Discuss About The Contemporary Marketing Strategic Management.
Dewaal in Netherlands and New York based BioHealth are two pharmaceutical companies whose area of specialization is to manufacture and sell a wide range of drugs ranging from pain killers to AIDS medications. Recently, the two companies hit the media headlines across the globe after signing a merger agreement to form one powerful multinational mega company known as DewaalBioHealth. The company is headed by Steve Lindell as the CEO and Kaspar van de Velde as the chairmain. Unfortunately, just two months later, the firm’s top most representatives are facing a huge setback in the effort to steer the company’s pre-merger process. According to contingency theory of management, organizational systems are directly linked to the environment within which it operates and the efforts to alter these systems may be met with a lot of challenges resulting from the employee resistance (Y?lmaz and K?l?ço?lu, 2013, pp.17). Failure by the firm to manage the merger process effectively has led to a challenge in the integration of the activities by the two companies (Anderson, 2013, pp. 132).
From the above discussion, it is evident that Steve and Kaspar are facing a difficult is steering a successful merger process for the two giant pharmaceutical companies. Just like any other change management practice, proper management is required to ensure that people, technologies, processes and strategies are integrated effectively without altering the company’s operations (Hayes, 2014, pp. 21). Leadership styles and skills between Steve and Kaspar is posing a big threat in the entire merger process. The differing culture of leadership between the top representatives of the two companies has slowed down the deal leading to massive losses, especially for BioHealth. It is evident that lack of clarity and consensus-based leadership between the two has led to a battle of supremacy on who is to head the company thus hindering the integration process (Watkins, 2013, pp. 9). Lack of unified leadership structure has also rendered the merger efforts futile. The shaky relationship between the two leaders has failed to produce a consensus in decision making thus failing to agree on who will lead the process (Galpin and Herndon, 2014, pp. 56).
There has been a number of values hindering a successful merger between the two companies. Such values can either be structural or cultural. Cultural values are linked to the different organizational cultures between the two companies. Structural values include those conflicting values involving the structure of the two companies. Therefore, these conflicting values include integrity, leadership styles, employees’ beliefs and norms, social values and lack of teamwork.
The employees’ unwillingness to change by maintaining their social identity has impacted negatively on the integration process (Alvesson and Sveningsson, 2015, pp. 112). From the case study, it is evident that most employees are leaving their jobs for since they are not ready to relocate from one place to another as they are adamant to change their social values.
Individual beliefs and vested interests have become a stumbling block to the successful merger and integration process (Alvesson and Sveningsson, 2015, pp. 112). For instance, Steve believes that BioHealth is the bigger player in the merger agreement and thus he deserves the leader the company leading to a conflict of interest-an aspect that has slowed down the process of integration.
Failure by the two leaders to discard their leadership structures and adopt a new one is a setback that has hindered the success of the merger process (Galpin and Herndon, 2014, pp. 56). Failure to adopt a unified structure of leadership has delayed the whole process since authority to enforce some rules and regulation on how to pick the new management has also posed a bigger threat.
From the HBR case study, there are cultural and structural values between Dewaal and BioHealth that are hindering the whole merger process. Therefore, the responsible leaders need to establish an elaborate way of eroding these values and embrace unified ways of doing a thing in order to fasten the process (Budhwar and Debrah, 2013, pp. 176).
During the post-merger stage, the two senior executives are supposed to move quickly in the effort to tap the best employees to fill the top senior jobs. It is believed that once the organization has a top management, the process of selecting and hiring the employees to the next level becomes easy (Cascio, 2018, pp. 165). However, due lack of an established structure of operating and making decisions, the newly merged company is facing a bigger challenge because the selection of the top management employees is done in an unfair way. The management has failed to obey the management philosophy and government rules involving the employees’ rights.
As a result, the company has failed to develop and initiate any reward system to motivate the employees in the newly formed company. There is also lack of a well-established HR department to conduct the process of selecting employees within the top management structure of the company. There has also been poor working systems due to lack of a unified system due to the integration of the two different systems from the two merging companies. As a result, the company is lacking employee commitment and motivation. There is also lack of competence due to the employment based on personal relationships rather than merits. The process has also been very costly and expensive to the organization as a result of the employees the company is losing as well as the money spent in endless meeting to agree on the appropriate process of selecting people to fill the top positions. As a result, the company seems to fail due to lack of effectiveness resulting from employment of unqualified employees due to lack of a well evaluated process of interviewing, recruiting and placing them within the right positions.
According to the case study, there has been a poor mode of communication between the two senior executives leading the merger and integration process. In the Kotter’s change management model, communication has been identified as a key part of enhancing a productive change process (McKay et al., 2013, pp. 14). However, due to the poor relationship between Steven and Kaspar, their personal beliefs and differences have slowed down the process of interaction to identify the criteria for selecting new employees to fill the top positions. The two senior executives have also failed terribly in identifying where the rest of the employees will go since out of 120 employees eying senior positions, only 65 slots are available (Bratton and Gold, 2017, pp. 79).
Lack of a proper appraisal plan has made the process of seeking the top structure employees more biased and unfair (Cascio, 2018, pp. 163). Due to the issue of who is supreme between the two senior executives, they tend to believe that they can allocate the posts based on their personal relationships and behaviour of the people. The failure by the two leaders to establish a proper way of identifying suitable people to fill the top positions based on one’s performance was very dangerous and could lead to total organizational failure (Rees and Smith, 2017, pp. 128). Therefore, the culture of being discriminative is purely traditional and once used in the selection process, it is bound to fail.
A multinational firm like DewaalBioHealth is such a complicated organization whose leadership and management needed well skilled and experienced employees. Steve and Kaspar seem not keen to establish a good system of identifying, interviewing and placing the appropriate employees to fill the positions of top management within the new organization. With a change in working environment for various employees, the firm ought to have constituted a well-organized HR department to help in the process of employee selection and employment (Parry et al., 2013, pp. 32). For instance, Bruce has been the head of HR at BioHealth though he is not actually a real performer to head such a strong firm like DewaalBioHealth which was formed after the merger of the two companies. However, Steve was keen to propose his name and ensure that he remains the head of HR even after merging the two companies. Thus, lack of using merit and performance appraisal was bound to fail he newly formed company since it required people with enough knowledge and experience employed based on performance not personal relationships (Rees and Smith, 2017, pp. 128).
According to situational leadership theory by Paul Hersey and Kenneth Blanchard, successful managers ought to change their leadership styles to cope with the change in environment and desired goals (Ceptureanu, 2015, pp. 30). Since the formation of the new firm after the merger, Steve and Kaspar ought to have changed their management styles to suit the new working environment which involved looking at the company as a multinational once which needed efficient and effective management of employees. The lack of an established HRM to evaluate the needs and skills of the whole company was a big problem posed by the system the two senior executives wanted to use in evaluating the best people to fill the top management positions.
The newly formed firm has seen a lot of conflicting values which have led to serious failure in the integration process (Risberg, 2013, pp. 108). Most of these cultural and structural values are supposed to be looked at from an HRM point of view to help the two senior executives streamline the process of helping the organization in achieving a well-established relationship and unity between the employees (Alvesson and Sveningsson, 2015, pp. 113). As an HR expert, it is essential to use a couple of strategic management knowledge and problem-solving techniques to achieve a unified organization with no conflicting values.
First and foremost is to establish a good communication structure within the firm. One of the problems leading to the conflicting values between the two senior executives steering the merger process is poor communication between them. When they are a proper communication structure between Steve, Kaspar and their respective employees, people can sit together and discuss the matters with employees on the procedure to be used to fill various positions within the firm (McKay et al., 2013, pp. 10).
Designing an integration team for steer the integration process will be needed. Constituting a team of people to set out the goals and objectives of the organization and letting the employees know the way forward is also important (Galpin and Herndon, 2014, pp. 60). Hence, as an HR expert, the senior executives leading the merger process should understand the need to communicate the firm’s goals and objectives to their employees as a way of eradicating the conflicting values between the two group as it leads to unity and long-lasting relationship between various organization stakeholders.
Establishment of a well-functioning HRM department would be imperative. A group of experts to lead the process of filling the top management structure would be important as well. These experts would help in selection and placement of various employees into their respective positions and thus reducing the conflict on who will take a certain position (Rees and Smith, 2017, pp. 130). Therefore, the conflicting value of who will take a certain position with the firm’s management would be solved by clearly setting a body to identify, select and place people in company’s top positions based on merit.
There has been a shaky relationship between Steve and Kaspar. The main reason for the conflicting values and failure in the integration process is the poor relationship between the two senior executives. As an HR expert, the essential aspect of any management is a good a relationship which steers a common ground for decision-making process. Consequently, for any integration to be successful, Steve and Kaspar must force a clear relationship for the sake of unity within the organization. Therefore, a good relationship will not only solve the conflicting values but also steer the process of integration as well as help in achieving the organizational goals (Bolman and Deal, 2017, pp. 98).
Any organization’s success is based on its ability to constitute to constitute a well-organized group of top management employees who manage and guide the other employees in achieving the organizational goals (Hayes, 2014, pp. 19). Therefore, the achievement of such will be possible upon the organization’s ability to engage in a certain process as discussed below.
The first step will be setting up the goals and objectives of the organization. In any management process, the formulation of organizational goals and objectives plays a key role in determining the company’s direction. Once you set your goals and objectives, it is now possible to know exactly what to do in achieving those goals. Therefore, setting the organizational goals and objectives will help in realizing the activities and resources to be used in undertaking such activities (Goetsch and Davis 2014, pp. 150).
The second step is clearly identifying the key people needed and what they are supposed to do. By engaging in this step, the HR people within DewaalBioHealth will be able to note down various people required to fill various positions within the organization’s top management. It will include what is required from them in terms of experience and job description.
The next step is selection and placement of appropriate people to fill the available top positions. Once the requirements are listed down for every position, the HR people will engage in interviewing people to determine their suitability for filling the job positions. The successful people will be required to go through the job description and ensure that they use it as a guide to help them understand what is required of them. With that in mind, the people are good to start working but for integration matters, more communication and familiarization with the environment is required (Cascio, 2018, pp. 160).
Helping the newly acquired employees to familiarize themselves with the new set goals and objectives of the organization is key. It is in the stage that the HR people and the two senior executives will engage in implementing the integration design. The integration design seeks to bring in new ways of doing things and ensuring that employee’s previous culture is discarded to adopt new ways of doing things under the new environment (Cooper and Finkelstein, 2014, pp. 72). The design stage involves clear communication, the motivation of employees and high emphasis on teamwork.
Good communication will help in explaining the organizational goals and the need to adopt new ways of working with the newly merged company (McKay et al., 2013, pp. 23). It will be imperative for the employees to understand the need to adopt the new ways of working and adapt to the new ways of doing things in new dockets. The management should also embrace and encourage the need for teamwork at a workplace (Hill et al., 2014, pp. 121). The new employees should now be motivated to work as one team to achieve the organizational goals and objectives. To wrap up the whole process and encourage the employees to work hard, motivation is required. According to the motivation theory, employees can be motivated by various ways such as rewards and incentives in terms of bonuses.
A number of management and organizational theories have been usingd to analyze the HBR case study here. These theories and HRM practices have been using as the basis of understanding the case involving a merger between two pharmaceutical companies Dewaal and BioHealth. These theories include Maslow’s hierarchy of needs/motivational theory, contingency theory, situational theory, Kotter’s Change management model and systems theory of management.
The systems theory of management states that suggests the management approach that seeks to achieve a whole balanced and integrated business. The theory has been used in the analysis of the case study to help the HR people within the merged firms to manage the integration of the company’s top structure (Miner, 2015, pp. 105). The model aims at identifying the organizational goals and objectives, identifying the appropriate personnel and assigning them the roles to guide in achieving those targeted goals. When two different companies are merging, it is important to note that the two different systems must be streamlined in order to ensure that the two organizations merge into one thing. Therefore, the people steering the merger process should be keen to merge the two systems into one and ensure that all the activities have been streamlined and the organization is one as one system.
The Maslow’s hierarchy of needs is used to help in helping the company to understand the need for motivating the employees to embrace change and remain cooperative throughout the merger process. The theory maintains that employees need to be motivated in order to be committed to supporting the goals of the organization (Miner, 2015, pp. 105). It is useful for the company to use the model in the bid to motivate employee not to leave the company and strive to adapt new ways of working. Motivating the employees can be one way of improving their performance and productivity. In the case study, many employees are leaving the company and the management should quickly develop and scheme to reward the employees to avoid high employees’ turnover. Thus, motivation is imperative and should be taken care of in the bid to retain the experienced employees who can help the organization achieve its goals.
The Kotter’s change management model has also been used to analyze the case study. The model suggests that the organization should ensure that they adopt an appropriate change management model by communicating effectively with the employees (Parry et al., 2013, pp. 25). Steve and his colleague should ensure that they communicate well the need to adopt the change brought by a merger between the two companies. Communication is very important in any management practice. Lack of proper communication between the two senior executives has delayed the process of selecting the top management within the organization. Thus, the two senior executives should ensure that they adopt an appropriate change management model with proper communication in order to explain to the employees the need to change and support the newly formed company. Therefore, the model of management can be used purely to showcase the way management of the merged company can manage their employees to adopt the new structure of doing things.
In the case study, situational leadership theory has been used to help understand the need for the company’s management to change leadership style to match the new environment (Miner, 2015, pp. 105). The theory suggests that managers should change their leadership styles to suit the changing environment and that is what has failed to happen among the two senior executive officers who maintained their old leadership styles. However, the two senior executives from the two merging companies have failed to fully change their leadership styles to fit the structure of newly formed company. Change is important for an organization in order to achieve organizational goals. Hence, the two leaders should discard their previous leadership styles and adopt the appropriate styles that will fit in the new business environment.
According to contingency theory of management, organizational systems are directly linked to the environment within which it operates and the efforts to alter these systems may be met with a lot of employee resistance (Y?lmaz and K?l?ço?lu, 2013, pp. 17). In the case study, the employees seem to fear the new environments they are being posted and some are leaving their jobs and the two leaders have failed to take that into consideration. The theory is useful in helping the organization to look at the new environments in which employees are operating in and help them in adapting to the new environment with different culture and systems. Changing from one working environment to the other is very challenging. The two senior executives lack the transformational leadership skills to help the organizational employees adapt to new culture of working within the new business environment. That has led to failure of the newly formed organization from incorporating the culture of the two companies that leading to high employee turnover, lack of commitment and endless conflicts. Therefore, the two senior executive steering the merger process should apply this theory in order to be able to urge the employees to adopt the new culture which changes their ways of working.
Summary and Conclusion
Thus, for any two merging companies to undergo a successful process, a keen attention is required to ensure that the two systems are effectively integrated to operate smoothly as one new system (Anderson et al., 2013, pp. 136). However, some firms like Dewaal and BioHealth have failed to deploy the appropriate models and mechanisms to facilitate an effective merger. Failure to manage the integration of cultural and structural values for the two companies has led to an abrupt fall in the share value of BioHealth pharmaceuticals. Therefore, the paper looks into a merger case study involving two pharmaceutical companies Dewaal from Netherlands and BioHealth from USA, integration bottlenecks encountered and the possible ways through which the newly formed company can overcome those integration challenges.
References
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