Abstract
The paper is designed to reflect the learning outcomes and lessons learned from the case studies of global organizations. The paper is based on two parts. The first part discusses the case study of Cliffe about “can this merger be saved?” to understand the reasons and causes of the failure of the merger of two companies Synergon and Beauchamp. The inefficiency of the management of the new developed company was the major cause of the failure as it was failed to understand the cultural differences of the two companies and thus resulted in the challenges. Then, I reflected my learning by discussing me on the position of the Nick (director of Synergon) to how to conduct the meeting with the managing director of the other company for the successful acquisition. The next part of the paper is about the case of Heinz and Kraft foods that have merged recently with the successful acquisition. The managerial approach and decision making are the major factors for the success of Heinz and Kraft merger. At the end of the paper, the learning outcomes are discussed.
Part: A
The case study “Can this Merger be saved?” describes the merger of Beauchamp (financial service company of Europe) and Synergon Capital (financial service company of U.S.). Synergon Capital was the company with the poor management while, Beauchamp had strong senior management. The differences were resulted in challenges.
The companies had different cultures, norms, values, behaviors, practices and leadership (Cliffe, 1) that were resulted in the greater challenges for their merger and acquisition. Julian Mansfield (managing director of Beauchamp) was unhappy with the merger because of the changes after merger such as unnecessary paper and forms work needed to be filled, new bonus system, rudely dealing with their employees and changes in other system as well. Where, Nick Cunningman was responsible for the merger from the side of Synergon Capital. Both of Nick and Julian were not satisfied with the merger and they were asking either they would stay in the company or not (Cliffe, 11).
Before going to focus on the salvaged of the merger, it is important to understand that why it was important and needed. The new market of Beauchamp and the way it deals with its clients were the major reasons for Synergon to takeover Beauchamp, where, the turnover rate of Synergon was very high as compare to Beauchamp and the company needs to increase its turnover in acquiring (Cliffe, 2). Though, the success of the acquisition was not possible with the way the approach they used.
The acquisition can be saved with the proper global management practices. Synergon Capital should consider itself as a global company after acquiring a company existing in Europe having different cultural backgrounds. The company should consider all the factors that shapes the culture differences that include individuals believe and norms, organization culture, regional culture and national differences. Keeping the differences based on the four factors, Synergon Capital approach for the merger was completely different of what Beauchamp practiced, believed. Therefore, it raised the challenges. So, to save the merger, the company was needed to change its leadership style and utilized all the tactics of negotiation with Beauchamp.
If you were in position of Nick, how would you prepare for the up-coming meeting with Julian Mansfield?
Although Nick was in the difficult position as he had to manage the merger, he opposed to, however, he could prepare himself for the management and meetings with Julian to lead the merger successfully. If I were in the position of Nick, I would definitely begin with understanding the culture, norms, practices and behaviors in the organization of Beauchamp to change the way of dealing and communicating. I would start the meeting with appreciations and clauses to him for signing with budget goals of Synergon. Further, I would encouraged him to be the in-charge for leading the budgetary goals, although, the agreement from my company would be must. As Julian has better understanding and knowledge of his culture and practices, I would suggest him to develop the strategic plan for the business of Beauchamp in merger with my company. It would help me to understand the strengths as well as the weaknesses of Beauchamp as well the opportunities and risks that would directly result in effective decision making.
It was very important that Julian should understand the vision of Synergon in selling its own and for this purpose; I would ask in the meeting with Julian to develop the operating budget, documents and reports for forecasting the sales. It would encourage Julian to understand the needs of Synergon under his own culture, practices and believes.
One of the most important aspects would be the discussion about the differences in cultures of the two companies. Rather than changing the culture of Beauchamp, I would tell Julian that one of the top managers of Synergon is going to bring in Beauchamp that would be the part of senior management of the company and deals with cost and operations, where, Julian would be free of managing customers, sales and revenue growth etc, that would results in the joint cultures of the two companies. In the most favorable conditions, I would suggest Julian Mansfield to run the business of Beauchamp, but as in, he was focusing on retirement, I would offer him to be paid premiums for his roles and contributions in Beauchamp. Without the efforts of Julian, it was not possible for Synergon to achieve its capital goals. Further, I would tell Julian that he can use the other ways to motivate his people even without any bonus system or plan, as the bonus are awarded in Synergon when the targets are achieved.
At last, once Julian Mansfield would be agreed to these terms and conditions, I would sign the agreement to purchase Beauchamp.
Part: B
Heinz & Kraft Food Merger and Acquisition
Recently, the two companies are teamed to develop their merger. These two companies include H. J. Heinz Co. and Kraft Foods and in combination, the new company is termed as The Kraft Heinz Company. On its acquisition, the company expected to become one of the top largest companies in the world.
Challenging or Successful
Before discussing the merger, it is important to know the reasons of the acquisition. Both of the companies have faced the down fall of their revenues and sales before the merger and acquisition. The revenue of Heinz was drop down by $2.63 billion, while, the revenue of Kraft foods was dived by $4.75 billion. The lack of demand and promotions were the major causes of revenue decline. However, with the merger, the two companies have begun to increase their profitability. Heinz reported the profit of $923 million from $874 million and Kraft foods reported the profit increase from $482 million to $551 million (Cruz). The merger went successfully, as the company became the third largest in U.S. and fifth largest in the world along with the growth in revenue and profitability (Miller). The company is now worth for $62.6 billion.
Aspects of M&A
Based on the analysis and discussion about Heinz and Kraft merger, it can be said that the decision making was the major cause of its success. Rather than taking pressures from the situation, the owners have made strategic effective decisions for how to merge the two companies in achieving the goals. As the companies were needed to increase their revenue, the cost cutting was very important. In mutual discussion and negotiations, the two owners 3GCapital and Berkshire Hathaway have decided to cut off the cost nearly around $1.5 billion (Donati) to increase the sales. They have applied the lean approach to the merger.
Furthermore, although, the company has developed in America, the senior team management includes the managers from former Heinz in UK and Europe. Also, rather than appointing new people, the company asked the COO of Kraft to hold its position in the new company (Spary). The mixture of two managements is expected to be the world class executive team that will lead the company to become the leader in the market. It shows that rather than dominating the company, the leaders have developed the innovative approach for the merger of two companies having different cultural and national background. The owners rather than focusing on the local market focused more on the international operations as they need to expand internationally. It means that the purposes, the aims and the planning are clear to the company for its merger.
Lessons learned from the two cases
I have also learned that decision making is the core to the ultimate success of the mergers. The decision making should involved thinking of what the company should own? Where it should it locate? How to operation being an international company? etc. The global and international business management is different from the local management as it requires more innovative tools and techniques to make the decisions for the business. The course learning taught me that the management of the global company should respect the people of the local companies in the way of their cultures, believes and communicate freely to encouraged and motivate them to support the company in achieving its goals and vision.
Works Cited
Cliffe, Sarah. “Can This Merger Be Saved?”. Harvard Business Review. 1999.
Donati, Marino. “Kraft Heinz merger to save $1.5 billion a year by 2017”. 2015. Online. 9 Feb. 2016. <http://www.cips.org/en-SG/Supply-Management/News/2015/March/Kraft-Heinz-merger-to-save-15-billion-a-year-by-2017/>
Cruz, Alex. “Kraft, Heinz Face Challenges As Revenues Drop Before Merger.” 2015. Online. 9 Feb. 2016. <http://www.jobsnhire.com/articles/24478/20150811/kraft-heinz-faces-challenges-as-the-revenue-drops-before-the-meger.htm>
Miller, Sue. “Kraft Heinz: What Happened after the Merger?”. 2015. Online. 9 Feb. 2016. <http://marketrealist.com/2015/08/highlights-kraft-heinzs-second-quarter-results/>
Spary, Sarah. “Kraft-Heinz bolsters leadership team ahead of merger.” 2015. Online. 9 Feb. 2016. <http://www.marketingmagazine.co.uk/article/1353948/kraft-heinz-bolsters-leadership-team-ahead-merger>
