This essay has a total of 1137 words and 6 pages.
Company mergers and the effect on employees and consumers.
· On-line research (On-line Magazines, News Groups)
· Human Resources
Why the topic is important:
· Mergers have affected our group, and it is a growing trend in the American businesses today.
A merger is achieved when a company purchases the property of another firm, thus absorbing them into one corporate structure that retains its original identity.
Consumers are everyday people who buy goods for personal use. Consumers have the right to question object and boycott companies who are not in their best interest.
Company culture is the DNA of an organization, not always visible, but it controls the form and function of such elements as decision making, communication style, reward and recognition methods, reporting hierarchies and leadership values.
A lot has been written about the financial aspects of merging companies. Less attention has been focused on the human element. More and more firms risk similar fates as the nation continues to experience a boom in mergers and acquisitions. Last year there were 11,655 domestic mergers and or acquisition deals for a staggering $1.6 trillion, according to Securities Data Company, a research organization in Newark, NJ The number of deals has more than doubled since 1990, when 5,654 transactions were reported.
In most merger and acquisition cases, the parties involved follow a well-established mating ritual called due diligence, which allows them to explore the merits of the marriage. Behind the scenes, lawyers, accountants and high-priced financial analysts join with top executives to make sure the move is strategically and financially smart.
Although predicted synergy’s point to handsome profits down the road, when the earnings reports start rolling in, the outcomes are often disappointing. Seven out of ten mergers and acquisitions do not live up to their financial promise. Forty seven percent of the acquired executives leave in the first year; and seventy five percent leave in the first three years, according to Mark Herndon, regional service leader, mergers and acquisitions, at Watson Wyatt Worldwide in Dallas.
The major cause of failure may have nothing to do with the financial or legal details that have been so carefully ironed out between accountants and lawyers. “People think that if you do the financial deal, the soft and squishy stuff will fall into place,” says Tom Davenport, a partner at Towers Perrin in San Francisco. “Not true. It’s the soft and squishy stuff that will make or break the deal.”
After understanding the steps for a merger, the major considerations associated with a firm's culture are the chemistry or compatibility of the individuals and do they share a common philosophy of how to do business. Stating the common goals for two or more diverse groups is a lot easier than achieving those goals. Cultural goals such as quality client service and teamwork are generally common to most firms, but how they achieve those goals may differ dramatically.
To determine if potential mergers complement one another and if a common operating culture exists a these questions must be addressed:
· How do partners show their commitment to quality client service?
· Are there major differences in the compensation systems of the respective firms, as to partners' earnings and staff salar
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