20141806 Comex Group Presentation

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Comex Group case presentation

Transcript of 20141806 Comex Group Presentation

Slide 1

A Mexican Firm Goes InternationalJun 18, 2014Comex Group (Mexico)

Group 9:Rijul BhardwajRashmi ChauhanSureshkumar A.

1A4_RBSC_PPT 2013-10_v01 do not delete this text object! #Source: xxx1) xxxLegend15 Point Text: Level 0Level 1Level 2Level 3SubtitleBased in Mexico, Comex Group has grown through international acquisitions in last decadeSource: Case author, Company Website1954Inception of Comex in MexicoBusiness of mixing water-based and paint oils1958Shifted to new facilitiesStarted manufacturing Vinyl Paint1988Marcos Achar Levy, nephew of the founder joined Comex2012Fourth largest paint manufacturer in North AmericaHas 3,300 Retail Stores2004Marcos Achar Levy became CEOFirst Cross- border acquisition of Professional paintsEstablished own stores after boycott from retailers Established 100 stores owned by themselves Current Was acquired by Sherwin Williams CompanyJourney of Comex Group so far

1A4_RBSC_PPT 2013-10_v01 do not delete this text object! #Source: xxx1) xxxLegend15 Point Text: Level 0Level 1Level 2Level 3SubtitleUsing a unique combination of franchising model and family values, Comex achieved domestic and international successFranchisingFamilySuccess Story at HomeExclusive distributor of its own paintStores specialized in one brand of paint unlike multi-brand shops.Allowed stores to become franchisesManagers became business owners

Family owned businessGuiding principlesOpenness to brothersRespect for eldersOpportunity for the most capable Development of dedicated workforce and dealersEmployee satisfaction from increased responsibilityCustomer satisfaction from vast array of products of a single brandAhead of competition because of Increased alertness No. 1 in MexicoNo. 4 in U.S. , Canada & Central America3,300 retail storesSource: Case author

1A4_RBSC_PPT 2013-10_v01 do not delete this text object! #Source: xxx1) xxxLegend15 Point Text: Level 0Level 1Level 2Level 3Subtitle

Major paint manufacturers were acquired post 2004 in North America4International AcquisitionsHead office To maintain a major growth rate, Comex has expanded internationallyAcquisition was chosen as mode for international expansionProfessional Paints acquired in 2004 allowed a lot of subsidiary paint companies to come in Comex foldCOMMENTSMajor Brands acquired in North AmericaFrazee Paints San Diego

Parker PaintTacoma, WA

Ideal PaintTorontoKwal PaintDenver

Professional PaintsLone Tree, Colorado

Central PaintsNew Hampshire

General PaintsVancouver

Source: Case author, News reports

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International expansion through acquisitions remains an important mode, but has its own specific HR issuesWhy Acquisitions?HR Issues to be tackledNeed to compete with global firms achieving world class market entry and industry leadershipAcquire assets and resources needed to compete that would be eitherExpensiveImpossible to develop internallyUsually seen as a quick and effective way to develop a presence in local marketAcquisition helps yield value and profits due to:Industry consolidationGeographic ExpansionNew Market EntryAcquisition of Technology/KnowledgeRealization of SynergiesHR complications often include issues likeOverestimation of the abilities of partner firmExaggerated assumption of the synergiesInadequate attention to incompatibilities of the firms programs, ways of conducting business and cultureUnwillingness to prepare for loss of productivity and staff post acquisitionIntegration issues surrounding legal and cultural systems in different countries

Comex Group wanted to bring color without borders for creativity without boundsIssues need to be tackled at every stage of the acquisition processSource: Case author

1A4_RBSC_PPT 2013-10_v01 do not delete this text object! #Source: xxx1) xxxLegend15 Point Text: Level 0Level 1Level 2Level 3SubtitleMedicines for Malaria Venture (MMV)Global Alliance for Tuberculosis Drug Development (GATB)Drugs for Neglected Diseases Initiative (DNDi)Institute for One World Health (IOWH)

UNDP/World Bank/UNICEF/WHO Tropical Diseases

5

These issues must be tackled across all phases of acquisition activityActivityHR InvolvementPhase 1: Pre CombinationInitial target screening and pre-bid courtcshipDue diligencePrice Setting and negotiationsAgreement on contract wordingInvolvement in due diligence to analyze potential issuesPreparation StageContent StagePhase 2: Combination and Agreement SigningDetailing implementationDiscovery and resolution of differencesSigning of AgreementAdvice on implementing the dealAnticipating problems during implementationPhase 3: Post Combination and implementationEnforcement of dealImplementationFacilitating integrationCreating employee communication regarding business consummationTraining employees for new fits, staffing and compensation systemsProcess of CombinationProblems in Phase 3 to be addressed in Phase 1 and Phase 2123

1A4_RBSC_PPT 2013-10_v01 do not delete this text object! #Source: xxx1) xxxLegend15 Point Text: Level 0Level 1Level 2Level 3SubtitleMedicines for Malaria Venture (MMV)Global Alliance for Tuberculosis Drug Development (GATB)Drugs for Neglected Diseases Initiative (DNDi)Institute for One World Health (IOWH)

UNDP/World Bank/UNICEF/WHO Tropical Diseases

6

Due Diligence is the most essential pre-combination activity performed by the acquirerPHASE 1: PRE COMBINATION1Due Diligence: A detailed auditFinancial Issues: Review Annual ReportsMarketing Issues: Product brochuresLegal issues: Legal documentationStrategic issues: Business memosCompany credentials: Certificates concerning principals, activities and other requirements

Key components in any Due Diligence activityOverall HR Issues Build understanding of HRM practices and people issues of acquired firmCompatibilities in corporate culturesEmployee attritionSuccession and talent planning

12Preparation: Items to determine ahead of timeContent of Due Diligence: Specific issues to assess ahead of time during the due diligence phase

1A4_RBSC_PPT 2013-10_v01 do not delete this text object! #Source: xxx1) xxxLegend15 Point Text: Level 0Level 1Level 2Level 3SubtitleMedicines for Malaria Venture (MMV)Global Alliance for Tuberculosis Drug Development (GATB)Drugs for Neglected Diseases Initiative (DNDi)Institute for One World Health (IOWH)

UNDP/World Bank/UNICEF/WHO Tropical Diseases

7

Preparation work for due diligence has its own peculiar HR issues which must be addressedKey StepsDevelopment of Pre-determined action plan and checklist of items to evaluate due diligenceHR IssuesWhen and where will deliberations occurMeasuring deliverables and outcomes

RecommendationsInformation from internal and external sources, determined ahead of timeStandardizing outcomes in the form of a report or recommendationsCreating a SWAT team: Identifying individuals who have strong non-directive interviewing skillsMust have cross-cultural, language and business expertiseFamiliarity with Compensation and Benefits financialsSensitivity to cultural and language differencesAwareness of union and labor differencesSenior executives with past experience in acquisition managementInternal reorganization to draw the right talent outForming and communicating new cultureClear communication on expectations of culture from new firmCreate and communicate expectations to old and new workforce membersPHASE 1: PRE COMBINATION1

1A4_RBSC_PPT 2013-10_v01 do not delete this text object! #Source: xxx1) xxxLegend15 Point Text: Level 0Level 1Level 2Level 3SubtitleMedicines for Malaria Venture (MMV)Global Alliance for Tuberculosis Drug Development (GATB)Drugs for Neglected Diseases Initiative (DNDi)Institute for One World Health (IOWH)

UNDP/World Bank/UNICEF/WHO Tropical Diseases

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Various concerns must be tackled when designing content for due diligenceGeneral concernsAdequate funding for pension and healthcare plansForeign employment regulations (legal requirements and their enforcement)HR department status, practices, policies and organizationMerger of corporate culturesSpecific ConcernsStaffingLaws on hiring/firingScrutiny of employment contracts(Potential) Downsizing costs

HR Information SystemsData protection normsHardware/Software differences

Compensation and BenefitsMandates on benefit plansCountry and firm pay scalesTreatment of ESOPs, incentivesLabour RelationsPresence of unions and their formsRole of government

Career DevelopmentImportance in overall strategyDetails on location and channelsCultural and national valuesWorks CouncilPresence or absence in different countries

PHASE 1: PRE COMBINATION1

1A4_RBSC_PPT 2013-10_v01 do not delete this text object! #Source: xxx1) xxxLegend15 Point Text: Level 0Level 1Level 2Level 3SubtitleMedicines for Malaria Venture (MMV)Global Alliance for Tuberculosis Drug Development (GATB)Drugs for Neglected Diseases Initiative (DNDi)Institute for One World Health (IOWH)

UNDP/World Bank/UNICEF/WHO Tropical Diseases

9

Integration may pose unique effects on morale of employees, which impact acculturation of acquired firmEffect on EmployeesEffects on CultureIntegration problems originate from resistance to changeEmployees feel frustration and insecurity in new firmTeamwork may break down due to stressEmployees lose faith in the organizationLack of commitment, loyalty and enthusiasmLoss of identity post acquisitionShort term attrition can make recovery and integration difficultEmployees sense loss of corporate culture and valuesAssimilation of cultures may be driven by dominating cultureWorries about loss of national character importantLeads to accultur