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Mergers Don't Always Lead to Culture Clashes - Essay Example

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This paper will answer in what ways were the cultures of Bank of America and MBNA incompatible and why their cultures appeared to mesh rather than clash will be further discussed. You will also find the explanation of why culture is important to the success of a merger/acquisition…
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Mergers Dont Always Lead to Culture Clashes
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Download file to see previous pages The culture in MBNA shows a more laid-back, business-like and highlights a secretive organization. Employees at MBNA are accustomed to lavish lifestyles and the company offers high salaries and generous benefits. Among the perks available include private golf courses, corporate jets and yachts. Bank of America, however, operates on financial efficiency and values low cost approaches. Moreover, Bank of America expanded because of thrift and has managed to focus on size and smarts rather than speed. Bank of America is expected to encounter challenges as the bank attempts to integrate a culture that is totally opposite from the ideals being promoted by the company.
The high salaries and benefits received by MBNA employees is one major issue. Although the salaries received by Bank of America employees are relatively competitive, the bank’s management has to decide what approach needs to be done to reconcile the gap. Lowering the salaries of MBNA staff will cause widespread demoralization. Maintaining the high salaries will also affect current Bank of America employees. This is a dilemma that needs to be taken into consideration before addressing the salary issue. Another aspect that requires focus is the perks received by MBNA employees. Bank of America will certainly reduce most of the privileges and to integrate the bank’s vision when it comes to spending....
Bank of America recognizes the culture of MBNA and how it has developed the organization. MBNA has been successful and Bank of America intends to ensure that the success will be sustained. Respect also drives Bank of American to be more sensitive and do consultations as to what needs to be changed and retained. The integration of MBNA in Bank of American required rigorous planning. Bank of America managers view MBNA managers as arrogant while the latter sees the former as bureaucratic. But these observations are part of the growing pains that Bank of American attempts to hurdle. Bank of America decided to adopt some of the practices in MBNA. The management also created new policies to satisfy both Bank of America and MBNA employees. The executive uniforms in MBNA underwent a hybrid phase change to suit the needs of both parties. Since most Bank of America processes are flexible, modifications are implemented seamlessly. The goal is to prevent clashes and satisfy the different cultures. Despite the adjustments, Bank of America remained firm on cutting costs and the high MBNA salaries were significantly reduced. Although some employees decided to leave, majority of the employees remained. Bank of American sold all but one of the corporate jets and donated the golf course to the State of Delaware. The bank maintains that there are other ways to compensate for the removed perks. The most important part is to ensure that Bank of America’s financial principles are followed but employees still enjoy the best rewards for their hard work. 3. Do you think culture is important to the success of a merger/acquisition? Why or why not? Most observers highlight financial impact, synergies and pipeline ...Download file to see next pagesRead More
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