Mergers Don’t Always Always Lead to Culture Clashes. 1.1. In what ways were the cultures cultures of Bank of Americ America a and MBNA incomati!le" incomati!le"
Both organizations organizations retained retained a dominant dominant culture; culture; however, the cultures cultures of Bank of America America and MBNA MBNA were incomp incompati atible ble.. MBNA MBNA featur featured ed a formal formal style. style. t was charact characteri erized zed as free! free! whee wheeli ling, ng, entre entrepr prene eneur uria iall spir spirit ited ed,, and and secr secret etiv ive. e. "his "his orga organi nizat zatio ion# n#ss empl employ oyees ees were were accustomed to high!life, above average salaries and generous perks. "hey were used to a formal dress code. ts management was perceived as arrogant and autocratic. MBNA believed in speed. n contrast B$A was a less formal organization which grew by thrift, maintained low!cost, no non!sense non!sense operations, operations, featured a more casual dress code, and believed in size and smarts smarts rather than speed alone. ts management was perceived as bureaucratic. 1.#. $hy do you think their cultures cultures aeare aeared d to mesh rather than clash" clash"
"he "he prim primary ary fact factor or whic which h allo allowe wed d to avoi avoid d clas clashes hes but but to mesh mesh can can be attr attrib ibut uted ed to the the systematic way management handled the cultural transitions. "he e%ecutives of both companies began by comparing thousands of practices covering everything from hiring to call!center operations. B$A#s ability to foresee which MBNA#s practices to keep and which to change was a huge success. B$A, being the ac&uirer and the more frugal and thrifty of the two imposed its will on MBNA in some case. 'or e%ample, because MBNA#s pay rate was well above market, many MBNA managers were forced to a pay cut. "hough some left, most of the employees remained. (ow turnover is an indication of how successfully the two cultures meshed. n other cases, the cultures co!adapted. 'or e%ample, MBNA#s dress code was much more formal than B$A#s business!casual approach. n the end, a hybrid code was adopted, where business suits were e%pected in the credit card division#s corporate offices and in front of clients, but business causal was the norm otherwise. Although different from one another, both organizations shared some similar core values. Being the ac&uirer B$A never tried to force their culture on MBNA. As mentioned in the case different cultures may be a recipe for disaster, however, these two mergers showed appreciation for each
other#s characteristics, choosing the best ones from both sides and creating a new set of values that led to a new culture. As a result, their cultures appeared to mesh rather than clash. 1.%. Do you think culture is imortant to the success of a merger&ac'uisition" $hy or why not"
)es, think that culture is important to the success of a merger or an ac&uisition. $rganizational culture refers to a system of shared meaning held by members that distinguishes the organization from other organizations. No two organizations have the same culture.
A
merger or an ac&uisition is an artificial bonding of two cultures. f the two cultures are forced onto each other collisions would occur between the two cultures which would constraint the achievement of the goals of the new organization. *tatistics indicate that up to one third of mergers fail within five years, and as many as + percent never live up to their full e%pectations. A great deal of evidence indicates that the ultimate success of mergers and the amount of time it takes to get them on track is determined by how well the cultural aspects of the transition are managed. n a merger or an ac&uisition, the companies try to understand the behaviors that have led to each organization#s growth, that is the organizational culture in other terms. "he ability to understand both companies# cultures at the outset can help uncover any bad signs that are nonnegotiable and can prohibit the deal from moving forward. -nderstanding cultures also helps identify possible synergies between the two companies and whether a target would be better achieved as a combined entity. 1.(. )ow much of the smooth transition* if any* do you think comes from !oth comanies glossing o+er real differences in an effort to make the merger work"
"he real culture of an organization cannot be glossed over. t might be possible to cover the things at the beginning but sooner the real culture of each other would be visible during coe%istence. owever, if the two organizations believe and commit themselves to make the transition a success a systematic approach could be followed. "hrough this kind of approach, the merger can be made to work.
"here has to be some negotiation and probably compromise in a merger so both sides can work efficiently as a new team. Both companies have to keep the overarching goals of the newly formed organization in place for the merger to happen &uickly and efficiently. /ompanies need to address critical issues head!on during a merger. 0ractically, some core differences could still remain unaddressed in order to facilitate a &uick transition. owever, in a successful merger, the most critical differences will be dealt candidly. /ultural differences cannot be entirely eliminated, as employees who have been used to working in a certain way will not be able to change their behaviors overnight. 1ven if some issues are glossed over at start, if these are critical to business, they need to be addresses as part of the integration process. "herefore, glossing over would make the transition look smooth at the beginning but not in the long run.
