Please dont Copy from Internet. Plagirism is Prohibited CASE Study -Mergers and
ID: 367673 • Letter: P
Question
Please dont Copy from Internet. Plagirism is Prohibited
CASE Study -Mergers and Acquisitions
In the past, the decision criteria for mergers and acquisitions were typically based on considerations such as the strategic fit of the merged organizations, financial criteria, and operational criteria. Mergers and acquisitions were often conducted without much regard for the human resource issues that would be faced when the organizations were joined.1 As a result, several undesirable effects on the organizations’ human resources commonly occurred. Nonetheless, competitive conditions favor mergers and acquisitions and they remain a frequent occurrence. Examples of mergers among some of the largest companies include the following: Honeywell and Allied Signal, British Petroleum and Amoco, Exxon and Mobil, Lockheed and Martin, Boeing and McDonnell Douglas, SBC and Pacific Telesis, America Online and Time Warner, Burlington Northern and Santa Fe, Union Pacific and Southern Pacific, Daimler-Benz and Chrysler, Ford and Volvo, and Bank of America and Nations Bank. Layoffs often accompany mergers or acquisitions, particularly if the two organizations are from the same industry. In addition to layoffs related to redundancies, top managers of acquiring firms may terminate some competent employees because they do not fit in with the new culture of the merged organization or because their loyalty to the new management may be suspect. The desire for a good fit with the cultural objectives of the new organization and loyalty are understandable. However, the depletion of the stock of human resources deserves serious consideration, just as with physical resources. Unfortunately, the way that mergers and acquisitions have been carried out has often conveyed a lack of concern for human resources. A sense of this disregard is revealed in the following observation: Post combination integration strategies vary from such “love and marriage” tactics in truly collaborative mergers to much more hostile “rape and pillage” strategies in raids and financial takeovers. Yet, as a cursory scan of virtually any newspaper or popular business magazine readily reveals, the simple fact is that the latter are much more common than the former.2 The cumulative effects of these developments often cause employee morale and loyalty to decline, and feelings of betrayal may develop.3 Nonetheless, such adverse consequences are not inevitable. A few companies, such as Cisco Systems, which has made over 50 acquisitions, are very adept in handling the human resource issues associated with these actions. An example of one of Cisco’s practices is illustrative. At Cisco Systems, no one from an acquired firm is laid off without the personal approval of Cisco’s CEO as well as the CEO of the firm that was acquired.4
Answer the following Question
Question 1. If human resources are a major source of competitive advantage and the key determinant of an organization’s ability to pursue a given strategy.
Question 2. why have the human resource aspects of mergers and acquisitions been ignored or handled poorly in so many instances in the past?
Question 3. How do you see the two the role of HRM in strategic management process.
Explanation / Answer
1.
Human resource is considered as a most important in the organization as it drives innovation and creativity that brings competitive advantage. Every year, a huge number of patents are filed and it is only possible through a strong and dedicated human resource. It can create a different and new market without competition and it is already proven at more than one time by Apple. Today, the emphasis is upon the diversified workforce and subsequent values and systems of each culture, facilitates the innovation and diversified HRM is the part of strategic initiatives. Hence, it can be said that human resources are one of the major sources of competitive advantage. On the basis of available HR, the organization devises plans to come up with the new ideas that helps in developing disruptive technologies and gain a majority of the market share.
2.
There are following reasons that HR aspect of the M&A is poorly managed:
A. Lack of proper planning of HR management and HR allocation after the M&A
B. Excessive focus upon efficiency, productivity and market share and less attention upon the factors that drive these outcomes
C. Lack of proper understanding and trust factor upon each other
D. Poor synergy between the management of two organizations, leads to cancelling the belief of each other
E. Pressure applied by the union of the company who has acquired the other company
F. No any initiative of cultural assimilation, leading to the confrontation of two groups of employees and lay-off as a result
3.
HRM is one of the most important resource and it plays an active role in the strategic management process. Strategic management is driven by the organizational vision and the objectives of the vision and subsequent strategy is achieved by the human resources. It is the human resource that uses the CRM & artificial intelligence, works on research & development and innovates to create new technology. All these activities are in accordance with the strategy. As a result, the organization achieves its goals. Hence, human resource delivers a key role. Without significant contribution by the human resource at every level, strategy cannot be realized and organization cannot achieve the goals. So, human resources are important and play an important role in SM process.