| dc.description.abstract | Mergers can be defined as a combination of two or more organizations where all their assets
and liabilities are combined to form one organization with a single name and legal entity.
Merges therefore, are strategic alliances between two or more companies, where the partners
in the alliance seek to add to their competencies by combining their resources with those of
other firms with a commitment to reach an agreed goal, while acquisitions occur when one
company takes over another in terms of management or ownership. Acquisitions usually
take place between big and small countries as well as between big manufacturing companies
and small supplying ones, the main aim being guaranteeing the sources of supplying
important inputs. Normally, the company being taken over consents to the takeover,
however, hostile acquisitions do sometimes take place, where the bigger company takes over
the smaller one without its consent.
The prime reason for mergers and acquisitions are to maintain or increase the market share
and to increase shareholder value by cutting costs and initiating new, expanded and improved
services. Research has shown that between 75-85% of mergers fail due to low productivity,
labour unrest, high levels of absenteeism and loss of shareholder value. Further research has
shown that mergers fail mostly during integration, and mainly because of improper strategy,
culture differences, delays in communications and unclear vision (PR Newswire, 1999).
When mergers occur, one of the biggest challenges still remains how to deal with culture
clash emerging from the merging companies. The term "culture clash" has been coined to
describe the conflict of two companies' philosophies, styles, values, and missions (Bijilsma-
Frankema, 2001). Even in the best of circumstances, mergers can so change the nature,
orientation, and character of one or both of the merger partners. Some issues arise from
employee's fears over the loss of situational control, the possible of loss of their jobs, the
financial obligations associated with the loss of a job. Moving into the realm of the unknown
with a new manager and a new team is also disconcerting and anxiety provoking (Mirvis and
Mark, 1992).
This case study explored the cross cultural perspectives of mergers and acquisitions, with the
aim of determining the role culture plays in the success or otherwise of mergers. The study in
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particular focused on GlaxoSmithKline (GSK) Kenya, a multinational pharmaceutical
company based in Kenya, formed following the merger of SmithKline Beecham and Glaxo
Wellcome in December 2000.
The case study depended on primary data collected through questionnaires and therefore
made use of the samples of the population making the study cheaper and less time
consuming. From a study population of 50 senior and middle managers at GSK, a sample of
12 respondents was taken for the study. Descriptive statistics was used to analyse the
quantitative data. Percentages were used to determine respondents' feedback and mean
scores were also used to analyse feedback received from the respondents.
The findings from the study showed that culture is a very important element for the success
of any merger. Culture is the key to success of a business and a good culture therefore leads
to better performance. Elements of organizational culture such as norms, values and believes,
management culture and leadership styles are very important for the success of mergers and
acquisitions. It also found out that GSK's staff are highly motivated and performance driven.
They also take pride in the organizations unique culture evolving from a history of many
mergers. The study found that most respondents found the cultural aspect of the 2000 merger
to be a success. | en |
