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Mergers And Acquisitions Essay

1833 words - 8 pages

Introduction:Mergers or acquisitions have become a norm for companies aiming at growth. Various companies resort to mergers and acquisition, to form strategic alliances. In majority of cases the underlying reason for these is to guarantee long-term sustained achievement of "fast profitable growth" for the business. In today's competitive world it is important for various companies to keep up with a rapidly increasing diversified global market and increased competition. In order to gain competitive advantage it is essential to form alliances.According to Megginson and Smart "Mergers and acquisitions are major corporate finance events that, when executed efficiently and with the proper ...view middle of the document...

Role of Managers in successful Mergers/Acquisitions:The scope of organizational behavior for a manager goes beyond carving strategies for the functioning of the organization, and can extend further during and after acquisitions to extend financial benefits. The manager has an important responsibility to develop a leadership plan while keeping human elements that arise from such mergers in mind. To create this balanced equilibrium, the manager must use transition strategies of organizational behavior to keep the vision and goals of the organization while motivating and achieving better individual performancesArkin, (2003) shows that, involving Human Resource Professionals at the earliest stages of a merger or acquisition is crucial to help employees adapt to the change. Kitching (1967) stresses the importance of installing "managers of change" to handle the critical areas needing change to accomplish the tasks of the acquisition. Kitching emphasizes the importance of change management efforts on control in the post-acquisition period. Of late M&A research takes into account not only control-based value creation, but also a variety of integration processes through which those synergistic benefits can be realized (Hitt, Harrison, & Ireland, 2001).Gadiesh, et al (2002) identified a range of leadership characteristics that might be associated with successful M&A outcomes. These characteristics are decisiveness (closing the deal), serving as a symbol and creating momentum (crusading for the new entity), fostering a sense of focus (establishing and communicating the strategic vision) motivating organizational members (cheering on the troops), and providing key cultural and operational guidance (captaining change through integration). Managerial ability must be a non-specialised proclivity, and the leaders of the acquiring company must be men of much greater talent than those of the corporations they absorbIn the context of mergers and acquisitions, managers create "accountable others" (Galpin and Herndon 2000) as Clemente & Greenspan, (1998) write, "These leaders make concrete "the mutual responsibility of all employees, but alert and bind them to everyone else's responsibility . . .this will create a social conscience".Case of BMW acquiring Rover:In the case of BMW (Gould, B 1998) acquiring Rover for 800 millions £ highlights the importance of managers and effective human resource management in mergers and acquisitions. BMW was easily able to gain entry into a new market segment without compromising its high end and niche market segment through acquisition of Rover. The main reason that's made BMW bought Rover and land Rover is that BMW doesn't have an SUV. the X5 was from the Land Rover team.So it was long term investment by BMW.Also the products and quality, although better, needed some help. And BAE was doing nothing with it.BMW thought about acquiring Rover, as it was too small to survive on its own. However, a more...

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