Mergers and Acquisitions: International Human Resource Management - Coursework Example

Mergers and Acquisitions al Affiliation) Introduction The opening of the international market for mergers and acquisitions boosted the revenues of such organizations. There are benefits to countries that impose fewer conditions on international trade. These benefits occur through gains from foreign investment. International investors have easy access to potential investment opportunities through mergers and acquisitions (M&As). In addition, M&As leads to the provision of infrastructure, productive operation mechanisms, and improved technologies (Ulijn, 2010). However, the M&As have factors that limit their success, especially through the regulations imposed by different countries. This paper discusses the impact of the cultures of individual companies to the success of the M&As. It examines the role of the International Human Resource Management (IHRM) in the determination of the M&As success. Discussion The growth in the global markets for organizations has led to an increase in international competition. Firms are thriving to seek a share of the foreign markets through mergers and acquisitions. The firms acquire the ability to explore their competitive advantage and create new opportunities. The firms take the consideration of the possible profits and benefits acquired from merging with other companies. There is a difficult process of internationalization through the policies imposed by several companies (Dessler, 2000). The firms, prior to a merging or an acquisition agreement, take a research on the viability of the partner company or the acquired firm. This enables such companies to determine the performance and international business ability of the firms to merge with or acquire. The M&A’s formulate policies that ensure that the degree of internationalization is constantly on the increase. This leads to better performance of the M&As and ensures that they achieve the best degree of internationalization. However, higher levels of internationalization could lead to negative returns for the M&As (Morley, 2006). This is because some of the managers of such institutions could initiate certain international projects that could lead to the decrease in value of the M&As. Such projects affect the cash flows of the organization in a negative manner. The International Human Resource management function could address the concern through the selection of qualified and experienced managers, who have the capability of pursuing viable projects. They need to have the capability to work with international people I the management and development of the projects (Vance & Paik, 2006).  Globalization takes various forms in the penetration into different countries. One of the forms is through the formation of the Strategic Cross-Border Alliances for the expansion of international business. There are different types of such alliances that ensure maximum benefits through interdependency of the merging companies (Bleeke, 2003). One of these types is the noncommittal form or merging, where the companies’ focus on short term international projects. The other type is an inclusive form that enables companies to commit to capital-intensive long-term projects. Another category of strategic alliances, relates to the level of internationalization and interdependency among the companies. Some of the types of alliances under the category include the equity alliance and the non-equity alliances. The equity alliances leads to the creation of a separate entity and the firms control the merger or acquisition through the percentage of shares held (Gilmore, 2009). The non-equity alliances base their relationships on agreements that could eventually lead to the formulation of a joint venture. The different types of strategic alliances have a common goal in relation to the increase in sales and promotional activities. The International Human Resource Management function could aid in the creation of a strategic alliance of good performance (Schuler & Jackson, 2006). This could occur through the employment of qualified personnel in the M&As. Such staff needs to have the ability to create a strong joint sales team that functions. The marketing managers need to be accountable for the trends in the international markets in relation to marketing activities. This trend could lead to the success of the M&As in service delivery (Mathis & Jackson, (2003). Mergers and acquisitions have grown in number with more companies seeking to undertake the process. Some of the companies, about 25% have an expectation of entering into transformational deals that offer high returns (Scullion, 2005). The rest of the companies seek to pursue deals that have smaller returns as they do not have the ability or willingness to undertake higher risks. There is an expectation of the firms in the M&A deals to have an increase in their portfolio. This could occur through offering private placements and initial public offerings. Most of the organizations, about 60%, have a goal of ensuring that they acquire a firm in the foreign market. The major industries that companies have an interest on include the technology sector, energy, and the banking industry (DePamphilis, 2012). The executives of the private equity companies focus on industrial development due to the availability of wider opportunities. However, most of the companies in M&A deals have made an admission that numerous transactions do not generate their expected return on investment. This could be due to poor formulation of policies and strategies because of a poor decision-making process. The International Human Resource Management function could undertake a variety of activities that ensure the success of the M&As. It could ensure the employee involvement in the formulation of investment policies. This needs to occur through the creation of an effective communication channel that links the employees and the executive management (Punnett, 2004). . There needs to be a coordination of the human resource strategies among the different companies in the M&As for their success. The human resource function has several challenges in relation to its role in mergers and acquisitions. It is the role of the human resource function to determine the cultures of the companies in the M&A agreement. The transition in culture poses a challenge to the human resources function. The need for training the personnel of the firms in the M&A deal becomes costly and consumes a lot of time. In acquisitions, after the purchase of the subsidiary company, an analysis takes place to determine the viability of the deal. This relates to the financial and strategic benefits created through the acquisition (Bratton & Gold, 2000). The role of the human resource function is to assess the human structure to determine any potential problems. This creates a challenge for the human resource function due to the development of a strategic initiative that accommodates the interests of both companies in the acquisition. It has to ensure that the personnel structure retains the right employees for the support of continued performance. The human resources function finds a difficulty in mobilizing the management of the M&As for the assignment of leadership roles (Anderson & Havila, 2012). Another challenge occurs in the determination of the effectiveness of the human resource function. There is a risk of self-review that is a threat to any organization. The organizations should review the perception of the human resource as an administrative function. The human resource team is a strategic partner of other functions within the M&As. International Joint Ventures (IJVs) are other forms of cross border alliances. Their development is difficult and they are prone to failure due to poorly stated goals. The factors that contribute to the failure of such organizations range from the political system to the economic state of a given country (Mondy & Noe, 2005). However, most of the failures of IJVs relate to ineffective and inefficient human resource management. Such organizations have formulated policies that address the HR function in the management of people. The HR function is responsible for the assignment of managers, top management evaluation, career management, and the management of loyalty concerns. On the joint venture, the parties to the deal place different priorities in investment decisions. Therefore, an effective HR function proposes the strategies and plans for the organization. This occurs through liaising with the managerial function that has the relevant capabilities to balance the interests of all the parties in the IJVs (Campbell, 2009). To ensure maximum benefits of the IJVs, the human resource function needs to let the top management make the final decisions in relation to staffing of any vacant position. The human resource function contributes greatly to the development of M&As and IJVs. It speeds up the process of integration of the companies in that enter such agreements. The HR function creates the need for strategic independence in relation to the goals put in place by organizations for success in foreign markets (Gutterman, 2009). It also develops the need to have an autonomous structure of the human staff within the organizations. This aids in the determination of the nature of the flow of information. Such information needs to be confidential, when addressed to a specific individual within the M&As and the IJVs. Conclusion Mergers and Acquisitions, in addition to the IJVs have become important for globalization purposes. There is a need to manage the organizations in an efficient manner, especially through the management of people. Such management occurs through the formulation of an effective human resource function that aims at the achievement of the success of the organization. The HR function plays a major role in the success or failure of M&As and IJVs. There needs to be an easy process of internationalization, in order, to achieve higher degrees of globalization through mergers and acquisitions. The strategic alliances play an important role in terms of pooling funds together to enable the success of viable projects from their initial to the completion stages. The human resource function has several challenges and the development of effective personnel for the function leads to the success of the M&As and the IJVs. The IJVs have potential for growth only if they implement an effective human resources function. The International Human Resource Function plays a major role in the success of M&As and IJVs. References Anderson, H., & Havila, V. (2012).Mergers, Acquisitions, and Stakeholders. Hoboken: Taylor and Francis. Top of Form Bottom of Form Bleeke, J. (2003). Collaborating to compete: Using strategic alliances and acquisitions in the global marketplace. New York: Wiley. Top of Form Bottom of Form Bratton, J., & Gold, J. (2000). Human resource management theory and practice(2nd ed.). Mahwah, N.J.: Lawrence Erlbaum. Top of Form Bottom of Form Campbell, D. (2009). International joint ventures. Alphen aan den Rijn, The Netherlands: Kluwer Law International ;. Top of Form Bottom of Form DePamphilis, D. 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Upper Saddle River, N.J.: Pearson Prentice Hall.Top of Form Bottom of Form Morley, M. (2006). International human resource management and international assignments. Basingstoke [England: Palgrave Macmillan. Top of Form Bottom of Form Punnett, B. (2004). International perspectives on organizational behavior and human resource management. Armonk, N.Y.: M.E. Sharpe. Top of Form Bottom of Form Schuler, R., & Jackson, S. (2006). Human resource management: International perspectives (9th ed.). Mason, Ohio: Thomson South-Western. Top of Form Bottom of Form Scullion, H. (2005). International human resource management: A critical text. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan. Top of Form Bottom of Form Ulijn, J. (2010). Strategic alliances, mergers and acquisitions the influence of culture on successful cooperation. Cheltenham, UK: Edward Elgar. Top of Form Bottom of Form Vance, C., & Paik, Y. (2006). Managing a global workforce challenges and opportunities in international human resource management. Armonk, N.Y.: M.E. Sharpe. Read More