lunes, 18 de octubre de 2010

MERGERS & ACQUISITIONS

Mergers and Acquisition are mentioned together and interchangeably very usually, but those topics even if are related for describing integration process between companies, they do not mean the same. Acquisition is the purchase of a firm, does not imply 100% ownership and control, and they can be friendly or unfriendly depending on the willing of management of the firm of being acquired. In the other hand, Mergers happen the assets of two similar-sized firms are combined and are not typically unfriendly, that simple comparison was taken from a class in the Au School of Management (Management, 2009), and give us a picture of the complexity of putting both terms together, and the power they bring to renew corporations (Angwin, 2001).

First of all, it is worthy to highlight that M&A has become a tendency and is known as a widespread activity (Pickston, 2009), due to the last economic changes and the prospect of increasing profitability and market share (Sudarsanam, 1995), and there are other important reasons to deciding go for M&A: Ensure survival and competitive parity, reduce costs (Share costs), gain market power (empire building), financial reasons and so on (Management, 2009). But after come to a decision of get into that process, is necessary making the relation cost-benefit under the Long-term scene, and once this decision is taken is important to prepare the companies involve to face the challenges in order to have a successful integration, creating value and opportunity. Those challenges include cultural differences (Social and Organizational Cultures) that represents important concerning even for HR studies (PricewaterhouseCoopers International Limited, 2005), differences in Industrial systems and differences in goal orientation (Alzira Salama, 2003) and going through the process is to reconciling those differences to get win-win results for the parties implicated, and going from diversifying portfolios to increase market share and then, generate expected value.



Challenges and Opportunities about M&A

From Journal of European Industrial Training: “Challenges and Opportunities in Mergers and Acquisitions: Three International Case Studies: Deutsche Bank-Bankers Trust; British Petroleum-Amoco; Ford-Volvo.”


Challenges

Integration Strategies: Planning the Integration process is a crucial part of this process,; it must be carefully planned and executed, starting for identify any significant differences or similarities between the core values, beliefs, attitudes, and management style (Alzira Salama, 2003). Since this is intendment to minimize culture clashes and creating a new organizational joint culture, training up a group and including external consultancy are necessary for success. As done in Ford-Volvo case, a cultural awareness exercise conducted before close the deal, facilitated learning and acculturation process, generating better understanding in the early stages (Alzira Salama, 2003).And in the big picture, reconcile the need for strategic interdependence between both firms, but at the same time, the need for organizational autonomy. In that order, we can identify main issues when carrying through M&A:

  • Minimize uncertainties of future direction: non repetitive personal. Joint after accomplishing same goals and objectives.
  • Acculturation process: Understanding others practices, in the individual and in the organization in order to increase the willingness to build common identity. Abolishing the perception of separate entities: “From us and them into the more inclusive we” (Alzira Salama, 2003).
  • Transferring Knowledge properly: As there are different HR policy, production systems and even technologies, is necessary to generate the atmosphere through the right Integration strategies, which increase the willingness to co-operate.

Finally, it is possible to see how the factors that contribute to tough challenges, turn over to opportunities for the firms involved once they have been overcome.


Opportunities

Once companies get into the process and discover themselves in a hard journey, require the vision of taking advantage of the panorama to use situations in order to reach the goals that trigger that process. The Learning Process was clearly the success and the principal outcome from the analyzed cases, those were the ones that raised real opportunities to the firms and lead them to create value from their experiences.

Pursue Organizational learning: M&A may trigger this kind of process, creating the scenario to intercultural and inter-organizational learning to occur (Alzira Salama, 2003)

  • Applying the other companies best practices (carefully planned and being pertinent to the case), making every firm to improve own activities and practices.
  • The creation of a new organizational identity, with a new organizational culture that gradually emerged, reflected in performance and profitability making companies feel stronger to compete in the market and set up new aspiring goals.
  • Accumulation of skills and knowledge that actually provide the new organization with tools to outperform other ones in their environment.

Finally, it is possible to see how the factors that contribute to tough challenges, turn over to opportunities for the firms involved once they have been overcome.


Videos

Alex Tabarrok on how ideas trump crises


Clay Shirky on institutions vs. collaboration



BIBLIOGRAPHY

Alzira Salama, W. H. (2003). Challenges and Opportunities in Mergers and Acquisitions: Three International Case Studies - Deutsche Bank-Bankers Trust: British Petroleum-Amono: Ford-Volvo. Journal of European Industrial Training , 313-321.

Angwin, D. (2001). Mergers and acquisitions across European borders: national prespectives on pre-acquisition due diligence and the use of professional advisers. Journal of World Business Vol 36 , 2-57.

Management, A. S. (2009). Mergers and Acquisitions. Thailand: Marketing Department, Competitive Analysis and Strategy.

Pickston, D. (2009). uk.Fujitsu.com. Recuperado el 18 de 10 de 2010, de http://www.fujitsu.com/uk/insight-opinion/insights/disaggregation.html

PricewaterhouseCoopers International Limited. (2005). Survey of Global HR Challenges:Yesterday, today and tomorrow*. Delaware: World Federation of Personnel Management Associations (WFPMA).

Sudarsanam, P. (1995). The Essence of Mergers and Acquisitions. London: Prentice-Hall.

Images:

focus.com

faculty.css.edu

cartoonstock.com

Videos:

www.ted.com/talks









domingo, 5 de septiembre de 2010

Management styles + Leadership Styles







Management and Leadership styles being interrelated concepts are not the similar. Management Style is the ways of making decisions and relating to subordinates, and is closely linked with personality. According to Yukl (2002), The Leadership Styles are more focus on “traits, behavior, influence, interaction patterns, role relationships, and occupation of an administrative position (…) is defined as the process of influencing others to understand and agree about what needs to be done and how it can be done effectively, and the process of facilitating individual and collective efforts to accomplish the shared objectives”. Management is more related to Decision Making and Leadership with motivating people, but they are related, indeed, leadership makes part of managers’ functions. Such functions are: Planing, Organizing, Staffing, Controlling and Leading.

Management Styles can be classified into 5 major categories:

1. Autocratic managers are in complete control of their organizations and make all or nearly all of the major management decisions.

2. Bureaucratic managers act much like autocrats, but derive authority from corporate management, organizational rules and regulations, and past practices. Bureaucratic managers implement decisions often made by others in a way that is generally autocratic.

3. Authoritarian managers make all of the decisions, although they also solicit and use input from other managers to reach their final decisions.

4. Democratic managers involve others in their deliberations and arrive at decisions through majority rule.

5. Participative managers let lower-level managers and employees make most of the major decisions. These managers function largely as facilitators. (Trask, K., Rice, R., Anchors, S., & Lilieholm, R. 2009)

The last Categories can apply to Leadership styles too, but those would be describe it in order to explain ways of persuade and motivate, and Managerial Attitudes. In this case, in the academic field have been identified 3 major categories: 1. Authoritarian or autocratic 2. Participative or democratic 3. Delegative or Free Reign. And not only the last three, a leader can be characterized as, task-oriented or human-oriented, depending on his inclinations in the ways of leading. It is important to underline, that interpersonal communication, is a core element, when it comes to leadership skills.


Both, Management and Leadership Styles show personality of the leader, and are influenced by the environment and the cultural background. That is why, when it comes to cross-national differences issues, there is wide debate about the flexibility of the categories and how those approaches applied to real life, are effective or not depending on the context, and also, how make a leader effective in motivating employees and obtain expected outcomes.

East Asia

1. Main similarities and differences of Japanese and Korean management styles.

Facts:

Japanese Management

- Importance to Market Share

- Long term value Maximization - Optimization

- Close relationship with suppliers: LT commitments, close cooperation

- Top Managing: Important Participation of Workers and Middle managers

- Consensus building and group loyalty as Principles

- Coexist in group

- Scan of environment: Both customers and competitors

- Flexible Manufacturing

- Corporate values as guidance

Korean Management

- Importance to Market Share

- Life time employment: workers tend to change jobs more freely

- Top Managing: Authoritarian, Centralized decision making

- Not emphasize group elements like group loyalty and consensus

- Individualistic and Hierarchical

- Managing Style: Nepotism, companies manage by the family members of founders

- Scan of environment: Monitoring rivals

“Korean firms are more “Japanese than the Japanese” in their pursuit of Market Share”






Japan and Korea have strong connections in culture, due to the past this nations share together, since Korea was actually a Japan colony back in 1910, some culture aspects are shared in their roots. Korea tends to follow Japanese Models that even Japanese already have passed and leaved, sharing finally so similar ways in the manufacturing sector and in the Internationalization policies and manners of incursion.

2. Explain the phenomenon of convergence in terms of management styles. What are the forces or factors pushing for convergence?

These two nations converge (share similarities) thanks to 2 forces:

- Firm size as measured by sales: Growth

- Globalization as measured by export ration: Internationalization

These two factors reduce the difference, being globalization/Internationalization the stronger of the last two.

The Convergence is about the Organizational characteristic, that compared across nations, are increasingly free from the particularities of specific cultures, and this convergence was found more in regional level than in a worldwide model. That outcome can be explained because: 1. Increasing managerial sophistication of the Korean firms as they grow and/or internationalize, is done by imitating the best practices of competitors, which grows similarity with its Japanese neighbors. And 2. The Isomorphic character of organizations, that helps them adapt inconsistent environmental demand, by creating a substructure in order to deal with the problem. So, Korean firms have capacity to adapt management to meet international competition requirements. Thus, Japan and Korea have to face similar challenges in the international environment.

Forces of international competition made both nations converge, but domestic factors, like cultural dimensions and level of development, make them to have certain consistent differences.


Watch Management Styles:
http://www.youtube.com/watch?v=ymFmBLHn0Ao


References:

Oshagbemi, T. (2008). The impact of personal and organisational variables on the leadership styles of managers. International Journal of Human Resource Management, 19(10), 1896-1910. doi:10.1080/09585190802324130.

Trask, K., Rice, R., Anchors, S., & Lilieholm, R. (2009). Management styles of lumber mill managers in the northern United States. Forest Products Journal, 59(3), 29-34. Retrieved from Business Source Complete database.

Keeffe, M., Darling, J., & Natesan, N. (2008). Effective 360° Management Enhancement: The Role of Style in Developing A Leadership Team. Organization Development Journal, 26(2), 89-107. Retrieved from Business Source Complete database.

Getz, I. (2009). Liberating Leadership: HOW THE INITIATIVE-FREEING RADICAL ORGANIZATIONAL FORM HAS BEEN SUCCESSFULLY ADOPTED. California Management Review, 51(4), 32-58. Retrieved from Business Source Complete database.

Lee Jangho, Roehl Thomas, Choe Soonkyoo, 2000, What Makes Management Style Similar and Distinct Across Borders? Growth, Experience and Culture in Korean and Japanese Firms, Journal of International Business Stuides, 31, 4: 631- 652

Ekaterini, G. (2010). The Impact of Leadership Styles on Four Variables of Executives Workforce.International Journal of Business & Management, 5(6), 3-16. Retrieved from Business Source Complete database.

De Vries, R., Bakker-Pieper, A., & Oostenveld, W. (2010). Leadership = Communication? The Relations of Leaders’ Communication Styles with Leadership Styles, Knowledge Sharing and Leadership Outcomes.Journal of Business & Psychology, 25(3), 367-380. doi:10.1007/s10869-009-9140-2.

Elizabeth B. Bolton 2007, Leadership Styles and Leadership Change in Human and Community

Service Organizations.

Standly J. Jadwinski, 2006, Leadership style for incident Command

Decision Making + Ethical Behavior and International Business


“A company’s value is just the sum

of the decisions it makes and executes”



Decision Making, simply defined as a mental process of selecting the course of action among several exposed alternatives, has been a focus on strategy about five decades. Noorderhaven (1995) defines it as “the process of selection of and commitment to a purpose or plan of action”. This process is becoming more vital to the everyday function of the organization, and the Decisions have to be made in an increasingly complex structure and turbulent world dynamic. No matter how complex this process turned, it is mandatory, being the concept that enables the organization to plan for the future while assessing the present through utilizing a number of systematic tools such as brainstorming, affinity diagramming, force-field analysis, flow charting, planning matrix, unilateral decision making, consultative decision making, voting decision making, and consensus decision making (Akdere, 2009)


Decision making is summated to 2 defining factors: 1. Complexity and 2. Time Presure. Complexity refers to the number and interdependencies of different components that exist in any decision-making process. And Time play a role when the clock is ticking, particularly when stress comes into the picture, sports are a good example for this. As DM is seen as a process, applied in every possible field, it is sensible to be adapt as is needed, that why we can find several models, created in the academic area. Those are models depending on how much de Decision Maker face the Complexity and Time pressure levels: Rational Model, Incremental Model, Boundedly-rational Model, Garbage can model, Delphi Method, Nominal Group Method, and The Environmental scanning method. There is another Method, frequently use, the Management science method. It uses sequential decision-making steps in a clear and precise way (procedure): 1) Define the problem. 2 ) Identify alternatives. 3) Develop some criteria. 4) Evaluate alternatives 5) Choose an alternative. 6) Implement the decision. 7) Analyze the results.


This Matrix graphically explain when to choose a method depending on the Complexity and the time pressure to take de Decision:



Rahman, N., & de Feis, G. (2009). Strategic decision-making: models and methods in the face of complexity and time pressure.

One important issue at DM, that is quiet sensible due to the multicultural differences, is the Ethics Reasoning when making decisions. It is stated that culture background may affect ethics perceptions. Thus, depending on cultural character, an individual can differ in his sensitive to ethical perception in different kind of situations. Cultural differences make people recognize an ethical dilemma depending on “the cognitive conception of what is good or right”.The Global Business environment faces a great challenge: Balance standardized policies with appropriate consideration of norms in diverse cultural context.

Case of Ehitcal DM

Ethics in international business: multinational approaches to child labor

The Case focuses on explaining the corporate codes of ethics in Child Labor Area, are use to enforce the treatment of this issue in the Strategic International Human Resource Management. This case paper studies how 50 multinationals adopt “Universal Ethical Norms”. This analysis attempt to show the adopting process of the norm and the ethical dilemmas that show up in the road, due to the diversity of the context were the case is presented (multicultural character of the companies)

The principal dilemmas were presented, for every context, in profitability and business wealth fare implications. As seen in the next table (see the table at Page 51: http://wase.urz.uni-magdeburg.de/evans/Journal%20Library/Ethical%20Management%20and%20Trust/Ethics%20and%20Child%20Labour.pdf)


This study concluded that a limited number of multinationals, indicated in the case material in this article, have adopted an active policy with explicit codes and policies, while others follow with rather general statements. External pressure, either on the industry as a whole or on individual companies, has sometimes played an important role in this regard. Clear examples are Nike concerning labor conditions from the early 1990s and Shell, forced to overhaul its overall ethical and environmental positioning following Nigeria and the Brent Spar.

Source: http://wase.urz.uni-magdeburg.de/evans/Journal%20Library/Ethical%20Management%20and%20Trust/Ethics%20and%20Child%20Labour.pdf

Wath: DM BP Petroleum Spill (Parody), Importance of DM

http://www.youtube.com/watch?v=2AAa0gd7ClM

Wacht: Explaining Ethics, Tangled?

http://www.youtube.com/watch?v=l-nz0kojLv8&feature=related

http://www.youtube.com/watch?v=ENPHak5fuO0&feature=related

http://www.youtube.com/watch?v=0vbI-P6mFbg&feature=related



References:

Fox, M., Tost, L., & Wade-Benzoni, K. (2010). The Legacy Motive: A Catalyst for Sustainable Decision Making in Organizations. Business Ethics Quarterly, 20(2), 153-185. Retrieved from Business Source Complete database.

Blenko, M., Mankins, M., & Rogers, P. (2010). The Decision-Driven Organization. (cover story). Harvard Business Review, 88(6), 54-62. Retrieved from Business Source Complete database.

(2010). How we do it: Three executives reflect on strategic decision making. (cover story). McKinsey Quarterly, (2), 46-57. Retrieved from Business Source Complete database.

Akdere, M., & Altman, B. (2009). An Organization Development Framework in Decision Making: Implications for Practice. Organization Development Journal, 27(4), 47-56. Retrieved from Business Source Complete database.

Rahman, N., & de Feis, G. (2009). Strategic decision-making: models and methods in the face of complexity and time pressure. Journal of General Management, 35(2), 43-59. Retrieved from Business Source Complete database.

Burciu, A., & Hapenciuc, C. (2010). Non-Rational Thinking in the Decision Making Process. Proceedings of the European Conference on Intellectual Capital, 152-160. Retrieved from Business Source Complete database.

Amber Levanon Seligson and Laurie Choi, 2006 Ethics Resource Center, Critical Elements of an Organizational Ethical Culture

Salvador, R., & Folger, R. (2009). Business Ethics and the Brain. Business Ethics Quarterly, 19(1), 1-31. Retrieved from Business Source Complete database.