Hersheys Company Organizational Innovation - Case Study Example

Management

Introduction

The success of an organization is influenced by competitiveness of the management team. However, with developments in technology, organizations are considering the strategy of mobilizing resources so that they can develop effective products and services so as to remain competitive in the market (Skarzynski & Rowan 43). Innovation is a concept that helps to develop business strategies that focus on improving achievement of organizational goals and objectives. However, it is important to understand that for effective mergers and acquisitions, there must be big and small organisations. The purpose of this paper is to discuss product innovation specifically in mergers and acquisitions. Corporate product innovation improves performance of an organization. Organizational innovation improves organizational performance through mergers and acquisitions.

Mergers and acquisitions

A merger is defined as the business context where two or more organizations come together to form one entity. On the other hand, acquisition on the other is a business strategy whereby one organization takes charge of another business entity by buying largest stock (Giotra & Serguei 23). Due to competition in various industries, organizations are considering the best ways they can engage in strategies that can improve their competitive advantage. On the other hand, an organization that wants to exit from an industry should focus on entering into mergers and acquisitions so as to ensure liquidity of the business premises. In this context, it is the responsibility of the management of an organization to develop effective strategy to improve the performance of the organization. One of the organizations that have implemented mergers and acquisition is Hershey’s Company.

The company has managed to improve its competitiveness by entering into effective mergers and acquisitions. For instance, the company entered into strategic alliance with other companies to improve their performance (Giotra & Serguei 12). For instance, the company entered into strategic mergers and acquisitions with companies like Cadbury and Ludens. Most specifically, the company acquired Ludens and this improved the resources of the company leading to better application of technology as well as research and development.

Conditions necessary for mergers

For a successful merger, there are conditions that should be followed and most importantly, Hershey’s Company managed to consider these issues when entering into mergers. The following are the main conditions necessary for successful mergers;

Well planned and structured process of implementing the merger. This is done by assessing the current business strategy and then focus on the most effective strategy that can help to improve performance of the organization (Rosenbaum & Joshua 52). It is important to understand that the structure of the two organizations are considered and then identifying the best strategy that can be used to ensure successful merger. It is important to focus on accelerating the business performance after the merger. In this regard, it will be possible to ensure that the new structure is incorporated into the existing structures of the organisations.

In addition, effective leadership process is required to ensure successful merger. Change management process is an important concept in ensuring successful mergers. This is important because without effective change management, there will be resistance to change (David 15). It is because the employees will not understand the aims and objective s of the merger and this will contribute failure of the merger. As a result, it is important to ensure self motivated leadership team so that they can influence the behavior of employees and work towards achieving successful mergers. However, it should be noted that free consent should be assented for effective merger acquisition.

The other success criterion is effective talent selection to manage the new developed organization. This is where technology is the key concept because it is used to manage new venture and focus on achieving goals and objectives. This implies that two organizations should agree on the management team that will engineer the merger towards achieving its aim (Christoph & Raphael 21). Most importantly, the management team should understand the best ways to implement technology in managing the new venture. In this regard, these conditions are necessary for effective merger. The organizational innovation is therefore important because it helps to improve the achievement of goals and objectives towards remaining competitive in the food manufacturing industry.

Benefits of organizational innovation

Organizational innovation is an important concept that helps to develop products that deliver customer value. Hershey Company is one of the companies considered to be innovative in the business world and that is why it has managed to achieve its growth. The benefits that the company has enjoyed from mergers and acquisitions include value through capture. It is important to note that organizational innovations do not only include development of an organization but innovative employees as well (Skarzynski & Rowan 12). In this regard, through innovation, employees develop skills to perform their tasks effectively and in the process they can increase their productivity. This is done through effective value chain process as applied by business innovation model. Through innovation, it is possible to introduce new products considering need and expectations of customers. Therefore, Hershey Ltd has experienced tremendous growth by pooling resources like technology.

In addition, organizational innovation has enabled employees of Hershey Company to be more motivated and get involved in the business management. This is important because employees are empowered to develop new techniques of accomplishing tasks and this means that they can be encouraged to be innovative. Eventually, they will be innovate new techniques of doing tasks and this contributes to improved organizational performance (Giotra & Serguei 23). The successful acquisition of Ludens by Hershey Company helped to pool resources like human skills in the two companies to develop products that provide customer satisfaction. Consequently, Hershey is able to beat competition in the global market due to its focus on customer needs.

Moreover, organizational innovation has contributed to successful alignment of different organizational departments. This is because there is top down support for employees and this contributes to effective link between various departments in the organization. For instance, human resource department and information technology department link to provide effective training to develop employee skills (Giotra & Serguei 23). This contributes to improved organizational performance because there is effective interdepartmental relationship. It is also important to note that organizational innovation is importantly because it helps to improve efficiency when executing organizational tasks and this contributes to effective utilization of resources. In this case, Hershey Company has managed to remain competitive in the market through research and development and creating value process when serving customers.

Furthermore, organizational innovation through mergers and acquisitions is important because it helps to create value for the organization. This is important by considering the case of Hershey Company. The company has managed to offer effective value chain process and delivering customer value by enjoying economies of scale (David 17). This is because through acquisition of Ludens, Hershey Company managed to pool resources together and this focused on enjoying economies of scale. The benefits are enjoyed by enjoying quantity discounts and this contributes to improved organizational performance.

Moreover, merger and acquisition innovation is also significant to Hershey Company because it has helped the company to enjoy tax gains. This is enhanced trough effective market share gain since the market share of the acquired organization help to generate more revenue. The main reason why companies go for mergers is to create more value for the separate firms (David 11). Hershey Company acquired Ludens with the aim of increasing share value because it also acquires the customers of the acquired company. In this regard, mergers and acquisition innovation strategy applied by Hershey Company has helped the company to generate more revenue.

Merger and acquisitions are important because they pool resources together to conduct effective research in relation to technology to apply to improve organizational performance. Extensive market research is costly for an organization (Rosenbaum & Joshua 41). In this regard, Hershey Company has entered into various mergers to conduct research jointly without affecting organizational financial performance. In this regard, Hershey Company has managed to improve its competitive advantage by ensuring effective mergers acquisitions leading to pooling of resources. This has led to improved competitive advantage of the organization.

Issues in organizational innovation

Despite the benefits of organizational innovation, there are issues that face organizational innovation and they should be managed effectively. The first issue in organizational innovation is inability to meet the needs of drivers of innovation (Christoph & Raphael 24). Performance of an organization is influenced by many factors and they keep on changing and this means that it will be difficult to cope with the rate at which organization requires change. Financial resources required to implement the innovation process are extensive and could not be afforded each time that there is need to innovate new products.

The other issue that affects Hershey Company in its innovation strategy is ability to foster an organizational culture that supports innovation. This is the biggest issue that affects implementation of innovation technology. For instance, the merger between Hershey Company and Cadbury was faced with a challenge of developing a culture of innovation between the two organizations. This is especially when the stakeholders are not engaged in decision making and they do not have clear objectives of the merger and acquisitions (Skarzynski & Rowan 32). However, this can be managed by ensuring that stakeholders contribute to strategic planning. As a result, they will be committed to implement the strategies they developed.

In addition, the other issue that affects organizational innovation is inability to build a collaborative approach to innovation by working together with other organizations. This is very difficult for Hershey Company and other organization to embrace innovation without collaborating with other organizations (Rosenbaum & Joshua 24). This is because once the organization has done extensive research and develops products; the competitors can copy the products and modify them for their own gain. In this regard, it is important to apply collaborative approach to innovation so that the developed products cannot be copied by the competitors for their selfish interests.

Further, there are issues in managing risks and intellectual property rights. This is mostly encountered when in mergers and acquisitions. For instance, each organization in the merger can claim ownership to intellectual property (Rosenbaum & Joshua 42). In addition, there is risk of pooling a part when there are disagreements between the mergers. As a result, it is difficult to successfully implement organizational innovation. It and lead to disputes if not managed properly.

In this regard, organizational innovation has been criticized because of the above reasons. It can improve performance and competitiveness of an organization but it can also lead to copyrights and conflicts between organizations. It can lead to rivalry competition that can drive out some competitors ad this affects health business practices (Giotra & Serguei 24). However, this can be managed by ensuring innovation practices to ensure that the culture of innovation is developed and implemented by the stakeholders.

Recommendations

In order to encourage innovation in an organization, intellectual property rights of innovators should be upheld. This is important because it helps to encourage innovation because the benefits of innovation can be enjoyed by the innovator. This is because the innovator is protected against copyrights. In addition, Hershey Company can improve its innovation by empowering the employees to make some decisions for the benefit of the organization (Christoph & Raphael 31). This focuses on improving the achievement of goals and objectives of employees because they can develop their career and in turn improve performance of the organization. In addition, the culture of innovation can be achieved by engaging stakeholders in decision making so that they can understand the need for innovation for he organization and individuals. Most importantly, there should be effective communication among stakeholders so that they can understand the benefit of embracing change.

Conclusion

Organizational innovation through mergers and acquisitions is important because it helps to improve performance of an organization. This is important because it helps to mobilize resources and achieve better results unlike when an organization does its operations independently. Organizational innovation can be successful by ensuring effective structures and systems in place as well as designing goals and objectives to achieve by the business initiative. Most importantly, mergers and acquisitions help to pool resources together to develop products to meet the needs and expectations of the customers. However, it is important to understand that organizational innovation has to be controlled to avoid rivalry competition by protecting intellectual property. This encourages innovation that focus on delivering customers value and improving organizational performance.