1. Strategic

Intent

5. Integration Process Variables:

a. Level of integrationb. Speed of integrationc. Acculturationd. Autonomy Removale. Communication

qualityf. Social Integration

Mechanisms

2. Target Organizations Variables

a. Degree of relatedness

b. Organizational architecture

c. Performance differences

d. Approache. Acquisition./merger

experience

3. Culture

a. General cultureb. Organization culturec. National culture

4. Org.Fit

6. Integration Processa. Strategy integrationb. Structure

Integrationc. Human Integrationd. Process Integratione. Task Integrationf. Procedural

Integration

1. Strategic Intent

Strategic Intent

Det

erm

ine

the

Exac

t Str

ateg

ic In

tent

–

Obt

ain

Clar

ity a

nd A

gree

men

t

Economies of scale

Interdependencies

Expand product lines and markets

Enter new business

Maximize and utilize capacity The Case

for the Merger

2. Target Organizations Variables

2. Target Organizations Variables

a. Degree of relatedness

The relatedness/ relatedness bring different synergies that can be generated:

Relatedness is usually considered against the background of the following:a. Similarity of production technologiesb. Similarity of research processesc. Similarities in terms of products and/or

service offeringd. Similarities in term s of markets

Relatedness generate the following potential synergies:e. Economies of scalef. Economies of scopeg. Market power

Relatedness is considered to generate other synergies such as administrative efficiencies, dominance due to size of firm, improved human capacity etc

2. Target Organizations Variables

a. Degree of relatedness

b. Organizational architecture

a. Do the companies differ in terms of the span of control and degree of decision-making?

b. Does the decision-making leeway, in terms of profit and cost centres, differ between buyer and target?

c. How dissimilar are the compensation and incentive structures (e.g., the variable portion of remuneration)?

d. What differences exist in core processes and functions such as market development, order processing, production of goods and services or extent of outsourcing?

Post Merger Integration:Hard Data, Hard Truths

BY Johannes Gerds and Freddy Strottmannwith Pakshalika Jayaprakash > Illustration by vince mcindoe

2. Target Organizations Variables

a. Degree of relatedness

b. Organizational architecture

c. Performanced. Merger approach

• Very little in terms of how performance • Influence the merger decision making process.• However the diagram below provide an intuitive view:

Assimilation Integration

Recreate or Shedding Assimilation

Firm

A

Firm B

Performance

Perf

orm

ance

2. Target Organizations Variables

a. Degree of relatedness

b. Organizational architecture

c. Performanced. Approache. Acquisition

experience

Studies show mixed results in terms of performance of firmsWith less or more acquisition or merger experience. Few showThe relationship consequences, as modelled here:

Positive – mentoring, sharing etc.Negative –

competitive

Joint Risk Mitigation Approach

Joint SearchDependence on Experts

Positive – mentoring, sharing etc.Negative –

competitive

Firm

A

Firm B

Previous Experience

Prev

ious

Exp

erie

nce

The influence of organizational acquisition experience on acquisition performance: a behavioral learning perspectiveby Jerayr Haleblian, Sydney Finkelstein

3. Culture

3. Culture

a. General cultureb. Organization culturec. National culture

Symbols

Hero's

Rituals

Values Practices

Cultures and Organizations:Software of the Mind

By Geert HofstedePresented by:

Natalie Balaziuk, Beth Roszkowski, Michelle Yeager

Cannot be “managed”Domain of transformation Transformational Leadership

Can be “managed”However almost always follows

3. Culture

a. General cultureb. Organization culturec. National culture

Age:

0

10

20

Culture:

Gender

Family/Social class

National

Occupational

Organizational

VALUES

PRACTICES

What Culture is Transferred

When

3. Culture

a. General cultureb. Organization culturec. National culture

Generalized Value Orientations

Perspective Constructs Comments

How is inequality dealt with Power distance Large – unequal distribution of powerSmall – more equal distribution of power

How is the unknown viewed Uncertainty avoidance Extent to which culture feels threatened by ambiguity

How is dependence on others viewed

Individualism – Collectivism Individualist – ties between individuals are looseCollectivist – strong group affiliation and oppose other groups

How is gender roles viewed Masculine – Feminine Masculine – gender roles distinct and more rigid “men are men”Feminine – gender roles overlap men can also be tender …

Perspective of time Long – Short See next slide

Dealing with natural drives Restraint - Indulgence Restraint – curbs gratification and regulates by strict social normsIndulgence – drives free gratification of basic drives

3. Culture

a. General cultureb. Organization culturec. National culture

Business start-up

Learning takes place (individual and collective- shared learning)

The shared learning becomes entrenched and are often not questioned

Manifest in a shared “way of doing things”

3. Culture

a. General cultureb. Organization culturec. National culture

Culture Development (Schein , Edgar H . Organizational culture & leadership [Web log message]. Retrieved from http://www.tnellen.com/ted/tc/schein.html)

ARTIFACTS

ESPOUSED VALUES

BASIC UNDERLYING ASSUMPTIONS

Visible symbols

Slogans

Languages

Behaviours

Histories & stories

Dress codes

Heroes & Legends

Rituals & Ceremonies

Core values

Beliefs

Share assumptions

Attitudes

Unconscious perceptions

Adopted from Schein, E.H. Organizational Culture and Leadership, Jossey-Bass, San Francisco, 1992, Figure 9

Organisational structures & processes

Strategies

Goals

Philosophies

Unconscious beliefs

Unconscious thoughts

Unconscious feelings

Organizational Fit

Cons

ider

info

rmati

on

gath

ered

Strategic intent

Target Organization Variables

Culture

Go – No Go Decision and Integration

Planning

5. Integration Process Variables:

a. Level of integration

Separate and Preserve

Integrate – “Best of Both”

Consider Merger Merit

- If Yes Deculturize

and Reinvent

Absorb and Assimilate

Need for Strategic InterdependenceDegree of Relatedness

Nee

d Fo

r Org

aniz

ation

al A

uton

omy

Tole

ranc

e Fo

r Mul

ticul

tura

l

High

Low High

5. Integration Process Variables:

a. Level of integrationb. Speed of integration

Expe

ctati

ons/

Valu

e Re

aliza

tion

Time

Expectations Tend to OutpaceValue Realization

Potential Conflict

5. Integration Process Variables:

a. Level of integrationb. Speed of integrationc. Acculturation

Cultural Maintenance= YES

Cultural Maintenance= NO

Contact Participation= YES Integration Assimilation

Contact Participation= NO

Separation/Segregation Marginalization