Cultural Differences and Mergers and Acquisitions

Paper Summary:

Many mergers fail to integrate cultural differences successfully in today's global economy. This paper examines what can be done to help them succeed. It shows that one of the most neglected aspects of planning mergers and acquisitions, and one of the leading causes of their failure or success is the performance or neglect of cultural due diligence. The paper shows that Microsoft and Great Plains Software, and Cisco's merger with Cerent are examples of what to do right when merging two companies. It discusses how successful mergers employ specific and detailed approaches for pre-merger planning, which include methods for communication of vision, changes and purpose, involvement of employees, establishment of strategy, leadership, due diligence and potential process and system conflict.

Paper Outline:
Executive Summary; Introduction; Microsoft Acquires Great Plains Software; About Microsoft; About Great Plains Software; Combined Strategy; Culture Integration; Communication; About AOL and Time Warner; Recommendations; Cisco Corporation Acquires Cerent Communication; The Cisco strategy; Due Diligence Pre Merger Phase; Culture Perspective; Communication; Leadership; System Conflicts; Process Conflicts and Staffing Issues; Quality and Continuous Improvement; Recommendations and Observations; Future Acquisitions; Hewlett Packard and Compaq Merger; The Values of the New HP; Due Diligence Phase; Recommendations and Observations; What HP/Compaq could have done differently; Conclusion; References

From the Paper:

"Companies who have experienced successful mergers have found that integration of corporate cultures in an M & A environment includes the establishment of the strategic direction of the merged entities, developing a shared vision, careful scrutiny of management styles, communication to employees, suppliers, customers and shareholders, and identifying and resolving important cultural differences early and having a plan to integrate the cultures (Miller, 2002). The communication of the rationale behind the decisions, future goals and objectives, new roles and responsibilities, and managerial expectations through constructive dialogue and feedback, are vital to build trust and ensure credible leadership. In fact, this communication is more important in the period leading up to and following closure of a deal. The more dissimilar the cultures, the greater the cultural shock, particularly if the M & A was not voluntarily chosen."

More papers on Cultural Differences and Mergers and Acquisitions:

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• Research Paper # 94078 : "Cultural Integration in Company Mergers"

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