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The Big Merger
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This merger will be successful, because of the organization’s capabilities to manage a deployment of such a size, which after the amalgamation would be worth $15 billion. Just like other industrial players in the market, the consultancy industry has been characterized by the global outreach. Since the competition in the current market became mature and more intensified, the players have found it necessary to venture into emerging markets with an aim of establishing more niche segments. Therefore, in the recent past, the automotive industry has engaged in many corporate mergers and consolidations. Inter-corporate linkage is another technique that has been employed, and this includes joint ventures and alliances.
The aim of these inter-corporate linkages is to achieve cost-efficiency and to remain competitive in the business. For example, merging businesses is a practice in corporate strategy that can help an enterprise grow rapidly in its sectors without necessarily creating a subsidiary or joint ventures. In this method, the set of different elements of a company are combined in a proportion discussed before the merger. Such elements include finances, management, assets and shareholding. The procedures that need to be completed in the registrars of companies’ offices must be followed before the merger is incepted. It does not cover requirements set out by the relevant legislations or those that the court can set out. For determining the profitability ratios of the merger there are financial tools, which are often used in the financial ratio analysis, since they are used in establishing firm’s bottom line, and they are usually significant in business. In fact, profitability measures do not find their relevance only to the business managers, but also to the investors, who invest large sums of money in a company to earn dividends.
Driving Forces behind the Cooperation
As pointed out earlier, the intense forces of competition in the traditional markets have pushed the automotive industry to work towards cost-cutting, new markets exploration and widening their poduct portfolio. These corporate goals can be achieved through lean manufacturing introduction, brand leveraging and offering new products. In addition, the same result can be attained through various levels of best-practice exchanges and collaboration, especially in product development, research and manufacturing, in such areas like distribution and product sharing. These should not just take place among the companies alone, but among the firms and the suppliers.
In terms of graphics, the location is chosen strategically to depict and effectively promote our company’s structured development and services, as shown in this case. For instance, the proximity to major highways and communication system makes the place most suitable for conducting business of this magnitude. Furthermore, there is almost no overlapping, since our company’s brand is strong in certain geographic localities, especially in the entire Europe and Asia, which are the home markets, and our partner is strong in North America and South America as those are its home markets as well. Whereas both, our company and our partner, were not present in the emerging Latin-America and Asia-Pacific markets, our partner’s product ranges and those from our company’s financial strength, it can be easier to meet the consultancy demand of the new market.
Focus on the cost savings followed by the economies of scale in consulting and research and development of the merger was geared towards delivering the synergy effects, which could amount to $15 million. Many integrated consultancy services should be implemented to ensure that these targets are met.
From this merger, the clients should expect an improved and efficient output from our services, which will aim at satisfying their needs. The merger between the two companies was pronounced as one of the largest industrial cooperation in history. Our partner’s shareholders were paid premium, when their compny officially joined us and its operation in about 200 days of working enabled our company’s CEO become the manager of the year. Indeed, this appeared to be the best match for both companies. Strategically, this arrangement enabled the company to have a global image that it was longing for, and to widen the portfolio of its products. In addition, this meant new technological access and investments for our partner and the probability to gain from the benefits of the economies of scale, which are associated to different consultancy products we were providing. Moreover, our company’s product range was perfectly complementary with those of our partner’s and with the global demand. The merged companies managed to provide better consultancy services to most of the deserving clients.
The biggest challenge that led to a fail of the merger can be witnessed in the cultural clashes that were not taken seriously by the top management. The approach that was taken at our company was strictly authoritative and regimented with many levels of hierarchy and a big bureaucracy, in which centralized decisions were taken deliberately. The situation was rather different at our partner, since the approach there was leaner with actions and decisions taken more promptly and simultaneously at all levels. These differences were not only revealed during the board meetings, but also among various levels of the consultants cross-functional teams. The actions of Germans were perceived as rather crude and arrogant, since they strongly believed that they were superior partners in the perceived ‘acquisition’ deal.
As a result of the differences, the top management members were not willing to work as a team and did not compromise with our partner, meaning that our company had to have some combined administrative departments, which would include public relations and finance. In addition, platforms and components were never shared earlier, since our company’s top management members were worried that their customers could feel cheated, in case they engaged themselves in sharing components with our partner’s seemingly inferior technology.