommends solutions to overcome
obstacles. It elaborates the steps taken by the companies to undertake the process of merger.
At the end the report also discusses the advantages and implementation of functional
techniques applied.
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3 Who Goes, Who Stays? Case Analysis Business Report
Table of Contents
Executive Summary...................................................................................................................2
Introduction................................................................................................................................4
Question 1..................................................................................................................................5
Question 2..................................................................................................................................7
Question 3................................................................................................................................10
Question 4................................................................................................................................12
Question 5................................................................................................................................13
Conclusion................................................................................................................................14
References................................................................................................................................15
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4 Who Goes, Who Stays? Case Analysis Business Report
Introduction
The current era is a competitive one, where companies face major competitive disadvantages.
Consequently, the companies are seen losing their financial stability and credibility. To
maintain the position and to gain the competitive advantage, companies often decides to
amalgamate. Although, amalgamation has its several advantages but there are several
obstacles which are faced during the process of merger. The most common issue which the
companies face is filling the gaps of cultural diversities. Therefore, it is important that
companies adopt best process for the successful integration of the work and culture of the
companies.
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5 Who Goes, Who Stays? Case Analysis Business Report
Question 1
In the given scenario, the companies i.e. DeWall Pharmaceuticals and BioHealth Labs have
planned for their merge their distribution and production processes for increasing their
profits. The amalgamation would help the companies to grow globally. The varieties of
medicines are produced by the companies which ranges from pain reliefs to the drugs which
cure AIDS. The area of concern for both the companies is to employ employees with best
skills for the amalgamated company. But there are several aspects which are stake in the
process of merger.
The surveys have shown that 83% of the mergers fails to enhance the return on investment
made by shareholders. In the process of amalgamation, the importance is given to the
production and the interest of employees is often ignored and the senior authorities often fail
to recognise the issues related to the employees.
Communication Challenges: When the companies plan their merger, they often fail to
communicate reasons behind the merger. The management and the employees are left in the
dark wondering why the merger is important. The authorities lack answers and consequently
they deter from communicating with their employees. The communication gaps generally
result in distrust and differences at the workplace. Hence, it is important that the authorities
communicate the reasons for integration in order to receive support from their employees.
Employees Withholding Challenges: In general, the employees react to the employees in
certain ways as the merger and acquisition bring changes to the organization. The employees
often feel anxious about the merger as they do not get the idea that how the merger is going
to benefit them. Therefore, there are huge chances of employee turnover during the process of
amalgamation or merger. The management is at obligation to communicate with the
employees in order to reduce employee turnover.
Cultural Challenges: It has been shown in the studies that 30% of the mergers fail because
of the cultural differences. Culture connotes the beliefs, values and assumptions that impact
the organisation. When a merger occurs, the shift in management system and strategies is
generally observed. The sudden shift in the management practices often impact the culture of
the organization negatively. This will result in unease and disruption at the workplace. In
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6 Who Goes, Who Stays? Case Analysis Business Report
order to resolve this issue, several surveys must be conducted for determination of business
practces carried out in both the organisations. Apart from cultural differences of the
companies, there may occur incidents where the employees are not comfortable with working
with employees of other which may arise conflicting issues. Hence, the conflicts must be
resolved by conducting ice-breaking sessions among the employees of both the companies.
Management Theories and Concept
Management theories cannot be applied alone they are surrounded by various concepts.
These are the tools used for implementing management strategies in the organization. These
theories and concepts includes the frameworks and guidelines for easing the process of
management.
 Scientific Management Theory: The theory states that way to obtaining best results
cannot be achieved by forcing the workers and employees to work. According to this
theory the best way to optimize results and to increase productivity is by simplifying
the tasks.
 Contingency Management theory: The concept enumerated under this theory is that
there is no specific technique `which can be applied for managing the company. The
manager or the leader should possess the skill of taking quick decisions suiting to the
particular situation.
 Theory X and Theory Y: Theory X implies pessimistic approach of employees
whereas, the theory Y signifies the optimism among the employees. They theory Y is
applied for achieving trust-based relationships at workplace.
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7 Who Goes, Who Stays? Case Analysis Business Report
Question 2
The amalgamation and acquisition often provides competitive advantages and also results in
gaining major profits. If done correctly and successfully it would also help the companies in
improving their financial position in the industry (Killen, et. al., 2012). The process of
amalgamation needs a well-conceived plan which could benefit both the organization and
ease the process of amalgamation A successful plan for the executing the process of
acquisition includes the following steps.
Step 1: Determining growth market
The planning of acquisition initiates with identifying market opportunities. The management
of the companies need to determine the target audience in order to determine customer needs
and to maximize profits. In order to determine the areas of growth, the managers need to
collect data analyze the data which consists the following:
 Client origin
 Details of employers
 Competitors
 Business strategies and programs
 Field staff
 Competitive cost
 Consumer needs and preferences
 Demographics
Step 2: Checking financial position of the company
This step includes determining whether the companies have required liquidity to carry out
process of acquisition. Once the liquidity is ascertained, the capital structure is to be analyzed
to determine whether the company is ready to bear the financial strain. If the companies do
not have enough liquidity, then it should determine the ways to raise funds. The management
and the accounts department need to make strategies to raise required funds.
Step 3: Evaluate
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8 Who Goes, Who Stays? Case Analysis Business Report
Before closing the deal of amalgamation the companies must negotiate with each other to
determine whether the deal is going to work for them or not. The companies must know how
the merger is going to benefit them. They must be aware of the fact that if their teams are in
place or not. The team must work in an ordered manner to assess the transactions and forecast
the performance of the companies’ post-merger.
Step 4: Outline Goals and Success factors
The companies planning for amalgamation must understand how the amalgamation is going
to benefit them. They also need to determine the goals of merger. For example, whether the
goal is to acquire strong market position or to maximize profits. The companies must analyze
their competitive position and their future objectives. The acquisition and merger must result
in filling the gap between the company’s current position and the position for which the
company desire for.
Step 5: Choosing the right people
The companies should choose the people who will lead the process of integration. The
leaders would not only lead the team assigned for decision making but would also be
responsible for maintain the pace or flow of the process. The members of team should be
highly skilled with the power of making wise and quick decisions.
Step 6: Carefully perform integration
The leaders must evaluate the plan in order to determine what steps are working and what
not. The plan needs to be developed in a way that it fills the gap of cultural differences
among the employees of both the companies. The plan framed should concentrate on
resolving the issues which threaten the value of the business.
Step 7: Control Performance and maintain motion
After the deal is closed the management of the newly formed company is responsible for
hiring people for new jobs available post-merger. The management of the company is
responsible for the smooth working of the company and obligated to evaluate the
performance of the employees in order to retain the successful motion of the business
processes.
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9 Who Goes, Who Stays? Case Analysis Business Report
Cultural Issues: In the process of amalgamation the authorities often ignore the employees’
confusions and questions regarding the merger. As a result of this post-merger, when the
teams of both the companies working together, feel anxious about the new workplace culture
and find difficulties in adjusting. To resolve the issue, the management must communicate
with the employees and enlighten them with the benefits of the merger to the organisation
and also how is it going to benefit them at the individual level. Transparency is the key to fill
the gaps of communication. Also, the leaders must welcome feedbacks and suggestions from
the employees and work on the them to overcome the obstacles which arise out of cultural
diversity (Haucap & Stiebale, 2016). The revaluation techniques would help the management
in analysing the performance of the employees.
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Question 3
Amalgamation and acquisitions are done to acquire a strong financial position in the market
and also to add value to their products and services. The companies opt to merge with a
company which is in stronger position in order to expand. Though, merger results in
benefiting the companies but there are several challenges which are faced in the process of
adoption of framework and guidelines of newly formed company (Graebner, et. al., 2017). In
order to resolve these issues, the companies need to apply several theories and strategies.
These strategies would not only help the company in resolving issues but it would also result
in successful implementation of the process of amalgamation.
Strategies to overcome Conflicting Values:
 Analyse cultural differences: Often the authorities of the companies fail to recognise
the cultural differences that may arise after the merger. There are various tools which
are used in analysing the cultural differences of the companies.
 Analysing the process flow which suggests how the work gets done
 Accepting feedbacks from the customers of both the companies in
order to understand their needs
 Conduct surveys to evaluate the behaviour of the employees Communicate to Employees: An effective communication result in improving the
effectiveness of the employees. The employees must be aware of the reasons and
process of amalgamation. The leaders must welcome the feedbacks and opinions of
employees. If the employees are anxious or frustrated with the idea of merger, then
they must be heard. In order to resolve the issues, the executives must conduct one-to-
one meetings. Implement Change: Companies can opt for adopting new cultural environment instead
of amalgamation the philosophies and cultures of the organisations. This would create
a sense among the employees as they have started a new job. Also, this would avoid
the feeling of anxiety felt by the employees in order to adjust in the combined
environment. Embrace Change: Employees often feel uncomfortable in adjusting in the new
environment, hence the executives should celebrate the merger. This would help in
breaking the ice between the employees and senior authorities of both the companies.
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11 Who Goes, Who Stays? Case Analysis Business Report
The celebration will create a better understanding of the behavioural structure of the
companies. Team building programs will lead to stronger integration of the
companies.
Cultural integration has major significance in implementation of the process of amalgamation
because employees are the people who are responsible for carrying out the business processes
with an ease (Stahl, et. al., 2017). Not only the authorities of the companies should be excited
about the amalgamation but employees should feel the excitement too.
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12 Who Goes, Who Stays? Case Analysis Business Report
Question 4
The merger of companies becomes successful when all the factors, whether internal or
external of both the companies are put together. The style of management, strategies and
methods constitute internal factors and companies’ business models and the overall objective
of the companies constitute the external factors. The external factors also include the sales
and purchases made by the companies. Identifying the growth opportunities and evaluation of
company’s performance post amalgamation would help the companies in recognizing ways
for moving towards improvement (Hibbert & Cunliffe, 2015). The higher authorities and
Human Resource Management of both the pharma companies are facing obstacles in
outlining the minute points of integration for the successful implementation of the process of
amalgamation. Following are suggestions and recommendations which would help the
companies in overcoming the obstacles.
 Draw out a Business Model: A proper business model needs to be developed by the
HR department of both the companies. The model should be framed in such a way
that it reverts to the external factors in the best possible way. While framing the
business model, the HR must consider the needs of the new business.
 Integration of Internal factors: In order to achieve successful integration, the
companies must identify and integrate the internal factors of both the companies.
Alignment of internal factors include integration of departments and the stakeholders
of both the companies must be communicated with the reasons of amalgamation. The
stakeholders also need to be informed about the costs incurred in the process and how
the amalgamation is going to benefit them.
 Develop skills to make quick decisions: The HR of the companies need to develop
skills regarding decision making. They must be able to take quick decision regarding
the employment of employees for the new jobs. Further, they should also recognize
the expertise and skills of the existing employees and make decisions regarding the
work needs to be handled by them (Comanor & Scherer,2013).
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