MY FIRM'S ACQUISITION

My Firm's Acquisition

[Name of the instructor]

My Firm's Acquisition

What does your firm do and what does the foreign firm you are trying to acquire do?

My firm manufactures and distributes mattresses in local markets of myriad countries. The firm I am planning to acquire is specialized in cultivating cotton and manufacturing the raw material required for mattresses.

Where are the firms based?

My firm is based in UK. Our company has manufacturing functions in UK and two more countries and it has businesses in different part of the world. The company I am acquiring is based in Philippines.

You are troubled by the fact that 70% of mergers and acquisitions (M&As) reportedly fail. How would you proceed?

Following are the reasons why 70% of mergers fail, so, I will try to strategically deal with each of them and try to have a better strategy to ensure better results (Reed & Lajoux, 1999).

If a merger or acquisition is planned depending on the (bullish) conditions prevailing in the stock market, it may be risky.

There are myriad situations when the purpose of seeking acquisition is just based on personal motives rather than the corporate strategy to have a competitive advantage. Rather than the corporate objective the top executives are more towards satisfying their own egos (Hartz, 1985).

In addition to the above, failure may also occur if a merger takes place as a defensive measure to neutralize the adverse effects of globalization and a dynamic corporate environment.

Failures may result if the two unifying companies embrace different "corporate cultures."

What institution-based issues would you encounter?

One of the biggest challenges for a cross-border merger or acquisition is to overcome cultural differences and business policy. The understanding of the culture, the regulatory environment, the philosophy of occupational pension benefits, the customer's expectations, work habits and the marketing strategy of a company provide additional complexity of a transaction. Conflicts between the cultures of countries and companies can store business goals quickly and bring the transaction to fail (Sanghoee, 2007).

Charges duplicates, cultural conflicts, problems in the styles of leadership, resistance to the changes, unclear definitions of the desired situation, selection of new employees for key positions, benefit differences, break in psychological contract perceived, some people are converted into "passive" (how many years have you worked in the company), taking advantage of the situation, loss of sense of belonging, power, status, absenteeism, affects morale and productivity. Complex labor and ...