Cross Border Mergers and Acquisitions

Topics: Mergers and acquisitions, Organizational structure, Organizational culture Pages: 11 (3330 words) Published: July 18, 2011
Module Name: Managing in Global Economy
Module No.: MM1910

The literature presents competing theoretical viewpoints about the factors that may potentially be influential in determining the outcome of cross-border Mergers and Acquisitions and therefore this study aims to summarize empirical findings to reach a conjoint result. This done through consideration of factors at structural level and organizational level, ensuring the success of cross-border M&As. The most important factor considered is the organizational culture and national level differences at the structural level in order to minimize the risk factor. Also related primarily to other structure of integration in also important and ensures success to the acquired organization.

Mergers and acquisitions (M&As) have been a very popular strategic movement for global businesses, attaining growth, diversification, or profitability (Fowler and Schmidt, 1988). In fact, the process of cross border M&As that started in the 1980s continued throughout the 1990s until the financial crisis and is still vigorous (Houghton et al., 2003). Cross-border merger and acquisition (M&A) activity has continued to increase at a torrid pace during the past decade and a half, to the point that it has become a major strategic tool for growth of multinational corporations (Cartwright and Cooper, 1993). During the phase of 1980s the number of cross border acquisitions occurring globally has almost tripled. Thus, accounting for a significant proportion of total M&A activity by the early 1990s - 95 percent in the case of Japanese companies and 50 percent for European Union companies (Morison and Singh, 1994). Observing a temporary slowdown during the recessionary global economy of the early 1990s, the value of cross-border M&A reached a record high of US$181.7 billion within the first nine months of 1996 (The Economist, 1997).

There is a essential paradox in the growth strategies of many technology-intensive global companies. For example: Hindalco – Novelis global leaders in aluminium rolling. In addition to internal organic growth – environmental arenas, psychological contracts, integration and speed a – growth by acquisition (merger and acquisition: “M&A”) is often a essential input in part of competitive strategy. Perhaps, it is now widely understood by top level individuals that the post-merger performance of companies has generally i.e. organizational level factors are not implemented in the right way and hence have been poor. The research below discusses about all the essential factors for cross border acquisitions. Literature review

The review of literature states that 50- 80 percent of Mergers and Acquisitions have proved financially unsuccessful since 1970’s (Ellis and Pekar 1978, British Institute of Management 1986, Marks 1988. There is evidence of adverse effects of M&As on an array of behaviors and applications: lowered productivity, deteriorate strike records, higher absenteeism, and poorer accident rates (Meeks 1977, Sinetar 1981).

Also addressed are the potential conflicts embedded in the differences in motives, perceptions, and values between the two merging organizations. The literature also emphasizes the importance of the integration phase for overcoming these conflicts. Building upon the literature review we further developed the theoretical framework of the current study. The theoretical perspective discusses about the Hofstede cultural dimensions and Porter’s diamond of competitive advantage.

The study below discusses the literature of cross border M&A’s that addresses integration practices as strategies, before it looks at these strategies within an international context In addition, the study offers a review of the literature that addresses national cultural and organizational cultural theories. With referencing to the example of recent cross- border acquisition of Indian- Atlanta based...
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