Case Study Takeover By definition, a takeover is when a company (the acquirer) buys the majority (if not all)

of the shares of another company, thus obtaining the leadership of that (target) company. Since 2000 Serbia has becaome an open market for foreign investments. Naturally, the banking sector washas been, and still is, one of the most appealing and lucrative ventures worldwide. Serbia is no exception. Since the fall of Milosevic regime, around 20 foreign banks have set up their business branches in Serbia. From the point of view of the clients, this was seen as a good thing bringing in new players into the game would mean stiffening the competition, i.e. expanding the range of products, such as new credit lines, lesser interest rates, etc. This would prove wrong, seeing how the banks quickly adapted to the local business climate, imposing very high interest rates, unfavourable credit lines, hidden fees, etc. The list goes on and clients have no legal remedy in collision with the banks power. Things might be changing, but only as of recently (economic world crises). On the other hand, employees of the local banks (most of them) expected a lot from the future takeovers. Younger people especially, in hope that an old socialist principle everyones the same would change and peoples work would become rated according to their capabilities, hard work and a will to learn and improve themselves. Experience from one of those banks proved that they were had been wrong. In the bank that is referred to in this text, most of the competent staff, a lot of them managers, left before the foreigners arrived. This was caused mainly by the bad climate in the company, in terms of human relationships, bad decisions of the higher management and their inability to cope with major problems that were perceived by the competent ones. So, when the takeover was had been finished completed and the new management came, the Peter Principle was already on. The Peter Principle (by Dr. Laurence J. Peter) states that in a hierarchy every employee tends to rise to his level of incompetence or that "in time, every post tends to be occupied by an employee who is incompetent to carry out his duties". This is exactly what happened. When the capable ones left, the ones who stayed were automatically promoted to managerial positions without any kind of evaluation of their previous work. Communication and trust. Communication, i.e. not knowing the local language is a good starting point for manipulation. The wWestern system of doing business involves trust as the basis for a good business relationship. If you have an incompetent local management, they will do anything in their power to keep the positions they are at, seeing that the main feature of those is high salary, to begin with. For those kind of people the most important thing is to present themselves as highly competent, hard-working and the illusion is kept in life by hiding the ones that really do all the work and presenting everything that is

done good as their own achievement. This is done relatively easily, since the employees at lower positions have practically no way of communicating directly to the foreigners. Further on, nepotism still thrives and personal relationships are grounds for salary increases, bonuses and promotions. All these factors lead to one thing poorly run business. Good employees quickly loose their will to work and contribute. Those that have other offers leave to work for other companies. With a bad management like that there are weak, incoherent procedures, often incomplete and confusing, shift of responsibilities in case something goes wrong and most importantly loss of the majority of clients, who simply terminate their business with the bank and move to another. The solution to the problem is rather simple evaluation of the results achieved. For every employee, including the management, on a monthly basis. This is the only way to really see how much someones work is worth or needed for that matter. Until this sort of thing is utilised, a company that turns a blind eye to these sort of problems is surely headed for a downfall in a long run.

Marko Balovic

br.ind. 485/09