International Human Resources Management - Cultural Integration after Merger and Acquisition - Compac and Lenovo case study

Résumé du document

Mergers and acquisitions are effective and common ways for companies to reach a market expansion in an international business environment. They offer different advantages, such as economy of scale as the amount of production is increased, synergy will also drastically reduce costs through the suppression of duplication of some parts of the production chain, but also increase its productivity. Realizing a vertical merger, a company can save money and have a global vision over its production chain by acquiring a supplier. Conversely, a horizontal merger would consist of integrating a competitor. Beyond increasing its market share, it allows the company to extend its production capacity, reduce competition, but also to improve the production of the new company as well as the purchasing company, as combining both ways of working makes keeping the best of both companies possible, and thus improve workers' efficiency if well managed. This is why human resource management is a midpoint for every merger and acquisition. For all of these reasons, mergers and acquisitions are very popular in international business, starting from the 1980s, to reach 50,000 transactions in the 2000s (Thomson Financial IMAA, 2011).

Extraits

[...] Dörrenbächer, Understanding the Human size of Merger and Acquisition, an Integrative Framework. Institute of Management Berlin Figure 7 Values and objectives of the HP-Compaq merger –Integrating the best of both cultures. Source: N. Weitzman, C. Dörrenbächer, Understanding the Human size of Merger and Acquisition, an Integrative Framework. Institute of Management Berlin See in Appendix, Figure Approaches to Integration, D. M. Schweiger, Y. Weber, Strategies for Managing Human Resources During Mergers and Acquisitions, Human Resource Planning See in Appendix, Figure Communication Medias, D. [...]

[...] All these Human Resources efforts led the newly merged company to a successful cultural integration, which widely helped the success of the merger itself. Conclusion As Mergers and Acquisitions are a popular transaction in international business, it is important to deeply understand the various issues it deals with, including cultural integration. This latter issue is frequently left out, and is often the reason behind merger failure. As seen before, manager confessed they underestimated the importance of human resources during mergers and acquisitions, as they are focusing on financial or physical synergies. [...]

[...] H. Ibrahim. (2016). Merging Cultures in International Mergers and Acquisitions, A Case Study of Lenovo's Acquisition of IBM PC Division. Journal of Intercultural Communication, issue 41. A. F. Buono. J. W. Weiss. J. L. [...]

[...] Acquisitions in Europe: Causes of Corporate Success and Failure. Geneva: Business International, Vol page 27. C. Lakshman. (2011). Postaquisition cultural integration in mergers & acquisitions: A Knowledge-based Approach. Human Resouces Management, Vol N° Page 605-623. M.L. Marks, P. H. Mirvis. (2001). Making Mergers and Acquisitions Work: Strategic and Psychological Preparation. [...]

[...] Cultural integration strategy took place way before the merger implementation[4], during the planning stage[5]. One month before the announcement of the merger intentions, both companies' CEOs, Carly Fiorina and Michael Capellas (Compaq) implemented the clean room strategy, in which they selected 30 senior executives from both companies to be in charge of the integration process and create a plan on how to merge both companies in one single unit, including a Cultural Integration Team working on shaping both companies' cultures together. [...]