BOMBARDIER TRANSPORTATION AND THE ADTRANZ AQUISITION CASE ANALYSIS
Prepared by: Samuel C. Anyanwu
Date of Submission: February 17, 2015.
Submitted to: Prof Dr. Kelly Thompson.
Bombardier Inc. (BBD) had over the years built a well diversified and versatile business in order to reduce cyclical risk, ensure long term survival and redefine the company’s position on a global scale. The route taken to achieve this level of diversification was through strategic acquisition of key players in the industry that complimented BBD’s vast business ventures.
BBD’s growth philosophy was to seek acquisitions that enabled the company to apply exiting competencies without focusing solely on ...view middle of the document...
[ (Rikard Larson & Sydney Finkelstein P1) ]
The acquisition of Adtranz by Bombardier Transportation (with Adtranz being twice the size of BT) fell within the lines of the company’s ascertained approach to expand revenue and geographical scope but the acquisition was mainly to increase its competencies in propulsion systems and train controls which would complement its product portfolio. (BOMBARDIER & ADTRANZ AQUISITION CASE ,P1,4,5).
Adtranz’s business model constituted a good strategic fit with great complimentary attributes which made for an increased degree of synergy realization but BT still needed to conceptualize and effectively rectify the organizational structure incompatibility as there were organizational issues to be dealt with before full synergistic benefits from the merger was to be realized.
According to Larson and Finkelstein, the presence of complementary operations increases the probability of acquisition success by boosting synergy realization of the merger and combination potential is significantly more successful when coupled with high organizational integration. [ (Rikard Larson & Sydney Finkelstein) ]. The theory proposed by Larsson and Finkelstein establishes the fact that the BT and Adtranz merger was significantly successful from a the complementary combination of operations to being about greater synergy realization but the lack of organizational integration could see to the less likelihood of the success of the merger being maintained and sustained overtime. The presence of complementary operations as opposed to combination of similar production and marketing operations made for the absence of resistance from employees on both sides of the merger.
According to Larson & Finkelstein, the approach to be considered by the executives at BDD when trying to integrate both companies from an organizational perspective would have to entail taking advantage of BT’s/BBD’s current approach of using a low degree of organizational integration as considerable interaction and coordination of both companies structure and strategy are necessary to adequately exploit the strategic interdependencies that both companies possess. Larson and Finkelstein proposes that organizational integration can be considered based on the degree of interaction between both companies from a restricting point of view where executives are able to analyze the best restructuring approach that culminates into a win-win strategy for increased synergy realization. [ (Rikard Larson & Sydney Finkelstein) ].
Considering the cross border combination hypothesis proposed by Larson and Finkelstein, it is stipulated that cross border mergers can impede interaction and coordination needed to realize synergies or it can speed up entrance into new markets thereby promoting globalization synergies. The acquisition of Adtranz by BT makes for a positive cross border combination as the legal and financial framework of both countries where the companies are located are...