Succesful Post Acquidition Change Management Essay Example

cultures during acquisitions by applying change management theories. This is important for organizations to efficiently achieve their goals, maximize synergies, and obtain or strengthen their competitive advantage.

The research aims to identify the reasons why some companies are more successful than others in effectively managing change. It also explores the contributions of the theoretical framework used in this process. This understanding will help draw important conclusions and insights for future studies and potentially identify areas for improvement. Having well-developed organizational and predisposition skills is crucial for the success of such activities, and having a clearly defined transition philosophy is essential.

Prompt and consistent decisions are essential for maintaining employee confidence in the success of the transition. Executives, the integration team, and the Human Resource function must understand the nature and impact of corporate cultures to ensure this. Many studies address the failure, process, and significance of acquisitions as they often prove unsuccessful. Similarly, strategic initiatives often do not achieve their intended objectives.

Managers and researchers should consider ways to prevent failure in acquisitions. Often, companies view acquisitions as financial engineering exercises rather than strategic ones. However, it is important to recognize that "culture eats strategy for lunch," even in the context of acquisitions (McKinney 2010:9). To become active participants in organizational change, individuals within organizations can shift from a reactive mindset to actively understanding the different patterns and types of change.

Leaders, workers, and executives can actively participate in the change process to guide the organization towards greater success (Nicole, J.C. 2011: 835). This phenomenon provides motivation and passion to contribute to the body of knowledge, offering a framework to help organizations succeed in implementing

and overcoming challenges during change. Despite the significance of mergers and acquisitions in the business world, there has been limited research on this topic in the literature.

Many researchers have attempted to investigate a specific aspect of the acquisitions process (Arizona et al. (2011 : 248). Previous studies have examined the challenges faced by managers in various organizations when selecting and implementing different business improvement strategies. There are multiple approaches available, each with different levels of overlap, reinvention, and claims of universal applicability (Anderson et al. 06: 13). It is important for organizations to carefully choose a business improvement methodology that is tailored to their specific needs, instead of simply selecting popular options. Replicating a methodology that has worked well in one organization may require significant adaptations to be successful in another.

The text highlights the significance of being proactive and adaptable to succeed in a dynamic business environment, while also staying ahead of competitors. It stresses the importance for organizations to assess their strengths and weaknesses in relation to environmental changes and effectively manage change projects. Change management theory is presented as a solution for companies faced with multiple changes in the business field. This theory involves preparing employees and organizations for continuous learning and growth by utilizing different leadership styles. Effective managers are those who plan, guide, and control changes, while also possessing the confidence to adapt and support others during the process. Although we cannot control changes, it is acknowledged that we can prepare ourselves to handle them. The passage concludes by quoting Headway (2011:7) who states that perceiving change as a threat impedes creativity.

Use opportunities to reach goals, as each

improvement counts as change. Changing habits at the group or organizational level is difficult, so informing employees of the changing outcomes is crucial for encouraging them. When communication fails, management fails. Involving employees in the change plan reduces resistance. Successful implementation within an entity requires careful change management (Stares et al. 013: 60). Change management is a complex and non-linear endeavor that demands imagination, creativity, and patience (Newman. 2012:3). The environment has a significant impact on organizations, which can adapt and be shaped by it simultaneously (Ivan and Castellated, 2010: 3). According to Difference (2006: 9), changes occur to increase efficiency and reduce costs or to boost profits and growth, ensuring the company's continued existence.

Currently, undergoing changes is seen as an unavoidable necessity, leaving managers feeling like there are no alternatives. Experts emphasize the importance of efficient management to handle the forces of change, given the complex world and business environment. Complexity is mainly attributed to factors such as globalization, the speed of innovation, and intense competition (Ivan and Castellated, 2010).

The success and survival of all companies in the long run rely on managers' strategic alignment (Menstrual and Revenuer, 2010: 10). It is important to recognize that substantial change plans are not formed by an individual alone but rather by a dedicated committee working towards the company's prosperity. In this dynamic landscape of significant shifts, comprehending the obstacles organizations confront becomes crucial. Managers must devise strategies to uphold market competitiveness; nevertheless, there remain numerous challenges demanding attention.

Merely having a strategy is insufficient for achieving success; carefully executing that strategy is also vital. Research reveals that the failure rate in effectively implementing organizational

strategies stands at approximately 70 percent. Moreover, studies indicate that companies only achieve a success rate of 60 percent. Common obstacles to attaining success in mergers and acquisitions (M) have been identified by experts, as demonstrated below. Financial analysts often mention an interesting statistic: ultimately, 70 percent of mergers, acquisitions, and other business partnerships end up failing.

This statement is interesting because management experts commonly acknowledge that 70% of strategic initiatives do not reach their intended goals. However, at the start of 2012, there was an increase in merger and acquisition activity. A report from PAW'S stated that M&A values in the preceding year exceeded one trillion dollars, marking a 15% growth from 2010. Forecasts for 2012 are positive, as indicated by a study carried out by KEMP and The.

According to a study conducted by the Wharton School of the University of Pennsylvania, 825 executives are cautiously optimistic about M&A in the upcoming year. The study reveals that nearly 70% of companies plan to make at least one acquisition in 2012, which is a significant growth from the previous year. Research firm Ideological (Denoting. 2012: 35) reports that there was an increase in corporate M&A deals to almost 5,900 in the first six months of 2012, compared to around 5,100 during the same period in 2011. Comprehensive research supports the argument for pursuing acquisitions.

According to a study conducted by the Boston Consulting Group, organizations that achieved sustained growth through acquisitions had the highest shareholder returns. The study analyzed approximately 700 large U.S. public companies over a 10-year period and found that these companies outperformed those focused solely on organic growth. They also generated

more value for shareholders and experienced faster market share growth compared to their competitors.

Cisco Systems Inc., known for its consistent pursuit of a growth strategy through acquisitions, serves as a notable example supporting the effectiveness of this approach. Unlike 87 percent of its peers in the Fortune 500 that disappeared over the past 17 years, Cisco has remained successful. In an interview with broadcast journalist Charlie Rose, CEO John Chambers highlighted that since joining the company in 1991, they have completed 150 acquisitions, which now contribute to 50 percent of the company's revenue. As a result, shareholders have enjoyed an impressive return on investment of 1,000 percent during that time period.

Cisco has regained momentum in the stock market and CEO Chambers is pursuing acquisitions again after a brief stumble. Their recent purchase of ENDS Ltd aligns with their strategy to dominate the growing markets of cloud computing and online video. Cisco and other companies have successfully generated strategic value through acquisitions, providing justification for developing models that ensure sustainability for organizations aiming to emulate Cisco's growth through acquisitions. 2. 2. 1 . Why Acquisitions fail?

The text highlights that failures in acquisitions can be categorized into four groups. Financial engineering problems often arise as companies view acquisitions as an engineering exercise rather than a strategic one. Additionally, issues related to organization and culture are significant, with a study by McKinney & Co. revealing that 92 percent of respondents believed that better cultural understanding before a merger would have greatly benefited them. The same study identified poor leadership as a cause for unsuccessful M&A efforts cited by nearly half of the respondents. Strategic issues

also contribute to failure since multiple studies indicate that the lack of a clear strategic rationale for an acquisition is a contributing factor.

This research aims to prevent these problems and reverse the negative trend for organizations by developing an organizational change management framework to sustain performance after an acquisition, satisfying all stakeholders. Various methods are being explored to identify the most suitable solution for the problem.

The integration of acquisitions into a strategic planning process is crucial for their success. This entails bringing together the senior leadership team to focus on market opportunities and chosen strategies. The assessment involves determining if an acquisition can enhance growth, innovation, and operational objectives. It is important to gain support from individuals when implementing significant organizational changes.

Unfortunately, many leaders only try to win employees' support by appealing to their minds rather than their hearts. It is rare for leaders to provide a clear vision of what success would entail for the integrated organization. Without an emotional connection, employees are unlikely to prioritize the organization's success and invest the necessary time, energy, and commitment (Cotter et al. 2008). Managing a large-scale change like an acquisition requires a different approach than smaller changes that can be handled within the existing hierarchical structure.

Smaller changes can be managed with a project or change management approach. However, larger, strategic changes require a more transformational process. In essence, the problem is not mergers and acquisitions themselves, but rather the high failure rate that they often have. This same concern applies to most large-scale change initiatives. Disregarding mergers, acquisitions, and other business partnerships is similar to suggesting that organizations should avoid attempting to transform

or improve their competitive position.

The key factor is to do it right: increasing acquisitions and minimizing failures. Acquisitions and mergers are becoming more common in business, with parent-subsidiary relationships being observed worldwide. Since the late 20th century, mergers and acquisitions (M&A) have become a major approach for companies to expand globally and revitalize their strategies for better positioning in a fiercely competitive globalized landscape (Termagants, 2010).

Calculations bring change to an organization strategically, procedurally, and at an individual level. The success of implementing change in an organization depends on the commitment of the employees who are the recipients of the change (Nazi, More. 2012). Chou et al. (2008) found that employees' perception of a takeover deal as an opportunity or a threat greatly influences their reactions towards the acquisition. Studies indicate that M can have a significant negative impact on individuals, leading to decreased commitment and unproductive behavior.

Human capital is widely regarded as crucial in effective merger and acquisition management. In such scenarios, the role of Human Resources (HR) plays a vital and strategic function at every stage of the process. The integration of merged companies heavily relies on the careful and well-planned handling of HR's role (Smith, 2012).

It is surprising that the Human resources (HR) function is not heavily involved in the acquisitions process. However, there is evidence to support the idea that including HR on the leadership team earlier in the acquisition is beneficial. Each acquisition involves integrating the acquired firm into the culture of the new parent firm, and every stage of this integration process presents opportunities for the HR department to contribute to the success of the acquisition.