DWO

Session 14: Second-Order Organization Changes

Case- MakeMyTrip and Goibibo Merger: Minimum

People Disruption for Maximum Customer Advantage
Mergers & Acquisitions (M&As) Worldwide

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 Trends of M&As in India

• LPG revolution (1991) has intensified competition and has forced companies to
consolidate in India.
• A KPMG survey revealed a 270% increase in M&A deals in the first quarter of the
financial year, 2013.
• According to the report of Merger Management consultancy M&A targeting India
totaled US$ 4.9 billion in Q1 2014, 12.7 % over the Q4 2013 value (US$ 4.4
billion).
• A 2015 M&A trend report of Deloitte suggests 12% of multinationals have
reported India to be the preferred destination for their M&A deals.
• India has seen 1,147 deals worth $60.54 billion in the year 2017.
• US $95.4 billion deals in 2018 (Financial Express).
• The increasing volume is witnessed in various sectors like that of finance,
pharmaceuticals, telecom, FMCG, industrial development, automotives and
metals.
Qus 1. What kind of strategic alliances was the MMT-GI
deal?
 Kinds of Strategic Alliances

• Joint Ventures
• Mergers
• Acquisitions
• Takeovers
• Demerger, Spin-off /Divestitures
• Outsourcing
• Affiliate Marketing
• Franchising
• Distribution Relationship

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 Strategic Alliances

Mergers Acquisitions and Takeovers

A+B C A+B A/B

- Daimler & Chrysler - Flipkart and Myntra

- Air India and Indian -Ranbaxy and Daiichi-
Airlines Sankyo
-TechMahindra and Satyam
 Strategic Alliances…

– Joint ventures
• Indus Towers
• Maruti Suzuki
• TATA-Starbucks
 Types of M&A Integration

• Horizontal Integration
• Vertical Integration
Fig. Value Chain of the Manufacturing Industry

Suppliers
R&D Manufacturing Distribution Consumption
/ Vendors

Downward Upward
Integration Integration

• Conglomerate Mergers
Qus 2. What were the reasons for MMT-GI deal?
 Drivers of M&As in Organizations

There is a tremendous allure to M&A. It’s the big play, the dramatic gesture. With the
stroke of a pen, you can add billions to size, get a front-page story and create excitement
in the market.” (Michael Porter)
Quest for Bigness/ Gain Market Share

Gain Competitive Advantage

Drivers Globalization
of
Diversification
M&As
Gain Access to New Technologies

Gain Access to New Markets

Access Each Others’ Distribution Channels

Achieve Economies of Scale

Reviving Sick Units

TATA and Air India
 Qus 3. How the integration of MMT and GI was
managed? Why is Srivastava worried? How should he
manage people integration better?
 Stages In Mergers & acquisitions process

• Stage 0 - Partner Assessment

• Stage 1 – Pre-merger (Due Diligence
and Negotiation)
• Stage 2 – Integration
• Stage 3 – Post-merger Integration
 Due Diligence

Disclosure of Info General Corp Matters Strategic Fit Financial Matters Tax Matters

Reg &Compliances Litigation IPRs, and Insurance Market & Marketing Competition

Production & Material Technology People and HR Cultural Piece Environmental

Negotiation in M&A
Qus. How should Srivastava manage overall integration
keeping in mind the goal of the deal?
Integration/ Combination During
Mergers and Acquisitions

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Integration End States

Marks & Mirvis

(1998)- Corporate
M&As are like
marriages and
their success is
contingent to their
understanding
towards each
other.
Q. Why, despite all this planning, do a large
number of strategic alliances fail?
 Entity Number of Employees Deal Status of the
ame of the Company

Daimler Merger 4,21,000 $36 billion Failed

Chrysler Merger
HP Merger 155000 $87 billion Struggled
Compaq Merger
Tata Steel Acquirer 74,000 $12 billion Divestiture
Corus Acquired 47,300 People issues

Vodafone Acquirer 1,06,825 $5.46 billion Absorption

utchison Essar Acquired 75,000 Separation

Daiichi Sankyo Acquirer 10983 $8.5 billion Failed

Ranbaxy Acquired
ttal Steels Acquirer 220,000 $ 33 billion Divestiture
96,000 1st time profit
Arcelor Acquired In 2017
Microsoft Acquirer 114000 $ 7.2 billion Failed
Nokia Acquired 114256
Acquirer 2.3 million $ 16 billion
Walmart WIP
Flipkart Acquired 30000
 Failed M&As

• Marks and Mirvis, 2001; Thach and Nyman, 2001; Schweiger, 2002; Ellis and
Lamont, 2004; Pablo and Javidan, 2009 - Barely 25-35 percent of M&As achieve
their desired goals
• Barney, 1998, Wright et al., 2001 - Less than one quarter of M&As achieve their
financial objectives
• Mitleton and Kelly, 2006; and Weber et.al, 2010 - Despite the strategic gains of
M&A like, synergy realization, increase in market share, business unit integration,
market extension, product extension; or financial gains like increase in profit their
success is not assured.
Post‐ M&A Integration During
Mergers and Acquisitions

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 A Successful Integration is a COMPLEX Process
(Bansal, 2019)
Antecedents of Justice Moderators Process Outcomes
Perceptions

HUMAN INTEGRATION
HR Integration
End-to-End Talent Management
Relational Convergence

CLIMATE OF
COMFORT
SYNERGY REALIZATION
CULTURAL Operational Synergy
INTEGRATION Financial Synergy
Cultural Fit PERCEPTION OF JUSTICE
Cultural Convergence Allocation of Resources
Managing Divergence Fair Execution of Processes
Candid and Transparent
Communication
EMPLOYEE
PSYCHOLOGICAL
TASK INTEGRATION OUTCOMES
Structure to Work TOP MANAGEMENT Employee Satisfaction
Inter-organizational Task Teams SUPPORT TO CHANGE Employee Commitment
Capability Transfer
Standardization of Processes
Manpower Optimization

Figure 1: Theoretical Model of Justice in Mergers and Acquisitions

Impact of Completion of Task and Human
Integration on M&A Outcomes

(Birkinsaw, Bresman and Hakanson, 2000)

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Qus . How should Srivastava prioritize and standardize
the integration of different HRM processes across
merging disparate entities?
 HR Integration

• Determining organizational blueprint;

• Identifying top management teams, middle level
management teams and change agents, representing both
the organizations;
• Identifying the core competence and job profile needed in
the new context;
• Developing job description, job families, and new roles;
• Determining talent management and retention strategies;
• Providing relevant trainings at different stages;
• Determining the new organizational culture;
• Developing communications strategy and plan; and
• Reconciling disparate HR policies, compensation and
benefits programs of the two merging entities.
Handling Employee Emotions through Training
(Thakur, Bansal, & Stokes, 2016)
 Communication

• Four considerations in any communication plan-

– Audience
– Timing
– Mode
– Message

Communication Strategy Continuum (Clampitt, 2000)