The University Reunion - Essay Example

?   Assessment Centre Case Study Reunion’ Introduction The economy, changes experienced in consumer needs, and the business strategies have a potential to lead to changes or transformations in the way companies operate or look. One way in which businesses or companies can work together to launch a new service or product or lower the costs is through a merger. Different types of mergers exist and examples include horizontal merger, which involve two companies initially offering similar goods or products and competing deciding to come together and vertical merger involving two companies whose operations complement each other. The major reason companies or businesses merge is to reduce or save on the production cost especially in the case of former competitors, generate capital for entering into the markets or launching products, and possessing technical knowledge and complementary practice needed to compete effectively in the market. (Sanders, 2012) Acquisitions and merger The term merger and acquisitions are usually used by several people as if they are synonyms of each other, but a slight difference exists between the two terms. According to Investopedia (2011), when a single company takes over another company and establishes itself clearly as the new owner, the sale or purchase is referred to as acquisition e.g. Panflow acquiring the Vatline Company. The force that allows for new business enhanced cost efficiencies is known as synergy. Synergy assumes the form of cost savings and revenue enhancement. When the companies merge, they hope to benefit from four major ways, which are also the ones that may generate issues if not handled well. These areas are economies of scale, acquisition of new technology, staff reductions, and improvement of industry visibility and market reach. Business issues The subject of employees is usually handled as a minor business issue while it has a huge role to play in the success of the merger or acquisition. John Reh (2012) refers to this issue as merger mania, and advocates for a successful management of people to achieve a successful merger. Bersin & Advocates (2010) supports this idea by presenting it from the perspective of HR consulting and outsourcing. The main reasons for a company acquiring another or merging are critical to the solutions of the business issues that may arise due to the company acquisition. Identifying the strategic reasons why Panflow acquired Vatline aids in concentrating on the synergies that Panflow may require for success. Common strategic reasons or objectives for acquisitions that range from complementary market and products, acquisition of key technology, gaining creative talent (from Vatline), and eliminating competitor are important in determining the solutions to the business issues. (Daunt, 2002: p.2) Merger pitfalls Gitelson et al (2001) identifies seven key areas that any merger needs to look into from the beginning in order to ensure success. These areas or pitfalls are preoccupation, list-making, organizational proliferation, irrelevant and infrequent communication, triangulation, relatives, and the guiding light. Technical issues The idea of merging organizations or companies always requires the technological integration between the two companies. Vatline and Panflow are utilizing different software and hardware platforms and making the same business units to function as one the companies require a technology in place that would enable the different systems to communicate at a machine level. (William, 2004) The easier way to attain this is for one group to migrate to the same technology functions as the other. The manner that should be followed in selecting the best technological platform to use would be considering the technological superiority of one of the systems over the other. Apart from the superiority of the technology, the major issue is supposed to be the ease at which the transition from one system to another would be achieved from the procedure, organizational structure, and process perspective. It might actually be easy to transit the larger individual groups to a new technology platform other than the reverse. Other factors that should be considered in achieving the integration of the business units and the systems are marketing mix of price, product, promotion, place, process, and people. (Boar, 2001) Communication issues The technological issues are several when the subject of systems migration or integration of the business units is being handled. Some of these issues are handled in an interview with the managers conducted by Porter Michael (1989, p: 19). The integration of the systems in a post merger and acquisition surrounding involve the choice of technology to be used based on the considerations of the economy, and the choices are usually limited to the systems that are used currently. The questions of whether the systems that are being selected are compatible to the communication protocols, and also if an alternate software application can run on the currently used hardware are vital to be considered. The possibility of transferring the database from one system to another without involving a tedious manual entry is vital to solving technological problems. A real integration is said to be different from the procedure that is involved in just connecting computers or applications together through a standard network interface. Considering the managerial perspective, the choice of the technology platform to be used depends on the licensing cost of the software, software and hardware life cycles, and the migration total cost in each considered direction. A proposal to use a data warehouse, which is an overall process or strategy used for building knowledge based and support systems applications, is an important and helpful choice. (Gantt head, 2012) Communication changes Communication change is another aspect that needs to be addressed. The systems that are to be adopted in the company after the merger are always recommended to be compatible with the communication system. (Marshall & Corman, 2000, p: 55) Economies of scale Economies of scale are defined as the cost benefits that a company receives because of engaging in a horizontal merger. The merged company, therefore, can have a bigger or larger production in the volume of products in comparison to the volume it used to produce when it was operating separately. (Gordon, 2012) The most important or critical benefits of economies of scale are expansion or growth, synergy, diversification of risk, tax liability diminution, and lesser competition and great market capability. Farell & Shapiro (2001, p: 687) discuses the importance and the benefits of synergies by addressing the scale economies considering mergers. The ‘quick wins’ in a merger or acquisition range from minimized losses and risks (Reference for business, 2012), increased growth, and supply chain (Lee, Mahler& Peters, 2012), strong management team, stable cash flow, market share that is significant, and a low risk of product substitution or technological obsolesce.(Sherman,1998,p: 4) Quick wins Merger related benefits also have a potential to stem or create increased power of the market. The managers need to devise ways on how to handle the market power. (Oladepo, 2010, p:203) The Strategic guidance for the Panflow Company would involve focusing on the people and cultural issues since the two organizations have different attitudes, mindsets, and culture(Atul,2009), and creating a unified culture of the merged organization quickly, which will allow the members to focus on the new aggressive goals of the business.(WHL consulting, 2011) References Oladepo,E.,2010. Mergers & Acquisitions And Efficiency Of Financial Intermediation In Nigeria Banks: An Empirical Analysis. International Journal Of Business Management. (Vol 5,pages 201-210) WHL consulting. 2011. Strategy Development & Execution: Mergers & Acquisitions. Available at: http://www.wlhconsulting.com/mergers-and-acquisitions.html(accessed on February 10th 2012) Atul,S.,2009. Post Merger, Acquisition Challenges &Solutions: A Contemporary Perspective. Available at : http://ezinearticles.com/?Post-Merger,-Acquisition-Challenges-and-Solutions---A-Contemporary-Perspective&id=2992623(accessed on February 10th 2012) Sherman,A.,1998. Mergers And Acquisitions From A To Z: Strategic And Practical Guidance For Small- And Middle-Market Buyers And Sellers. AMACOM Div American Mgmt Assn. Lee,K., Mahler,D.,& Peters,j., 2012. Jump Start Your Merger. Available at: http://www.atkearney.com/index.php/Publications/jumpstart-your-merger.html (accessed on February 10th 2012) Reference For Business., 2012.Mergers And Acquisitions. Available at: http://www.referenceforbusiness.com/small/Mail-Op/Mergers-and-Acquisitions.html#b (accessed on February 10th 2012) Marshall,S., & Corman,S., 2000. Perspectives On Organizational Communication: Finding Common Ground. Guilford Press. Gantt head., 2012. Process/Project DWH- Data Warehouse Process. Available at: http://www.gantthead.com/content/processes/9076.cfm (accessed on February 10th 2012) Sanders, M.,2012. What Is A Company Merger? Available at: http://smallbusiness.chron.com/company-merger-21903.html (accessed on February 10th 2012) Investopaedia.,2011. Mergers And Acquisitions: Definition. Available at: http://www.investopedia.com/university/mergers/mergers1.asp#axzz1lxttRbWo (accessed on February 10th 2012) Bersin & Advocates., 2010.Aon And Hewitt Merger: Tackling Real Business Issues “Risk” And “People”. available at: http://www.bersin.com/blog/post.aspx?id=4f5d481c-d8fe-4381-9fcb-35189490fe4d (accessed on February 10th 2012) John Reh,F.,2012. Managing Mergers Successfully. Available at: http://management.about.com/cs/mergersma/a/MergerSuccess.htm (accessed on February 10th 2012) Gitelson,G.,Bing,J., and Laroche,L.,2001. The Impacts Of Culture On Mergers & Acquisitions. Available at: http://itapintl.com/facultyandresources/articlelibrarymain/the-impact-of-culture-on-mergers-a-acquisitions.html (accessed on February 10th 2012) Daunt,J., 2002. Mergers & Acquisitions For High Technology Companies. Available at: http://www.fenwick.com/docstore/publications/corporate/ma.pdf (accessed on February 10th 2012) William., 2004. Change Management In A Post-Merger & Acquisition Environment. Available at: http://williamcox.net/Thesis.html (accessed on February 10th 2012) Boar, B.,2001. The Art Of Strategic Planning For Information Technology .2nd edition. New York: John Wiley & Sons. Gordon,M.,2012. Horizontal Mergers. Available at : http://www.mcphersongordon.com/mergers-and-acquisitions/merger-types/horizontal-mergers.html(accessed on February 10th 2012) Porter Michael.,1989. Interview: Building Competitive Advantage By Extending Information Systems. Special Report . Computer World Magazine. Farell,J., & Shapiro,C., 2001. Scale Economies And Synergies In Horizontal Merger Analysis. Antitrust Law Journal. (Vol 68, pages 685-710) Read More