Art of Integration after acquisition

8/20/2019 Art of Integration after acquisition

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Submitted by:

Rohit Pl (231122)

John S. Manavalan(231178)

Srijit air (2311!")

#ive$ %havan (231173)

&eena 'aral(2311!3)


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Introduction:

+nteration ,an be de-ned in eneral term a the /ro,e in hi,h to

,om/anie et ,ombined into a inle one at all level. S/e,i-,ally0

interation involve the ynthei o /eo/le into one ,or/orate ,ulture.

he ne ,ulture may im/ly be the ,ulture o the a,uirin ,om/any that

i u/erim/oed on the a,uired ,om/any or ome ne entity that i a

,ombination o the bet a/e,t o both ,or/orate ,ulture.

he ,ombination o to ,om/anie4 ytem into a inle et i

interation5 thee may rane rom inormation ytem li$e ,om/any e6

mail and intranet to0 human ytem li$e &Rmar$etin-nan,e

de/artment and their a,,om/anyin /oli,ie and /ro,edure. atly0

interation i the merer o the to ,om/anie4 /rodu,tion /ro,ee into

a uniorm ytem.

he ,om/anie hi,h have a /lan o a,uirin another ,om/any are

reali*in that the real ,hallene in4t about ho to o on ith the

a,uiition0 intead it i hen the deal ,loe and more attention need to

be iven on ho to bet derive value rom the a,uiition. 9ually the

eitin buine and the tareted buine o/erate either in the ame

-eld or in the ,om/lementary -eld and the a,uirer deire to interate

the to buinee in order to ave ,ot0 develo/ ynerie and enerate

value or it hareholder. hi interation uually /oe ubtantial

,hallene and i the buinee o the a,uirer and the taret are

multinational then ,ale and the number o ,hallene in,reae

ini-,antly.

he la,$ o a tron ,ultural interation /lan i the main reaon hy

merera,uiition ail to deliver lon term value. Jut li$e /eo/le0

a,uired orani*ation alo o throuh a ,hane ,urve immediately ater

a deal i made0 and the ytem0 /ro,ee0 and /roram that under/in

the a,uired ,om/any4 ,ulture are under ,rutiny. 'll too oten0 thee are

ui,$ly re/la,ed. hat4 be,aue the a,uirin ,om/any /end little time

/lannin and leadin throuh thi ,riti,al ,hane ,urve. ;ne thin the


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leader ail to undertand i that ,ultural interation i a lon term ta$

and ouldn4t ha//en early. Rather0 it ta$e time to undertand hat the

nely ormed entity ill loo$ li$e and then /ut a manaement team in

/la,e that i both /eritent and alined a it uide the orani*ation0/ra,ti,e0 and /eo/le toard the etablihed viion.

he olloin ,ha/ter o,u on a ,ommon ituation here there ha been

an a,uiitionmerer and the a,tor hi,h made the a,uiition a

u,,e or a ailure tory.

The DaimlerChrysler Merger

Introduction

;n ovember 120 1aimler%hryler '=. Aith ,ombined

revenue o @13B billion and a mar$et ,a/itali*ation o @aimler%hryler be,ame the -th laret automa$er in the orld in

number o vehi,le old and third laret in ale. %hryler %D; ?ob

Daton /redi,ted0 ithin -ve year0 they ould be amon the ?i hree

automotive ,om/anie in the orld. hree year later >aimler%hrylerE

mar$et ,a/itali*ation tood at @FF billion0 rouhly eual to the value o

>aimler6?en* beore the merer and %hryler =rou/E hare value ha

de,lined by one6third relative to /re6merer value. < year don theline0 >aimler -nally dum/ed 8BG o it ta$e on %erberu %a/ital

Manaement or jut @7.F billion.

Rationale for the Merger

Hor %hryler and >aimler6?en* there ere hih ho/e about a number o

ain to be a,hieved throuh their merer. >aimler6?en* a troner in

Duro/e5 %hryler0 in orth 'meri,a. >aimler6?en* had a lobal ditribution

netor$. >aimler6?en*4 re/utation or enineerin ,om/lemented


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%hryler4 re/utation or ,reative tylin and /rodu,t develo/ment.

%hryler4 e/erien,e in dealin ith 9S invetor ould hel/ >aimler6

?en* be,ome a /a,eetter in brinin modern ,on,e/t o ,or/orate

overnan,e and hareholder value to the =erman e,onomy. %hryler4reeheelin method o vehi,le develo/ment ould $i,$6tart the more

bureau,rati, Mer,ede6?en*. he ,ombination ith %hryler hel/ed

redu,e the ri$ ao,iated ith >aimler6?en*4 de/enden,e on the

/remium ement o the automobile mar$et by introdu,in brand

diverity. >aimler6?en*4 -nan,ial ,lout and te,hni,al /roe ould

bolter %hryler in the auto ar. Moreover0 the ,ombined ,om/any had

reater -nan,ial trenth ith hi,h to enter ne mar$et.

Reasons for the Failure of the Merger

Lack of Due Diligence: >aimler6?en* underetimated the ,om/etitive

or,e that ould invade the orth 'meri,an ,ar mar$et and ta$e mar$et

hare rom the dometi, ,arma$er. >aimler6?en* never did due dilien,e

beore it bouht %hryler and never loo$ed into the uture to ee hether

%hryler ,ould aIord to be ,om/etitive ith the other in the indutry.

“Marrying up, Marrying don! "henomenon: Mer,ede a

univerally /er,eived a the an,y0 /e,ial brand0 hile %hryler and it

ub brand >ode0 Plymouth and Jee/ ere the /oorer and eeminly had

blue ,ollar relation. hi uelled an under,urrent o tenion0 hi,h a

am/li-ed by the a,t that 'meri,an or$er earned a//re,iably more than

their =erman ,ounter/art0 ometime our time a mu,h.

Di#erent philosophies of organi$ational structure: %hryler had

matri manaement and /latorm team and o/erated in een,e a a

inle tratei, buine unit. >aimler6?en* had a more traditional

tru,ture ith dire,t line o authority and buine unit autonomy or

ea,h o it 23 buine unit. >aimler6?en* manaer ere rearded

baed /rimarily on the /ro-t and lo reult o their unit. %hryler

manaer ere rearded baed on the u,,e o their team and


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%hryler. Hurther0 %hryler ee,utive had ri,h termination ,ontra,t0

(olden /ara,huteK)0 a /ra,ti,e not ued in =ermany.

Culture Clash: %hryler and >aimler6?en*E brand imae ere ounded

u/on diametri,ally o//oite /remie. %hrylerE imae a one o

'meri,an e,e0 and it brand value lay in it aertivene and ri$6

ta$in ,oboy aura0 all /rodu,ed ithin a ,ot6,ontrolled atmo/here.

Mer,ede6?en*0 in ,ontrat0 euded di,i/lined =erman enineerin

,ou/led ith un,om/romiin uality.

%eparate Distri&ution and retail sales systems: Mer,ede6?en*

dealer0 in /arti,ular0 had /roven avere to in,ludin %hryler vehi,le in

their retail /rodu,t oIerin. he loi, had been to /rote,t the an,tity o

the Mer,ede brand a a hallmar$ o un,om/romiin uality. hi had

,ertainly hindered the %hryler =rou/E mar$et /enetration in Duro/e0

here mar$et hare remained tanant at 2G. Potentially /ro-table

vehi,le u,h a the >ode eon and the Jee/ =rand %hero$ee been ide6

lined in avour o the le6,ot6eIe,tive and troubled Mer,ede '6%la

,om/a,t and M6%la S9#0 re/e,tively.

Di#erent product de'elopment philosophies: >aimler6?en* remained

,ommitted to it oundin ,redo o Luality at any ,otL0 hile %hryler

aimed to /rodu,e /ri,e6tareted vehi,le. hi reulted in a undamental

di,onne,t in u//ly6/ro,urement ta,ti, and a,tory tan

reuirement.

Mismanagement: he CMerer o Dual4 tatement a ne,eary in

order to earn the u//ort o %hrylerE or$er and the 'meri,an /ubli,0

but the real intention a or %hryler =rou/ to be a mere ubidiary o

>aimler%hryler. he relationhi/ la,$ed viion and leaderhi/ to ma$e it

or$. Dm/loyee didn4t $no hat the relationhi/ a u//oed to loo$

li$e in the end. eaderhi/ didn4t dra the /i,ture0 nor did they en,ourae

the to ,om/anie to meh. +t ,ould have or$ed i leaderhi/ had old

the em/loyee on hy the marriae a ne,eary and demontratin


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ho both ould be better oI a a reult o their union. ' ,om/ellin joint

/roje,t ould have hel/ed a ell.

Ford and (aguar Land Ro'er

Introduction

he Hord Motor %om/any (,ommonly reerred to a im/ly Hord) i

an 'meri,an multinational automa$er headuartered in >earborn0

Mi,hian0 a uburb o >etroit. +t a ounded by &enry Hord and

in,or/orated on June 1"0 1


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Failure to translate the strategy &y Top Management

Hord anted to in,reae the ale o Jauar in Duro/e. ?ut it a,ed many

/roblem in doin o a there ere hih manua,turin ,ot in the 9O. o

over,ome thi0 Jauar made the de,iion to redu,e ,ot by harin /art

a,ro brand0 o that Jauar ere built uin /latorm on hi,h other

Hord vehi,le ere bein built. he /ra,ti,e i ,ommon in the auto

indutry0 but in thi ,ae it may have hurt Jauar4 imae and uality. Hor

eam/le0 they laun,hed the ne N6y/e bain it on the Mondeo0 and thi

dia//ointed mot o the ,otumer. hat ,ar in /arti,ular a ellin at

@2


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Culture at (aguar under Ford

Role ,ulture in4t ne,earily neative0 but it or$ better in tableenvironment. Sin,e ,hane reuire lot o a//roval0 it4 very badly

uited or /eriod o ,rii0 here at rea,tion and eibility are very

im/ortant. +nide the ,om/any0 ,om/etition or /romotion a very hih0

and de/ended more on tie and a,uaintan,e0 rather than a,tual

/erorman,e. Manaer o,ued too mu,h on their ,areer and too little on

,utomer. hi meant that there a very little inormation harin

beteen de/artment0 and /roblem ere oten hidden0 in,e loo$in

ood a the mot im/ortant thin.

>urin meetin0 manaer uually atta,$ed ea,h other0 loo$in or ay

to ain an advantae on them. he obje,tive o thee meetin a el6

/reervation0 and nothin a uually olved. hee ,hara,teriti, alo

/ermeated to Jauar0 here there a alo a robut role ,ulture.

9ltimately0 Hord de,ided to ell JR to '' in 2BB8. Hord made a lo o

@12.7 billion and @ 2.7 billion in 2BB" and 2BB7 re/e,tively. hey ere

alo hit by the lobal -nan,ial ,rii in 2BB8 and ent ,loe to ban$ru/t,y.

he alo old #olvo in 2B1B in order to re,over rom the loe. Dventually0

Hord tarted hoin a /ro-t in the year 2BB


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manua,turer a the buine a baed on S9# and other bi ,ar

hi,h ere not /erormin ell in term o ale due to the bad

environmental ,ondition. ;ne u,h ,om/any a H;R> ho hi,h

needed a bailout deal very badly to urvive the donturn in the indutry. JR a,uiition by '' a one o the i,oni, and mot tal$ed about

a,uiition in automobile indutry. '' oIered to buy the JR (Jauar and

and Rover) brand or @2.3 billion in the year 2BB8. Hord old the to

brand to to o,u on their ,ore buine alo JR had alay been a do0

in the ene it never /rovided any /ro-t to the /arent ,om/any.

The Rationale ehind The )c+uisition

here ere numerou reaon behind thi a,uiition:

here a %trategic dimension to thi move a thi ould4ve abled

T)T) to launch glo&ally, by ivin it better te,hnoloy and broadenin

the /rodu,t rane. +t ave '' easy access to international markets-

Hurthermore0 the a,uiition ,ould alo be a cost.e#ecti'e ay of

gaining competiti'e ad'antages u,h a te,hnoloy0 brand name

valued in the taret mar$et and loiti,al and ditribution advantae0

hile imultaneouly eliminatin a lo,al ,om/etitor.

Hinally0 the a,uiition o JR ,ould enable the ,om/any to enhance its

/nancial position in the mar$et. Re,ent -nan,ial reult ho that ata

ha /ro-ted rom the a,uiition o Jauar and and Rover. JR /oted a

re,ord ale o @ billion in the year 2B1262B13.

0ains for T)T)

M' ee$ to develo/ lon term /ro-tability by e/andin ,om/any4

o/eration. +n thi ,ae both JR and '' manaed to obtain bene-t. ;n

one hand '' ained eay a,,e to the international mar$et and on the

other hand JR ot the reuired invetment by '' hi,h enhan,ed

their R> hi,h ave (LR a ell de/ned &rand image.


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Hurthermore (LR*s technology ga'e T)T) the cost ad'antage alo

than$ to the ynerie ith the other buine. he dein ,entre o

Jauar ere ued by '' or all it /rodu,t dein. hi a,uiition not

only ave '' the dein ,entre but alo ditribution ,hannel o Jauar.

Reasons for the %uccess of the )c+uisition:

Change in randing

Jauar a jut an a//endi o a mu,h larer orani*ation under Hord.

ata de,ided to brin it ba,$ a a ,entral and inde/endent brand. Darlier0

Hord ruined Jauar4 imae by tryin to maiyK luury0 removin it4

e,luivity. Hor eam/le0 it too$ it on /art and /ut them in Jauar ,ar0

omethin that a vieed by traditional oner a una,,e/table. hi

ty/e o behavior may be juti-able in venture beteen diIerent ,ar

,om/anie0 but not ith Jauar.

In'estment in the right areas

umerou ne enineer ere hired0 and the obje,tive a to im/rove

the reear,h and develo/ment area. he ne o,al area o buine ano innovation and renovation0 not jut ,ot ,ontrol

Cultural factors:

Hirtly0 '' de,ided to leave the eitin manaement tru,ture inta,t

and leave the national ?ritih manaer. here an4t any attem/t to

im/oe +ndian manaer on JR. 'll the $ey /eronnel retained their

/oition.

Se,ondly0 '' didn4t jut leave the ,urrent manaer on their on. ''

manaed to motivate them throuh ,ontantly ,hallenin them and

or$in ith them. +n other ord0 hel/ a oIered only hen it a

needed and eitin /ra,ti,e remained in /la,e0 but at the ame time

manaer ,ouldn4t aIord to be idle be,aue they had oal to rea,h and

/lan to im/lement.


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hirdly '' manaed to in/ire trut in JR. Hirt o all0 the a,t that mot

o JR4 /eronnel ere let on their /oition hoed that '' trut JR0

and believed that it i ,a/able o olvin their /roblem. Moreover0 more

than on,e in intervie the Manain >ire,tor made ,lear tatement oloyalty hi,h ,ontributed /oitively on the ,oo/eration beteen the

,om/anie.

Hinally0 '' $e/t an o/en6mind and never heitated to liten to eedba,$

rom ubordinate. ''4 to/ level o,ial oten ma$e tri/ to their

a,torie and dealerhi/ outide +ndia and ,olle,t eedba,$ rom lo,al

em/loyee. hee o/inion are bein ued in the develo/in ,om/any4

tratey.

Cash management

' JR didn4t have a ,ah manaement ytem o it on0 ata Motor

turned to ,onultant OPM= to develo/ a ,ah manaement model. '

three6tier model a develo/ed. Hirt0 a hort6term oal to manae

liuidity ith the aitan,e o OPM= a /ut in /la,e. hen ,ame a mid6

term taret to ,ontain ,ot at variou level and the ormation o 1B611

,ro6un,tional team. Hinally0 a lon6term oal that run until 2B1F a

dran u/0 o,uin on ne model and rerehin the eitin one. he

$ey aim,ah manaement and ,he,$in ,ot.


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Conclusion:

he early identi-,ation o /rimary tratei, and buine obje,tive o the

a,uiitionmerer and ubeuent interation i the $ey to over,omin

the ,hallene in im/lementin the /ot6a,uiitionmerer interation

/lan. Provided that thee buine obje,tive are realiti, and ell

undertood and u//orted by the manaement and u,ient amount o

attention i iven to /lannin and im/lementation /hae o the

interation0 the li$elihood o obtainin /re6deired bene-t out o the

a,uiitionmerer ill be in,reaed.

?eore a u,,eul interation ,an bein0 /ro/er /lannin or that u,,eneed to ta$e /la,e. 9nortunately0 many interation initiative ail rom

the tart be,aue the interation bein beore any thouht i iven to

the ,oure that the interation ill ta$e. Plannin or interation revolve

around viion and ,ommuni,ation.

he >aimler6%hryler merer ailed be,aue %hryler and >aimler6?en*E

brand imae ere ounded u/on diametri,ally o//oite /remie.

%hrylerE imae a one o 'meri,an e,e0 and it brand value lay in

it aertivene and ri$6ta$in ,oboy aura0 all /rodu,ed ithin a ,ot6

,ontrolled atmo/here. Mer,ede6?en*0 in ,ontrat0 euded di,i/lined

=erman enineerin ,ou/led ith un,om/romiin uality. 'lo0 /re6

a,uiition due dilien,e an4t iven to ,om/etitive or,e beore the

merer.

he a,uiition o JR by '' ho to u ho u,,eul interation led

to the obtainment o deired bene-t rom the a,uiition. '' didn4t

attem/t to im/oe +ndian manaer on JR and manaed to in/ire trut in

JR and ave a ne o,u to the buine ater the a,uiition and didn4t

jut ,on,entrate on ,ot ,ontrol.

%om/anie that are ,ommitted to ,om/lete a u,,eul merer ill

enhan,e0 not detra,t rom0 em/loyee elare. ;ne ay to enure that

em/loyee elare i enhan,ed i to em/hai*e /ro/er /re6a,uiition

/lannin0 thouhtul and ,onitent ,ommuni,ation and trainin0 and0


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above all0 litenin. Dually im/ortant i to a,$nolede the role o

eibility in the /ro,e.

Art of Integration after acquisition

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