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Mergers and Acquisitions

The document discusses the integration process between Lenovo and IBM following Lenovo's 2004 acquisition of IBM's personal computer business. It outlines the four main stages of the integration: [1] separation, [2] assimilation, [3] integration, and [4] transformation. The acquisition faced challenges due to the different cultures and ideologies between the Chinese company Lenovo and American company IBM. HR played an important role in managing the cultural integration and changes for employees during the acquisition.

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manmeet kaur
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70 views

Mergers and Acquisitions

The document discusses the integration process between Lenovo and IBM following Lenovo's 2004 acquisition of IBM's personal computer business. It outlines the four main stages of the integration: [1] separation, [2] assimilation, [3] integration, and [4] transformation. The acquisition faced challenges due to the different cultures and ideologies between the Chinese company Lenovo and American company IBM. HR played an important role in managing the cultural integration and changes for employees during the acquisition.

Uploaded by

manmeet kaur
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Mergers and

Acquisitions
HRM 2020
Pearl Malhotra
What are the major tenets of the case?
• PC industry not doing well (IBM wanted to sell)/ PC division was not strategic
• Lenovo – Asian market - they wanted to expand globally
• Respect, sincerity and compromise!
• 2004 went ahead with acquisition (6-10 years to integrate)
• Lenovo dynamic/ IBM (ties) – two different ideologies
• Team for Integration
Let’s
Stage 1 – separation
chalk out the journey
Stage 2 - assimilation
- continued to act as strangers / two different entities - Take charge
- Integration team that was set up (after-thought – - replaced the CEO / Amelio
realisation that we are very different) - Dynamic CEO
- Compromise - Frequent meetings/ night teleconferences/ English
- Finally the employees were considered as stakeholders language
- US managers (Ward)/ benevolent acquirer -Western Culture
- new for Lenovo
- 2007/08 (confusion, staff departures)

Stage 3 (Integration) Stage 4


- “thinking” - Liu’s speech
- revise our strategy - 4 Ps
- culture cocktail strategy - Real growth (Top most player)
- did not deny IBM their culture/ did not let Lenovo way - thought-process - Chinese
also die - practices - systems - policies - processes (new
- Mutual understanding amalgamated culture)
- senior management team (US / Chinese )
- Hired / insti – department of cultural integration
Old employees – Lenovo
Layoffs
Restructuring
Let’s chalk out the journey
Stage 1 (EXPLORATION) Stage 2 (COLLISION)
- Raise guiding principles (sincerity, respect - Amelio!
compromise) - Increased frequency of touchpoints (meetings)
- Exploring each others’ cultures - use of English language
- Separation of culture - Adoption of one culture over another
- Business Transformation team was created (assimilation)
- Ward era (refused lay-offs & integration) - “Multinational work culture” (Conflicts, denial,
language barrier)
- Top 500
- 2007
Stage 3 (INTEGRATION) Stage 4 (Transformation)
- Culture cocktail - Liu and the 4 Ps (plan, perform, prioritise,
- Director of Cultural Integration practice)
- No. of online and offline activities - Lay-offs and rehires
- Understanding reasons for differences and - Fupan (review, revise and continue)
coming up with mutual solutions - New amalgamated culture emerged that relied
- Non-threatening meetings on strengths rather than diminishing weaknesses
- too much of a compromise?
It all boils down to
• How much do you value the other culture?
• How much do you value the preservation of your own culture?

Integration Assimilation

(Both high) (Value your own culture more -Acquirer)


Examples: HP-Compaq, Adidas-Reebok, Infosys-McCamish, Atos-Syntel, Air
Lenovo-IBM India-Indian Airlines

Separation Deculturation

(Value your own cultures more - (No culture is valued)


acquired) Daimler-Chrysler
Mindtree –LTI (New culture not built on mutual shared
values)
The different roles!
Stakeholders Roles

Senior managers Acquired! Integration / loss of morale / laid-off/ leaving the organisation

BoD Long-term vision/ Strategic Fit/ quick inorganic growth/ potential


(shareholders!) acquirer – stocks fall/ acquired co.’s stocks - rise

Executives/ CEO/ top Economies of scale, matching of synergies, complementarity , grow (who is
management the top leadership)
leadership
HR (Union) No role ! – 90% (pre-merger)/ due diligence
The role of HR!

Source: Brueller , Carmeli & Markman (2016) – Journal of Management


At the end of the day!
Administrative Expert Employee Champion Change Agent Strategic partner

Absorption - Creating common None - Impose acquirer’s - Create Downsizing


employee databases, culture on the strategies
aligning employee processes acquired company’s - Finding
employees redundancies
Preservation - Creating common - Offering help for - Management of - Create a Transition/
employee databases, post-termination morale and post acculturation team
aligning employee processes guidance merger cultural
- Bringing in equity in R&Rs - Maintain morale of integration
and compensation strategies existing employees

Symbiosis - Create a new system (if - Offering help for - Be involved across Be there on the Board
required) to bring in true post-termination stages of the merger. Table and be a part of
integration. help/ guidance the due diligence
- Employees from both the - Maintain morale of process.
firms should be able to existing employees Have an acculturation
transition freely into new - Create opportunities strategy along with
employee systems for alliances, synergies the ‘business’ merger
etc.
So what should Lenovo do now (new
acquisition)?
Follow the old “integration”
(acculturation has already happened?) Come up with a new strategy
• Go through slow yet deliberate stages of a • (Yes, possibly)
merger.
• Important to use the findings of the
• Start with the philosophy of “separation” to Acculturation Team/ Cultural
allow time Transformation team
• Let IBM ex-managers control decision- • Already a strike (This should be the first
making & culture priority)
• Look for alignments and complementarities • Considering Lenovo is used to the IBM way
– this should come at an advantage
• Use a change management process (role of
HR) to bring in the change from separated
to integrated identities

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