The Role of Organizational Culture in merging processes

In processes of Merging and Acquisitions, it is necessary to build a Corporate Strategy. This is defined as a proper Decision Making process, where objectives, purposes, goals and means to attain them are well defined, to lead the organization to success.

Inside a Corporate Strategy, there are two kinds of strategies which are:

• Low-growth: It is not intended to change, it only focuses on limited special opportunities to the organization.
• Forced-growth: It can include acquisition of competitors, which means vertical integration, geographical expansion and diversification.

It has to be taken into account that a Corporate Strategy is different from a Business Strategy because the last one only focuses on products, so it is a "narrow strategy".

Merging process:

One corporation absorbs the corporate structure of another, so only one company retains its identity, but it involves exchange of stock avoiding taxes in that way.

Acquisition:

One company taking over controlling interest in another company. Normally, it shows an acculturative process in which cultural changes result from the interaction of one organizational culture with another.

References:

Alzira Salama, Wayne Holland, Gerald Vinten (2003). "Challenges and opportunities in mergers and acquisitions: three international case studies - Deutsche Bank-Bankers trust; British Petroleum-Amoco; Ford-Volvo". Journal of European Industrial Training, Vol. 27 Iss: 6, pp. 313-321