Week 8 DiscussionCOLLAPSE
Choose ONE of the following discussion question options to respond to:
Six Deadly Sins of M&A
- Review Jack Welch’s article “The Six Deadly Sins of Mergers and Acquisitions”
- Locate and post a link to an article published in the last 5 years in The Wall Street Journal, or another reputable source, about a merger or acquisition that did not go as planned.
- Which of these “sins” were committed, what issues arose as a result, and what behaviors could the organization have employed to prevent these errors?
- Under what circumstances should an organization seek a strategic alliance?
- Provide a specific example of a company where a strategic alliance was preferential to a merger or acquisition and summarize some of the unique challenges faced by the alliance leadership team.
- What worked well and what did not?
- How could the strategic alliance have been managed differently to be more beneficial to the organization(s)?
- Support your response with references to this week’s readings.
Post your initial response by Wednesday, midnight of your time zone, and reply to at least 2 of your classmates’ initial posts by Sunday, midnight of your time zone.
!st person to respond to is Christina
“Eddie Lampert, chairman of Kmart, purchased Sears for $11 billion in 2004, changing the name of the company to Sears Holdings” (Delventhal, 1). Kmart and Sears were both very similar companies and both companies were not well off at the time. Part of Jack’s Six Deadly Sins of Mergers and Acquisitions, is to beware the “merger of equals”. It doesn’t add value by merging very similar companies and they end up fighting about which one should be in charge. “Sears Holdings filed for Chapter 11 bankruptcy on Oct. 15, 2018, at which time it had 700 stores across the U.S., $6.9 billion in assets and $11.3 billion in liabilities” (1). Since the merger their revenue continues to go down, while their competitors keep going up. Instead of experiencing with new management techniques and being distant, Lampert should have put a solid management plan in place and make sure to oversee it. Had he been more hands on and more involved Sears Holdings might have been in a much better position today.
- Delventhal, Shoshanna. 2020. Who Killed Sears? Fifty Years on the Road to Ruin.
- Welch, Jack. 2016. The Six Deadly Sins of Mergers & Acquisitions.
2nd peraon to respond Erica’
Hey Dr. G and Class!
I have selected Six Deadly Sins of M&A for this week’s DQ.
This week, in Welch’s article, we have learned that no company should shy away from M & M&A, just from its six most common pitfalls (1). The six most common pitfalls are:
- Beware any “merger of equals.”
- Recognize that the cultural fit of two companies is as important as strategic fit—if not more so.
- Run for the hills if you enter a “reverse hostage” situation.
- When it comes to integration, boldness is the most sensible approach.
- Do not fall into “conqueror syndrome” by marching into your new “territory” and installing your people everywhere.
- Do not pay too much.
Locate and post a link to an article published in the last five years in The Wall Street Journal, or another reputable source, about a merger or acquisition that did not go as planned.
The article I found published within the last five years was about the Amazon, and Whole Foods failed merger “One Reason Mergers Fail: The Two Cultures Are Not Compatible.”One Reason Mergers Fail: The Two Cultures Are not Compatible (hbr.org)
Which of these “sins” were committed, what issues arose as a result, and what behaviors could the organization have employed to prevent these errors?
Out of the six sins Welch covered, the one that arose with this acquisition was sin two “2. Recognize that the cultural fit of two companies is as important as strategic fit (1). The deal would allow Amazon to spread into a different sector and grow customer data analysis and allow Whole Foods to be more competitive by lowering pricing. The two companies failed to investigate their cultural compatibility before merging, and now they stand on a fault line researchers call tightness versus looseness (2). The companies could have researched each other culture before the acquisition to identify areas of opportunities to compromise. They also could have outlined the changes and made sure everyone in both organizations understood the changes to help team members embrace the upcoming changes.
- Jack Welch. The Six Deadly Sins of Mergers & Acquisitions (Listen Up Linkedin and Microsoft!). Retrieved from: https://jackwelch.strayer.edu/winning/mergers-and-acquistions-six-deadly-sins/
- Michele Gelfand, Sarah Gordon, Chengguang Li, Virginia Choi, and Piotr Prokopowicz. Harvard Business Review. One Reason Mergers Fail: The Two Cultures Aren’t Compatible. Retrieved from: One Reason Mergers Fail: The Two Cultures Aren’t Compatible (hbr.org)
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