Analysis of BioHealth Labs & DeWaal Pharmaceuticals Merger Case Study

This case study analyzes the merger of BioHealth Labs and DeWaal Pharmaceuticals, focusing on the challenges faced during the integration process. It delves into the conflicting values between the companies and their CEOs, exploring the relevance of management theories like contingency theory, systems theory, and chaos theory. The study examines the staffing process, highlighting the application of executive competencies, objectivity, fairness, and benchmarking. It further recommends strategies for resolving value conflicts, including negotiation, mediation, and cultural strategies, while also suggesting processes for integrating the top management structure. The analysis covers cultural issues arising from the merger and emphasizes the importance of follow-up and monitoring to ensure successful integration and achieve the merger's objectives. The case study provides insights into leadership, decision-making, and the practical application of management theories in a real-world merger scenario.

Case Study

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Conflicting values and their relevance to management theories and concepts along with
integration problems....................................................................................................................1
Staffing process and its relevance to management theories and concepts along with cultural
issues...........................................................................................................................................2
Recommendations for resolution of conflicting values..............................................................4
Recommended processes for integration in regard to the top structure......................................5
Usefulness of management and organisational theories.............................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
This case study of “Who goes who stays?” is about the merger of two pharmaceuticals
companies that is BioHealth Labs and DeWaal Pharmaceuticals. This case is all about issues
faced at the time of merger due to lack of decision making about what executives should
continue their work and which employees are not capable enough to make their position in the
new company. CEO and chairman of these companies faced numerous problems and their
journey of merger is discussed in this project report. The main aim of this report is to build an
understanding about the concept of merger and acquisitions by considering this case study and
addressing issues such as conflicting values related with management theories, problems faced
during staffing process and recommendations for the issues faced. Mergers and acquisitions are
the most important phase of a company which is discussed in this report by concerning and
focusing this case (Cartwright and Cooper, 2012).
MAIN BODY
Conflicting values and their relevance to management theories and concepts along with
integration problems
Conflicting values are the conflicts which occur due to different values and belief
systems present within organisation. Here, values are beliefs which provides meaning to the
understanding of an individual. Values are related to the perception about certain things and the
explanation about what is just and unjust, good or bad. In the case of merger, two different
companies come together to work but the value system of both the companies are different.
Value conflicts can occur due to either diversified values of company or varied values of CEO's
of the companies. Here, nature of both the companies are similar that is Pharmaceuticals due to
which there are negligible value conflicts. But when it came to CEO and chairman of these
companies, different value systems and beliefs of senior executives can lead to eruption of
several problems within the organisation (Cartwright and Cooper, 2014).
In the case of Who goes Who stays?, there were various value conflicts arise due to
different perception, value and mindset of CEOs. Despite of the conflicts between the CEO and
chairman of these companies, there were few conflicts which arise due to personnel issues.
Various conflicts which were at stake in this case are mentioned below along with relevant
management theory and concepts:
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Contingency theory – Under this managerial theory, managers of the organization are
directed to make decisions based on the situation. A manager or other authority should take
appropriate action by considering all the aspects of the situation. In this case of merger, CEO of
DeWaal Pharmaceuticals engaged himself in clearing the regulatory hurdles which task could be
performed by a set of lawyers. This decision of CEO Steve Lindell bought conflict of improper
decision making due to which pressure of actual tasks of mergers resulted in major decline in
share prices of these companies (Cooper and Finkelstein, 2014).
System theory – According to this management theory managers and other authorities of
business organization are suggested to recognise the relationship between employees of the
entity and the systems which are used by the entity. It is a broad perspective which allows
managers to recognise personnel patterns and events in the workplace. The conflict which
relevant to this theory is different perception of CEO and chairman of both the companies.
Merger is a process where two different companies are brought together to run a lawful business.
In this case, CEO of DeWall pharmaceuticals was unaware with the patterns of employees of the
other company and Chairman of BioHealth Labs has no clue about workplace of the other
company due to which various conflicts raised.
Chaos theory – This theory or concept states that change is constant. In this case, major
change of merger occurred due to which various conflicts related to management and control
emerged as well. Steve Lindell CEO of DeWall pharmaceuticals has the major charge of this
merger but the conflict arises when Chairman of BioHealth Labs Kaspar van de Velde,
convinces media from his charming persuasiveness that he holds principle charge of the merger
(Chaos theory. 2011.).
Above conflicting values and their suitable management theories reflects the integration
problems which occur at the time of mergers and acquisitions such as conflicts of value system,
employee retention and cultural changes which rises problems for employees and members of
both the organizations.
Staffing process and its relevance to management theories and concepts along with cultural
issues
Mergers and acquisitions is the process where two organizations integrate their functions
and operations to work together so that high profit and market access could be attained. In this
case, two companies that is BioHealth Labs and DeWaal Pharmaceuticals decided to merge
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together their business operations. In this case CEO and chairman of both the companies decide
to integrate their operations and employees. In order to integrate employees with regard to
structure and top management staffing, process of staffing is mentioned below along with
relevant management theory:
Mainly the process of staffing is related with hiring suitable candidates to fill the vacant
position but here two companies are merged and the process of staffing is concerned with
selecting required number of employees from total number of available employees. These
companies had total of 120 employees on top level management from which they has to select
only 65. Process and steps by which this merged company can select appropriate employees are
executive competencies, objectivity, fairness and bench marking (Ferreira and et. al., 2014).
Executive competencies – According to this measure of staffing, this merged company
can ascertain competencies of their employees and executives and then select them accordingly.
It is easy to determine qualities of personnel from which CEO is well aware but in order to
ascertain competencies of those employees which are related to other company is a crucial task
to perform. CEO of DeWaal Pharmaceuticals decided to select employees which are capable and
dose not bias between them on the grounds of equal employees ratio of both the companies.
Equity is the concept of management which is related with this step of staffing process as it
states that employees must be selected according to the competencies of employees.
Objectivity – Under this step of staffing process, CEO and management of the merged
company are suggested to select those employees which can be beneficial for the organization.
Every employee has it's own qualities but the major issue which should be focused here is that
whether those qualities and skills can help company or not. Every organization has a principle
objective which should be achieved and selection of personnel must be done by considering
those objectives. This step of the process also helps in bringing transparency in personnel
management. The concept which is suitable of this measure of staffing is subordination of
individual interest to general interest. According to this concept of principle, personal objectives
of employees are directed towards organizational goals due to which merged company can attain
benefit (Galpin and Herndon, 2014).
Fairness – In this case where two companies are merging it is important to be fair with
all the employees. In order to bring transparency, CEO of this company has to make sure that the
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concept of division of work and remuneration is followed so that it can be said that
organizational methods are fair.
Bench marking – In order to select suitable employees, measure of staffing process
which can be result to be most appropriate is bench marking. In this step, company can set
certain standards by which suitable top management executives can be selected. For this step,
initiative and authority are relevant management concepts.
Above steps are the measures which can be used by this merged company in order to
effective apply integration of employees in their company. Various management theories and
concepts which are relevant to these steps are discussed above which articulate cultural issues
which are faced by the employees of companies which decided to be merged. Some of those
issues are demographic problems as one company has grounded in Netherlands and other is
based in New York. Another cultural issue is the varied experience which both the companies
has in this industry (Girasa, 2013).
Recommendations for resolution of conflicting values
Mergers and acquisitions is the process in which two companies merge their operations
and form a new organization. The major issue related with process is varied values and beliefs of
personnel of both the companies. In this case, DeWall pharmaceuticals is based in Netherlands
and BioHealth Labs is grounded in New york due to which there are several variations in values
and perception of their employees. Besides employees of the organisation, CEO of DeWall
pharmaceuticals has perception directed towards hard work whereas Chairman of BioHealth
Labs beliefs that being in media can resolve any problem. Varied personalities of CEO and
chairman of both the company is a major value conflict issue. These issues can be resolved and
some of the recommendations for resolution of these issues are discussed below:
Negotiation – Negotiation is method by which every party has to compromise a bit in
order to achieve what is most important to them. In this case of merger, value conflict is way too
complicated as both the companies has different place of operations and has variation in
perception. In order to resolve this situation, employees of both the companies has to
compromise a bit so that they can achieve their purpose of merging operations i.e. higher market
reach and improved profitablity. For example: employees of DeWall pharmaceuticals can
compromise when it comes to morale and employees of BioHealth Labs can compromise when it
comes to deadlines.
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Mediation – This method is an internal strategy by which value conflicts can be resolved
between the employees by appointing a mediator who will able to resolve or minimize the
differences between both parties. The main aim of this mediator or mediator group is not to grant
most appropriate perception of employee but to make efforts so that both the parties or in this
case employees can understand and accept the values and beliefs of others.
Culture strategy – Two pharmaceutical companies are merging in this case which are
based in different continents. In order to resolve this issue of value conflict, management of the
organisation can develop a culture strategy in which values, habits, cultures of employees of both
the organisations are recorded. It is essential for this strategy to be flexible and adaptive so that
it help in understanding perception and beliefs of personnel and ultimately leads to attainment of
unified goals (Green, 2016).
Follow up and monitor actions – After using most suitable method and strategies, it is
important for the management of the merged organisation to follow up and monitor actions of
the employees. The significance of this step is to measure efficiencies of all the above methods.
Recommended processes for integration in regard to the top structure
According to this case, two pharmaceuticals companies are merging and forming a new
company for which they has to conduct few processes for integration in regard to top structure.
Few processes for this integration are discussed below:
Top management combination – The most important process which should be followed
by senior executives and HR people of this merged organisation is integrating top management.
Top management in an organisation is a collection of well skilled and knowledgable personnel
which includes managers, directors and executive directors. Under this process, most efficient
and experienced mangers are selected from both the companies. In this case scenario, only 65 top
management employees were required out of 120 due to only best employees are selected and
integrated in order to achieve future organisational objectives.
Development of vision and mission – Both the pharmaceutical companies had their own
vision and mission but after the integration of top level management it is important to
development a new and common vision and mission for this merged company. The significance
of formulation of vision and mission is that employees can see themselves being part of similar
organisation which may bring good values and beliefs in the organisation.
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Redefining organisational goals – Before initiating the process of merger, goals of both
the pharmaceutical companies were related but different. After integration of both the
companies, the major function or process which is required to be performed by top executives of
the company and HR people is redefining organisational goals. These goals are set by
considering existing objectives of both the companies (Harris, 2015). The unification of goals
will make sure that employees carrying different values and beliefs are directed to contribute
collectively.
Dovetailing employees – The most crucial process which is needed to performed by
executives and HR people is dovetailing employees. Under this process, HR team downsize the
strength of employees. In this case CEO and chairman of both the companies decided to
downsize their employees on around 50%.
Two senior executives in this case are Steve Lindell and Kaspar van de Velde, who work
out with HR team and conduct various processes which are mandatory for the organisation. The
above process are recommended for integration of top structure.
Usefulness of management and organisational theories
Merger and acquisition phase is the most crucial phase for any organisations and needs to
be managed ideally so that purpose could be fulfilled. The usefulness of the different concepts
and theories which are undertaken in this assessment are mentioned below:
Effective communication – There are various theories and practices are used by an
organisation which are going through the process of merger and some of them are even discussed
above. Practices such as cultural strategy and monitor helps in enhancing the communication
between employees of both the companies which are merging together. In this case of merger,
two pharmaceutical companies are merging and facing various issues regarding the concept of
“who stays, who goes” and this brings major issue of communication. Using practices such as
cultural strategy, a company can decrease the impact of issues related to communication at the
time of merger (Levi, 2014).
Trust – The most crucial problem which is faced by the CEO and chairman in this case is
trust. Two executives clearly stated that only 50% of the total employees would not be
retrenched from the organisation due to which the major problem which occurred was lack of
trust about job security. Most talented employees of the organisation were not ready to trust and
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started resigning. In order to resolve this issue practices of remuneration, division of work and
authority is used which resulted as beneficial for the organisation.
Efficient management – The most important use or benefit of management practices are
efficient management. The most important requirement at the time of merger is effective
management so that all the functions and operations can be done accurately and reliability.
Theories and practices which resulted in efficient management are negotiation, mediation and
objectivity (Puranam, 2015).
CONCLUSION
From the above project report, it can be concluded that mergers and acquisitions are the
most crucial phase in the life cycle of any company. In this case, two pharmaceutical companies
that is BioHealth Labs and DeWaal Pharmaceuticals are merging. By analysing various
conflicting values and recommendations for improving it can be said that this merger could be
improved if the time spend on regulations was not spend by the CEO and chairman of the
company. Several useful management practices which helps in mergers and acquisition are
concluded to be cultural strategy, negotiation and mediation.
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REFERENCES
Books and Journals:
Cartwright, S. and Cooper, C. L., 2012. Managing mergers acquisitions and strategic alliances.
Routledge.
Cartwright, S. and Cooper, C. L., 2014. Mergers and acquisitions: The human factor.
Butterworth-Heinemann.
Cooper, C. L. and Finkelstein, S. eds., 2014. Advances in mergers and acquisitions. Emerald
Group Publishing.
Ferreira, M. P., and et. al., 2014. Mergers & acquisitions research: A bibliometric study of top
strategy and international business journals, 1980–2010. Journal of Business Research.
67(12). pp.2550-2558.
Galpin, T. J. and Herndon, M., 2014. The complete guide to mergers and acquisitions: Process
tools to support M&A integration at every level. John Wiley & Sons.
Girasa, R., 2013. Mergers and Acquisitions. In Laws and Regulations in Global Financial
Markets (pp. 73-116). Palgrave Macmillan, New York.
Green, M. B., 2016. Mergers and acquisitions. International Encyclopedia of Geography:
People, the Earth, Environment and Technology: People, the Earth, Environment and
Technology, pp.1-8.
Harris, R. S., 2015. Mergers and Acquisitions. Wiley Encyclopedia of Management, pp.1-2.
Levi, M., Li, K. and Zhang, F., 2014. Director gender and mergers and acquisitions. Journal of
Corporate Finance. 28. pp.185-200.
Puranam, P., 2015. Mergers and Acquisitions. Wiley Encyclopedia of Management, pp.1-1.
Online
Chaos theory. 2011. [Online]. Available through:
<http://competitionlawblog.kluwercompetitionlaw.com/2011/07/17/chaos-theory/>
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