Mergers Don’t Always Lead to Culture Clashes

A case study is a form of qualitative explanatory research that is used to look at individuals, a small group of participants, or a group as a whole. Research on case studies allows people to understand complex issues that can extend experience and add strength to previous research. Case studies articulate detailed analysis of a minimal number of events and their affairs. This paper will look at the case study entitled “Mergers Don’t Always Lead To Culture Clashes”. This paper will answer 4 questions in regards to the case study giving adequate feedback about the questions being asked.

IN WHAT WAYS WERE THE CULTURES OF BANK OF AMERICA AND MBNA INCOMPATIBLE?

The cultures of Bank of America and MBNA were incompatible because MBNA’s culture was characterized by a free-wheeling, entrepreneurial spirit that was also quite secretive. MBNA employees also were accustomed to the high life. Their corporate headquarters in Wilmington, Delaware, could be described as lavish, and employees throughout the company enjoyed high salaries and generous perks from the private golf course at its headquarters, to its fleet of corporate jets and private yachts. Bank of America, in contrast, grew by thrift. It was a low cost, no-nonsense operation.

Unlike MBNA, it believed that size and smarts were more important than speed. The cultures of both companies were so different that they became incompatible. However, to everyone’s surprise the merger worked. This was done by Bank of America’s respect for MBNA’s culture.

WHY DO YOU THINK THEIR CULTURES APPEARED TO MESH RATHER THAN CLASH?

Both Bank of America and MBNA appeared to mesh because executives of both companies began by comparing thousands of practices covering everything from hiring to call-center operations. Because of this, both cultures co adapted. MBNA’s dress code was much more formal than Bank of America’s business casual approach. In the end, a hybrid code was adopted, where business suits were expected in the credit card division’s corporate offices and in front of clients, but business causal was the norm otherwise.

DO YOU THINK CULTURE IS IMPORTANT TO THE SUCCESS OF A MERGER/ACQUISITION? WHY OR WHY NOT?

This author believes that culture is important to the success of a merger/acquisition because with culture, the two companies or organizations can learn from one another and gather ideas of how to make the company better. “In many ways, it makes sense to consider mergers in the same light as acquisitions. It has become a truism that there is no such thing as a merger – one side will come out dominant in each function, even in the friendliest of mergers” Zatz, D. (2010). Mergers can be a deeply depressing time, especially if the leaders possess a communication failure causing it to be sparse. The best way to handle this is to communicate with every employee using different tactics. Tactics like face to face conversations so that people can understand the merger.

HOW MUCH OF THE SMOOTH TRANSITION, IF ANY, DO YOU THINK COMES FROM BOTH COMPANIES GLOSSING OVER REAL DIFFERENCES IN AN EFFORT TO MAKE THE MERGER WORK?

The author believes that the smooth transition that came from both companies in an attempt to make the merger work was because of Bank of America’s foresight to know which MBNA practices to attempt to change, and which to keep in place. Especially critical was Bank of America’s appreciation and respect for MBNA’s culture. Also, Clifford Skelton had helped manage Bank of America’s acquisition of FleetBoston Financial before moving on to MBNA.

Conclusion

Mergers are a common tactic that many companies or organizations pursue to make their business more successful. Unfortunately for most of the employees working for that company, the merger is kept secret. It is also likely that the public will be kept out of the merger as well. It boils down to one big secret as it is taking place. The majority of mergers do not succeed. However, many companies still pursue the merger for a number of reasons. The main reason is so one company can profit from another company that it losing. The profiting company chooses to merge with the loosing company to use the losses as a tax write-off while causing their company to grow.

References

Robbins, S., & Judge, T. (2009). Organizational Behavior: Organizational Culture. Case Study.

Mergers Don’t Always Lead To Culture Clashes. Chapter 17, Pg. 577. [University of

Phoenix Custom e-text]. Upper Saddle River, NJ: Prentice Hall. Retrieved September 24, 2010,

From University of Phoenix, rEsource, CJA/473 – Interdisciplinary Capstone Course Web Site.

Zatz, D. (2010). Tool pack Information. Mergers and Acquisitions: Finding Synergy and

Avoiding the Reefs. Power Relationships Para.1 Retrieved September 24, 2010, from

http://www.toolpack.info/issues/mergers.html