Essays on Reasons for the Mergers and Acquisitions of the Firms Coursework

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The paper "Reasons for the Mergers and Acquisitions of the Firms " is an outstanding example of management coursework.   Australian multi-nationals have divergent histories. Often they share different global ambitions and strong product recognition in Australia and abroad. New Australia multi-nationals are formed through the merger of different firms. The new conglomerates so often run into snags due to structural problems with the mergers and off-shooting management issues which crop up after the mergers. This situation leads to failures at various levels. It is noted that domestic markets for the consumption of the products and international demand for the products of the new acquisitions obtained as a result of these mergers are not very well surveyed and accounted for.

Sometimes the local challenging environment forces the new mergers into the increased export focus and a new mix of quality and price both at home and abroad. The export focus of such companies as concentrated on penetrations into the markets of New Zealand, the United Kingdom and the United States. On the cost side, the firms usually improve profitability through better operational processes and improved management of distribution channels.

Although, Australian climate and soil are very well suited to agricultural products like the fine quality of wines like Shiraz and Cabernet, Sauvignon. But this whole story is not so smooth. The structural mergers and operational management strategies are so often not so compatible therefore they result in serious issues and ultimate failures. This case is more evident in Australian mergers. There are different opinions on precise causes responsible for the failure of mergers and acquisitions. At the same time, there are many recommendations that can be counted upon for avoiding such situations.

Although It is widely accepted that the 'human factor' is a prime cause of difficulty in making the integration between two or more companies work successfully. If such transitions are carried out without care towards the employees who may suffer as a result, and without full awareness of the vast differences that may exist between corporate cultures, the ultimate result is a stressed, unhappy and uncooperative human resource and a substantial drop in productivity. Appelbaum et al 2000 (p9-10) has said that, in fact, a merger or acquisition is an extremely stressful process for stakeholders in terms of job losses, restructuring process, and the introduction of a new corporate culture and identity that may create uncertainty, stressful anxiety and resentment among a company's employees. Research has shown that a firm's productivity may drop up to 50 percent while undergoing such a large-scale reform substantial demoralization of the workforce is a major reason for this situation while Tetenbaum 1999 ( p45) explains that companies so often pay undue attention to the short-term legal and financial considerations that are involved in a merger or acquisition.

Balmer and Dinnie 1999 (p5) say that companies usually neglect the implications for corporate legal identity and communication and the factors that may prove equally important in the long run because of their impact on workers and productivity. In order to bring out the reason and argument behind the failure of Southcorp wines and Rosemount, it is proper to go into the brief history of both the companies in Australia before their merger. As a matter of fact, Southcorp wines had a long history of a diversified conglomerate until the late 1990s, producing a variety of products such as packaging materials, Air conditioners, Water heaters and above all the finest quality of wine in South Australia.

Before the disinvestment program, the name of the firm was a proud brand name for all of its products. Southcorp Wines in the 1990s changed its organizational strategy to become an international wine company and disposed of all of its operations and assets, by the end of 2002 except for wine production. At that juncture of time, the Australian wine industry was already dominated by BRL Hardy and others.

These companies had created already a sort of oligopoly in the Australian wine market. BRL Hardy and its competitors Orlando Whndham company producing Jacob’ s creek label were already the mergers with French companies. In this backdrop, it was not reckoned that Australian domestic wine consumption was already static for a number of years. In view of this fact, these companies with the new inclusion of Southcorp wine ventured into the exports abroad. So the Australian wines exports in December 2003 grew 24% higher than the corresponding period for 2002.

But despite this effort, the Australian wine production amounted to only 6% of the world’ s total export which was already dominated by the USA and Europe. Since the Australian climate and soil were suitable for fruitier and smoother than the European wines, people in the USA and Europe liked it more and more.

References

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1- Ferguson A 2001(Southcorp’s magnum opus), Business review weekly. MCSJ case study journal. University of South Australia.p-46

2- Mergers and acquisitions in Australia14th April 2000 ConferenceUnited Nations Regional Seminar on Competition Law and Policy for Asia-Pacific.

3- Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia.p-5

4-Appelbaum, Steven H., Gandalf, Joy, Robin, Francois, Proper, Shay, and Yurts, Harry (2000), "Anatomy of a merger: behavior of organizational factors and processes throughout the pre- during- post-stages", Management Decision, Vol. 38, p 9 and 10

5- Balmer, John M.T., and Dinnie, Keith (1999), "Corporate identity and corporate communications: the antidote to merger madness", Corporate Communications: An International Journal, Vol. 4 Number 4 1999.p-5

6- Tetenbaum 1999, corporate strategy of Australian mergers and acquisitions. Second Edition, International institute of business administration Sidney Press Club Australia. ISBN 2038475. p45

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