Merge of Kudler Fine Foods - Case Study Example

Running Head Kudler Fine Foods Kudler Fine Foods For Kudler Fine Foods, merging with another organization will bring a lot of benefits including stable market position and opportunities to compete with direct competitors, increased market share and innovations. Thus, mergers hide many threats for small and medium sized companies unable to meet financial requirements and increased competition. Too often managements think primarily of merger as a method of adding products to the existing product line. It is often said that there are only two ways to grow: through the internal development of products and through the merger of enterprises with similar or different products. Strengths For Kudler Fine Foods, the main strengths of merging with another organization are additional investments in R&, product diversification and greater efficiency. For Kudler Fine Foods, a merger with another company will allow to strengthen the companys financial position, procure the services of one or more key personnel or new executive talent, obtain land, buildings, and equipment for expansion, stabilize cyclical or seasonal types of business, avoid concentration in a regulated area of industry, acquire the technical skills of highly trained scientists, and many other critical elements in business which determine growth and success. The process of merging, then, is one that ought to be considered by the management of any enterprise as its plans for growth are executed. Merger is one way to be considered in achieving the complete set of defined objectives. And many companies have found it a very satisfactory way. Like all approaches to the solution of management problems, merger may for any particular company provide a profitable and satisfactory alternative to other ways of expanding company activities. Merger per se does not automatically solve all problems for all companies. It is shortsighted for management to refuse to consider any merger, and it is foolish for management to operate on the assumption that merger will guarantee sound growth and increased profits (Gaugham, 2002). Product diversification can be achieved through the internal development of new products and the merger of other companies. And the diversification may be narrow if. the new products added are closely allied to the existing product line or broad if the new products added have no relationship to the present product line. Some executives enthusiastically endorse the idea of moving into new product areas. They know well the sharp and difficult competitive conditions in their own industries, a point of view which seems to be characteristic of all industries, and look admiringly across the business street at what appears to be greener competitive pastures. Weaknesses The main weaknesses are unpredictable results and consequences for both companies. When a major reorganization occurs within a company, the benefits of the reorganization are not always immediately apparent. Employees are shuffled around, out of one department and into another, taking on new or additional tasks. Management roles might change. Work locations might change. However, out of this apparent chaos might emerge a stronger, more viable corporate structure. But one factor that undermines this type of activity is that people are basically resistant to change. People become comfortable with the status quo and organize their lives around perceived constants. When these constants that stabilize ones life are disrupted, one tends to resist them, even if the future benefits will outweigh the current inconvenience. Likewise, merger strategies tend to suffer from similar problems. Even a sound strategy, and the friendliest of mergers will tend to face some amount of resistance from within the two corporations. Change is inevitable, and these structural changes within the organization take time to settle and be accepted by the respective management and employees. After all, not only are two companies physical assets and technologies merging, but their employees must merge together as well. Thus, it is important to recognize that it might take some time before the "dust" settles and the benefits of the merger are realized. Most mergers fail as a result of internal conflicts. These conflicts, moreover, arise as a result of power struggles from within the organization. Corporations, both large and small, must be run for long-term growth and profits, rather than for immediate, short-term gains for shareholders and management. To compete in todays global marketplace, a policy of growth through strategic alliances must be implemented. In our discussion, we have surveyed many case studies of international corporate successes and failures in the hope of identifying those traits that will characterize the successful firm. It is no longer enough to pursue traditional management techniques in a world radically changed. The challenge for corporate America is to seize the future (Gaugham, 2002). Opportunities The main opportunities are economics scale and international competition. When merger is contemplated as one method for corporate growth, it must be remembered that it includes a large bundle of problems quite different from those involved in the day-to-day operations of a business. Failure to recognize these differences has led many managements into unfortunate and unprofitable merger experiences. It would have been possible to create a national sales and service organization to market commercial products resulting from company-sponsored data processing technical developments. Top management of technically oriented companies must be alert constantly to the risk of failure. To neglect the developments of others through an unwillingness to consider the merger of technical know-how created in other laboratories is to deprive the company of a significant opportunity to strengthen its own position. To rely completely upon ones own research and development team is to assume that this is the only source of ideas on the subject. Most larger companies can augment their own research and development programs by searching out and acquiring the know-how developed elsewhere. The smaller organizations may need and want the resources of a larger, financially capable, and established company. The willingness to acquire technical know-how enables both the seller and the buyer to profit from commercial realization on the idea or product (Gaugham, 2002). Threats The main threat of merger is a financial failure. It is difficult to develop confidence in an amorphous, leaderless management group, or in a group where there is unsettled competition for leadership. It doesnt take long to determine whether a companys management really translates its plans and actions into effects in P & L performance. Realistic profit consciousness is a vital quality in a successful company. Healthy managements are usually able to engender and maintain healthy attitudes among themselves and the whole family of people who do the companys work. A depressed disinterested working group is usually a product of poor management, while an enthusiastic group is rarely an accident, but rather the result of management skill in dealing with people. Internal competition is an ever-present process (Gaugham, 2002). However, in some companies it is an internal game of musical chairs where power is the prize; it is a pushing down process. In other companies, it is more nearly based on individual contribution to total company accomplishment. Usually company goals are subordinated in the first type of internal competition; it is possible, and important, to channel competitive energies toward company achievements, and to develop an atmosphere of mutual respect. Reference List Gaugham, P. A. (2002). Mergers, Acquisitions, and Corporate Restructurings. Wiley; 3 edition. Speaker Notes Strengths For Kudler Fine Foods, the main strengths of merging with another organization are additional investments in R&, product diversification and greater efficiency. For Kudler Fine Foods, a merger with another company will allow to strengthen the companys financial position, procure the services of one or more key personnel or new executive talent, obtain land, buildings, and equipment for expansion, stabilize cyclical or seasonal types of business, avoid concentration in a regulated area of industry, acquire the technical skills of highly trained scientists, and many other critical elements in business which determine growth and success. Product diversification can be achieved through the internal development of new products and the merger of other companies. And the diversification may be narrow if. the new products added are closely allied to the existing product line or broad if the new products added have no relationship to the present product line. Weaknesses The main weaknesses are unpredictable results and consequences for both companies. When a major reorganization occurs within a company, the benefits of the reorganization are not always immediately apparent. Employees are shuffled around, out of one department and into another, taking on new or additional tasks. Likewise, merger strategies tend to suffer from similar problems. Even a sound strategy, and the friendliest of mergers will tend to face some amount of resistance from within the two corporations. Change is inevitable, and these structural changes within the organization take time to settle and be accepted by the respective management and employees. Opportunities The main opportunities are economics scale and international competition. When merger is contemplated as one method for corporate growth, it must be remembered that it includes a large bundle of problems quite different from those involved in the day-to-day operations of a business. Failure to recognize these differences has led many managements into unfortunate and unprofitable merger experiences. The smaller organizations may need and want the resources of a larger, financially capable, and established company. The willingness to acquire technical know-how enables both the seller and the buyer to profit from commercial realization on the idea or product. Threats The main threat of merger is a financial failure. It is difficult to develop confidence in an amorphous, leaderless management group, or in a group where there is unsettled competition for leadership. However, in some companies it is an internal game of musical chairs where power is the prize; it is a pushing down process. Usually company goals are subordinated in the first type of internal competition; it is possible, and important, to channel competitive energies toward company achievements, and to develop an atmosphere of mutual respect. Read More