CRITICAL SUCCESS FACTORS IN DELIVERING PLANNED VALUE FROM MERGERS

TRENDS

The corporate world or the world economy, which consists of different marketing fields or business world is never stabilised. Even big companies in the different parts of the world confront the ups and downs that come their way. Hence there should be a market driver which will enhance the disaster market trend. ‘Mergers’ of the companies are one of the strategies to overcome such difficulties. This strategy of advancement does not affect the consumers so the market value but has profound impact on the economy of the certain countries. However the ‘mergers’ may take place in national and international level and delivers the value in the economy world.

There may be an approach of determining the needs of the organisation rather than that of individuals, commonly known as Critical Success Factors (CSF). Such means of approaches are productive and appropriate while enabling the identification of types of information that may help the different firms to attain an added advantage to overpower the rest, in the ever competitive world of corporate marketing.


HISTORICAL OVERVIEWS

For determining the information needs of managers, Daniel in 1961 proposed the idea of Critical Success Factor. However it was popularized by Rockart in 1969. In this idea if objectives associated with the factors are not achieved, the organisation will fall catastrophically. Hence few of the issues would prove very significant in the overall growth of the organization. The methodology has been basically incorporated in the Universities of UK (Greene et al., 1996). It was also applied as a component of a strategic information management (SIM) approach put forth by Wilson (1994)

CSF was combined with the chain concept made by Porter in 1985 in order to audit information. The primary purpose was to test the idea that the information intensive areas of an organisation could be identified within the value chain by using the Critical Success Factor technique to indicate the critical areas and, thereby, enable the identification of the requirements of the corporate sector.

New product development, effective advertisement of the product, product distribution comes under this category.

Highly qualitative open-ended interviews were conducted for identifying significant domains pertaining to the information needs as well as usage of information systems. Grounded theory (Strauss & Corbin, 1990, Glaser & Strauss 1967) had been implemented for the definition of CSF’s in Finnish as well as UK studies.
COMMON PROBLEMS AND ISSUES

Critical Success Factors in delivering planned value from mergers can be difficult and challenging failure. The mergers using critical success factors apply the SIM methodology which is quite slow and time consuming. Generally the entire process was carried out in 3 phases and in all 3 phases, the first phase is the most difficult to conduct. The main problems related to interpretation were most severe for the analysis process of the interviews carried out in the pharmaceutical lab. These problems also slow down the process in the education sector simultaneously to the economic market. The failures may be during the implementation process or during the running of the new mergers entity. These potential failures may be affected by many factors like legal issues, implementation problems, financial failures, people failures, risk management, negotiations failure and planned strategic objectives failure. The intercultural synergy is also responsible for problems in mergers.
Although few of the problems can be solved with the help of a merger, there may be other complications involved as well. Taking an example of satellite radio operation based firms. For the receivers of both the companies, there could be compatibility issues, and other hidden concerns associated with the merger that may not be so apparent.

Actually ever since merger is made, there are always plenty of people expressing their views over its aftermaths.

Mergers may be defined as the amalgamation of the companies or combination of two different companies into a large company. For the growth of the industries and business and business strategies mergers may be defined as a successful method. Stocks swap or cash payment to the target is a prime factor of it. The mergers may be classified as follows-

Horizontal Mergers: In horizontal mergers the companies are selling the same product in the same market and so are competitors to each other. Here to competing companies conjoin to form a single large company. It has tremendous influence on the market from creating monopoly to escalating prices of the commodity.

Vertical mergers: Vertical mergers are the mergers between the distributor company of the supplies and the supplier. It is highly beneficial to the company because the distributor will no more have to pay for the manufacturing of the supplies and it gets the product at the company price. Hence these types of mergers have good cost saving.

Conglomeration: In Conglomeration merger, there is nothing common to sell for the concerned companies, so there could be lot of compatibility issues involved while dealing with the customer after the merger.

Market Extension: In market extension merger, companies sell same products but in different markets. Since they now act as one Soul Company this merger enhances the market as well as the new possibilities that could evolve in due course.

Product Extension: In product extension merger an eminent company makes a part and another makes other part of a same product. So the companies involved here wholly make a complete product and send to the market. This promotes the sale of both the companies significantly.

The entire business set up can be changed by mergers and acquisitions and the planned value can be delivered to the Market economy. Due to certain changes in the market, the employees of the organisations may be demoralised and business is affected. So there is a necessity of handling properly to the whole process of mergers. However in this way everyone from employees to the management is affected. The world trade commission and federal trade commission etc. approves the above all mergers.

BENEFITS

There are various benefits of mergers. There is a good outlay saving, because companies after merge decrease the staff by keeping only the skilled people. So they may work with a single MD, CEO etc. The merging companies jointly rule the market by maintaining healthy relation among them. Hence the competition in the market is reduced. When a company is not performing well after merging it enhances its potential. Both mergers get stronger and are able to provide more options down the line. Mergers prevent a certain company to be the largest and monopoly inhibiting competition in the market place.

Internal inconsistencies can be overcome by the mergers. Balancing the financial and economic world becomes easier. The purchasing power of the company increases substantially as a consequence of the merger.

EXAMPLES

There are various examples of mergers who have used CSF in delivering planned values. Qwest Communications International Inc. and MCI Inc., Sony and Ericsson, Sirius and XM, Microsoft and Yahoo, Verizon Wireless and Alltel, Daimle-Benz and Chrysler known as merger of equals are some examples of the merged companies.

ASPECTS OF IDEAL SOLUTION

There are various problems in mergers. Hence to look for an ideal solution, there should be certain concepts like-
Market Widening: Addition of niche markets and elaboration in the geographic span of operations contributes towards the growth of the organizations.

Political necessity: it informs the different legal requirements in a particular countries e.g. in SA companies have to adhere to the regulations of Black Economic Empowerment., Access to resources, manage risks, listing potential, Additional products, Increased efficiencies, Realising shareholders value, Services and facilities and Speculative possibilities. It can be of great benefit to the mid practice owners and they should be cognizant.

SPECIFIC SOLUTIONS

The primary elements that contribute to the success of a merger include materialised synergies as well as increment in the value of the shareholders.

However by working within a predefined methodology, proper planning and managing the whole merge and by acquisition as a project the specific solutions to the problems in economy world can be solved.

CONCLUSION

The case studies presented here provide an affirmation to the importance of the Critical Success Factors methodology to identify organizational objectives irrespective of the fact whether these are pre-defined or otherwise, as well as in clubbing the informational needs of the personnel in different aspects to the specific objectives. So it is proposed that the CSF methodology must be incorporated duly as an asset to determine the Strategic Information Management requirements of the organization as well as other aspects.

As a mater of fact, out of the available ways of enhancing the growth rate of the organization, a merger is one of the best options. But before proceeding with the decision of a merger or a new acquisition all the minute details of the possible consequences must be taken into account. Despite all the complications involved, as a whole merger is always beneficial to the growth of the organization.


REFERENCES:

 Buchanan, S. & Gibb, F. (1998). The information audit: An integrated approach. International Journal of Information Management, 18(1): 29-47.
 Burt, R.S. & Minor, M.J. (1983). (Eds.) Applied network analysis. A methodological introduction. London, Thousand Oaks, CA: Sage publications.
 Auster, E. & Choo, C.W. (1994). How senior managers acquire and use information in environmental scanning. Information Processing & Management, 30(5): 607-618.
 Bergeron, F. & Begin, C. (1989). The use of critical success factors in reviewuation of information systems. A case study. Journal of Management Information Systems, 5 (4), 111-124.
 Granovetter, M.S. (1973). The strength of weak ties. American Journal of Sociology 78: 1360-1380.
 Glaser, B. & Strauss, A.L. (1967). The discovery of grounded theory. Chicago: Aldine.
 Borgatti, S.P., Everett, M.G. & Freeman, L.C. (1996). UCINET IV Version 1.64. Natic, MA, USA: Analytic Technologies.
 Boynton, A.C. & Zmud, R.W. (1984). An assessment of critical success factors. Sloan Management Review, 25 (4), 17-27.
 Dimond, G. (1996). The reviewuation of information systems: a protocol for assembling information auditing packages. International Journal of Information Management, 1996, 16(5): 353-368.
 Eisenhardt, K. (1989). Building theories from case study research. Academy of Management Review, 14 (4), 532-550.
 Huotari, M-L (1997). Information Management and Competitive Advantage. The Case of Finnish Publishing Company. Tampere: Univ. of Tampere, Dept. of Information Studies: Finnish Information Studies 7.
 Huotari, M.-L. (1998a). Social networks as a basis for designing effective information systems. In Khosrowpour, M. (Ed.). Effective Utilization and Management of Emerging Information Technology (pp. 704-710). Hersey: Idea Group Publishing.
 Huotari, M.-L. (1998b). Human resource management and information management as a basis for managing knowledge. A synthesis of three case studies. Swedish Library Research, 1998; 3-4: 53-71.
 Huotari, M.-L. (1999). Social network analysis as a tool to reviewuate IM in the public sector: A pilot study at the University of Tampere. In Wilson T.D. & Allen, D. (Eds.) Exploring the contexts of information behaviour (pp. 568-585). London: Taylor Graham. \ Strauss, A. & Corbin, J. (1990). Basics of qualitative research. Grounded theory procedures and techniques. London, Thousand Oaks, CA: Sage Publications.
 Wilson, T.D. (1994a). Information needs and uses: fifty years of progress? In Vickery, B. (Ed.) Fifty years of information progress. London: Aslib.
 Leidecker, J.K. & Bruno, A.V. (1984). Identifying and using critical success factors. Long Range Planning, 17 (1), 23-32.
 Lucas, W. (1998). Effects of e-mail on organization. European Management Journal, 16(1): 18-30.
 McKinnon, S.M. & Bruns, W.J. (1992). The Information mosaic. Boston, MA: HBS Press.
 Porter, M.E. & Millar, V.E. (1985). How information gives you competitive advantage. Harvard Business Review, 85(4): 149-160.
 Rockart, J.F. (1979). Chief executives define their own data needs. Harvard Business Review, 57 (2), 238-241.
 Wasserman, S. & Faust, K. (1994). Social Network Analysis: Methods and Applications. Cambridge: Cambridge University Press.
 Wilson, T.D. (1989). Towards an information management curriculum. Journal of Information Sciences, 15, 203-209.
 Goldsmith, N. (1991). Linking IT planning to business strategy. Long Range Planning, 24(6): 67-77.
 Hewins, E.T. (1990). Information need and use studies. Annual Review of Information Science and Technology (ARIST), 25, 145-172.