How is Organizational Culture Managed in Mergers?
Mariam Peyton is a professional Financial Analyst. She holds a Masters degree in Economics. She specialises in financial analysis and forecasting. Her expertise includes studying the financial performance of companies, markets and entire industries looking for trends, insights and information that can help you glean rich insights for use in academic and market research.
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Important to note is that mergers are a very significant aspect of business growth. But a number of mergers fail to attain their primary objective. A number of mergers don’t produce value for their acquisitions. A number of literature reviews and surveys suggest that organizational culture is vital for mergers and acquisitions to be successful. These studies also indicate that cultural differences are one of the factors that could lead to unsuccessful mergers and acquisitions.
This assignment examined how organizational culture can be managed in mergers. It answers questions like; how can organizational culture be managed during a merger? How to maintain company culture during mergers and acquisitions?
Organizational culture constitutes aspects such as principles of the enterprise, operational standards, management style, entrepreneurship, ethics, and development goals among others which are agreed upon by all members of the organization. Armstrong and Taylor, (2017) define culture as the pattern of values, beliefs, norms, assumptions, and attitudes that may or may not have been articulated but shape the way people in the organization behave and do things. The authors further highlight values as what is believed to be important about how people behave, while norms are the unwritten rules of behavior. According to Izuogu, (2015), culture is the “way things are done”. Organizational culture is defined as the company's beliefs, values, and attitudes, and how these factors affect the behavior of employees and customers, it can also be defined to mean the basic assumptions and beliefs shared within an organization.
The importance of organizational culture in the strategic management of a business is that it is one way by which it can sustain itself.
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How is Organizational Culture Managed in Mergers? a Case Study
Key Learning Outcomes
By the end of the case, students should be able to:
- Understand the concept and different scopes of organizational culture and how it influences the behavior and performance of employees and managers.
- Analyze the challenges and opportunities of managing organizational culture in mergers and acquisitions, such as cultural fit, alignment, adaptation, and change.
- Evaluate the effectiveness and impact of organizational culture management in mergers and acquisitions on various stakeholders, such as shareholders, customers, employees, and society.
1.0 INTRODUCTION
Mergers and acquisitions are common strategies for businesses to grow, diversify, or gain competitive advantages. However, they also pose significant challenges for managing organizational culture, which is the set of shared values, beliefs, and norms that shape the behavior and performance of employees.
Organizational culture is one way through which an organization safeguards itself from external forces that affect the business environment. Organizational culture is defined as the company's beliefs, values, and attitudes, and how these factors affect the behavior of employees and customers, it can also be defined to mean the basic assumptions and beliefs shared within an organization.
In this assignment, we will discuss some of the key aspects of managing organizational culture in Mergers and acquisitions, such as:
Why is organizational culture important in Mergers and acquisitions?
What are the main types of cultural differences and similarities in Mergers and acquisitions?
How can organizational culture be assessed and measured in Mergers and acquisitions?
What are the best practices for aligning and integrating organizational culture in Mergers and acquisitions?
Organizational culture is important in Mergers and acquisitions for a number of reasons such as;
It affects the strategic fit and value creation of the deal. A strong cultural fit can enhance the compatibility and complementarity of the merging entities, leading to greater synergies, innovation, and customer satisfaction. A poor cultural fit can undermine the strategic rationale and expected benefits of the deal, resulting in lower performance, efficiency, and quality.
It influences the human and social aspects of the deal. A positive cultural integration can foster employee engagement, motivation, and retention, as well as trust, collaboration, and communication among stakeholders. A negative cultural integration can trigger employee resistance, turnover, and stress, as well as conflict, distrust, and silos among stakeholders.
It shapes the identity and reputation of the new entity. A coherent and distinctive cultural identity can help the new entity establish a clear vision, mission, and values, as well as a strong brand image and reputation in the market. A fragmented or diluted cultural identity can confuse or alienate the new entity's customers, partners, and investors.
What are the main types of cultural differences and similarities in Mergers and acquisitions?
Cultural differences and similarities in Mergers and acquisitions can be classified into four main types:
National culture: This refers to the differences and similarities in values, beliefs, and norms that are influenced by the country or region of origin of the merging entities. For example, national culture can affect the preferences for hierarchy, individualism, uncertainty avoidance, or long-term orientation.
Industry culture: This refers to the differences and similarities in values, beliefs, and norms that are influenced by the sector or field of activity of the merging entities. For example, industry culture can affect the attitudes toward risk, innovation, competition, or regulation.
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