Integration Management of Western Acquisitions in Japan
Fabian J Froese, Leif E Goeritz. Asian Business & Management. Houndmills: Mar 2007. Vol. 6, Iss. 1;
In addition, employee resistance -- in other words, failed human integration -- can be seen as the main reason why organizational integration was not achieved. Unlike Birkinshaw et al. (2000) and Buono and Bowditch (1989), the findings of this study indicate that human integration is a prerequisite for organizational integration. Without human integration, only limited organizational integration can be achieved. Organizational and human integration cannot be separated from each other in an Asian context. Scholars have frequently noted that building trust and relationships is of the utmost importance when engaging in business with Asian counterparts (eg Oikawa and Tanner, 1992; Cullen et al. , 1996). Business and human relations might be separate in a Western context, as implicitly stated by Birkinshaw et al. (2000), but in an Asian context these concepts seem to be strongly interwoven.
Authors
Fabian J Froese: Graduate School of Asia Pacific, Waseda University, Nishi-Waseda Bldg. 7F, 1-21-1 Nishi-Waseda, Shinjuku-ku, Tokyo 169-0051, Japan. E-mail: fabian@fuji.waseda.jp
Leif E Goeritz
German Centre for Industry and Trade Beijing Co. Ltd, Landmark Tower 2, Unit 1111, 8 North Dongsanhuan Road, 100004 Beijing, People's Republic of China
Birkinshaw, J., Bresman, H. and Hakanson, L. (2000) 'Managing the post-acquisition integration process: how the human integration and task integration processes interact to foster value creation', Journal of Management Studies 37 (3): 395-425.
Buono, A.F. and Bowditch, J.L. (1989) The Human Side of Mergers and Acquisitions , San Francisco: Jossey-Bass.
Cullen, J., Johnson, J.L., Sakano, T. and Takenouchi, H. (1996) 'Setting the stage for trust and strategic integration in Japanese-US cooperative alliances', Journal of International Business Studies 27 (5): 981-1004.
Oikawa, N. and Tanner, J.F. (1992) 'The influence of Japanese culture on business relationships and negotiations', Journal of Services Marketing 6 (3): 67-75.
Showing posts with label Mergers and acquisitions. Show all posts
Showing posts with label Mergers and acquisitions. Show all posts
Wednesday, July 16, 2008
Thursday, July 10, 2008
Mergers and Acquisitions HBR 2006
Mergers and Acquisitions
Making M&A Fly in China
Mike W. Peng
Forethought, March
Reprint F0603G
Making M&A Fly in China
Mike W. Peng
Forethought, March
Reprint F0603G
Sunday, July 6, 2008
Human Due Diligence in Acquuisitions
Human Due Diligence.
By: Harding, David, Rouse, Ted,
Harvard Business Review,
April 2007, Vol. 85, Issue 4
The success of most acquisitions hinges not on dollars but on people. Here's how to analyze potential people problems before a deal is completed
David Harding (david.harding@bain.com) is a partner in Bain & Company's Boston office and leader of the firm's mergers and acquisitions practice.
Ted Rouse (ted.rouse@bain.com) is a partner in Bain's Chicago office and leader of the firm's merger integration practice.
By: Harding, David, Rouse, Ted,
Harvard Business Review,
April 2007, Vol. 85, Issue 4
The success of most acquisitions hinges not on dollars but on people. Here's how to analyze potential people problems before a deal is completed
David Harding (david.harding@bain.com) is a partner in Bain & Company's Boston office and leader of the firm's mergers and acquisitions practice.
Ted Rouse (ted.rouse@bain.com) is a partner in Bain's Chicago office and leader of the firm's merger integration practice.
Wednesday, June 25, 2008
Systematic Errors in Processing Information in M&As
Deals Without Delusions. By: Lovallo, Dan, Viguerie, Patrick, Uhlaner, Robert, Horn, John,
Harvard Business Review,
Dec 2007, Vol. 85, Issue 12
Our work has shown that companies that aggressively leverage acquisitions for growth are at least as successful in the eyes of the capital markets as those that focus on purely organic ways to grow. Nevertheless, recent research from McKinsey & Company reveals that approximately half of acquiring companies continue to pay more for acquisitions than they're worth.
when executives take a targeted debiasing approach to M&A, deals can be more successful. The approach requires executives first to identify the cognitive mechanisms at play during various decision-making steps and then to use a set of techniques to reduce bias at specific decision points, thereby leading to sounder judgments.
Confirmation bias.
Overconfidence.
Underestimation of cultural differences.
The planning fallacy.
Conflict of interest.
The Bidding Phase: Avoiding the Winner's Curse
McKinsey survey suggested that successful acquirers are much more likely to exit when competitors initiate a bidding war: 83% of the successful companies withdrew at least sometimes, compared with only 29% of the unrewarded (not so successful)companies.
One technique for avoiding the winner's curse is to tie the compensation of the person responsible for the deal's price to the success of the deal - for example, to the percentage of estimated synergies realized.
The Final Phase biases
Once an initial bid is accepted, the acquirer has an important opportunity for additional due diligence, since it now has much greater access to the target's books. The final negotiation phase also encompasses the deal's legal structuring (for example, the exact composition of payment cash or stock). In this final phase of due diligence, the goal is to honestly evaluate the investment case in light of the more detailed information now available from the target. Two biases can come into play.
The first stems from a tendency to underreact to surprising news.
The sunk cost fallacy can cause an acquirer to continue pursuing the target even when it shouldn't.
Dan Lovallo (dan_lovallo@external.mckinsey.com) is a professor of management at the University of Western Australia Business School in Perth and a senior adviser to McKinsey & Company. He is a coauthor of "Delusions of Success: How Optimism Undermines Executives' Decisions" (HBR July 2003).
Patrick Viguerie (patrick_viguerie@mckinsey.com) is a director in McKinsey's Atlanta office.
Robert Uhlaner (robert_uhlaner@mckinsey.com) is a partner in the firm's West Coast office.
John Horn (john_horn@mckinsey.com) is an associate in its Washington, DC, office.
Harvard Business Review,
Dec 2007, Vol. 85, Issue 12
Our work has shown that companies that aggressively leverage acquisitions for growth are at least as successful in the eyes of the capital markets as those that focus on purely organic ways to grow. Nevertheless, recent research from McKinsey & Company reveals that approximately half of acquiring companies continue to pay more for acquisitions than they're worth.
when executives take a targeted debiasing approach to M&A, deals can be more successful. The approach requires executives first to identify the cognitive mechanisms at play during various decision-making steps and then to use a set of techniques to reduce bias at specific decision points, thereby leading to sounder judgments.
Confirmation bias.
Overconfidence.
Underestimation of cultural differences.
The planning fallacy.
Conflict of interest.
The Bidding Phase: Avoiding the Winner's Curse
McKinsey survey suggested that successful acquirers are much more likely to exit when competitors initiate a bidding war: 83% of the successful companies withdrew at least sometimes, compared with only 29% of the unrewarded (not so successful)companies.
One technique for avoiding the winner's curse is to tie the compensation of the person responsible for the deal's price to the success of the deal - for example, to the percentage of estimated synergies realized.
The Final Phase biases
Once an initial bid is accepted, the acquirer has an important opportunity for additional due diligence, since it now has much greater access to the target's books. The final negotiation phase also encompasses the deal's legal structuring (for example, the exact composition of payment cash or stock). In this final phase of due diligence, the goal is to honestly evaluate the investment case in light of the more detailed information now available from the target. Two biases can come into play.
The first stems from a tendency to underreact to surprising news.
The sunk cost fallacy can cause an acquirer to continue pursuing the target even when it shouldn't.
Dan Lovallo (dan_lovallo@external.mckinsey.com) is a professor of management at the University of Western Australia Business School in Perth and a senior adviser to McKinsey & Company. He is a coauthor of "Delusions of Success: How Optimism Undermines Executives' Decisions" (HBR July 2003).
Patrick Viguerie (patrick_viguerie@mckinsey.com) is a director in McKinsey's Atlanta office.
Robert Uhlaner (robert_uhlaner@mckinsey.com) is a partner in the firm's West Coast office.
John Horn (john_horn@mckinsey.com) is an associate in its Washington, DC, office.
Tuesday, June 24, 2008
Time once again for Europeans to Invate USA
Jack and Suzy Welch feel that Europeans should acquire companies in USA with their strong currecny.
With US equity prices down, Europeans armed with their currency advantage could make American acquisitions tody and feel the impact (on profits and cash flows) a lot sooner than investments in BRIC countries which they are favoring today.
NYT syndicated article published in MINT (India) dated 23 June 2008.
With US equity prices down, Europeans armed with their currency advantage could make American acquisitions tody and feel the impact (on profits and cash flows) a lot sooner than investments in BRIC countries which they are favoring today.
NYT syndicated article published in MINT (India) dated 23 June 2008.
Wednesday, June 18, 2008
To Get Value from a Merger, Grow Sales
Rothenbuecher, Juergen &Schrottke, Joerg
Harvard Business Review; May2008, Vol. 86 Issue 5, p24-25
Some interesting points
After a merger, managers strive primarily for improving the bottom line through cost reductions. Instead they should make it a priority to strengthen sales and marketing in order to sustain profitable revenue growth.
These insights came from our recent study of 270 mergers in various countries and regions. We found that in most cases sales growth had slowed dramatically after the merger - on average, it had dropped six percentage points. (The figures in this article are weighted averages adjusted for industry trends and refer to three years pre- or post-merger.) That decline led to a reduced rate of earnings growth, by 9.4 percentage points, and a consequent reduction in value creation: The firms' market-capitalization growth decreased by 2.5 percentage points.
Therefore, the post-merger firms must throw themselves into preventing or offsetting the customer attrition (often the result of diminished trust) that usually follows a merger. Managers must devote sufficient resources to retaining current customers and gaining new ones. That typically involves improving the customer experience by streamlining processes; creating consistent marketing messages on how the merger will improve offerings; minimizing changes in sales-account managers; ensuring that the formerly distinct companies present a single face to the customer;
Juergen Rothenbuecher (juergen.rothenbuecher@atkearney.com) is a vice president at the strategy consulting firm A.T. Kearney and the head of its EU Merger Strategies Competence Team. Joerg Schrottke (joerg.schrottke@atkearney.com) is a principal at the firm and a member of the EU Merger Strategies Competence Team. They are based in Munich.
Harvard Business Review; May2008, Vol. 86 Issue 5, p24-25
Some interesting points
After a merger, managers strive primarily for improving the bottom line through cost reductions. Instead they should make it a priority to strengthen sales and marketing in order to sustain profitable revenue growth.
These insights came from our recent study of 270 mergers in various countries and regions. We found that in most cases sales growth had slowed dramatically after the merger - on average, it had dropped six percentage points. (The figures in this article are weighted averages adjusted for industry trends and refer to three years pre- or post-merger.) That decline led to a reduced rate of earnings growth, by 9.4 percentage points, and a consequent reduction in value creation: The firms' market-capitalization growth decreased by 2.5 percentage points.
Therefore, the post-merger firms must throw themselves into preventing or offsetting the customer attrition (often the result of diminished trust) that usually follows a merger. Managers must devote sufficient resources to retaining current customers and gaining new ones. That typically involves improving the customer experience by streamlining processes; creating consistent marketing messages on how the merger will improve offerings; minimizing changes in sales-account managers; ensuring that the formerly distinct companies present a single face to the customer;
Juergen Rothenbuecher (juergen.rothenbuecher@atkearney.com) is a vice president at the strategy consulting firm A.T. Kearney and the head of its EU Merger Strategies Competence Team. Joerg Schrottke (joerg.schrottke@atkearney.com) is a principal at the firm and a member of the EU Merger Strategies Competence Team. They are based in Munich.
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