Shyamal Verma SHRM PC20200364

Section B

The cases discuss post-acquisition Human Resource management, post acquisition period is usually
very sensitively for both acquirer and acquired firm since both are trying to locate and understand
their position in the new combined entity. The case gives examples of two firms that handled the
post-acquisition period in their way; while one emerged as a high-growth company, the other lost its
consumer base and competitive advantage.

Global Products acquires Gas Appliances:

Gas Appliance possessed a strong Home products division with excellent brand names: either the
market leader or runner-ups in all major product lines; despite this, gas Appliance's performance can
be considered a medium growth firm because its internal inefficiencies had tremendous potential for
growth.

On the other hand, gas products were successful and witnessed exponential growth in the past ten
years due to their highly successful acquisition techniques.

The Acquistion decisiosn:

The critical thing to consider while acquiring a company with excellent brand names is that the
acquirer usually has to pay the premium for the company being sold because of the dominant
position it enjoys in price negotiations. Apart from synergies, The acquiring firm has to make sure
that the premium is paid for the company doesn't go to waste. Hence, the focus should be on
increasing the performance of an acquired firm. However, the scope of improvement in both good
performance and poor performance firms depends on its type of inefficiencies. Usually, the firms
with internal inefficiencies have a high scope of performance improvement. The above discussion is
summarized in the flow chart below. The Global Product paid 400M Pounds for the acquisition after
several years of negotiations.
Shyamal Verma SHRM PC20200364
Section B

Post-acquisition:

The first thing, the post-acquisition, conducted by Global Products, was to summon GA's directors at
their headquarters. The reason for the same are two folds:

1) Reducing the anxiety and uncertainty that might be lingering in GA directors' mind regarding
their position in the new entity
2) Since the aim here is to improve GA's performance, it is necessary to demonstrate the vision
and the direction to the acquired firm's directors.

The First Impression is the Last: GP's professional presentation regarding the strength and weakness
of GA with absolute accuracy demonstrated the due diligence GP had undergone pre-acquisition,
which helped build the confidence in GA employees and hinted the direction of change they are
going to experience in the coming years. Further, A video was also distributed, shown to the
remaining GA employees, ensuring inclusivity at every step post-acquisition.

The remaining Post-acquisition tasks were carried out by the GPs expert team, who were carefully
selected based only on their expertise in the Post-acquisition phase. This is the most crucial phase;
many firms make mistakes here and suffer the consequences.
Step 1: The top management of GA was grilled for their past poor performance; the reason for the
same could be because the poor performance might result from poor systems and structures, which
were, as discussed in the "American Medical Technologies" case is the responsibility of top
management. The two possible ways to tackle this situation are:

1) Change the thinking and management style of top management by showing them their
failures and asking them to justify those.
2) Get rid of the complete top management and replace it with new top management
compatible with new decision patterns.

Why Grilling?

The grilling exercise conducted by GP also tells us about the negotiant clauses in the acquisition
contract itself. After negotiating, the target firm's top management tries to get a "Retain Top
management clause" in the agreement. However, the grilling exercise indicates the absence of such
a clause. Therefore, the only reason that might have gone for point 1 mentioned above was to gain
the confidence of GA employees and, at the same time, to tell them to change the existing practices
and improve performance.

Reflection: Another example of a similar process I have experienced is a mock PI and GD, where the
panel usually grills and takes stress interviews to prepare the candidate for the actual interviews.
The idea is identical, reflecting the mistakes you have already made and pinpoint improvement areas
in the candidates.

Step 2: The next step was to clean up the place! The reason for the same could be to create hope
and goodwill among the GA employees. This is something we observe in our personal lives as well; In
asking someone to change their behavior, the first step is always to generate goodwill and a sense of
trust. The cleanup exercise demonstrates to GA employees what they will get: an efficient
workplace. Moreover, the fashion in which the cleanup process was conducted i.e., the default is to
throw the waste, helped remove much junk. Since everyone was involved in the cleanup process, it
created a sense of oneness among the employees.
Shyamal Verma SHRM PC20200364
Section B

Reflection: On a personal level, I experience a similar process while joining the IIMA, where the
mentorship cell conducted various group activities like hoax week, meme-making competition, know
your PGP2, etc., to create goodwill, while at the same time introducing PGP1s to IIMA life.

Another real-life example of a similar process is the "Swachh Bharat" mission itself, which
encourages every person of the country's participation irrespective of caste, religion, etc. Again, the
idea was to create a sense of goodwill and create a platform to bring people together for a more
significant cause.

Step 3: After Step 2, the workplace was refurbished with new furniture, curtains, reception, and
open areas, etc., which encouraged and motivated the employees. They felt pride in bringing the
customers in the product demonstration building.

It is necessary to understand that the goodwill generated in step 2 only remains for a short time,
and hence, step 4 must follow immediately to leverage that goodwill.

Step 4: Leveraging ons the goodwill, the shopfloor was reorganized to cell-based design, JIT was
introduced, delayering and a suggestion of "Shorter summer timing and longer winter hours" was
given by employees. These were not easy changes, but the manner they were introduced resulted in
their acceptance by all employees. Moreover, the introduction of new systems and JIT resulted in
low defects in manufacturing.

The cell members' pay grades were also increased and leveled to two different paygrades on the
shop floor. The employees accepted the change again because of the vast goodwill created earlier;
everyone expected that something for the better would happen.

Reflection: After 2014, the govt introduced "Swachh Bharat" with similar intentions to generate
goodwill in the first year of the elected government itself. The Swachh Bharat steadily gained
momentum throughout the country, which might have helped the government to gain the necessary
support

Quality Caterers and Service Conglomerate:

Similar to GA QC can be considered as a high-performance firm with a colossal focus and quality
service and retain contracts. The QC was able to generate steady 4.5% margins. However, the way
post-acquisition phases were handled resulted in a complete breach of trust of QC employees. As a
result, many of them left the firm and overall resulted in the loss of consumer base. The practices
different from the previous case that resulted in the same are as follows:

1) The most significant difference was that there was no attempt to create goodwill among the
target firm's employees, but on the contrary, SC decided to lay off many employees, referred
to as "Black Monday" in the case. The employees felt betrayed, and Those who were
retained had to suffer from survivor's guilt.
2) The Day 1 presentation was poor, with many errors. This resulted in employees suspecting a
direction towards the worst and felt very uncertain about the situation.

An important thing to note here Is that "whom to sell?" is an equally important question: "Whom to
buy?". In the second case, both the buyer and seller were conglomerated and had multiple
businesses. As a result, despite being a high-performance firm, QC could not take a dominant
position in negotiation. The SC and QC didn't bother much about QC, which was reflected in the way
post-acquistion was handled.