Sphinx Airline PLC (S.A. Plc) is a major airline operator offering its services majorly in the Europe region. With an aim to expand as well as optimize their business environment, the organization has acquired a major proportion i.e. 60% of the shares of another airline operator Biz Pride Airways Ltd (BPA Ltd) following the death of the founder. The other 40 % shares of the organization are held by the two sons of the founder in 25% and 15 % ratios respectively.
The move to acquire the BPA airline operator was backed by the potential business opportunities that are present in the Middle East lucrative routes which is the general target or customer domain of BPA airlines. Acquiring BPA will potentially allow Sphinx Airline PLC to operate on this route in a cost effective manner which is otherwise an expensive business activity considering the overhead, local difficulties as well as increased landing cost involved. Hence, the move to acquire BPA aims to allow the organization to serve its existing customer base as well as potentially expand the same by offering reliable services in a cost effective manner.
The Management of the S.A. Plc has proposed to utilize the local presence of BPA airline operator to serve its entire Western Europe customer base and close the S.A. operations in this region completely. Further, the existing resource base and the business unit can be relocated to Dubai, United Arab Emirate region in search of new business opportunities. The management intends to retain all their pilot base and approximately 50% of their cabin crew and other staff and let go of the redundant (extra) human resources. The move has received mix inputs and feedbacks from the human resource base of the organization.
The success of a business merger or acquisition depends upon a variety of factors such as the customer domain, market reputation, customer satisfaction, demands, working environment (expectations as well as the cultural issues associated) with the target organization. The acquiring organization needs to address all these elements while structuring their strategic action plan to ensure a smooth transition or implementation of their acquisition business process. (Ulijn, 2010) This will allow the organization to develop an after merger working environment and manage cultural environment in an effective manner (Belloc, 1967). Following is a detailed assessment of the business case in terms of the possible advantages and opportunities it will offer, the challenges the organization may have to face, and the possible strategy (organizational structure, strategic action plan as well as monitoring and controlling approach) need to be followed throughout the implementation of the merger.
The proposed business project is expected to add significant value to the organization in terms of increased revenue sources, optimization of business processes, reduced financial overheads and potential increment in their market segment. (Paas-Mohando, 2014)Following is a detailed description of the opportunities the business will generate.
With this project, Sphinx Airline PLC (S.A. Plc) intends to restructure their business unit and establish a more structure present in the customer domain. Following this acquisition of BPA airline, Sphinx Airline PLC (S.A. Plc) will be able to serve their Europe to middle-eastern airline route customers with the infrastructural and human resource capabilities of BPA airline. The route is generally considered as a financial burden for Sphinx Airline PLC or any other foreign airline operator due to the strict legal policies, high taxes, and several other local difficulties resulting in making a landing in Western Europe an expensive affair. (Kim and McConnell, 1977)
Using the existing resources of the local providers in form of BPA airline will allow the organization to address a majority of these responsibilities in an economical manner, hence allowing the organization to operate in the concerned market with reduced financial overheads. Hence, the organization will not have to compromise on their existing customer base or market position and continuously drive significant revenue. Although the organization will need to provide the much-required strength to the BPA airline infrastructure using their financial muscle. (Weber and Tarba, n.d.)
“Increased Business Reach” is another significant opportunity presented by this project idea. Acquiring BPA has not only allowed the organization to cater the middle eastern airline route requirements in an optimized manner but the existing resource set of the organization can be re-allocated or re-structured in another market segment allowing the organization to create opportunities of market or customer base expansion (Reuer and Shen, 2003).
The airline industry in UAE (Middle East) is experiencing a significant hike in demand, hence resulting in the development of significant business opportunities for Sphinx Airline PLC (S.A. Plc). Although the organization may have considered targeting or operating in the UAE market from their Europe hub but would have resulted in increased financial overheads considering the high landing costs and associated taxation structure. Therefore the move to completely developing its base in the UAE can be termed as a significant opportunity for the organization. The following stats represent the financial performance of “Emirates Group” in the UAE airline service industry.
Revenue Generation of Emirates group in UAE
The stats presented in the above image clearly represents that potential of UAE market in terms of revenue generation and how the same is experiencing a significant increase in demand. The success of Emirates group in the region is largely related to the local business presence of the organization and their ability to better understand the customer’ expectations and requirements. Hence making a positive argument for the organization’ decision to move its operation base in the region itself.
The above graph presents the expected increase in demand and revenue generation in the middle-eastern region. (Vekariya, 2011)
The above analysis clearly represents the strength of the project idea in terms of its impact on the financial performance of the organization and the opportunities it will generate for diversifying the revenue stream of the organization. This increased financial performance coupled with the opportunity to enjoy strong local presence in both Western Europe as well as Middle Eastern market with the services of BPA and the mother company of Sphinx Airline PLC (S.A. Plc) surely presents a compelling case for the organization’ project, but the fact that the organization will have to undergo a major reform in its business structure (Organizational structure, business practices, and human resource management) can’t be ignored. The organization will have to face and battle a significant number of intrinsic and extrinsic challenges in order to ensure that the project can be leveraged to the maximum extent. The next section will detail the possible set of Challenges that the organization may have to face as a result of changed internal as well as the external organizational environment.
The scope of opportunities presented by this business idea is surely significant but there exists a number of Intrinsic and extrinsic challenges that will be developed following a complete restructuring of organizational structure and business operation domain. The most significant intrinsic challenge is evident in terms of the increased complexity of the Human Resource Management dimension within the business of the Organization (Srivastava, 2012). With this project, the organization will not only be acquiring a new business division but a whole functional group of human resources that will form the core of business operations or activities to be performed by the organization. Hence it will be important for the organization to understand the expectations of the newly acquired workforce in terms of leadership style, organizational culture, decision making process and other strategic areas of business. (Ulijn, 2010)Different experts expressed their opinions related to the “conflicting situation” developed within an organization following a change in leadership or management. The business management approach and practices of the new management can sometime develop resistance in the existing workforce (in case they develop or enforces an opposite or unfamiliar organizational culture for the workforce) resulting in development of an oppressive environment within the organization which can seriously impact the productivity and efficiency level of the organization as a whole. The different leadership approach coupled with the differences in expectations for both the employees as well as the management can make it difficult for the organization to establish a common ground between the BPA employee base and their organizational objectives. (Kim and McConnell, 1977) These differences can eventually lead to the development of an environment where the engagement levels and the commitment levels of the employees majorly rely on financial perspective and not on the organizational commitment and goal achievement. Hence, making it tough for the organization to maintain high-efficiency levels (Weber, 2013).
The organization not only need to map and manage the expectations of the new workforce (from BPA airlines) but managing the transition of existing workforce (Sphinx Airline PLC employees from Western Europe to the Middle East). Transition to the Middle-Eastern industry may result in development a significantly different environment which may be tough to adapt and become a part of for the existing workforce or the organization. (Cooper and Gregory, 2003)The employees will have to address or battle different cultural expectations, believes, behaviors and ideologies which might result in possible cultural conflicts between the employees and the customer base. Further, the organizational management will also need to address the requirement of hiring local professionals who have a better understanding of the Middle-Eastern. (Tatuskar, 2014) As organizational leaders, the management domain will be responsible for the development of a harmonic organizational environment where the existing employees and the newly hired professionals can co-exist. This state or environment will be tough to achieve considering the already troubled and oppressive state of the organization due to the need to structuring employee retention and releasing criteria to manage the redundant workforce. (Paas-Mohando, 2014)
In addition to the above challenges, there are few Extrinsic Challenges that the organization might have to face considering their relative unfamiliarity of the majority of the target market. (Coisne, 2011)The customer mindset and expectations in the middle-eastern market are relatively unknown for the organization hence the organization might face a certain extent of difficulty in mapping these expectations and requirements. This will eventually restrict the organization to implement customer service policies and practices in an effective manner. (Howson, 2007) For any business, the satisfaction level of the customer is extremely essential as they are the key revenue source or stream for the business. As the organization has never served the Middle-Eastern customer domain (an assumption made for this assignment) hence it will be extremely difficult for the organization to structure the policies and regulations to be followed while serving this customer domain, possibly developing a negative foundation to start the business. (Tucker, 2013)
Another critical extrinsic challenge for the organization is evident in form of the Unfamiliar Legal Structure that the organization may have to face in the Middle Eastern market. Every country has its own set of rules, regulations and legal obligations related to the business ventures operating in their countries. (Xing and Liu, 2015) These policies are subjected to differ on the basis of the business industry, the nationality of the business i.e. whether the business is local or international, the customer domain the business targets etc. In case of a failure to address these legal aspects can attract serious legal obligations towards the business which might impact its business performance, profit margins, and the market position as a whole. (Whitaker, 2012) Additionally, the business practices of the organization are subjected to differentiate in accordance with the legal structure or policies (Badubi, 2017). For example, the legal environment surrounding foreign business in countries like Australia, parts of Europe as well as some underdeveloped and developing countries like Bangladesh, Sri-Lanka, Pakistan are on the easier side. Whereas the same on developed countries like US, UK, and other developing countries like India and Several Middle Eastern countries including UAE itself is strict. (Dettwiler, 2008)This difference is generally evident due to the different focus of the national government. UAE is a financially strong country and authorities majorly focus on empowering the local business providers. Due to the strong financial structure of the nation, a majority of the foreign business ventures are attracted towards the nation but they have to incur high taxes and legal obligations to the national authorities, hence establishing the base in UAE for their business unit will surely be a tough call. (Wells and Kloppenborg, 2015) The success of this move will largely depend upon the business productivity that the organization will be able to develop in terms of its financial performance. In other words, the demand in the industry might be high but the operating conditions are surely tough for a foreign business to step (Raitano and Kleiner, 2004).
Conclusion:
The above assessment of the business project idea clearly expressed the need for a strategic approach to address the risks and uncertainties related to the business environment as well as human resource management. There is no doubt related to the potential of this project and the value it can add to the organization in terms of business revenue and financial strength. The customer base of the organization is expected to increase significantly in addition to the diversification it will bring in the revenue stream. (Stahl, 2010) But an effective execution of the project is only possible if all the challenges and uncertainties can be addressed in an efficient manner. It will need Sphinx Airline to construct an organizational structure that can ensure implementation of this project in a strategic manner. The organization needs a structure that can not only plan and implement but effectively monitor and control this project. The following recommendations related to the organization has the potential to offer the much-required strength to the organization project plan. (Happy, 2010)
Delegated leadership (Protecting the Core of BPA)
In order to leverage maximum benefits and strength from this project, the organization needs to follow a partially delegated leadership approach. Till now BPA airlines have managed to operate and cater to the requirements of the core customer group in an effective manner. The organization drew its biggest strength from their local presence and the image they have established in the local market (Western Europe). Although S.A. has replaced the founder of the organization as its key shareholder it does not need to alter or modify the business operation and the strategic approach followed by the organization till now. (Friedman et al., 2015) The organization just need to control the top level management of the organization as its majority shareholder and the owner of the group (Zheng and Ho, 2010). In other words, the organization needs to establish one of their managers or executive as a part of the controlling board of BPA airlines but they should not alter or modify the business operation practices that are currently in place. This will allow the organization to Leverage the leadership abilities of existing leaders/managers of the BPA airlines and ensure that maximum strength can be provided to the acquisition domain of this project. (Ceil, 2013)
Top-level organizational structure
Empowering the Middle-Eastern business unit: Recommendations for Monitoring and controlling the project
The primary requirement for the organization should be on understanding the legal structure of the host market. This will allow the organization to understand legal obligations they have to follow while implementing their business practices or activities. (Callahan and Brooks, 2004) From the employee wage criteria to the taxation structure, the organization needs to adhere to all the rules and regulations established by the regulatory authorities within the host market. The organizational leaders need to ensure that any of their business activities or process does not contradict with the legal obligations they have towards the authorities of the host nation. (Buono and Bowditch, 2003)
Additionally, Understanding the expectations of the human resource will also be an essential element or part of the strategic plan to monitor and control this project. As evident in the given business case the organization has a number of challenges associated with human resource management. The organization needs to develop a workforce that is competent enough to address the market (customer) expectations as per the Middle Eastern culture. (Aklamanu, Degbey and Tarba, 2015) For the purpose, the organization needs to hire professionals with an understanding of the targeted culture but the same will require effective management of human resource expectations in order to ensure that a harmonic culture can be developed within the organization. Further as reflected in the given case, the organization plans to retain only a specific proportion of their existing human resource set with respect to the cabin crew and administrative roles. (Angwin et al., 2014) Such a requirement demands the needs of suitable “Employee Release strategy or policies”. The strategies should majorly focus on:
The primary concern of the Organizational leaders should be to on providing suitable notice period to the employees so as they can get the chance to source other job opportunities with respect to their professional competence.
Further, the organization also needs to prove satisfactory financial rewards to the employees who are relieved from their jobs. This will help the employees to manage their economical responsibilities towards their family and additionally give them time to find opportunities that are suitable for their career growth. Further, it will also be important for the organization to structure a proper policy or criteria that will be used to judge the employee base. In other words, the key identifiers that will be used to retain or release the employees need to be established and communicated to the employee base in order to provide them a fair environment. All these initiatives need to be preceded with providing a clear description of the vision and objectives of the organization behind this project to the employee base. (Aklamanu, Degbey and Tarba, 2015)
It will be important for the organization to develop a clear vision and communicate the same throughout the organization. Failing to do the same can result in the development of resistant environment within the organization which can eventually result in organizational conflicts and disputes, that can seriously implement the efficiency levels. Hence, if the organization needs to succeed with their vision behind this project, it will be important for them to address each of these elements in an effective manner.
References
Aklamanu, A., Degbey, W. and Tarba, S. (2015). The role of HRM and social capital configuration for knowledge sharing in post-M&A integration: a framework for future empirical investigation. The International Journal of Human Resource Management, 27(22), pp.2790-2822.
Angwin, D., Mellahi, K., Gomes, E. and Peter, E. (2014). How communication approaches impact mergers and acquisitions outcomes. The International Journal of Human Resource Management, 27(20), pp.2370-2397.
Badubi, R. (2017). Managing Diversity in Enterprises after Mergers and Acquisitions Process. INTERNATIONAL JOURNAL OF MANAGEMENT SCIENCE AND BUSINESS ADMINISTRATION, 3(6), pp.23-27.
Belloc, H. (1967). On. Freeport, N.Y.: Books for Libraries Press.
Buono, A. and Bowditch, J. (2003). The human side of mergers and acquisitions. Washington D.C: Beardbooks.
Callahan, K. and Brooks, L. (2004). Essentials of strategic project management. Hoboken, NJ: John Wiley & Sons.
Ceil, C. (2013). Role of Due Diligence in Mergers and Acquisition. SSRN Electronic Journal. [online] Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2294836.
Coisne, C. (2011). Managing Culture in International Mergers and Acquisitions. SSRN Electronic Journal. [online] Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1839837 [Accessed 26 Nov. 2018].
Cooper, C. and Gregory, A. (2003). Advances in mergers and acquisitions. 1st ed. WA, United Kingdom: Emerald Publishing.
Dettwiler, P. (2008). Virtual and real boundaries of growth firms. Journal of Facilities Management, 6(2), pp.110-119.
Friedman, Y., Carmeli, A., Tishler, A. and Shimizu, K. (2015). Untangling micro-behavioral sources of failure in mergers and acquisitions: a theoretical integration and extension. The International Journal of Human Resource Management, 27(20), pp.2339-2369.
Happy, R. (2010). Project 2010 Project Management. Hoboken: John Wiley & Sons.
Howson, P. (2007). Commercial Due Diligence. Farnham: Ashgate Pub.
Kim, E. and McConnell, J. (1977). CORPORATE MERGERS AND THE CO-INSURANCE OF CORPORATE DEBT. The Journal of Finance, 32(2), pp.349-365.
Paas-Mohando, K. (2014). Extraterritorial Merger Control Enforcement in Small Economies— Challenges and Possibilities. Juridica International, 21(0), p.137.
Reuer, J. and Shen, J. (2003). The Extended Merger and Acquisition Process:. European Management Journal, 21(2), pp.192-198.
Srivastava, R. (2012). The role of brand equity on mergers and acquisition in the pharmaceutical industry. Journal of Strategy and Management, 5(3), pp.266-283.
Stahl, G. (2010). Mergers and acquisitions. Stanford, Calif.: Stanford University Press.
Raitano, R. and Kleiner, B. (2004). Stress Management. 1st ed. Emerald Group Publishing Limited, pp.32-38.
Tatuskar, S. (2014). Managing human capital during mergers and acquisitions: the Indian perspective. International Journal of Management Practice, 7(3), p.240.
Tucker, C. (2013). Analyzing Faculty Citations for Effective Collection Management Decisions. Library Collections, Acquisitions, & Technical Services, 37(1-2), pp.19-33.
Ulijn, J. (2010). Strategic Alliances, Mergers and Acquistions. Cheltenham, UK: Elgar.
Vekariya, D. (2011). Impact Of Pre-Merger And Post Merger On Financial Performance (With Reference To Private Sector Banks). Indian Journal of Applied Research, 1(5), pp.6-8.
Weber, Y. and Tarba, S. (2016). Mergers and acquisitions, entrepreneurship and innovation. 1st ed. Emerald Group Publishing Limited.Weber, Y. (2013). Handbook of Research on Mergers and Acquisitions. Cheltenham: Edward Elgar Pub.
Wells, K. and Kloppenborg, T. (2015). Project management essentials. New York, NY: Business Expert Press.
Whitaker, S. (2012). Mergers & acquisitions integration handbook. Hoboken, NJ: John Wiley & Sons.
Xing, Y. and Liu, Y. (2015). Linking leaders’ identity work and human resource management involvement: the case of sociocultural integration in Chinese mergers and acquisitions. The International Journal of Human Resource Management, 27(20), pp.2550-2577.
Zheng, L. and Ho, K. (2010). Short Sales, Payment Methods, and Mergers and Acquisition Announcements. SSRN Electronic Journal.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download