Merge the Acquired Company Into Your Company.

Merge the acquired company into your company. The result of this strategy will be one company containing the elements of both companies. What are the pros and cons of this implementation strategy? How will you know if the strategy is working?

The risks and downsides of mergers are well-known -- it is often said that mergers make it easy to predict the future, because they almost invariably fail. In fact, two-thirds of all mergers fail, a staggering statistic (McClure 2012). The theory behind mergers is that they generate potent cost synergies, improve profitability, and trim costs of production when the strengths and capacities of the two companies are merged together. The basic idea of a merger is that the best of both companies can be fused. However, mergers often result in the clash of organizational cultures. Inharmonious corporate cultures can lead to confusion and organizational disarray -- ultimately costing the company money, rather than generating savings. Cultural differences, such as a very competitive and cutthroat culture vs. A laid-back culture, or a culture with a great deal of worker autonomy vs. A fairly authoritarian managerial structure, may be overlooked. (McClure 2012).

Whether a merger has 'worked' can be partially determined if the proposed synergies and cost savings are generated, while the companies still retain their core consumer bases. Also, to justify to shareholders the merger and to 'prove' that the merger was justified, companies will often resort to extreme cost-cutting measures that ultimately alienate customers (McClure 2012). There are exceptions, of course, like the Disney-Pixar merger, which has been judged a success, however this merger was completed with Pixar was a fairly young company and easily malleable in the hands of the mighty Disney empire (Amidi 2008).

B. Operate the acquired company as a separate business entity. The result of this strategy will be two separate companies under one senior management umbrella (the senior management team that is responsible for running both companies). What are the pros and cons of this implementation strategy? How will you know if the strategy is working?

Governing the acquired company as two separate operations will circumvent some of the problems regarding inharmonious corporate cultures. But although employees from the two entities may not be forced to work side-by-side, senior management must still serve the interests of both companies. These managers likely will not understand the differences in culture, output, and standards of the two different organizations. The new governing board may exhibit the 'worst of both worlds' -- merging aspects of the company leadership, while still necessitating the negotiation between two different corporate cultures. Divided interests between the heads of two formerly different organizations will likely result in intense friction.