Hewlett Packard and Compaq Computers - Research Paper Example

According to Palo & Houston (2001), the merger of Hewlett-Packard Company (NYSE: HWP) and Compaq Computer Corporation (NYSE: CPQ) was meant to create an $87 billion global technology leader. The main aim of the new HP was designed to “offer the industry's most complete set of IT products and services for both businesses and consumers with a commitment to serving customers with open systems and architectures,” (Palo & Houston, 2001). The combined company was expected to create value through significant cost structure improvements and access to new growth opportunities.

According to Fiorina, the strategic benefits of combining highly complementary organizations and families were set to immensely benefit the customers. The synergies of these companies were expected to create a value of $25 billion and this merger was supposed to be a force to reckon with in the IT sector, storage and management software. This merger was a failure because the new culture was not compatible with the HP way of doing business. According to Malone (2002), the major resistance came from the management of HP since they felt short changed by this newly merged company given that the culture was “so alien to the HP legendary way.

” From the onset, it can be seen that there is no mutual understanding between the parties from the two companies and this is the reason why there is a revolt especially from HP management. Thousands of employees believe that the HP way, the company’s influential and unique culture is the most valuable asset that has led to the success of the organization hence the reason for fears that a merger would destroy this culture. However, Fiorina differs with the views other people who support the HP way.

The new CEO did not follow the dictates of the HP way and this is where she failed the whole deal. It can be seen that the notion of organizational culture is very important since it determines the success or failure of the company. The culture of the company mainly spells the way people in a particular company are supposed to behave. People in a particular organization create values and norms from the culture that obtains in that particular company and these values shape their behaviour. Any attempt to deviate from these values is likely to be met with stiff resistance from the employees like the case in this merger of HP and Compaq computer companies.

Change in an organization is something that is often resisted by many employees since they do not want to change their usual way of doing things in the company. Change entails that workers will be forced to acquire new knowledge in order to be in a position to operate effectively under the new culture. Any change initiative that does not have the support of the stakeholders such as the employees is likely to fail since it would be designed to fulfil the needs of a few people. The other reason why the merger of the great two companies failed is that the CEO failed to effectively communicate her plans to the stakeholders.

She chose to be secretive and this impacted negatively on the outcome of the merger. The other reason why the merger failed is that the CEO of the new company used an autocratic style of management. She undermined the intelligence as well as valuable ideas of the employees while she expected them to support her ideas