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How much an international acquisition can influence in the acquired
organization’s performance and culture? Integration of strategic and
organization perspectives: a case study of Alstom Grid transition towards
acquisition periods.
Acknowledgment
I would like to express appreciation to my dissertation advisor for the support and advice during
the course of preparation of this dissertation. Furthermore, my gratitude goes to my wife and
other members of my family for the support and patience during the whole period of my study.
Moreover, I also would like to thank all my friends and work colleagues that have inspired me to
achieve further status of knowledge in my career.
2
Abstract
The dissertation involves the analysis of culture performance and differences of influenced by
organizations that have experienced. The conducting of the dissertation involves one of the
leading energy organizations, particularly the Gas Insulated Switchgear manufacturing facility in
Switzerland, Alstom Grid GmbH, which has overtaken and resurged from successful several
merging and acquisitions processes in the past 40 years. A broad review of literature associated
to the influence aspects of mergers and acquisitions is conducted. The foundations which result
into how economic, social and politic factors weight the cultural differences within the
organization are taken into consideration. The dissertation also describes the main identified
cultural differences which results in the merging and acquisitions to become successful or
failure. Cultural evaluation, management and leadership performance analysis, cultural
integration analysis and their benefit towards the accomplished mergers and acquisitions are also
conducted specifically focused in Alstom past history in the dissertation. The evaluation of the
dissertation is also assured by the applied methodologies in which includes the conduction of
research design and approaches. The findings of the dissertation are explained in details to
ensure a clear understand of how important organizational and national cultural differences
influence in the process of establishing a merging and acquisition. Lastly, the conclusion and
recommendations develop the knowledge and enable the improvement of merger and acquisition
process in others international organizations.
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Table of Contents
Acknowledgment.............................................................................................................................ii
Abstract..........................................................................................................................................iii
Table of Contents............................................................................................................................iv
List of tables and figures..............................................................................................................viii
Chapter One...................................................................................................................................1
Introduction......................................................................................................................................1
1.1 Background...................................................................................................................1
1.2 Aim................................................................................................................................2
1.3 Research Question.........................................................................................................3
1.4 The Research Objectives...............................................................................................3
1.5 Research Feasibility......................................................................................................4
1.6 Justification of the Topic...............................................................................................5
Chapter Two...................................................................................................................................6
Literature Review.........................................................................................................................6
2.1 Introduction...................................................................................................................6
2.2 Industry type influenced in acquisition performance....................................................6
2.3 Identification factors that influenced in merging and acquisitions...............................8
2.4 Organizational and national cultural differences.........................................................11
4
2.5 Management role and performance management practices in context of acquainted
company.................................................................................................................................13
2.6 Human resource aspects towards implementation phase............................................19
2.7 Supportive structured faced by organizations towards merging and acquisition........21
2.8 Conclusion...................................................................................................................23
Chapter Three..............................................................................................................................25
Research Methodology..............................................................................................................25
3.1 Introduction.................................................................................................................25
3.2 Research Method and Design(s)..................................................................................26
3.3 Participants..................................................................................................................29
3.4 Materials/instruments..................................................................................................32
3.5 Process of data collection............................................................................................33
3.6 Ethical consideration in research.................................................................................34
3.7 Summary.....................................................................................................................35
Chapter Four................................................................................................................................37
Presentation of Results..................................................................................................................37
4.1 Introduction.................................................................................................................37
4.2 Data Presentation.........................................................................................................38
4.3 Participant Background...............................................................................................39
4.4 Rank of employees......................................................................................................40
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4.5 Departments involved in the study..............................................................................40
4.6 Age and Gender...........................................................................................................40
4.7 Summary of questionnaire Outcomes.........................................................................43
4.7.1 Quantitative Results.................................................................................................43
4.7.2 Qualitative Results...................................................................................................44
4.8 Conclusion...................................................................................................................45
Chapter Five.................................................................................................................................47
Analysis of Data and Discussion...............................................................................................47
5.1 Introduction.................................................................................................................47
5.2 Data Analysis..............................................................................................................48
5.3 Responses and Interpretation between different departments during previous
transitions...............................................................................................................................49
5.3.1 Industry type and organization structure.................................................................49
5.3.2 Other factors influenced by previous Merging & Acquisition................................51
5.3.3 Organizational and national culture differences......................................................53
5.3.4 Management role and performance post merging.......................................................54
5.3.5 Overall departments....................................................................................................55
5.4 Discussion of the research question............................................................................57
5.5 Conclusions.................................................................................................................59
Chapter Six...................................................................................................................................60
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Analysis of Data and Discussion...................................................................................................60
6.1 Introduction.................................................................................................................60
6.2 Research summary of key outcomes and implications...............................................61
6.3 Limitations of the Study..............................................................................................64
6.4 Scope for future research.............................................................................................65
6.5 Summary.....................................................................................................................66
7. References........................................................................................................................69
8. Appendices........................................................................................................................83
Appendix 1.............................................................................................................................83
Appendix 2.............................................................................................................................94
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List of tables and figures
Table Page
1. Questionnaire – Demographic data.......................................................................... 42
2. Questionnaire – Department involved in the quantitative analysis...........................42
3. Questionnaire – Difference cultural factors…………………………………………43
Figure Page
1. A systems approach to successful mergers and acquisitions (DiGeorgio, 2002) ….. 10
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Chapter One
Introduction
1.1 Background
The understanding of human behavior is a continuously focus of study that expands every year.
Human beings are subjected to react at different manners towards a change in his/her ritual of
day to day actions. Either at personal or in professional life, changes are subjected to reactions
that might become beneficial or detrimental to others and within an organization environment. In
the real economic situation, competition brings organizations to new strategic definitions to
expand that are resulted in acquisition or merging (Rottig, 2007). Towards the changes in
strategic, political and economic views within an organization, integration of culture, either
being within ways the business run or different national cultures requires an perceptive study and
understanding of barriers countered and what best practices could be engaged. The order to
support future organizations as done by previous researches has not examined the relationship of
cultural differences and tasks integration with sufficient frequency (Stahl & Voigt, 2008).
Alstom Grid Switzerland has a history of acquisitions in the past with similar national and
organization culture where an acquired organization with a complete different culture may
prompt to bring drastic changes in culture. The present situation within Alstom, under being
acquired by a different organization with different organizational and national culture has
become a worry due to expected changes in the way of running business, processes and
functions.
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Employees and customer are under the stressed expectance of changes that might become
beneficial to some but at same time developed contrary behavior affecting business. According
to Finkelstein (2009), “Merger and Acquisitions are associated to high degree of stress and
uncertainty for the individuals affected by them, especially those of the target organisation”.
Attention has been brought under the investigation within colleagues inside the project
management department and expanded attention in further analysis the previous acquired and
management performances that stabilize the changes during that period. The development of
interview with the employees that felt the changes in the past experience and questionnaires with
those non acquired experience employees lead to analysis and a formation of guideline with
management best practices to maintain order and flow of the actual transition. At same time the
information contributes to bring attention of management of how much expectance employees
wait to contribute inside the corporate atmosphere.
1.2 Aim
The aim of this dissertation was to review and carry out a study of how acquired organizations
are influenced by acquiring companies that result in their performance and culture behavior
improvement and imperfection before and after acquisition takes place. Integration is the main
important phase which requires strategic and organizational conditioning factors that includes the
culture acceptance and best management practices. Geiger (2010) described that many factors
can influence and improve the implementation and cultural integration. The organization of an
early process plan, setting and communication of clear goals, arrangement of management with
appropriate incentives to define the areas that can be achieved, keeping appropriate information
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between employees and customer, applying a quickly integration system with a sensitive culture
change are many of these important factor.
The case was most focused on the past and present experiences within different departments in
Alstom Grid Switzerland, and the old and future acquisitions that influence the present
organization. It also investigated, through secondary approach, others organizations that have
experienced similar situation.
1.3 Research Question
The creation of a research objective in a dissertation is supported by the creation of questions and
evaluation of its feasibility. The main research question explored in this dissertation was:
How much an international acquisition could influence in the acquired organization’s
performance and culture?
1.4 The Research Objectives
In order to conduct the study, research objectives were considered, as they determine the kind of
questions, data collection and analysis procedure and design of the propose study. The objective
of this research was to follow the investigation based on the below statements:
Identification of the organization culture and national culture, the differences and
importance each ones is considered (Gerhart, 2009).
Identification of the past and expected behavior of cross cultural alienation before and
after acquisition and the impact that might affect the organizations performance (Coisne,
2014).
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Assessment the role of management and performance management practices in context of
acquainted company.
Description of challenges during integration to a new culture, formulation of a common
vision, building trust and communicate information.
Recommendation of effective strategy to execute the most effective model of
organizational culture and the participation of management towards cultural-related
processes (Latta, 2009).
1.5 Research Feasibility
Feasibility study has as a goal to perceive the intending meaning of suitable concept even the
required study is right or not. For that reason, available sources about the chosen topic were
investigated, primary sources related to the research topic were identified and appropriate
methodology was defined accordingly. Within the interest of Alstom Grid, this research study is
expected to bring share of experience, recommendations and values of how employees, managers
and clients would behave during the acquisition/merging processes. Appropriate sources of
evidence of acquisition/merging organizations were also available within the internet, university
library, academic journals and books. Alstom Grid in Switzerland also agreed to contribute with
the research by making available access to the data sourcing to obtain the needed material and
proposed questionnaires and surveys to support the qualitative part of the study. The available
materials allowed the preparation of a meta-analysis of existing studies associated to the
organizational performance and culture behavior and supported the study by providing
quantitative resources. The access of all resources was eligible to perform the research and
finalize the work in 9 months period. In overall, the study would also provide other organizations
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in the same situation and also Alstom to appropriately adapt to the expected circumstances that
might happen in future.
1.6 Justification of the Topic
Within many years of operation, Alstom Grid became a respected engineering organization
delivering and supporting the energy business by providing know how in supplying transformers,
switchgears, other electrical components and engineering expertise. The achievement of success
in the factory in Switzerland originated from different merging and acquisition with similar
national and organizational cultures. Switzerland as a triple culture country of Italian, German
and French, did react well in past acquisition with French organizations. However, changes is
about to arrive towards an unknown culture, American, which became known since few months
and is under European approval process.
As a member of family in Alstom Grid in Switzerland, the understand of past acquisitions and
the characteristics that headed to a successful implementation became focus of interested as well
by many other employers that would come to react differentially into an unknown new journey.
Manager and leaders have an important and extensive role to appropriately define strategy,
leadership and communication plans to integrate both organizations keeping harmonization in
between employees without affect work performance and culture.
Chapter Two
Literature Review
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2.1 Introduction
Within this section, the readers become acknowledged of the way the dissertation topic has been
selected. This chapter is based on existing available researching material and experience within
departments in Alstom Grid towards historic acquisitions. With many critical factors preventing
organizations to achieve success; competition is considered as one of the most complex, which
requires the need to create new strategic directives with the aim to achieve a greater Return of
Investment (ROI). Some common ways to achieve a market share is to see beyond the existing
potential and expand geographically through joint venture, Merging and Acquisition (M&A).
The literature review covered the industry type influence in acquisition performance, factors that
affected the mergers and acquisitions, differences of national and organizational cultures and
their implications and consequences, role of management of acquiring company to enhance the
performance, human resource aspects and benefits of supportive structure for successful mergers
and acquisitions.
2.2 Industry type influenced in acquisition performance
Acquisition of a company by another company is most often done inter-industry and most often
it is part of the core strategic alliance or complementing the internal resource capability of the
firm. The companies which mull the acquisition, so because they have either become stagnant in
growth or see an opportunity in a creative, fledgling or ailing organization which will impart
them the boost in lieu of the monetary returns (Healy et al., 1992). It has not been hitherto seen
that merger and acquisition been taken place outside one’s core or peripheral offerings.
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However, this possibility cannot be totally discarded as many firms are coming out of the
reservation and are trying to expand their product offerings by just acquiring the companies
operating in the industry which they want to enter into.
Merging and acquisition (M&A) of an organization as studied by Yaghoubi et al. (2014) showed
that huge impacts of the success performance of the acquirer companies were related to the
industry type. Since merger and acquisitions in any industry distort the entire market space of the
industry irrespective of the number of players, it has been seen that in an industry which is
governed by few players, mergers were mostly successful because they were able to transform
the competitive scenario of the industry because of influence on the small number of players
(Laabs, 2009). This could be a positive feature for the company if it works in the oligopoly
market where there is less number of players in market.
Industries which are fragmented do not see much change in the competitive landscape, and thus
the merger does not provide much boost to either of the players. This can be very challenging if
both the companies complement each other’s core competencies, and thus the resulting entity has
a much larger hold and control over the offerings in that particular industry. In the 90’s merging
and acquisitions were used as a mechanism for consolidating firms in the fragmented industry,
especially in the new industries and business services using different techniques which were
differed in term of players, motivations, strategy for growing the acquired business and exit the
route (Sundarsanam, 2003).
Another factor was the extent of creativity required in the industry. The industries like telecom,
fashion and entertainment are governed by idea generation and innovation while industries which
are stable like education, manufacturing, banking and hospitality are governed by regulations and
efficiency. The industries which rely on innovation are seen to be much successful with mergers
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as they gain large resource pool of information as well talent (UNC, 2011). However, industries
that are driven by their internal efficiency do not gain much by mergers as they are disrupted and
fail to adapt to each other’s way of working. The union in between Daimler-Benz and Chrysler
in 1998 as an example can be considered the greatest of all global mergers that resulted in cross
cultural clash (Laabs, 1998). Many social variances and administrative culture proved the
unsuccessful conglomerate that first emphasized, ethnic issues just cannot be overlooked on an
international level, particularly not within mergers. Daimler-Benz was a “traditional, well-
organized and innocuous” German company, while Chrysler was known as “bold, varied and
innovative”.
The energy industry is also considered complex and have specific characteristics applied for
every country that are considered under the influence of political, financial and social factors
which are broadly explored as individual contexts. The acquisition or merging of this specificity
seems to be focused on general purposes and does not specify clearly. Hypothesis tested by
Mantravadi & Reddy (2008) in the electrical equipment sector which was the closest compared
to the energy sector has been identified and concluded by using pre and post operation and
performance ratios that industry type does appear to influence in post-merger operating
performance of acquiring firms.
2.3 Identification factors that influenced in merging and
acquisitions
Integration is considered as the most important phase involving strategic and organizational
factors that includes the culture acceptance and best management practices. As part of the
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research, research materials have been examined and evaluated to understand the theories related
to cultural challenges, differences, and proposed solutions. From many years, organizations are
seen to adopt the strategy of merging or acquiring new organizations by forgetting to adopt the
cultural concept to integrate the organizational and national cultural difference that results in
high failure rates of mergers and acquisitions (Hajro, 2015). The lack of leadership management
is also considered as an impact in the goal achievement and satisfaction of employees and
redirection to a supportive acquisition flowing action. Chatterjee et al. (1992), Datta (1991),
Kavanagh & Ashkanasy (2006), and Ollie (1990) all represented by Cooper and Finkelstein
(2013), have looked deeply behind the triggering factors for problems and what could be
performed to mitigate such situations. Additionally it is also crucial to assess national and
organizational culture, management performance and measurement of state level of both
organizations.
According to DiGeorgio (2002), the change in culture was always difficult and could take an
amount of seven to ten years, but combined, can afford an exceptional occasion to take culture
and impact performance to an extra level. The identified best practice model proposed by
DiGeorgio (2002), and tested by organizations such as Cisco System and GE Capital, centered
the systematic approach by identifying cultural fit, structuring the integration team, deciding on
leadership styles and integration issues. These factors are vital such as the cultural fit and
leadership selection as the culture of the organization may differ from other organization and in
the merging or acquisition if the both companies leadership approach are same, organizational
structure are same that it will lead to a successful merging or acquisition.
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Figure 1 - A systems approach to successful mergers and acquisitions (DiGeorgio, 2002).
The figure 1 showed the keys to front end accomplishment and keys to integration success. The
honesty to dialogue referred to open communication with transparency could resolve the various
issues before a merging takes place. The time, resources and tools must be judiciously used to
select the right target for merging and acquisitions. The transition structure should be based on
type of combination that can support the merging and acquisition process. For integration of
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acquired company it is recommended to select the new leaders that follow the company
principles and practice a common philosophy of working. There should be communication
channels that can streamline the process of merging and acquisitions. Strategies should be
devised to retain the existing customers of both companies. The people issues of both companies
should be successfully managed by adopting the collaboration strategies to achieve a successful
integration.
2.4 Organizational and national cultural differences
Merging & acquisitions not only leads to merger of business processes but also human resources
and their sensibilities which are governed by transitional culture, individual values, ethics and
sometimes national differences. One of the principal foundations of work culture differences
among various countries studied by many theorists, especially by Hofstede (1980), was the
consideration of the national cultures. From this study performed in more than 100,000
employees of the multinational IBM in 20 countries, five dimensions were defined forming the
basis of the attributes of a work culture of any country: individualism, masculinity, power
distance, uncertainty avoidance and confucian dynamism later discovered (Hofstede & Bond,
1984).
These, nevertheless lost their significance within the situation of present business, due to the
globalization, where national cultures are becoming weakened and no longer generating
opportunity to outline a certain organizational culture only on the basis of its national values.
Consequently, it is in truly seemed that economic effects beside national characteristics are
elements of forming cultural basis for the definition of work ethics and standards across the
world (Hsu et al., 2013).
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Hofstede’s (1980) dimensions of analyzing a culture and individuals who belong to a particular
culture were at the verge of obsolesce, as they were centered on a view that cultural aspects of an
individual are water tight compartments which are uniform and static for a very long time. In the
current business scenario, this is no longer seen. There are many variables that embrace culture
and these variables are likely to adjust accordingly to the economic development in the country.
Organizations that seem the necessities to achieve further territory development that are
unknown are certain to have a remarkable influence when they establish oversees offices or
production facilities. Likewise expatriates that would take responsibilities for the oversea office
locations would achieve in return many factors that would weak the rigid culture based on both
economic and national features. The identification and structuration of the work culture
according to the ever changing cultural variables is one of the most insuperable challenges that
encounter managers in present business world. More than the technical core competencies, what
outlines a successful organization is the capability of high level management to induct and
absorb the changes done by the various national and cultures to its native culture (De Jong,
2008).
Initially, it was determined to examine the organizational culture and national culture, and the
differences and importance of each one. According to the arguments by many authors (Buono &
Bowditch, 1989; Cartwright, 1997; Krug & Nigh, 2001 cited in Hajro, 2015 and Mendenhall &
Stahl, 2005), the organizational and national culture differences have been considered as the
main source of hostility and distrust between organizations. Therefore, the result of post-merger
integration process has remained ambiguous with negative association with merging and
acquisition outcomes or as a source of value creation in cross border merging and acquisitions.
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A research carried out by Hajro (2015) analyzed how cultural differences of organizations affect
the integration process and which other factors enable or obstruct successful socio-cultural
integration in merging and acquisitions. This research was based on longitudinal case study using
four different time registration: immediately before the acquisition, during negotiation
discussions, during the first, third and six year after the acquisition between German and
Austrian energy organizations. The use of qualitative analysis during the four different points of
time and through theoretical analysis on socio-cultural integration process and national/
organizational cultural differences resulted in a development model to merge social cultural
integration process.
The study additionally came to a proposal outcome of strong influence on mediate variable in
interpersonal relationships, trust and shared identity through significant occurrences of critical
incidents resulting in a closer cross cultural interaction under the surveillance of a proper
international human resource management. This confirms that cultural differences by some
people are considered as a source of friction and conflicts however can be considered a source of
enrichment and progress and more as a mean of cross-fertilization and innovation by selecting
the best practices (Emerson, 2001).
2.5 Management role and performance management practices in
context of acquainted company
The connection in between national and organizational culture and between organizational
culture and organization performance became a point of interest for another investigation. Many
failures involving merging and acquisitions are related to the lack of national effort to assess
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cultural compatibility of fit prior to engagement of the firms, different types of managerial styles
and complexity to implement changes initiatives, causing negative effect to its performance. The
need to understand the culture diversity between countries and also between the organizations is
a dominant factor to avoid problems and support change.
Yussuf et al. (2008) stated that “influence of organizational culture on company performance”
tended to analyze the cultural diversity based on four cultural dimensions. This was the early
framework by Hofstede (1980) who proposed: individualism, uncertainty avoidance, power
distance and masculinity, between organizations in different countries. He provided valuable
information for organizations for formulation of a strategic direction and decision. The paper
confirmed the analysis carried out by Hofstede (2010) with the indication that cultural
constraints determine the feasibility of strategy and supports the identification of potential areas
of culture conflicts. Further the cultural distance in mergers and acquisition suggests that these
are barrier to the knowledge flow and evidences suggest that congruence can be accomplished by
achievement of complementarity and there is no necessary need of achieving similarity for
cultural distance (Haspeslagh & Jemison, 1991). Power distance could bring the role ambiguity
(Shenkar & Zeira, 1992).
The individualist and collectivist values refer that individuals are motivated by the personal goals
and support competitiveness while the collectivists are motivated by group goals and interests. It
was revealed that members of individualistic society show have weak bonding with the alliance
partners and they were less likely to give up their control in relationship (Delerue & Simon,
2009). This provides an insight when a corporate culture has the collectivism approach and
acquires a firm that has an individualism national culture. The analysis revealed that American
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company and Switzerland Company have the similar individualistic culture as proved by the
Hofstede research. (Hofstede, 2001).
Power distance refers that where the power distance is high, subordinated may not ask questions
from senior managers but where the power distance is low people can perceive that they are
more equal at work place. It is also important to notice that the power distance refers to a degree
according to which a person accepts inequality as fair and normal that may not be perceived by
other person having low power distance in culture. It showed that the American culture and
Switzerland culture had low power distance and people worked with equal opportunity so
forming an alliance with the American company couldn’t be difficult by the acquirer company.
The next factor uncertainty avoidance refers that society attitude and tolerance towards
uncertainty and ambiguity. It the uncertainty avoidance is high in the society, than people will
not be willing to change their existing pattern of thinking and working norms. The low
uncertainty index shows the willingness of society to take risks and unstructured new situations.
American culture show generally the low risk index and they may be willing to adopt the
changes proposed by acquirer Company.
Cultural integration
It is necessary to have a cultural integration between both companies involved in merging or
acquisition proceeds. It has been identified that cultural integration can help to remove the
cultural differences (Zhu, & Huang, 2007). The cross cultural change management considers the
new pattern of system to solve conflicts and converts antagonistic feelings of employees towards
positive feelings of support to each other and achieves the cultural synergy. It respects the core
cultural beliefs of each company involved in mergers or acquisition and acknowledges the
importance of communication and change management adaptability.
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It was found that the national culture compatible post strategy of acquisition can significantly
improve the performance of employees after the post-acquisition (Morosini & Singh, 1994). For
solving the cross cultural differences, four models were suggested (Zhu & Huang, 2007). These
models refereed that the company must adopt localization model, transplanting culture of
parenting company model, cultural innovation by integration model, and lastly the evasion
tactics.
All these models could be used in different circumstances. The first model localization allows
the subsidiary company to make its own strategy and conclusions according to local
circumstances and conditions. The second model of cross cultural integration transplants the
parent company culture through strong supervision of the target company. The third model is
cultural innovation and here both companies develop a new culture for working together. The
fourth model suggests that company must use evasion tactics model if there is huge cultural gaps
between the acquirer and the target company. This model is generally suitable during the
transition period.
In the latest paper written by Hajro (2015), “cultural influences and the mediating role of socio-
cultural integration processes on the performance of cross-border mergers and acquisitions”
presented information that national culture still influences the organizational culture and
statistically demonstrates socio cultural environment relation with the work culture of each
specific organization. The research method was based through a Model of Culture fit, the
influence of internal work culture on human resource management practices showing
quantitative statistical relationship result with a significant malleability prediction of supervision
and control that shape the dimension of human resources practices. The direction of changes in
the behavior of employment are influenced by management impact and leadership style that
24
results in self-motivation of employees to achieve goal setting practices, empowerment practices
and opportunity to self-control.
Managers and top management professionals at the merged companies face a daunting task to
consolidate the aspects of business by eliminating, generating or merging the various task as well
as functional duties of the respective departments. Employees are at the heart of every process
post-merging phase and this means that managers need to deal with a lot of communication as
well as query resolutions. Most managers have a full-fledged plan for taking on the questions and
concerns of the employees and this is done by making a platform where in the concerns of the
functional departments are met and resolved. This can be done by offline platforms like
presentation, query resolution cell or department or online methods like separate portal for
various stakeholders and their questions being lined up as FAQs. The management needs to
chalk out a plan which is in line with the core corporate strategy as well the major objectives of
the mergers (Rouse & Frame, 2009).
Few months following the merger are the toughest challenge with respect to strategizing the job
responsibilities, roles and accountabilities. Also, since there are duplication of several duties and
designations, some of the restructuring is mandatory which means bad news for several
employees. This leads to low employee morale across the new entity after the merger. Most
employees are in the constant state of confusion and panic which should be handled very
effectively, failing which the merger might not see though the real goals set in the first place
(Bandyopadhyay, 2010)
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The following points elucidate the steps to be followed by the change management managers or
other change management diagnosis professionals in order to streamline and make the merger
absorption smooth.
1. Organizational structure analysis: The first factor which implies in the structure
transformation of an organization is: the construction of a collaborative clear structure in which
transformation processes distributed into specific, clearly defining initiatives that start from
measuring a corporation’s current condition carefully, classifying the present state of business
capabilities and difficulties, and clearly organizing the fundamental thought practices that are
required to change in order to be successful on the goals of transformations (Jorgensen et al,
2012).
2. Employee’s commitment: The second factor relates the importance of employees
commitment demonstrated by the fact when employees feel a sense of ownership, 70 percent
success rate are described as results for revolutions and when initiatives are taken towards
change transformations, 71 percent success rate with 79 percent success rate combines both
criteria (Jorgensen et al, 2012).
3. Evaluate leadership capabilities: The third factor leading to an effective transformation is
leadership and capabilities supported by the result that 83 % of the organizations built know-
hows, transformed mind-sets or culture, or established ability for continuous development in
imperative drive to a transformational change. Similarly, leadership capacity seems to be
significant in cultivating long-term comfort of the organizations as said by 63% of managers.
Organizations which didn’t emphasized much on leadership while passing through change were
successful in renovating only short-term performance (Jorgensen et al, 2012).
26
4. Categorization of positive points: The fourth factor contributing towards the successful
transformation is to stress the positive, which means that the institutions have a tendency to
become more effective in encouraging the transformation when reasons for change are debated
and the change is notable when communications concentrates exclusively on causes for
transformation. Focusing on the positive points appropriately in the practice throughout the
assessment of a business’s present situation also has a positive association with the successful
transformation (Jorgensen et al, 2012).
2.6 Human resource aspects towards implementation phase
The study of the organizational culture impact on leading towards change demonstrated by Latta
(2009) came to examine other human resource aspects in relation to how the organizational
culture reacts when a change implementation process is implemented. The author also examined
how leader’s knowledge of organization culture affected the process of implementation change
process in different ways and identified the stages towards the implementation. Some of the
human resources aspects such as resistance to change and failure to adapt to an organization
culture that were not covered by Yusuf et al. (2005) have been considered and it presented
culture as a moderate variable that acts respectively to the implementation of change.
The model developed by the Latta (2009), Organizational Change in Cultural Context (OC3
Model) advanced theoretical perspectives reflected in the critical stages during the process of
change implementation. Additionally the model “could be used to foster a continuously
expanding awareness of organizational life and increase consciousness of factors outside a
leader’s limited frame of reference that influence the course of change”. The understand was that
organizational culture exerts differential influence and provided a road map registering the points
27
in the process of implementation change where consideration of the impact of organizational
culture contributes towards effective leadership.
According to Schuler & Jackson (2001), the management of human side of change was
considered the primary indicator and real key of the success or failure of a merging and
acquisition deal, which during evaluation, identified threads was most encountered during the
combination – implementation stage. The merger deal depends on equal or unequal type of
organizations in which from both sides put pressure on the cultural and work ethics of the
employees. Ideal ways to communicate is to openly and clearly express about the concerns
directly with the involved person and communicating indirectly towards to hit at the problem.
Direct communication is sometimes considered inept; as a result a mediator or distributor is
habitually used with delicate or important matters. Verbal communication is the prevailing
manner, though body language is similarly depending onto a certain degree. Words are not to be
trusted as much as mutual feelings and non-verbal cues (Western Washington University, nd.).
After the merger and acquisition has been absorbed by both the companies, Human Resource
comes into picture for the real role. The role is basically to make employees of both the sides feel
at home with each other and see that no one feels out of place or out of context. The following
were few of the activities that Human Resource needs to follow in order to make sure that the
employees of the merged companies get to know each other better and find space for each
other’s ideologies and well as cultural affiliations (Schuler & Jackson, 2001).
Friendship programs: The companies that are merged should follow some ideas such as
employees visit and socialization with the local offices and get to know the office culture.
Regular Business trips: Managers should learn other culture and nuances of work in different
countries which your organization are involved with.
28
Communication, trust and mentoring: The merged companies should certify that continuous
mentoring by managers and a good communication plan which is implemented routinely leading
to firm trust between higher management and employees. A free flow of thoughts should be
encourages in order to facilitate problem solving and decision making at mid and lower
management.
Workplace flexibility: It is vital that workplace should not be severe and individuality of each
employee is appreciated and valued. The merged companies should provide suitable–policies
relating to work-life balance. Continuous employee engagement plans should be implemented
and environment should be as comfortable as the employee’s home country because the
engagement will translate progressively into retention, hence employee faithfulness for a long
tenure.
2.7 Supportive structured faced by organizations towards merging
and acquisition
The study of Hofstede (1980) presented the information that in cross cultural context the risks,
cost and difficulties were multiplied between organizations. The studied was performed with
collective material in more than 40 countries, contributing in the areas of cultural definition and
mapping theory building becoming a significant systematic review tool and empirical
comparison of work area during that time. The study of Data and Puia (1990) presented that
cultural distance in terms of different management thinking and work related values poses a
significant impact on the organization. The degree of relatedness was most important that
29
determines the level in integration and degree of change between acquired and acquirer
companies.
The report conducted by Morosoni et al. (1998) presented information that the possibility of
relatedness between firms, post-acquisition strategy of firm, impact of sizes between acquired
and acquiring company, uncertainty avoidance factor in companies, and differences in industry
between them were important variables to consider for understanding the impact of culture in
merger and acquisition. On the other hand, Silvia & Simona (2013) presented information that in
the acquisition, factors such as architecture of building, dresses of staff, behaviors and habits of
people, employees, behavior in conflicting situations, role fulfillment ways, and working
environment were important to determine the influence of culture. These both papers, supported
structures for understanding the situations organizations came to face during merging and
acquisitions and outline the positive and negative impact of cultures. Additionally supportive or
hindrance elements towards the impact, offers the process collaboration between acquired and
acquiring firms’ management people and for change management to enhance productivity of
both firms. The main question was to understand the role of culture in shaping the performance
of people of both organizations after acquisition.
The following steps described the formation of a supportive structure after merger and
acquisition:
1. Entry (Problem identification): During this stage, the top management of the firm realizes
that there are certain gaps and need for the change. The top management rope in the specialist
that identifies certain considerations in the organization to initiate the change process which
include relating with the client, motivation of client, readiness for change resources available,
and potential leverage points (Leifer, 1989).
30
2. Contracting: The expert carefully examines the organization and evaluates the considerations
mentioned above, by using his own normative methods to initiate the change process. The expert
makes expectations and formulates the framework to start the process of change.
3. Diagnosis: This stage implicates gathering of facts and figures to conduct investigation about
the status quo of the operation, organizational structure and various other parameters which
should be changes in order to bring in change. It also includes drawing the trends and pattern by
evaluating the data which is collected (Leifer, 1989).
4. Feedback: After the brainstorming session with the team about the results of the analysis of
the data the common study is accepted with the top management of the organization to diagnose
the underlying problems and the evident symptoms (Leifer, 1989).
5. Planning Change: The top management and the specialist usually work collaboratively to
take explicit action made after the directional road map based upon the study carried on the
culture, technology and environment of the organization (Leifer, 1989).
6. Intervention: This stage deals with the actual implementation of the change process which
has been done on paper and involves the collaboration, communication and cooperation from all
organization. It includes setting up of new methods, restructuring and work designs, and
strengthening of new conducts (Burke & Litwin, 1992).
7. Evaluation: This stage consists of assessing the process of change implementation which
involves collection of data after the organization has involved thought change and the change is
seen in everyday activities and conducts. Because action research is a cyclical process, data must
also be gathered after the action has been taken to measure and determine the effects of the
action and to feed the results back to the organization. (Burke & Litwin, 1992).
2.8 Conclusion
31
The conclusions drawn from the literature reviews suggested that many actions and factors are
vital for a company to understand and plan the strategies accordingly in order to achieve success
of a merger and acquisition. Many of these parameters include the role of management and
leadership, role of national culture and corporate culture, role of parameters suggested by the
Hofstede research, cultural competency of managers, supportive structure of organizations,
transparent communication, collaboration to build a new culture and adoption of different
models for cultural integration. Additionally, it is important in the merger and acquisition
process the identification of factors that would in somehow become an important thread to
achieve the final outcome.
Culture assessment involves many knowledge areas and risks definition declaration even when
merging and acquisition takes place within same national culture. The suggestion by Schein
(1990) that the idea of corporate culture provided a basis for understanding the differences may
exist between successful companies operating in the same national culture in which even
operating successfully, can possess certain culture traits in business excellence. Organizations
with defined strong culture can deliver better organizational performance, however changing
environments will influence in these both criteria. Quantitative and qualitative practices
combined, deliver the understanding of these criteria, set general principals and reform specific
organization measurements and priorities to achieve efficient and effective integration
(Tennyson, 2010).
32
Chapter Three
Research Methodology
3.1 Introduction
The research design proposed should have quantitative and qualitative approaches to unearth the
complexity and dynamics of merger and acquisition integration process (Rottig et al., 2013). The
methods followed two developed dimensions as cited by Cooper & Finkelstein (2013), sequence
of implementation and priority of methods. Though the qualitative research does not furnish a
systematic comparison between organizations or subcultures within one organization Cai (2008),
it was helpful to gain insights so it was recommended for primary research. The next method
followed was quantitative method that provided systematization, repeatability, precision,
comparability (Tucker et al., 1990) and because of these benefits, quantitative research should be
followed after qualitative research to obtain generalization of study. The questionnaires were
distributed to 100 participants within common characteristics to ensure the sufficient feedback
(Kent, 2007). The questionnaire consisted of closed-ended as well as open-ended questions to
gain in depth answers (Saunders et al., 2012). It was proposed that research would adopt a
triangulation approach consisting qualitative, quantitative and theory method to minimize the
research biasness and ensure validity of data (Yeasmin& Rahman, 2012). Along with
33
questionnaire and interviews, observation methods were also recommended to use for research.
The interview script were verified with other research cases in order to avoid the ambiguous,
embarrassing and unnecessary questions and needed to be reformulated to avoid further
frustration and complication (Jordao et. al., 2014). The ethical consideration was an integral part
of research process (McBurney& White, 2009) and ethical sets that should be practiced were
included in this report.
3.2 Research Method and Design(s)
The research design of concerned company was a social research design. As the change occurs
due to mergers and acquisitions, specific questions must be asked from the participants. There
were fears of being laid off or not getting salary increases or unfair practices by the acquirer
company. All these, originated from the perception of individuals and groups working in the
organization. For reducing the stress level of employees and retaining their confidence in merger
and acquisition outcome, clear communication should be established, culture and business
processes should be aligned, support for employee development should be available and top
talent of the company should be retained.
For this purpose, individual and groups perceptions must be measured. As a result from the
cognitive process of individual and it was very difficult to apply quantitative research methods to
obtain data with accuracy, mostly the qualitative research design was considered to obtain
results. As the human subject was involved in research process, so it was preferable to
understand different types of qualitative research to determine appropriateness of research
method.
34
The habits, preferences, attitudes, perceptions were hard to measure and in the absence of
accurate data regarding, these can only prompt towards qualitative research method. There may
be the old results regarded the turnover rate, absenteeism rate and cases of conflicts and chaos in
the previous mergers and acquisitions. However the company was to be soon acquired by an
American company which the roots were totally different culture from the culture currently
blended of Italian, French and German culture in which was difficult to analyze the impact of
American and Switzerland culture when to organization work together. It was recommended that
quantitative research would be adopted and carried out first to provide a base for assumption that
was a part of quanlitative research.
The definitions of the qualitative research design conferred that it was a subjective research
approach that was used to describe the life experiences of humans and provide them meaning.
The goals of the qualitative research design were to gain insights and explore the depth, and
complexity involved in subject. The characteristics of qualitative research are that it is a soft
science, has complex and broad focus, is subjective, helpful in development of theory, helpful in
shared interpretation and communication and observation, and provides holistic view of research
and basic element of analysis is individual interpretation and uniqueness (UMSL, 2000).
The quantitative analysis is concerned with testing the cause and effect relationship, is a hard
science, is objective, tests theory, provides control, and basic elements of analysis are numbers,
statistical analysis and provides generalization. Due to absence of individual perceptions and
attitude regarding the merging effect, it was determined that research design should start with the
quantitative research design first and after obtaining feedback from the participants it should use
the qualiitative research to provide generalization of findings of research study. The
35
phenomenology revealed that the purpose or goal of research was to know the subjective reality
of individual.
The research question was how mergers and acquisitions could influence the acquired
organization performance and culture leads to subjective analysis of people. The research
question compelled to choose a qualitative research design and ethnography research that
purpose was to describe the culture characteristics. The methods were direct observation and
interactions with subjects and these were qualitative tools for ethnography study.
Further the different research design methods were taken into account here to judge the
appropriateness of chosen research design that was descriptive design and descriptive research.
The aim of the descriptive design is to observe and describe. The tools for the descriptive
research are descriptive research, case study, naturalistic observation and survey.
The co-relational studies aim is to predict and tools are observational study, longitudinal study,
cross-sectional study, cohort study and other studies. The semi experimental designs are aimed to
determine the causes of effects and quasi experimental design, field experimental design as well
as twin studies are the tools to conduct this research design. Experimental designs have aim to
determine the causes and tools are true experimental design and double blind experiment. As the
research aim was to conduct subjective analysis and it was concerned with providing conclusive
statement there was no scope of experimental design. Also the cohort study and cross sectional
studies were not performed due to focus on individual perceptions and attitudes.
The feasibility of adopting the qualitative research mostly for the analysis of merger impact is
due to the human subject involvement and analysis of their perceptions, attitudes, preferences
regarding the impact of merger and acquisitions so that a desired behavior expected from them
can be shaped by the top management. For this purpose, a generic qualitative approach was
36
adopted. The generic qualitative approach is described as process to seek the worldviews of
participants and understanding of a phenomenon (Cooper & Endacott, 2007).
The worldviews can be obtained through the use of descriptive research design. This is a
combination of ethnographic research and phenomenology research design combination. As the
ethnographic study is related with the culture impact analysis and phenomenology research is
concerned with the individual reactions, perceptions and feelings regarding merger and
acquisitions (Biddix, 2009).
Both the research designs were recommended to use in the research. Why the qualitative
research is largely promoted for the cultural analysis and individual attitudes along with the
feelings towards certain changes. These changes taking place due to mergers includes subjective
analysis, which is not limited to defined, variable (Mehta, 2013).The analysis of feasibility of
both methods revealed that first quantitative method should be employed and after that
qualitative analysis should be conducted.
3.3 Participants
The participants in the study were employees that have encountered the past acquisitions
occurred in the in the past years within the factory in Switzerland. The sample size of 50 - 100
peoples should be considered and the relevant characteristics of population were that they should
have experience of change process before and they can elaborate the likely effects of change
process due to merging or acquisition of company so that their feeling towards merging and
acquisitions can be analyzed (Kent, 2007). These factors were important to gain insights how
they survived through the change process and how they have adopted the strategies to build a
new culture and work ethics to get along with different employees.
37
Also the availability of them for research, their knowledge, and their background that confirms
that they are part of multi-skilled and diverse cultural background team could enhance the
research findings as they would be able to provide practical solutions to the issues that generally
emerge due to merging and acquisitions. Generally the respondents for the sample consisted of
employees from top management who are involved in multitasking for assessing their cultural
competency as they are in leadership position, so the employees that are chosen for the sample
must hold at least mid to higher position in their respective organization.
Probability sampling method was chosen for survey of sample drawn. The reason for selecting
the probability sampling method was that every member of population has a probability that he
could be selected for the sample thus reducing the chances of biased representation and biased
result. Every person has an equal opportunity to be selected as the participant of study there by it
increases the sample representativeness for population. This method reduced the sampling error.
Further stratified sampling was chosen that is based on certain parameters such as person
experience in working with diverse work group before, service tenure, and position in the
organization.
Generally the most senior position occupied by the employees comes under these parameters.
This sampling method was chosen from other sampling methods that it could offer greater
precision than other sampling methods and ensure that unrepresentative sampling method should
not be formed. As the focus was to select most experienced employees who are in leadership
position to analyze their respective feeling towards cultural influence and impact of mergers and
acquisitions, creation of a subgroup in both the organization provides sufficient representation of
participants and the stratified sample could assist in become an economic advantage.
38
Thought the simple random sampling was easy to administer than stratified random sampling
lack of precision in simple random sampling method did not make it attractive to consider. These
people could come from the holding different positions such as CEO, top management, senior
managers, managers and junior managers. Creating equal participation of these groups in
stratified sampling method could be difficult due to experience factors in managing the diverse
work force and experience in change management occurred prior because of mergers and
acquisitions, it was recommended to adopt a disproportional sample for stratified sampling. Here
the subgroups representation in sample was disproportionate. The non-probability sampling
method was not chosen because of the characteristics like not every member of population can
have the opportunity for selection in sample, there was no sampling frame, non-random selection
of participants, was likely to produce a biased sample, restricts generalization of findings and
population parameter that was crucial for the study were unknown in this method
The recruitment and selection of participants must consider these strategies to attract the
participants. The participants should be approached by the Memos and circulars regarding the
questionnaire nature and content so that they can be prepared to answer the questions in advance.
Notice board of company could also be used for participating in the research. Emails and
telephones could be used to inform participants in advance to participate in the research. As this
was internal recruitment of participants that were the currently employees of acquired company,
certainly there was no need to use advertising for attracting the participants.
The content must clearly furnished the research aims and objectives that were to be
accomplished. The content must be easy to comprehend and should be in the easy language of
participant to have better understanding of questions of questionnaire. Before starting the
research, the consent of the participants must be acquired for participation in research. The time
39
for fulfilment of questionnaire, mode of conducting the questionnaire through email, and
personal interview using face to face technique must be determined with the participants.
As the research tools were observation and interview, a prior consent to have one to one
interview with participants must be fixed so that research could be carried out. The doubts and
issues of the participants must be sorted out by one-to-one conversation after their approval of
participating in the research. A written consent should be taken from the participants to ensure
that they are available for the research.
3.4 Materials/instruments
The materials that were used for the survey, interviews and observations were questionnaires
based on existing literature review and influential mindset of employees when on new and
different merging was about the happen. The questionnaire contained the relevant questions that
analyses the cross cultural impact, merger and acquisitions effect on the employees. The
questionnaire contained around 30 questions that have to fulfill by the respondents. The
questionnaire consisted of both structured and unstructured questions. The strategy for using the
unstructured questions was to gain the deeper insights about the perceptions of individuals
regarding the cultural exchange effect and their own perceptions and attitudes towards acquirer
company management and acquired company management. The questionnaires examined the
mission and vision of companies, business philosophy, and direction of organizational culture,
extent of cooperation, communication system, motivation system, and freedom of expression of
employees, reward and recognition programs of companies and their leadership practices.
The interview method considered was the one to one interview. The pattern of interview was
semi-structured so that open questions of questionnaire could carry out without limitation of
40
answer (Saunders et al., 2012). This could help to gain more understanding in the employee’s
perceptions and attitudes. In this way, interviewers would be communicate freely and describe
common issues reported in the literature on the effect of culture on management performance
and what changes took place in the organization system during and after integration period.
For measuring the validity and reliability, concurrent, content and predictive validity should be
considered. Validity refers to the degree in that the test of questionnaire should measure the
intended measurement (Heffner, n.d.). For content validity it was recommended to have logical
reasoning in setting the questions. Here it was determined that question should cover the full
range of issues of problems that are measured.
For measuring the face validity, the research instrument that was questionnaire must have a
logical link with the objective. For content validity, Likert scale should be used such as
providing points to questions. For generating reliability, it should be ensured that questionnaire
should produce the similar answers repeatedly. For this purpose, test retest reliability would be
performed for stability and test should administered twice for the same participant at different
times, however time constrain were considered as part of limitation and decision in distribution
the questionnaire only once was considered, as it could cause no willingness by participants for
further participation.
3.5 Process of data collection
The tools decided to be used in the process data collection were questionnaires, interviews and
observation. The data collected through the questionnaire was coded on the basis of Likert scale.
The interviews were based on semi structured and unstructured. Interviews were digitally
recorded in order to obtain firmly statements and analyze the data and responses of respondents.
41
The observation process involved direct observation where the interviewer could interact in open
exchanging dialogues with the respondents. The observer could at same time identify the actions
and facial gestures of respondents during the replying of the questions. The observation method
was direct because indirect method of observation could not be employed as it could not access
issues of employees and recognize their feelings, believing and reactions towards the questions.
For data collection course, the following steps were determined:
a. First the issues or opportunities for collecting data should be determined. The issue here
was related to the influence of merging on work culture and employees performance.
b. In the next step the issue was selected.
c. In the third step, planning regarding approach and methods should were determined. The
questions such as collection of particular data, group of interest to be compared of,
department locations of collection of data, sources of data such as quantitative or
qualitative, and duration of data collection were taken into consideration.
d. The next step was the collection of data. This step must consider that person responsible
of collecting the data, declaration of responsibility for logistics, resources, technology
and people use, responsibility for communication process, address of people’s concerns
and duty for test period of data collection to improve the data collection method.
e. The next step was the analysis and interpretation of the data.
f. And lastly step, was data collection process in which provides action of result obtained.
For coding the data, Likert scale was used. This enlarged the simplicity of data analysis process
consequently supporting the researcher to integrate many statistical data analysis tools such as
the Statistical Package for Social Sciences (SPSS), Microsoft Excel or add in tools available in
Microsoft and Google Forms. The incorporation of these data analysis provided the availability
42
to convert the quantitative and qualitative data into variables that were easy to be understood by
the proposed analysis tools.
3.6 Ethical consideration in research
The ethical consideration in the descriptive research can be the own biasness of researchers to
present the information. The other issue of strained relationship could also be possible between
the respondent and researcher (Orb et al., 2001). The information acquired must be kept
confidential and there should not be other uses of information that can harm the privacy of
respondents and threaten them for promotion, or career advancement.
For ensuring the confidentiality, the access to the information must be offered to the accountable
person and no name of participants should be mentioned in the report. All the sensitive
information such as their telephone numbers, their account numbers, their email addresses, their
employee identification numbers, their personal information, their other characteristics or codes
that can reveal their identity must not be disclosed in the research. There are many issues of
informed consent, misconduct in research, conflicts of interest and authorship.
For obtaining the informed consent, information must be shared and questions and concerns of
participants should be addressed to obtain the informed consent. The researcher must be aware of
the culturally sensitive information that was required by the participant. A written consent form
Performa must be sent to the participants and if there are any doubts regarding the research, it
should be sorted out.
After the written consent of participants to participate in research, researcher should start the
process. It is important here that the consent form must be in the participant own language to
understand the content of research and their role in research. The consent form must describe the
43
availability of participant for a particular time, the location where the research can be held, the
rules of ethical research so that participant can be ensured that they do not have any risk in
participating in to the research. Getting the formal signature on the informed consent form can
approve the conduction of research, however was no longer necessary as complete information
and consent can be assessed trough online tools before the access of online questionnaire.
3.7 Summary
The descriptive research was proposed that has the elements of phenomenology research and
ethnography research. The tools used in this dissertation to present the quantitative and
qualitative cases were the use of questionnaires, interviews and observation for research. The
questionnaire should use the Likert scale and should use the mode measure of central tendency
for the ordinal and interval. Coding analysis tools, such as Google forms, SPSS and Excel were
taken into account in order to easy and statistically analyze the qualitative data into variables and
make the possibility for the researcher to identify the attitudes of the employees interviewed
related to the cultural differences in the existing acquisitions.
Interviews using one to one methodology were conducted and allowed the access employee’s
intimacy to deliver the answers related to the cultural and performance changes during past
merging and acquisitions. Observation of their reactions towards the questions asked and during
the answer provided the honest and confirmation accountability and sense of any distress that
could considered value for the study. Consent of their answers was accessed through the use of
electronic tools before the access of questionnaire and through acceptance via email for the
interviews.
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Chapter Four
Presentation of Results
4.1 Introduction
The description of this chapter primary presented the experience description of the participants in
the study related to past merging and acquisitions experienced in the factory in Switzerland. The
emphasis of the study was based on demographic variables including the gender, management
level and number of acquisitions experienced into the organization by the employees within
different department. The following were consisted in the summary of the questionnaires results,
summary of the interviews and observation criteria and the presentation of a discussion based on
the results showing the comparisons and contrasts perceptions by the employees in the factory in
Switzerland that have experienced many past merging and acquisitions.
4.2 Data Presentation
Research study includes gathering data from the participants to be reviewed and such a study be
carried out dealing with the study of influences on the acquired organizations through the
acquiring companies. Gertsen, Soderberg and Top (n.d.) described that significant degree of
disruption and transformational changes surely occur within the organization towards merging
45
and acquisitions. One of the manners of the affect felt on the performance and variation is the
culture behavior.
Culture behavior with the needed improvement and imperfection before and after acquisition
takes place becomes crucial study for the understanding (Accenture, 2009). Integration is
considered to be also crucial from the perspective that it requires strategic and organizational
conditioning factors that include the culture along with the acceptance and the adherence to the
best management practices followed by the organization.
There are various factors that are responsible and do influence and improve the implementation
along with the presence of cultural integration. Integration involves common management and
financial control systems adaptation (Jones & Hill, 2008) and involvement of people synthesis in
one corporate culture (Knilans, 2009). For that reason, available sources about the chosen topic
were investigated, primary sources related to the research topic setting up of the required goals
and the arrangement of the incentives accordingly done while providing the needed motivational
levels to the employees is crucial.
The presence of the past and present experiences of the employees serving the various
departments in Alstom Grid Switzerland and the influences they have come across as part of the
new roles serving in the various departments served as part of the analysis done in order to
understand the various influences pertaining to the acquisition. The best practices as part of the
management strategy and the order in which the flow of the transactions which is considered
important was maintained. At same time the information would contribute the delivery amount
of attention that management and how much expectance employees wait to contribute inside the
corporate atmosphere.
4.3 Participant Background
46
In the past 53 years of working unit in Switzerland, the Factory in Oberentfelden has been
rebranded into different organization names. The initial name came from a high and medium
voltage business called Sprecher & Schuch. In 23 years of expansion of business to Turnkey
projects a further integration with GE Alsthom started with some rebranded names to only
Alstom which during late 90s floated the stock market.
Few years later a new integration with a French organization, AREVA T&D, expanded the
organization. The vision of AREVA T&D was the product line development and extension of
new workshops. In 2010 the company has been returned to the hands of Alstom leading to a new
sector, Alstom Grid, in which today’s situation is facing a newer merging to an unknown and
different culture (Alstom, 2013).
To cover such many transitions, there are still employees based in the factory in Switzerland that
have experienced such many transitions. Many of those people experienced in between 1 to 5
merging and acquisition transitions. For that interest, the background of the participants
considered in the research were the employees of the organization who have been part of the
management teams and under the leadership as part of the various departments such as Project
Management, Sales and Tendering, Research & Development, Engineering Department and
Human Resources.
4.4 Rank of employees
In order to identify many experience in past merging and acquisitions, especially with the
different issues related to cultural differences and organizations performance within the
organization, different management level has been taking into consideration for the study. Many
47
of these levels include top, medium and lower level managers. With this difference in
management levels, it makes more interested to identify the factors that most impacted in each
level and reach the result of differences between the effects of culture towards its operation.
4.5 Departments involved in the study
With many merging in acquisitions happened in the past, it is important to understand the impact
and effects that each department has experienced and how much cultural differences affect in the
employee’s performance. The objective of the dissertation was to review the experience of many
departments involved in a project which also felt impacted during past merging and acquisitions
in Alstom Grid GmbH. From all these impacted departments, some were available to share their
experience: Project Management, Tendering and Sales Management, Research & Development,
Engineering Department, Human resources and Operations department.
4.6 Age and Gender
Of the 90 invitations to participate in different departments for the questionnaire, 42 respondents
(47%) has described their experience, being 34% male and 8% female, most with a range of age
in between 36 – 45 years old and worked more than 4 years in Alstom Grid in Switzerland. The
decision in verification of age, experience and gender was to verify the efficiency that employees
coped towards many changes due to transitions. The following tables illustrate the demographic
data obtained which has been considered important for the research.
48
Invited employees to participate in the questionnaire
Yes (47%) No (53%)
Gender
Male (81%) Female (19%)
Age Range Management level Ordinary employees18-30 1 031-35 5 136-40 8 241-45 8 246-50 4 2
51 and above 5 4Table 1.1 Source: Author (2015).Questionnaire – Demographic data
2%
12%
14%
5%
40%
17%
2%2%
5%
Departments involved in the questionnaire
a. Purchasing and Procurement
b. Finance
c. Tendering and Sales
d. Human Resource
e. Project Management and engineering
f. Services
g. Research and Development
h. Production, Assembling and Testing
i. Quality and Industrialization
j. Others
Table 1.2 Source: Author (2015).Questionnaire – Department involved in the quantitative
analysis
49
a. Values
b. Norms
c. Language
d. Practices
e. Beliefs
f. Behavior
g. Organizational Goals
0 2 4 6 8 10 12 14 16 18
Difference Cultural Factors
Difference Cultural Factors Respondents Percentagea. Values 9 24%b. Norms 4 11%c. Language 5 14%d. Practices 14 38%e. Beliefs 3 8%f. Behavior 11 30%g. Organizational Goals 16 43%Table 1.3 Source: Author (2015).Questionnaire – Difference cultural factors
4.7 Summary of questionnaire Outcomes
4.7.1 Quantitative Results
When many of the employees where questioned to identify many factors that impacted in
departments and in the organization during several past merging and acquisition, many widely
responses were given. From the responses given many were related to difference cultural factors
describe in the question 7 of part 2 described in the Appendix 1. Such factors included reasons
50
related to value, custom, belief, traditions, ethical and moral policies, objective and behavior of
the organization all described in the Table 1.3 above.
More than 50% of the respondents were of the opinion that merging & acquisitions have
impacted in the Alstom organizational structure and many other values within the organization.
Positive outcomes have brought the organization to a stronger management structure and course
of operation culminating into attainment of a high competitive advantage over other competitors
and take the result that leadership style and communication programs are important factors in
order to succeed in a merger and acquisition. Much wider opinion were also raised in the
evaluation conduction of the existing values in between the Areva T&D and Alstom Grid due to
the same French organization culture to define if the mergers and acquisition would become
successful or not. Many of these respondents have many difference responses in organizational
philosophies as a major factor to achieve the success or failure of mergers.
4.7.2 Qualitative Results
The outcomes as part of the interview included the changes that the participants felt due to the
previous acquisitions and the manner in which the structure got impacted within the
organization. The fact that the realization that the desire with separation of regions and
manufacture, as quality would not be distributed correctly to customer, due to non-optimized
access of opportunities to get contracts at reasonable margins with customer expectations. The
relevance of the culture is an important factor as it does impact. Alstom – French was dominant
and culture was strongly on cost savings (control). Areva T&D on the other hand, had the
culture which was entirely focused on customer satisfaction and market grown and opportunities
51
(more training, evaluation of results) differing from Alstom in which focus were most on cost
and this decrease the market volume.
The top leadership also weighted as an impact on the organization’s culture. In the same way it
also impacted on the employees after merger or acquisition. The culture of lower levels of power
distance, i.e., the process of decision making is decentralized and happens at various levels of the
organization. Further the individualistic culture of Alstom aided in most managers by taking
decisions on their own.
While decentralized and centralized form of decision making have their respective, it was
increasing seen that business favor decentralized decision making. The performance of an
organization rest on different aspects such as its physical and intangible assets and its
capabilities. More over organizations, even within same industry, are very diverse and its
performance depends on many unique features and competencies based on their own
experiences, nature of its assets and capabilities and organizational culture. These assets and
abilities defined the performance and success of each company.
Many departments declared that there was no real issue with ethics, as they were never force to
be unethical. They have tried to find solutions which were with interest of company based on
ethics. Management has the importance to take control of ethical within his employees and
control at morale balanced level. There was a very positive experience with the takeover of GE
Alsthom to Areva T&D (well structure) with communication and training program to understand
the culture (lot of actions done).
Diverse integration programs divided by different business units needed during GE Alsthom to
Areva was none identified; either being same nationalities have different style cultures of
management behavior. The takeover to Areva T&D, plans for growth existed where strategically
52
was done to obtain a market share and grow split in sub steps which became quite positive (price
sold was complete different of what was bought due to high development of market shares and
products). After Alstom Grid took over with the aim only on optimize costs. Commitment of
clear vision and the manner in which to act in line within the vision with greater consistency was
the requisite.
4.8 Conclusion
This chapter supported the presentation of all quantitative and qualitative data collected by the
researcher in a manner to facilitate the understanding of the objectives and outcome to the
questionnaire and interview performed to selected employees at Alstom Grid GmbH. All
directive questions were answered and presented within this chapter. Some of the answers were
assessed and represented in graphs and tables in order to perform a clear analyses and delivery
the connection to the research questions and objectives established in this dissertation.
The organization of the methods followed two developed dimensions as agreed by many authors
as cited by Cooper & Finkelstein (2013): the sequence of implementation and the priority of
methods. The initial plan followed by the simultaneous design, where qualitative and quantitative
data were collected at same time and followed by the prioritization of one of the methods that
most fitted in the effects caused by the previous acquisitions. In that way the collected data
would build a roadmap direction, supporting the most appropriate prioritization method.
Many variables were considered in selection of candidates and their experiences within different
departments during past merging and acquisitions. The data presented in this chapter and results
described were considered effective and useful on the interpretation of data analysis and
discussion in the next chapter. Consecutively it would draw the conclusions and guidance of
53
recommendations based on the interpretation and understanding of data. At the same time
limitations and open topics for future analysis would be described for possibility to explore the
organization post merging integration with the new unexpected culture within Alstom and further
understanding of the strengths and weakness in comparison to the past experience.
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Chapter Five
Analysis of Data and Discussion
5.1 Introduction
The measurement relevant to the effect of the objectives is associated to the simulation on the
relevant adherence to the human participation and the performance in the arena. A company to
be successful in its pursuit of profit expansion depends on various aspects that it might entirely
control, partially control and cannot control. Additionally, these factors could be identified
through the use of qualitative or quantitative methods.
Qualitative research is a type of systematic research. In broad terms, scientific study comprises
of an evaluation that, strives to find solution to a question, methodically utilizes a pre-defined
group of ways to reply the research question, gathers proof, derives the outcomes that were not
identified earlier and derivate outcomes, is useful beyond the immediate limits of the pursuits of
the qualitative study shares the features. The specialty of qualitative research is the ability to
offer the intricate word-based on the consideration of accounts of ways individuals understand or
experience a specific research and referring to this research’s case, that of the acquisition of the
company and the impact felt as a whole in the organization. Additionally it offers information
related to the human aspect of a research problem, i.e. the frequently contrary actions, beliefs,
views, feelings, and interactions of humans.
Qualitative studies are always effective in recognizing aspects that are like the societal norms,
social and economic status, gender factors and its role, ethnic origins, and religion, whose
influence in the research problem may not be evidently seen (Mack et. al, 2005). Cai (2008)
55
explained that not always qualitative approach allow systematic comparison between
organizations of between subcultures within one organization and for that reason research
methods like statistical or quantitative analysis were applied along to qualitative research in
which can aid the researcher to infer and effectively realize the intricate reality.
In a better way for the explanation of the research problem towards organizational culture and
management performance during international acquisition at subjective level, the mixed
methodology involving qualitative and quantitative approach were selected to perform full
analysis of phenomenon. Consequently, it became relevant to answer the research question and
gave the ability to understand the complexity and dynamics of merger & acquisition integration
process within Alstom (Rottig et al, 2013). The advantage and disadvantage of both approaches
above described implies, to some extent, that qualitative and quantitative assessment of
organization culture complements each other.
5.2 Data Analysis
The data management analysis from the questionnaires taken up as part of the study included the
identification of volunteers who were part of the study along with the preliminary questionnaire
conducted and the analysis based on the performance exhibited with the intervention done.
Leadership can be defined as the activity of leading an organization or a group of people
(Ogbujah, 2014). It also set up a focused and clear vision, influence and motivate people to
passionately empathize with that vision and ensure delivery of require results from subordinates
by establishing a culture that is consistent with the vision (Bedinarz, 2014).
Generally the various traits in a person that can mean to suggest good leadership skills are ability
to lead and manage, functional or technical excellence ability to see context of an activity, i.e.
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larger picture without losing the grasp on minor details, decisiveness, initiative and self-assertive
or self-confidence. Within the past acquisitions, the latest one was focused on customer and
regions. Not much management satisfaction was identified on latest change. Headquarters
location, national culture (French), management levels of acting were all taken into
considerations for the study.
Bearing in mind, the new future acquisition changes would be felt quite strong from French to
American, business and competition should govern respect and be in line and follow the ethics.
With the new acquisitions, there were still some upcoming gain fulfillment of organizations
ethics and adaptation. The initial period can be complicated, as management needs to be clear
stable to keep employees focus on the direction to follow.
The growth and development plans of the organisation impacted the organizational change and
cultural development. The interviews and observations were conducted in different departments
of organization in order to understand how the acquired organization’s culture was influenced by
the acquiring companies. The set of questions were presented in Appendix 2.
5.3 Responses and Interpretation between different departments
during previous transitions
5.3.1 Industry type and organization structure
The interview with different departments and their results were analyzed in this respect. Many
departments have demonstrated a different range of belief in the way their departments were
impacted during the past merging and acquisitions transition occurred. The expectances of the
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following coming change in which might become an advantage or disadvantage for some of the
departments were also recognized. From the data collected, the most significant merging and
acquisition experienced by most of the departments were during the transition of Areva T&D to
Alstom Grid. The organizational structure before and after acquisition reflected on Areva T&D
vision and objective to improve their products and values towards customer, while Alstom Grid
would established new product lines and new regions and focused on customers and cost saving
leading to less time in the factory unit.
The acquisition which involved organizations with different product portfolio, however related to
the energy industry, proved compliance of the hypothesis investigated by Mantravadi & Reddy
(2008), presenting that pre and post merging operations do make difference in the performance
of the organization. With the changes in the strategy of what was before to after, the main
emphasis were aimed in the expansion of markets and reduce of cost to achieve further
competition on the market, however many factors could be seen impacted towards the new
vision of Alstom Grid employees post merging in comparison to the vision stablished by Areva
T&D before the transition.
Towards the merging and changes in the organization structure, all departments have sensed a
decentralization organization structure. The most affected departments in that case, as identified
in the questionnaires and interviews, were Tendering, Sales and Research & Development
departments. In those departments, there were no desire with separation of regions and
manufacturing due to inability to distribute the quality to customer correctly and the reasons that
have offered were not having optimization access of opportunities to obtain contractors at
reasonable margins.
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As per Alstom Grid’s decision and according to Fiol & Lyles (cited by Kessler et al., 2000),
centralized organization structure restrain the internal learning process and makes diffusion of
knowledge difficult across the organizations and also leads to low decision making autonomy by
those employees that resist any attempts of innovation. The vision of a decentralized structure
was related to decisions and problems that could be settled at lower level in between those
employers closer to the problem question, at the same time, it could also be attributed to decision
experience, gaining of service oriented culture and greater level of procedure fairness. However
these changes were not much seen as an advantage by the actual employees whose believe that
centralization lead to more efficient operations, particularly when the organization is operating in
a stable environment (Creative Commons, 2012).
5.3.2 Other factors influenced by previous Merging & Acquisition
In many manners to understanding the influence of merging and acquisition in the organizations
culture and performance, the assessment throughout questionnaire and interview within several
departments have identified that many factors became crucial influential triggers. Business and
competitive forces, the influence of political system, working philosophies and the management
performance were some of the factors described by many of the participants. The categorization
of these factors could be clearly compared to the factors described in the literature review.
Competitive forces are usually shifted according to needs of the industry, requirements of
customers, market cost fluctuation, product and process innovations and anything else that upset
the competitive balance (Day et al., 2004). Alstom Grid’s decision to a new concept and change
in organizational structure was related to strategies engaged to follow the competitive forces.
Consecutively, the new competitive forces also drives to an influence and adaptation of a new
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political system to fit the culture of the acquisition organization, in which become some of the
factors that contribute in the failure of a merging and acquisition. To what extent the business
and competitive forces have impacted the chosen organization ethics and culture was responded
by some participants that Alstom followed the fashion of copying ABB with a delay factor of 2-3
years.
It has also been acknowledged by many of the participants that as both organizations belonging
to the same national culture, French, adopted strategy was taken as a main core during the
merging and acquisition, forgetting the cultural concept adaptation (Hajro, 2015). The poor
cultural fit inside an organization can influence in the productivity, morale and turnover rate of
the employees, which are usually embedded to an existing established culture (Marmenout,
2006) and the impact is only felt during the influence of a merging and acquisition phase. Within
a cultural fit assessment, values, products, beliefs and others were amongst of issues that should
be taken into consideration.
Apart of an approach to identify the cultural fit, integration and leadership selection, as identified
by DiGeorgio (2002) are vital factors that should also be well defined to lead to an effective
merging and acquisition. The selection of new leaders that follow the company principles and
ethical best practices are a common recommendation philosophy of working during an
integration process. The participants of the questionnaire have clearly identified that the
organization culture, in some level; have been impacted during the past merging and
acquisitions.
Important key factors as described by DiGeorgio (2012) were also described by the participants.
Employee morale and a cultural change management with strong leadership and proactive
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communication plan were right strategies to minimize the dip in the employee productivity
(Saldaña, 2010). It would also achieve the organization goals more quickly and efficiently.
5.3.3 Organizational and national culture differences
From many studies available (Hofstede, 1980 and 1991; Hause et al., 2004; Inglehart et al., 2004;
Schwartz, 2004; Trompenaars & Hampden-Turner, 1998; all cited by Sarala, 2010), the
organizational and national culture differences are considered one of the main sources of
hostility and distrust in between organizations. Sarala (2010) asserted that existence of a cultural
diversity in organizations involved during merging and acquisitions despite they functioning
within the same local context.
Due to Areva T&D and Alstom Grid belonging to the same national culture; no social-cultural
integration analysis was identified by the participants. The intention was further supported by
studies performed by Gouled and Schweiger (2006) and Ulijn et al. (2010) who suggests that
cultural aspects should not be generalized. In other words, Alstom Grid merging and acquisition
formation was oriented on the misconception of assuming the existence of familiarity of culture
between the Areva T&D and Alstom since they had a similar national culture.
To support the analysis approached by Hajro (2015) in understand how cultural differences of
organizations affected the integration process and factors that facilitated or hindered the
successful socio-cultural integration in merging acquisition, the quantitative and qualitative
analysis with those employees that have witness many past acquisitions became influentially
necessary for the study. Questions based on their experiences and expectance with the new
coming transition would be beneficial to the deal with new challenges that managers would face
and the awareness of how to deal with such situations. Many departments, such as Research &
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Development, Engineering and Project Management have witnessed a lack of a cross cultural
interaction and some level of friction and conflicts between the employees and managers
(Emerson, 2001).
Top leaders’ impact on organization culture revealed that top management was supportive and
provided cross cultural training to the employees to adopt changes after merger and acquisitions
in some departments. By others, leadership also impacted in the organizational culture, but due
to its inefficiency, leadership was found slow to respond the queries of employees. It was
recommended that efficiency should be introduced during the integration phase.
5.3.4 Management role and performance post merging
One of the major challenge tasks during a post merging and acquisition are given to managers
and leader professionals. Many Human resource oriented studies focused in the specific attention
that Managers and top management professionals face with customer concerns and situation
specific considerations when making integration decision (Buono & Bowditch, 2003). The
intimidating task to consolidate the aspects of business by eliminating, generating or merging the
various tasks as well as functional duties of the respective departments were some of the
situations recognized by the managers experience collected during the qualitative research.
Employees are considered the triggering point of every process post-merging and this means that
managers need to focus in delivery best communication practices as well as query resolutions.
Most managers have a full-fledged plan for taking on the questions and concerns of the
employees and this is usually done by making a platform where concerns of the functional
departments are met and resolved. The use of effective communication also minimizes the
challenges associated with ambiguity as suggested by Fost and Sullivan (2010).
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One of the methods to increased success during a post merging and acquisition is by assessing
the existence of culture differences and the development of strategies to merge it (Stahl & Voigt,
2005). Within the latest merging and acquisition, the main cultural differences identified by the
participants, were the organizational goals and practices. This resulted in a needed of leadership
and communication skills as vital qualifications to coordinate order and mitigate any type of
resistance amongst the employees.
Effective communication should be improved from top to the lower levels. It should be ensured
that there is continuous communication during the entire transformation period. In total more
than 80% of the participants were of the opinion that effective communication was the most
important tool in managing change especially during establishment of mergers and acquisition.
5.3.5 Overall departments
The results obtained by the overall department employees’ interviews were that some
experienced in between 3 to 4 merging and acquisitions. The organization structure was matrix
and it was directly linked to product line. Employees suffered non-cooperation from the sales
team due to moving sales team to regional teams. The globalization is an existence factor that
impacts over the selection of organizational culture (Kazi, 2011).
The impact of business and competitive forces over the ethics and culture also weights on sub-
suppliers direction of forced acceptation of ethics of organization. Other factors that shape the
organizational culture are the environmental health and safety (Nielsen, 2014). The top
leadership of organization has impact over the organizational culture and influence in the
direction of the employees to follow the guidelines in line with organizational ethics. Initiatives
to introduce training programs for the new employees and recycling training to existing
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employees are recommendations that every company should follow the compliance with market
rules that are based on growth.
Further analysis revealed that most of participants identified differences in culture between the
acquired and acquirer companies. The differences were in terms of norms, values, organizational
goals, practices, behavior, languages and beliefs (Morris et al. 2015). Many respondents had the
opinion that the differences have affected the organization. In other hand many others replied
that these differences have not influenced.
According to the participants, the relationship between the cultural factors could be improved by
fostering open communication, respects and interests, trust, avoidance of centralized
management system, developing common understanding, and other factors. How merger and
acquisition affect the organizational culture depends on management and the enhancement of
morale of employees. It is also dependent upon management initiatives.
Profitability, organizational culture, and competitive environment are usually triggering factors
identified in the selection of company for merging. The merging of Alstom Grid with Avera
T&D was judged in overall as good move from financial viewpoint. Employees responded with
mixed responses that Alstom organizational culture was greatly affected by the acquiring of
other companies while others agreed the impact to a certain extent.
The most important aspect of merger related to the restructuring of organization was identified
by the employees with mixed responses once again. Most employees have suggested that change
management was crucial for merging and acquisitions. The changes in the structured around the
complementary resources and capabilities have reflected the mixed responses. Some say it was
essential while other replied that structuring should not be based on complimentary resources
and capabilities. Mixed opinions have been identified as some merge or acquire the ailing
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company to turn it around for long term gains or become successful merging within the same
sector.
Employees and customer might suffer due to mergers and acquisition as the process creates
many mind confusion and resistance against the integration activities, i.e. Confusion in terms of
changing the brand names after the merger. Customer trust and loyalty was considered the least
factor to influence during a merging and acquisition. While proactive management
communication plan for employees were more important action during an integration process.
Other proactive change management programs must be performed by experienced professionals
and should be embedded in organization culture. The refrain to go for ambiguous profitability
analysis and have clear objectives using internal strengths and resource capability, inhibits
financial savings and motivates employees for improvements and achievement of further
qualification positions. All these factors were taken in to account to conclude that what were the
important factors Alstom organizations should consider to effectively function with the merging
organization.
5.4 Discussion of the research question
With the consideration of understanding the different opinions and managers and employees
within Alstom Grid GmbH in Switzerland, this study imposed the analysis of challenges
experienced during a merging and acquisition. The objective came from the conduction of a
comprehensive analysis of how much level of success or failure would been achieved in question
of existing cultural differences and professionalism engaged to managers and integration team.
Through the qualitative and quantitative analysis, most of the participants, from medium and
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higher level management agreed that a pre-acquisition planning in merging and acquisition
should exist.
There were several motives and objectives behind a pre-acquisition planning that are part of a
merging and acquisition. The practice proceeding to the possession handover happening is
significant for outlining the acquisition candidate and assessing the opportunities from a strategic
point or view. Nupponen (1995) recognized the importance of an early planning process for a
merging and acquisition in order to suit strategy and organization point of view within the
organization. Shanley & Correa (1992) emphasized that the influence of a strategic fit for the
accomplishment of a merging and acquisition while Datta (1991) argued the importance of a
culture creation thought an organizational fit.
Many other factors should be considered in order to adequate cross cultural training program,
perception and morale and motivation level of employees, efficient change management program
as suggested by Zhu & Huang (2007). These factors are open and transparent communication,
internal strengths and resource capability and active role of top management leadership as
identified by Di Georgio (2002) during integration phase process. Additionally complementary
resources and business philosophies, consideration of Hofstede dimensions, needs of channel
partners, settling the grievances of employees and promotion of diversity in organization,
organizational norms, beliefs of employees, organizational behavior, organizational goals, and
practices were some other important factors to be considered.
All these factors must be improved by the organization to make the merger a successful merger
as the analysis revealed that many employees were complaining about the inactive role, poor
communication and poor change management initiatives of Alstom organization. In that case the
organization must improve these areas to make future merger and acquisitions successful.
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Organization must offer cross cultural training to employees to develop cultural competency
(Chebium, 2015). Also the company must listen to the channel partners grievances and demands
before going to mergers and acquisitions. The acquired company culture can be contributory to
the success of acquirer-company by considering these factors.
5.5 Conclusions
The conclusions drawn from data collection was that organization must focus on various factors
of organization behavior such as perceptions and attitudes of employees, leadership role,
cultural differences, change management program, existing values, norms and behavior of
merged organization, its business philosophies and approach for conducting business and it
should implement the conflict management strategies such collaboration, theories of change such
as force field analysis theory, team building theories such as Tuckman model, and provide the
clear roles and responsibilities, transparent communication at all layers, provide familiarization
training to new employees, and consider other important measures.
Chapter Six
Analysis of Data and Discussion
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6.1 Introduction
This chapter represented the conclusions of the work assessment in relation to the investigation
of experience of previous merging and acquisitions and belief of employees as stated in the
research objectives. Additionally, it also summarized considered recommendations concerned
the featuring of merging and acquisition with culture adaptation practices with strategic
organization management process. As a final point, other areas that might require future study
were identified and described in relation to how management performance was influenced
towards their teams during an integration phase originated from a merging and acquisition.
With the globalization and real economic situation in the energy market becoming extremely
competitive, organizations are defining new strategies to achieve geographical expansions trough
the concept of merging and acquisition (Rottig, 2007). Apart from organization strategic
principals, political and economic analysis, culture differentiation and integration required a
perceptive study and understanding of barriers countered and what best practices to be engaged.
To support future organizations as identified by previous researches, not much attention to the
relationship of cultural differences and tasks integration with sufficient frequency was given
(Stahl & Voigt, 2008).
The main objective of this dissertation was the findings trough literature review using theoretical,
analyzed factors and in-house belief of the influence of cultural differences and organizational
performance towards past mergers and acquisitions. A certain amount of investigation detailed
objectives were devised in order to lead the study .A considered number of concerns related to
the cultural factors were taken into account which would guide to a more efficient mergers and
acquisition.
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For a better understanding of influences that cultural differences have towards the existing
organization performance during a merging and acquisition, a depth analysis of existing
experiences in the Gas Insulated Switchgear running activities were taken into account. The
existence of the factory in Oberentfelden (Switzerland) for more than 50 years compiled the
experience trough 5 merging and acquisitions in between different international organizations.
However the most important and taken into consideration for analyses was in between Areva
T&D and Alstom Grid, in which operates within the Energy industry. An extensively review of
literature regarding same industry type, shared experiences and organization performances were
conducted and assisted to identification of many concerns related with organizational culture
behavior in which would drive readiness and adjustment of actions towards the new merging
with General Electric (GE), if necessary.
6.2 Research summary of key outcomes and implications
Through the evaluation of various outcomes suggested by many authors and described in the
literature review, key important factors have been identified and shared between employees that
have experienced many transitions within the factory in Switzerland. From many of those who
shared their values and beliefs, mainly from medium level management realized the importance
of understanding the cultural differences and adaptation using practical strategic planning. The
involvement of professionals and management were essential ways to lead employees to a clear
and efficient understanding of process organization implemented towards new conduction of
works post merging and acquisition.
In the same way a merging and acquisition can delivery great success to organization, disaster
can occur if not identified at early stages before merging and acquisition happen. Organizations
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find a way of expansion their markets through the opportunity to complement missing objectives
by using efficient merging and acquisition implementation practices (Javidan & Pablo, 2009).
However many challenges could jeopardize the organizations to achieve the success as important
actions and experienced leaders are necessary to certifying that integration strains are
successfully addressed (Schroeder, nd).
According to Gertsen et al. (n.d.) significant degree of disruption and transformational changes
surely occur within the organization towards merging and acquisitions. Hypothesis tested by
Mantravadi & Reddy (2008) identified that organizational operations performance within
different industry type does influence through a merging and acquisition phase. Changes in the
strategy scenario to achieve competitive forces as expansion of markets and reduce of costs to
achieve further competition and the organization restructuration to decentralized structure were
some of the identifications that managers felt during the post merging.
From one side, the organization’s point of view can provide efficiency in operations and
economic and social opportunities to employees. In other hand these decisions also deliver
human resource aspects such as resistance to change and failure for adaptation to a new
organizational culture. In additional to the decisions that an organization should take, a political
system is an influential factor that should be analyzed and adapted. Hajro (2015) described that
many organizations forget to identify cultural differences even within same national culture.
Hostfede (1980) identified that cultural differences between nations can be found on deepest
levels. Practices in cultural differences are existence in between organizations with same national
culture. According to Waisfisz (2015) practices are more intangible than values, which also
allows for a more precise and specific definition. The average values differences in organizations
of same national culture are relative small, especially in larger organizations where specific
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qualities of each employee will be less noticeable, unless seen by a different culture perspective
in which however can have larger difference in the organizational culture within one nation.
With a cultural analysis in place, managers and integration team would establish channels of
adaptation. This would serve as a mitigation event of any cultural clash post integration phase.
Important values as defined by Hostfede (1980) as deepest level to every human should be
identified by acquirer organizations. In many research conducts, it has been identified that
usually organizations that are acquired have their culture suppressed by the acquirer
organization. The same can be seen in between the latest acquisition in between Areva T&D and
Alstom Grid.
The change management work using the similar steps described early in the literature review by
Jorgensen et al. (2012) and Leifer (1989) were important to a smooth absorption of a merge and
formation of a supportive structure. These steps would follow:
a) The analysis of the organization structure,
b) The engagement to employees,
c) The evaluation of leadership capabilities,
d) The identification of positive points.
With the evaluation of the questionnaires and interview performances to the employees, it was
seen that some of these steps were not cultivated or were left with less influence during latest
merging.
Leadership and communication were other important aspects that should be considered during a
cultural assessment and implementation during an integration phase. Employees play a special
role and the concept of due diligence by managers were necessary to understand their priorities
and identify possible concerns related to the human capital. Hajro (2015) supported the statement
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by describing that the direction of changes in the behavior of employment were influenced by
management impact and leadership style that resulted in self-motivation of employees to
achieve goal setting practices, empowerment practices and opportunity to self-control.
The best practices identified by DiGeorgio (2002), seen in figure 1 and already tested by the new
acquisition organization GE, provided the expected scenario of a new successful culture that is
about to happen. The systematic approach by identifying cultural fit, structuring the integration
team, leadership selection and integration issues are important rules that should be applied
together with the execution done from higher management levels. These factors are vital such as
the cultural fit and leadership selection as the culture of the organization may differ from other
organization and in the merging or acquisition if the both companies’ leadership approach and
organizational structure are same, that it would lead to a successful merging or acquisition
expected in between Alstom Grid and GE.
6.3 Limitations of the Study
The limitation on this study began with the fact that not many energy companies which have
experienced mergers and acquisitions have enough resource available for study. This indicates to
assortment of a very specific sample size and therefore the outcomes might not deliver
conclusive information. Additionally the actual organization even participated on experienced
transition times could not provide much data information due to the no accessibility to any
collection of historic data related to culture adaptation. For this reason the collection of data was
remaining hectic as well as time consuming.
Another limitation is also related to the availability of many employees of different management
levels to participate in the questionnaire and interview activities distributed during the period of
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holiday season, as part of the milestone achievement of the dissertation period. Also,
communication was another barrier encountered by the participants to understand the questions
and express opinions and thoughts in the English language. Limitation in vocabulary distorted
the interpretation of questions and validity of answers.
Regardless of the previous stated limitations and several other unspecified, the information
obtained were confidential and the research analysis and presentation of results has been
methodically accomplished without of any bias and in line with the research objectives declared
in chapter 1.
6.4 Scope for future research
Bearing in mind the advantages through the use of merging and acquisitions implications as for
instance achieve market shares and competitive forces, this activity in the past 30 years became a
usual concept integrate in many organizations operation. Since then, many studies by many
academics and experts have brought many considerations in relation existing political, economic
and social factors. Financial aspects are some of the most concerns described in many studies, in
which many unnoticed the human aspects during a merging and acquisition.
Many challenges are encountered by the acquirer and acquired organizations to align to a single
note of harmony. Some of these challenges are related to differences in culture and deserve more
attention to be analyzed according to the conditions that come upon in every time of
investigation. Technological changes, political and economic environment effects are also other
influential factors.
Cultural difference effects prompt many challenges and deserve an additional attention in the
course of pre-merger phase to evaluate the degree of threads that would appoint after a merging
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and acquisition. Suitable directions with the development of effective structures in relation to the
existing cultural differences and selection of appropriate criteria in management directions would
also have further considerations. Concentration of the others industries culture scenario with
other Alstom corporate industries such as Power to analyze multi-cultural regional variations
would be interest for study.
Further research should also be conducted to analyze the degree of trust in between managers
and employees during an integration process and the results delivered through many
organizations that have faced several merging and acquisitions. Research direction should also
demonstrate effective methods through which communication that will be accepted within the
organization. Systematic approaching plans for integration process involving non related
industry type can also be part for further research.
6.5 Summary
With the globalization, competition and actual economic situation, organizations are strategically
managing their business by the perception of merging and acquisition processes. The
implementation of the process of merging and acquisitions in an effective basis introduced the
opportunity by many organizations to accomplish the extension of their business geographically
and chances to achieve maximum profit objectives. Furthermore, the efficacy of investigation
related to culture differences in between organizations that are intended to merge, by the
management’s acquiring team, defines the condition whether success would be achieved or not.
The examination of culture related factors in mergers and acquisition allowed organizations to
conclude if there were suitable conditions to proceed with further actions. The need to
understand the culture diversity between countries and also between organizations is a dominant
74
factor to avoid problems and support change. With a cultural analysis in place, managers and
integration team would establish channels of adaptation and avoid any cultural clash post
integration phase.
Cultural integration between both organizations supports the mitigation of cultural differences
trough the accomplishment of shared cultural strong characteristics. It respects the core cultural
beliefs of each company involved in mergers or acquisition and acknowledges the importance of
communication and change management adaptability. Leadership and communication were
important aspects that should be considered during a cultural assessment and implementation
during an integration phase.
The conduction of a cultural assessment was also considered critical as acknowledge
management with allowance areas that can be strengthen using human’s perception and create
new powerful force. The establishment of a cultural adaptation was directly related to the
organizations performance including the productivity of employees. Manager and leaders have
an important and extensive role to appropriately define strategy, leadership and communication
plans to integrate both organizations keeping harmonization in between employees without affect
work performance and culture.
Taking into account the benefits that a merging and acquisitions can be achieved, a perceptive
study and understanding of barriers countered and what best practices could be engaged for
future integration efficiency process. A research study is expected to bring shared experience,
recommendations and values of how employees, managers and clients behaved during the
acquisition/merging processes. Part of the process understanding includes cultural evaluation,
management and leadership performance analysis, cultural integration analysis and their benefit
75
towards the accomplished mergers and acquisitions specifically focused specifically in Alstom
Grid past history towards a new unknown and different national and organizational culture.
76
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8. Appendices
Appendix 1
Survey Questionnaire
Welcome to my MSc dissertation questionnaire regarding the performance and cultural influence
towards an International acquisition.
Dear Participant: My name is Alex Maciel Ribeiro, I work at the Project Management
Department (AE2) in SEH and I am conducting a questionnaire in fulfillment of my dissertation
for an MSc Programme in Project Management at the University of Liverpool. For my final
project, I am examining the experience of past performance and cultural influence of Alstom
Grid Switzerland during various acquisitions in the previous years of service. Hence, I am
inviting you to participate in this research study by completing the following questionnaire. The
questionnaire should take about 15 minutes of your time.
91
There is no compensation for responding nor is there any known risk. All responses will be
analyzed in order to provide data for my research dissertation. If you choose to participate in this
project, please answer all questions as honestly as possible. Please be informed that your
responses are voluntary and will be kept confidential. Responses are anonymous and cannot be
identified by individual.
Please note that you can choose not to participate and that you are free to withdraw at any time
without explanation and without incurring a disadvantage. In case you decide to withdraw before
the completion of the questionnaire any incomplete form will be deleted and not used in the data
analysis.
If you have any questions or concerns regarding your participation, please contact me:
[email protected] or [email protected].
In case you are not satisfied with the manner in which this study is being conducted, you may
report (anonymously if you so choose) any complaints to the research participant advocate at the
University of Liverpool: 001-612-312-1210 (USA number) - email address:
Again, I would like to thank you for your participation and for taking the time to assist me in my
educational endeavours.
Kind Regards,
Alex Ribeiro
SHORT DESCRIPTION OF THE QUESTIONNAIRE
The aim of this dissertation is gather data to review and carry out a study of how acquired
organizations are influenced by acquiring companies that result in their performance and culture
behavior improvement and imperfection before and after acquisition takes place. Integration is
92
the main important phase which requires strategic and organizational conditioning factors that
includes the culture acceptance and best management practices. Many factors can influence and
improve the implementation and cultural integration. The organization of an early process plan,
setting and communication of clear goals, arrangement of management with appropriate
incentives to define the areas that can be achieved, keeping appropriate information between
employees and customer, applying a quickly integration system with a sensitive culture change
are many of these important factor.
The case will be most focused on the past and present experiences within different departments
in Alstom Grid Switzerland, and the old and future acquisitions that influence the present
organization. The questionnaire comprises topics such as mission and vision, business
philosophy, and direction of organizational culture, extent of cooperation, communication
system, motivation system, and freedom of expression of employees, reward and recognition
programs of companies and their leadership practices
* Required
Part One
Personal Information
Please select the appropriate answers
Gender *
Male
93
Female
Age *
18 - 30
31 - 35
36 - 40
41 - 45
46 - 50
51 and above
How long have your been working in the organization? *
Please select the appropriate years you are working within the organization
1 - 3
4 - 8
9 - 12
13 - 20
94
21 and above
Part Two
General Questions
1. In which area do you work at inside Alstom Grid? *
If your department is not listed below, please select others
a. Purchasing and Procurement
b. Finance
c. Tendering and Sales
d. Human Resource
e. Project Management and engineering
f. Services
g. Research and Development
95
h. Production, Assembling and Testing
i. Quality and Industrialization
j. Others
2. In what ways was your department affected by the past acquisitions? Please explain. *
3. Which level do you hold in your department? *
a. Management
b. Ordinary employee
4. If you hold a management position, please select the level below.
This question is not mandatory.
a. Top level management
b. Middle level management
c. Low level management
5. Was there any difference in culture between the acquired and acquisitor companies? *
a. Yes
b. No
96
6. How many acquisitions have you experience in your previous or actual organization? *
a. 1
b. 2
c. 3
d. 4
e. 5
7. If yes, which are the main cultural differences which you have identified between the acquired
and acquisitor companies?
Select as many options as you prefer.
a. Values
b. Norms
c. Language
d. Practices
e. Beliefs
f. Behavior
97
g. Organizational Goals
8. Is there any way in which the differences identified have affected the performance of the
acquisition? *
a. Yes
b. No
9. What is the nature of the relationship between the key cultural factors which improve mergers
and acquisition? Please explain.
Part Three
The next following questions will measure your experience and feeling throughout the past
acquisitions and expectance to which might become beneficial for a future acquisition.
For the 5 likert scale the options are defined as following:
1. Strongly Disagree, 2. Disagree, 3. Neither agree nor disagree, 4. Agree, 5. Strongly Agree
1. How does merger and acquisition impact organizational culture? *
Positively
Neutrally
98
Negatively
Depends on the management
2. How does merger and acquisition impact employee morale? *
Increases
Decreases
No effect
Depends on management
3. Which is the major factor that affects selection of the company for merger or acquisition? *
Competitive environment
Profitability
Complementary resources
Organizational culture
4. The Merger or acquisition of Alstom with other companies was a good move from financial
viewpoint *
1 2 3 4 5
Strongly disagree Strongly agree
99
5. The merger or acquisition of Alstom with other companies was a good move from competitive
advantage. *
1 2 3 4 5
Strongly disagree Strongly agree
100
6. Organizational culture was impacted after Alstom acquired with other companies *
1 2 3 4 5
Strongly disagree Strongly agree
7. The most important aspect of merger or acquisition is the restructuring of organisation *
1 2 3 4 5
Strongly disagree Strongly agree
8. The most important aspect of merger or acquisition is the employee morale and cultural
change management *
1 2 3 4 5
Strongly disagree Strongly agree
9. Mergers or acquisitions should be structured around complementary resources and capabilities
of the merged or acquired organizations. *
1 2 3 4 5
Strongly disagree Strongly agree
10. It is beneficial to acquire ailing companies and turn them around for long term gains *
1 2 3 4 5
Strongly disagree Strongly agree
11. The mergers of equals like ABB - Siemens (of same product portfolio) would be a bad
example of merger and that should be avoided *
101
1 2 3 4 5
Strongly disagree Strong agree
12. Employees and consumers suffer because of mergers and acquisitions *
1 2 3 4 5
Strongly disagree Strongly agree
13. One of the major decision maker in the merger or acquisition should be channel partners. *
1 2 3 4 5
Strongly disagree Strongly agree
14. The most long term work after merger or acquisition is the financial consolidation *
1 2 3 4 5
Strongly disagree Strongly agree
15. The brand and brand elements should not be changes after merger or acquisition. *
1 2 3 4 5
Strongly disagree Strongly agree
16. The consumer trust and loyalty decreases after a company is acquired by a better company *
1 2 3 4 5
Strongly disagree Strongly agree
17. Management should have a proactive communication plan for employees after Merging &
Acquisitions *
102
1 2 3 4 5
Strongly disagree Strongly agree
18. Organizational change and diagnosis should be done by professionals and it should be
embedded in everyday functioning of organisation *
1 2 3 4 5
Strongly disagree Strongly agree
19. Companies looking for acquisitions should have a clear objective to be achieved after
acquisition and should refrain from ambiguous profitability analysis *
1 2 3 4 5
Strongly disagree Strongly agree
20. I would support a Merging & Acquisition which is based on resource capability and internal
strengths. *
1 2 3 4 5
Strongly disagree Strongly agree
103
Appendix 2
Interview questions
1. How many merging and acquisitions have you experienced within Alstom?
2. What was the organizational structure before and after acquisition?
3. What is the organisation structure that is followed in your company and why do you think
that it is appropriate for your company?
4. What are the various factors that impact the selection of organizational culture of an
organisation for merger or acquisition?
5. To what extent do you feel the type of business and competitive forces impact the chosen
organizational ethics and culture for merger or acquisition?
6. How does the top leadership impact the organization’s culture and its impact on the
employees after merger or acquisition?
7. How do you ensure that your personal ethical and morals are in-line with the organizational
culture of an organisation for merger or acquisition?
104
8. What are the steps and initiatives taken up by the organisation to induct employees from the
merged or acquired company into the culture of the organisation?
9. How do the growth and development plans of the organisation impact the organizational
change and cultural development?
10. What advice would you like to give to the new managers and leaders about the kind of
cultural framework they should follow after merger or acquisitions?
105
