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Posted on Jan 1, 2018 in Electronics

1. Who are the two parties involved in a vertical merger?

a. buyer and supplier

     2.   What was the main reason that the merger of Daimler-Benz and Chrysler failed?

c. The companies were from two different countries and had different corporate cultures.

     3.   What was one of the key factors that resulted in the effective merger Rogers Communications Inc. made with Fido?

b. Rogers set up an intranet site.

     4.   If a book publishing company decides to merge with a pulp and paper mill for its paper needs, what type of merger would result?

b. vertical

     5.   How do you describe the situation where a company experiences a feeling of alienation by the dominant partner following a merger?

c. deculturation

     6.   If two competitors merge, what type of merger is created?

a. horizontal

7. What is the growth strategy that results in the fastest growth for an organization?

     8.   If a company wants to reduce its dependency on a market that is cyclical in nature, what type of merger strategy should it choose?

     9.   What type of strategy is applied when the targeted company makes a counter-offer for the bidding firm?

10.       If a company is able to use one set of inputs to produce a wider range of products and services, what is this ability called?

   11.   Why must the needs of management be considered as an important motivator for mergers?

   12.   Which of the following is NOT a typical employee behaviour category during a merger?

   13.   Following a merger, what is constructive dismissal?

   14.   What is one important benefit that an organization can offer its terminated employees?

   15.   Why must collective agreements be considered during a merger?

   16.   Why must development programs, like overseas assignments, be put on hold for managers during a merger?

   17.   Why was the merger of Alberta Energy with PanCanadian Energy deemed a stunning success?

18.       What is one benefit for organizations that apply due diligence in order to manage their culture during a merger?

   19.   According to the textbook, what percent of ALL mergers fail due to the mismanagement of culture?

   20.   Which of the following is typically NOT an item included in a contingency plan for a merger?

   21.   According to the textbook, what percent of firms fail to produce any shareholder value following a merger?

   22.   What are the three primary reasons that companies create mergers?

   23.   Within what timeframe should the majority of anticipated synergies be captured and identified to ensure the success of the merger?

   24.   How many person-hours did the executives of HP and Compaq spend in planning for the merger integration?

   25.   What is it called when two cultures fuse and evolve into a brand new culture?

26. There is strong public opinion against foreign ownership in Canada.  What was one acquisition that the federal government recently blocked?

   27.   Which of the following is NOT one of the key areas that General Mills’ transition team focused upon?

28.       What is the most successful conglomerate in India?

   29.   What is one financial benefit of a merger?

   30.   Which one of these factors may influence the success rate of a merger?

TRUE/FALSE

     1.   A horizontal merger occurs between a buyer and a supplier. ANS:    F          (vertical merger)         

     2.   According to the textbook, the number and value of acquisitions has yet to peak. ANS:        F

(peak occurred in 2007)

     3.   Culture refers to the set of important beliefs that members of an organization share. ANS:    T         

     4.   A conglomerate merger is the merger of two organizations competing in different markets.

ANS: T         

     5.   Typically, mergers and acquisitions do not result in layoffs or the reduction of the size of the workforce. ANS:      F          (layoffs do occur)

6. Horizontal integration is the merger or acquisition of two organizations that have a buyer-seller relationship. ANS:        F          (vertical integration)   

     7.   Due diligence is a process through which a potential acquirer evaluates a target firm for acquisition. ANS:  T         

     8.   Demotion refers to a reduction of responsibility, territory, or lines of authority for an employee.

ANS: T

9.        A takeover usually refers to a hostile transaction because it involves acquisition of the company against the wishes of its management. ANS:           T

   10.   Assimilation is when two organizational cultures are fused together to create a new culture.

ANS: F                    (this is integration)  

   11.   Some mergers are done without acknowledging the loss of tangible assets like the knowledge of vacating employees following a merger. ANS:   F            (intangible assets – human capital)

   12.   Researchers have found that there is a tendency for some organizations to dismiss issues related to organizational culture if the numbers from the merger look good. ANS:         T         

   13.   Individuals who survive a merger often experience stress, anxiety, and loss of productivity.

ANS: T         

   14.   In their mergers, typically Canadians want more structure and definition of roles and responsibilities than do Mexicans. ANS:       F          (Mexicans want more)

   15.   When XM and SIRIUS — two satellite radio businesses in Canada — merged, the impact was negligible on the bottom line for XM. ANS:         F (XM’s revenue and customer base quadrupled)

   16.   The success of the valuation-driven acquisition depends on predicting economic cycles.

ANS: F (timing economic cycles)

   17.   One of the disadvantages of mergers is that employees might have to re-apply for their old jobs.

ANS: T

   18.   When two companies merge, one possible result is the creation of a new compensation system.

ANS: T

   19.   One main advantage of mergers is to reduce expenses by reducing headcount. ANS:            T

   20.   Deculturation describes the feeling of inclusion from the dominant partner in a merger even though the organizational cultures may be different. ANS:            F          (feeling of alienation)

   21.   Culture can be likened to the social glue that binds individuals together in an organization.

ANS: T         

   22.   Pension plans are often the root cause of failed merger deals. ANS:  T         

   23.   Mergers and acquisitions can be classified as corporate restructuring strategies.

ANS: F (growth strategies)

   24.   “White knights” refers to a situation where key players have the right to purchase shares at a huge discount, which makes takeovers extremely expensive. ANS:         F (poison pills)

5. Identify and describe THREE HRM impacts that occur as a result of mergers and acquisitions.

ANS: HR planning in an M&A has several dimensions that are not part of the normal planning process.

Compensation — Two companies with two different compensation systems have to merge their systems, adopt one, or create a new one. Benefit plan integration also needs to be assessed.

Training and Development — After the strategic plan development, inventory the KSAs needed to align with the strategy.

1.         What is a merger? Identify and describe THREE different types of mergers.

ANS: A merger is the combination of two organizations to create a third organization.

Horizontal merger – is the merging of two competitors. The competitors combine to increase market power. These mergers are subject to review by regulators who fear monopoly in the marketplace. For example: the merging of Coles Books and Smith Books to form Chapters (which was then acquired by Indigo).

Vertical Merger – the merger of a buyer and seller or supplier. These two merge to achieve synergies by controlling all factors affecting the company’s success, from the production of raw goods to manufacturing to distribution and sales. The example provided is the merger of a real estate agency with a real estate developer.

Conglomerate Merger – the merger of two organizations competing in different markets. These are different businesses competing in different markets.

Acquisition – the purchase of a company or a controlling interest in a company.

Consolidation – two or more organizations join and form a new organization. A third company takes on the assets and liabilities of both companies, usually after the original companies are dissolved. For example: Metro Toronto Hospital consolidations.

Takeover – one company acquires another company. Usually, a takeover refers to a hostile transaction, but it can mean a friendly merger, as well. A hostile takeover refers to the acquisition of a company against the wishes of management.

2.         Identify and describe TWO of the three major benefits of mergers.

ANS: Financial Benefits

••Reduce the variability of the cash flow of their own business – put “different eggs in different baskets”

••Organizations use funds generated by their own mature businesses (cash cows) to fund growing business

••Considerable tax losses in the acquired firm may offset the income of a parent company

••Astute corporations may analyze the financial statements of a company and decide that the company is undervalued

••Shareholders’ wealth is increased

& Managerial Needs

••Managers love to play the corporate game

••Personal motives of managers

••CEOs have incentives or payoffs if they engage in acquisition behaviour – e.g. managerial compensation, prestige, and status

••Unconscious motives of CEOs

••Personality characteristics of CEOs

     6.   According to researcher David (2009, 169) what are FIVE of the main reasons for the failure of mergers and acquisitions?

ANS:

1.Integration difficulties

2.Large or extraordinary debt

3.Inability to achieve synergy

4.Too much diversification

5.Too large an acquisition

3.         What is culture? Identify and briefly describe the TWO of the four different types of cultures companies may adopt after a merger or acquisition.

ANS:

••Culture is the set of important beliefs that the members of an organization share – these beliefs are unspoken – they are an accumulation of the group’s shared history and experience. Culture is known as the “social glue” that binds individuals together and creates organizational cohesiveness.

••Assimilation – occurs when one organization willingly gives up its culture and is absorbed by the culture of the acquirer or dominant partner

••Integration – refers to the fusion of two cultures – resulting in the evolution of a new culture

••Deculturation – sometimes the acquired organization does not value the culture of the dominant partner and is left confused, alienated, marginalized

••Separation – the two cultures resist merging, and either the merged company operates as two separate companies  or divorce occurs

     4.   List TWO major results of the research surrounding success rates of mergers and acquisitions.

ANS: Research demonstrates that only 15% of mergers successfully achieve their financial goals

•Acquisitions of related businesses fare better than acquisitions of businesses unrelated to the parent company

•A merger occupies so much management time, attention, and other resources that the original businesses are neglected

•Major challenges face the merging of companies: integrating computer systems, eliminating duplications, re-evaluating supplier relationships, reassuring clients, advising employees, and reconfiguring work routines

1. According to the textbook, what is the least commonly used restructuring and organizational change tactic?

     2.   What time horizon is generally associated with systematic change related to downsizing and restructuring?

     3.   What should union officials and management protect when anticipating potential downsizing and restructuring?

     4.   According to Pfeffer, which of the following happens first when a layoff is announced?

5.         Which of the following is a medium-term alternative to downsizing?

     6.   According to the textbook, what is the most common benefit provided to displaced workers?

     7.   According to a poll of almost 7 000 employees discussed in the text, what personal strategy would the majority of individuals implement if they heard that their company was planning layoffs?

     8.   How do you define job insecurity?

     9.   Perceptions of fairness and equity play a key role in understanding how survivors react to a downsizing. What type of justice is associated with the fairness of a downsizing decision?

   10.   In the Bowater Mersey downsizing in 2011, what was the most significant ethical departure, from the employees’ perspective?

11. What is one HR program associated with embeddedness, given that downsizing is unavoidable?

   12.   What is one challenge that managers must confront when managing in times of uncertainty and potential downsizing?

   13.   Which of the following programs is NOT typically associated with high involvement human resource management?

   14.   If employees believe that they will be rewarded for loyal service and feel protected by job security, what type of contract do they have?

   15.   What organizational initiative provides a program of counselling and job-search assistance for workers who have been terminated?

   16.   What do you call an employee who remains with an organization after a downsizing?

   17.   Downsizing became a huge phenomenon in the 1990s and then it waned.  Which year did downsizing make a comeback?

   18.   When survivors of downsizing continue to work for an organization, there are several impacts on them personally. Which of the following is NOT an impact experienced by survivors?

   19.   If an organization wants to achieve an effective restructuring, what is one strategy that it might implement?

   20.   Why do organizations with high-involvement work practices suffer more from downsizing than those with fewer such practices?

   21.   What type of strategy requires an organization to focus on work process and to assess whether specific functions, products, and/or services should be eliminated?

   22.   According to the textbook, what is the main goal to be achieved if an organization is downsizing and restructuring with a systematic change strategy?

23. What type of justice focuses on the interpersonal treatment employees receive during the implementation of the downsizing decision?

   24.   What is one issue that has received little attention relative to downsizing?

25. What is the relationship between downsizing and workplace safety for employees?

   26.   What is an essential component that is necessary for senior management prior to developing a downsizing strategy?

   27.   According to the textbook, what is the relationship between job loss and social withdrawal?

   28.   In the research by Classen and Dunn, what is one of their major findings?

   29.   What is another term that experienced downsizers might use to describe a workforce reduction or realignment?

   30.   What is one historic issue that necessitates so much emphasis on downsizing today?

TRUE/FALSE

     1.   Offshoring occurs when an organization moves work to foreign entities outside the company.

ANS: T                   

     2.   Systematic change is a short-term strategy, whereas work redesign is a medium-term strategy.

ANS: F                    (systematic change is a long-term strategy)

     3.   Outplacement is providing a program of counselling and job-search assistance for workers who have been terminated. ANS:        T         

     4.   Interactional justice refers to the interpersonal treatment employees receive during the implementation of the downsizing decision. ANS:   T         

     5.   A psychological contract is a written commitment between employers and their employees that guarantees job security and rewards for loyal behaviour. ANS:         F (unwritten)

     6.   “High involvement human resource management” deals with treating people as expenditures.

ANS: F                    (treat people as assets)

     7.   There are three types of restructuring: portfolio, human capital, and organizational.

ANS: F                    (portfolio, financial, and organizational)

     8.   There are three types of downsizing strategies: workforce reduction, work redesign, and systemic change. ANS:    F          (systematic change)

     9.   Many organizations are reactive to downsizing instead of proactive. ANS:    T         

   10.   Downsizing is unlikely to disappear in the future because it helps to alleviate the huge financial burdens facing many organizations. ANS:            T           

   11.   Some researchers have found evidence that the longer a person is unemployed, the higher the person’s risk for suicide. ANS:       T         

   12.   There is considerable evidence that workforce reduction programs ultimately achieve their objectives of cutting costs. ANS:          F          (ultimately fail to achieve their objectives)

   13.   Work redesign is a short-term strategy, whereas workforce reduction is a medium-term strategy.

ANS: F                    (medium-term strategy and short-term strategy respectively)

   14.   Outsourcing refers to the re-absorbing of excess or inappropriately placed workers into a restructured organization. ANS: F          (inplacement)

   15.   Downsizing may be considered a breach of the unwritten employment contract between employers and their employees. ANS:      F            (psychological contract)

   16.   Inplacement provides a program of counselling and job-search assistance for workers who have been terminated. ANS:    F          (outplacement)

17. Asking employees to take voluntary sabbaticals is one medium-term solution to avoid downsizing. ANS:         T         

   18.   When rationalizing decisions about downsizing, many managers will rely on economic, accounting, and revenue-based rationales. ANS:  T         

   19.   Distributive justice refers to the rules used to determine which employees will be downsized.

ANS: F                    (procedural justice)

   20.   Negative consequences of downsizing might be minimized with greater communication and employee participation. ANS: T         

   21.   Research evidence indicates that downsizing creates job insecurity and low job satisfaction, which are related to greater safety compliance because employees do not wish to be hurt on the job. ANS:    F          (less safety compliance)

   22.   One issue that has received little attention is the effect of downsizing on the organization’s reputation for corporate social responsibility.

ANS: F (reputation for corporate social performance – RCSP)

   23.   Downsizing can be linked to less innovation and more protection of one’s turf. ANS:          T         

SHORT ANSWER

     1.   Define “downsizing” and identify and describe THREE types of downsizing strategies.

ANS: Downsizing involves activities undertaken to improve organizational efficiency, productivity, and/or competitiveness by reducing the size of the firm’s workforce, the costs, and the work processes. Three Types of Downsizing: Downsizing strategy – is the strategy to improve an organization’s efficiency by reducing the workforce, redesigning the work, or changing the systems of the organization.

a.   Workforce Reduction: A short-term strategy to cut the number of employees through attrition, early retirement or voluntary severance packages, and layoffs or terminations.

b.   Work Redesign: Medium-term strategy in which organizations focus on work processes and assess whether specific functions, products, and/or services should be reconfigured or changed.

c.   Systematic Change: Long-term strategy that changes the organization’s culture and attitudes and values of employees with the goal of reducing costs and enhancing quality.

     2.   What are FOUR of the reasons that organizations downsize?

ANS: The most common reasons for organizational downsizing include:

1.Declining profits

2.Introduction of new technology

3.The need to reduce operating costs

4.Getting rid of employee “deadwood”

3. What are FIVE of the more insidious consequences of organizational restructuring and downsizing?

ANS:

1.Deteriorating organizational climate and culture

2.Inability for organizations to reliably cut costs

3.Inability for reduction programs to meet objectives

4.Higher potential incidents for depression and suicide

5.Violation of the psychological contract

4.The Downsizing Strategy:

Strategies toimprove an organization’s efficiency by reducing the workforce, redesigning the work, or changing the systems of the organization

Ø1.Workforce Reduction Strategy: Workforce reduction: Ashort-term strategy to cut the number of employees through attrition, early retirement or voluntary severance packages, and layoffs or terminations

Ø2.Work Redesign Strategy: Work redesign: A medium-term strategy in which organizations focus on work processes and assess whether specific functions, products, and/or services should be changed or eliminated

Ø3.Systematic Change Strategy: Systematic change: A long-term strategy that changes the organization’s culture, attitudes, and employees’ values with the goals of reducing costs and enhancing quality

5.In placement and Outplacement Issues:

Outplacement:  Providing a program of counselling and job-search assistance for workers who have been terminated

Inplacement:  Reabsorbing excess or inappropriately placed workers into a restructured organization

Benefits:

1.         severance pay

2.         continuation of employee benefits

3.         extended notice period

6.Survivor syndrome: A description of the emotional roller coaster that survivors experience

}Some of these emotions include: anger, pain, fear, cynicism, stress, mistrust, risk aversion, overwork, job insecurity

Job insecurity: an employee’s expectations of continued employment and the future existence of the job

}Negative attitudes and behaviours

}Reduced performance capabilities

}Lower organizational productivity

Survivors of layoffs report lower perceived organizational performance, lower job security, reduced attachment to the organization, and higher intention to quit

7.

ØMerger: The consolidation of two organizations into a single organization

ØHorizontal merger: The merging of two competitors

ØVertical merger: The merger of a buyer and seller or supplier

ØConglomerate merger: The merger of two organizations competing in different markets

ØAcquisition: The purchase of an entire company or a controlling interest in a company

ØConsolidation: Two or more organizations join and form a new organization

ØTakeover: One company acquiring another company

8.Merger Methods:

ØHostile takeovers: Dramatic and complex; one company takes over control of another

ØPoison pills: Refers to the right of key players to purchase shares in the company at a discount, making the takeover extremely expensive

ØWhite knights: Buyers who will be more acceptable to a targeted company

ØPac-Man: A defensive manoeuvre where the targeted company makes a counteroffer for the bidding firm

9.Some Reasons for Failures of M&As:

•Integration difficulties

•Inadequate evaluation of target

•Large or extraordinary debt

•Inability to achieve synergy

•Too large an acquisition

10.M&A Culture Options:

}Cultural pluralism: The partners co-exist

}Cultural integration: The partner organizations blend current cultures together

}Cultural assimilation: One company (usually the acquirer) absorbs the other

}Cultural transformation: The partner companies abandon key elements of their current cultures and adopt new norms

11.Why Do Organizations Downsize? (MCQ)

·Declining profits

·Business downturn

·Increased pressure from competitors

·Organizational merger

·New technology

·Reduce operating costs

·Decrease levels of management

·Get rid of employee “deadwood”

12.

1.   Procedural justice: Procedures or rules used to determine which employees will be downsized

2.   Interactional justice: The interpersonal treatment employees receive during the implementation of the downsizing decision

3.   Distributive justice: The fairness of the downsizing decision