Leading and Managing Organizational Resources (GC01559)

Executive summary

The finding of this paper shows that the acquisition between Company A and Company B has been successful in majority cases. It has given huge success in strategy (buy and build) and market development, operational activities (mainly in medical and energy sector), information systems, and financial activities. The leadership practices in Company A have varied before, during and after the acquisition. Before the acquisition it practiced democratic leadership where it engaged the employees giving freedom of voices, priority of their ideas, and opinions. During the acquisition it applied transformational leadership.

After the acquisition the Company A has been practicing mainly autocratic leadership. The acquisition has given huge success business operation including supply chain of energy and medical market segments. The effective use of information system in this acquisition has reduced overall cost of businesses. The acquisition has provided strong balance sheet with lower level of headroom and net debt to pursue significant growth opportunities. Although the acquisition has motivated the employees of Company B, it has de-motivated the employees of Company A because of autocratic leadership practices. Therefore, the Company A should take initiatives to attract talents and retain them for long time.

Table of Contents

1.0 Introduction.

2.0 Strategy developed in the acquisition.

3.0 Effectiveness of acquisitions in the perspective leadership, operation, information system, and finance

3.1 Leadership styles.

3.2 Corporate governance.

3.3 Operations.

3.4 Information systems (IS)

3.5 Finance.

4.0 Conclusion.

5.0 Recommendation.

References.

1.0 Introduction

The aims of this paper are to critically evaluate a ‘Hot Topic’ related to leading and managing organizational resources for a specific organization, called Company A. In this case, the ‘Hot Topic’ for Company A is the recent acquisition with other renowned company, called Company B. Company A is an engineering company that specializes in designing, manufacturing motors, steam turbine generators, compressors, and pumps. Company B provides engineering products, systems and services, components to the energy, traffic management and medical sectors across the world. This paper critically analyses the term ‘acquisition ‘in theory and practices from different perspectives. This paper first evaluates the strategies developed through the acquisition. Then, this paper evaluates the acquisition from the perspective of leadership, operations, information systems, and finance. Finally, this paper concludes the finding and provides recommendations for both Company A.

2.0 Strategy developed in the acquisition

According to Johnson et al. (2011), businesses have several strategic options including diversification, internationalization, and innovation, whereas businesses apply three different strategic methods that are organic development, mergers and acquisitions, and strategic alliances.

In this case, Company A applied an acquisition strategy to bring diversification, internalization, and innovation. Johnson et al. (2011) said the acquisition is concerned with a combination of two businesses, whereas businesses achieve acquisition by buying the majority of shares from Target Company. An acquisition can be ‘Friendly’ or ‘Hostile’. Company A successfully achieved a ‘Friendly ‘acquisition in September 2017, whereas the target management (Company B) recommended accepting the deal of Company A. The acquisition between Company A and Company B focused on strategic motives, financial motives, and managerial motives. Johnson et al. (2011) classified strategic motives as extension, consolidation, and capabilities. The strategic motives of acquisition between Company A and B was to increase efficiency, scales, market power and technological capabilities in global marketplaces. Johnson et al. (2011) defined three main financial motives that are financial efficiency, tax efficiency, and asset tripping or unbundling. The key financial motives of acquisition between Company A and Company B were to increase their financial efficiency and asset stripping. Johnson et al. (2011) classified managerial self-interest as personal ambition and bandwagon effects. The acquisition of Company A served managerial self-interest for personal ambition, where the key motives were to boost up business growth, share prices, revenue and profits.

Johnson et al. (2011) said businesses apply two main criteria in target choices that are a strategic fit and organizational fit. In terms of strategic fit, the target business (Company B) complemented the strategies of Company A. In the case of organizational fit, management and cultural practices were matched between target firm (Company B) and acquiring firm (Company A).  In the negotiation stage, the management of Company A agreed on prices, terms and conditions offered by Company B. However, this negotiation has changed the ownership structure of Company A. Johnson et al. (2011) said businesses mainly emphasizes two main criteria in the integration stage of the acquisition process that are the extent of strategic interdependence, and need for organizational autonomy. The acquisition between Company A and Company B mainly focused on the extent of strategic interdependence by sharing resources and capabilities. According to Johnson et al. (2011), as post-acquisition integration strategies, businesses apply absorption, symbiosis, preservation, intensive care, and re-orientation approach.

The acquisition between Company A and Company B applied a re-orientation acquisition approach, where the acquired company (Company B) was in well run and good health but needed to align sales and marketing functions and integrate central administration. Johnson et al. (2011) said in the result stage of the acquisition process businesses do organizational justice (that is the perceived fairness of managerial actions) in case of procedure, distribution and information. The acquisition between Company A and Company B distributed rewards and posts as part of distributive justice and justified procedures and information used in the integration process as part of procedural and informational justices.

3.0 Effectiveness of acquisitions in the perspective leadership, operation, information system, and finance

3.1 Leadership styles

According to Mullins (2014), leadership is the capabilities of a business’s top-level management people to translate the vision and mission of the business into reality to achieve organizational goals and objectives. Leadership styles are mainly classified as democratic style, autocratic style, liaise-fair style, transformational and transactional styles……….

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