A-summary of the case
Deficit in water supply in USA and Canada
USA facing drought conditions in 2003
Environmental authorities concern over Water Conservation
Proposed “pricing” as a means to stimulate conservation
Estimated Price elasticity of demand for water :
Households: -0.2 to -0.4
Business Users: -0.5 to -0.8
B-Justification of the problem
1-one critical reason for failure in mergers and acquisitions is poor
planning and manage integration. Further underestimating the
challenges involved in blending corporate cultures
2-Bringing more bureaucracy and decision making at the top
was harmful for the success of the business
This causes the employees to lose enthusiasm about their
work and their organization, and a drop in morale and
organizational pride follows the merger. Countless hours are
spent feeding the rumor mill, and large numbers of people
adopt a wait-and-see attitude. Results usually suffer and
customers are lost
3- Fear of the unknown
The employees of both companies are not aware of the
changes at the beginning. They can feel threatened by the
combination.
They do not have the feeling the opportunity of growth and
development is threatened. The employees prefer to have a
secure future and any changes within their workplace are desired
to be known beforehand. Psychologically it is quite difficult to
accept even minor changes, mergers and acquisitions are almost
often treated as “hard times”, and, of course, the secrecy has
caused negative effect in the acceptance of the deal among the
employees
The consequences of not dealing effectively with cultural
integration issues can be devastating.
4-Key human problem areas
**Loss of key people
If not handled right, the wrong people will leave and the
venture can be jeopardized.
**Judgment versus respect for differences
There is a tendency for each group to be judgmental about
the way things are handled by the other. Rather than
respecting and building on differences, people frequently
enter into right and wrong judgments.
C-List of alternatives
1- Developing a precise transition plan
Educating the companies on the modern concepts of
strategic planning in the Mergers and Acquisition process.
2- Retain key leaders.
It's essential to identify those people critical to continued
success and initiate a plan to ensure that these key people
stay and remain engaged and aligned.
3-It might be beneficial to leave the merged company’s culture
and way of doing business “as is” for a certain time. If the
changes are to take place, the employees of both companies
should feel they are one team and they both should learn new
rules of behavior and gain common experience in the corporate
culture
D-Evaluation of alternatives
1- Developing a precise transition plan
**A) Create an integration plan. Do due diligence on the
cultures both before and after as systematically as you do on
the numbers, and create a specific cultural integration plan
led by the CEO and senior team, not just delegated to an HR
team.
**B) Communicate the vision.
The process of creating a vision, mission, and shared values
creates excitement, inspiration and commitment with all
people working for a new future goal as opposed to living in
the past
**C) Address the new organizational structure as early as
possible.
**D) Be clear about the nature of the union and be willing to
talk about.
Treating the employees as valuable corporate capital instead of
just incidental appendages to a business deal. Accepting and
appreciating employee abilities and their cultural values of is very
necessary to gain their trust and commitment. Also keeping the
employees informed about the changes that are going to happen
will build their confidence towards the company.
2-Retain key leaders
Make sure the company’s leaders communicates in person
as much as possible Successful mergers only happen when
senior managers make themselves visible and accessible to
all employees affected by the merger and promote the
benefits at all levels. Employees at all levels need to experi-
ence the buy-in and support of their leaders for the merger or
acquisition
When merging, it is very important to make sure employees know
their job is secure, and they will not suffer. It is often better to
emphasize nothing will change or that the changes will be minor,
and will not worsen the course of business life.
*Recommendations
I believe that alternative no 1 and 2 must be done together to
create
***a new combined entity, and ensures inspiration and alignment
of people around vision, mission, and shared values
***a sense of community is created sooner since shared vision
and values link individuals to the organization and bind people
together.