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Organizational Issues of Mergers and Acquisitions – Part 4

Trademark Infringement

Key Principles

Successful mergers and acquisitions are not particularly rare, but the degree of success as (measured by productivity) can be enhanced by adhering to a few elementary principles. The core organization must have a solid foundation, and at the same time be flexible enough to deal with the myriad of changes that will come about as the result of merging multiple functional business units into one. It is primarily the responsibility of executive management to foster an atmosphere of cooperation and communication between the diverse departmental management teams, and even within those groups. It is also essential to structure the organization along lines that will facilitate communication and teamwork, so that the enterprise functions as a cohesive unit when viewed from a high level. Last, but not least, the organization must overcome the natural fear of change and be open to the concept of constant modifications to process, procedure, policy, and practice.

In reality, even corporations that have never engaged in a merger or acquisition, nor have any plans to do so, would be well advised to adopt this type of philosophy to gain a competitive edge in the marketplace. Success often results in complacency, and the inability or unwillingness to recognize the need for change.

To understand why success breeds failure, it is necessary to look at how organisations use their success. Success is a learning experience for organisations: it reinforces behaviours which they must practice to succeed. Correspondingly, organisations “programme” themselves around their successful strategies and processes so that they can consistently replicate their success experiences. One way in which this programming takes place, is at the informal cultural level. Corporate success produces strong cultural norms, based on the belief in the correctness of one’s actions. Such strong cultures, however, are also resistant to change, and reduce the flexibility of organisational responses. (Shukla, 1994, p. 1).

Communication and Organization

Communication sounds like an easy task to accomplish – there are numerous technologies in place in any organization that serve as platforms to exchange information and ideas: e-mail, phones, voicemail, inter-office mail, on-line request and approval for routine business needs, etc. What large corporations tend to forget is that effective communication requires that the flow of information is at the very least bi-directional. Input from one source should always result in some type of feedback, even if it is only acknowledgement that the information has been received. The inherent danger of implementing a communications model built along those lines is the probability of information overload. Individuals and groups within an enterprise must learn to gauge the value of information and refrain from overloading the system with redundant or irrelevant data.

“The major fallacies of communication are the assumptions that 1) meanings exist in information or message displays, and 2) meanings can be transferred from one person to another. In reality, information and displays can only be presented or delivered to people; the recipients must make sense out of the displays.” (Pace & Faules, 1994, p. 20).

To facilitate communications between individuals or groups, the ideas presented must be clear and concise, and avoid ambiguities. The following is an outline of rules to follow when utilizing the various communications methodologies that exist in a corporate setting:

1. E-mail – always include the actual topic of the correspondence in the subject header of the e-mail. If there are numerous subjects addressed, include two or three of the most important items, and indicate that there are additional issues included. Indicate in the body of the e-mail if there is a response required.

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2. Voicemail – announce the subject of the information to be presented at the beginning of the message. Be brief, state your preferred method of response if one is required, an acceptable timeframe for any response, and the phone number where you can be reached if there are questions or concerns related to your message.

3. Inter-office mail – although primarily replaced by e-mail, there are still times when it is necessary to send hardcopy documents to other individuals or departments within an organization. Include a note with the documentation with some explanation as to why it has been sent – don’t expect someone to automatically correlate an e-mail that was received several days ago with an envelope that was left on their desk today.

4. On-line forums – in the fast-paced world of business, there is not always time to have meetings to resolve issues, or address questions and concerns related to mundane operational matters. Corporate intranets are an ideal way to communicate between and within functional groups, especially when there are geographic boundaries to consider. Bulletin boards and on-line forums can be created as a means of discussion that will minimize the impact of differing schedules and the availability of the interested parties.

5. Voice and video conferencing; data collaboration – there will always be situations in which real-time interaction is the most effective method of communication. Most enterprises have the technology in place to accomplish this methodology across geographic boundaries.
Having a variety of technologies at one’s disposal is not a guarantee of effective communication. It is vitally important that what is stated actually means something, and that the recipients can understand that meaning.

MERRILL LYNCH: “When we became aware of a potential problem, we investigated and have taken steps as part of our continuing efforts to prevent problems.”

A Merrill spokesman commenting on the fact that its former chief energy trader is being investigated for $43 million of alleged fraud activity, as reported by the FT’s Gary Silverman. The Babbler likes the soothing sound of a company taking those first gentle steps in tiptoeing away from one of its people – Aug 13, 200312:21 PM EDT.

RESEARCH IN MOTION: “We are obviously pleased with today’s ruling and believe that the District Court’s decision to stay the injunction is especially appropriate given the frequency of successful appeals at the appellate level as well as the specific merits of RIM’s appeal and the impending reexamination of the disputed patents by the U.S. Patent and Trademark Office.”

Lead counsel Henry Bunsow commenting in a press release on a U.S. federal judge’s decision to order the company to cease production of its Blackberry device and pay $53 million in damages for trademark infringement. The Babbler is still trying to understand why they would be pleased, much less how that pleasure is supposed to be obvious. – Aug 8, 20036:15 PM EDT. (author’s note: I am also curious as to where else in our judicial system, other than at the appellate level, that appeals would be heard).

AT&T; I: “To claim that everyone in the industry engages in efforts to lower their access costs is a true statement. That, however, is not the issue we are disputing with MCI. MCI has not simply been shopping around for the best deal. Instead, they have concocted an elaborate scheme, shipping voice traffic originating with their customers and routing it through three companies, across an international border and onto the AT&T; network, for completion to high-cost areas in the U.S. In doing so, they have not simply lowered their costs. They have avoided them altogether. They have committed a fraud upon the shareholders of AT&T; by tricking a competitor into paying a cost that is rightly theirs.”

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Spokeswoman Claudia Jones commenting on MCI’s that its alleged “call laundering” was actually normal industry activity, as reported by the NYT’s Stephen Labaton. The Babbler found it worth wading through 104 words to find out the violation was “tricking a competitor.” – Aug 6, 20031:53 PM EDT. (2003, p. 1-3)

The preceding examples illustrate how attempts at communication can fail to actually convey any discernible meaning. Corporate communications should be clear and concise, and adhere to the following general principles:

1. Avoid using “buzz” words and phrases – this is particularly important in organizations that are geographically widespread, as regional dialects differ within a common language, which in fact may not be the primary language of all the recipients.

2. Always state the main subject of the communication, referencing previous communications when applicable. This will avoid any misunderstanding that could result from similar situations being discussed in regard to multiple areas of concern. If the communication is general in nature and addresses multiple areas of concern, say so.

3. Request some feedback from the recipients that will gauge whether the communication was effective – this will ensure that tactical and strategic planning will continue to proceed in the intended direction.

Establishing good communications practices is only the first step – to whom those communications should be addressed also requires careful consideration. Organizational structure and communications conduits should be constructed so as to be complementary; keeping in mind at all times the interdependencies of functional business units as well as the strategic and tactical goals of the corporation. Because procedural changes typically have a ripple effect on the organization, it is wise to consider a non-traditional structure to deal with potential communications dilemmas.

Matrix management is a descriptive term for the management environment where projects cut across organizational boundaries and involve staff who are required to report to their own line manager as well as to the project manager. This is not a radical departure from traditional hierarchical management; in fact the traditional vertical management structure is still in place but is enhanced by temporary horizontal structures representing each project.” (“Project management”, n.d., p. 1)

Impact Evaluation and Review Cycle

Building an organization that meets current business needs is an important first step towards creating a corporate structure that will stand the test of time. It is, however, only the beginning of the journey. No policy, no procedure, no business model is so perfect that it will be viable for all eternity. Corporations that want to continue to build shareholder value must engage in a constant cycle of review; examining how the corporate culture and its related business practices address existing needs, both internal and external. There are a number of key areas that should be scrutinized regularly to ensure that the organization has not become complacent.

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Impact evaluations should be conducted from the outside in, from the inside out, and from a wholly internal perspective. Consider the following questions:

  • Does a particular change in the external (market) environment really signal a need for an internal change? Expending organizational resources to jump on a bandwagon that is destined for a short trip quite often proves to be unprofitable.

 

  • Does a change in process and procedure address all the areas that will be affected? Taking a long, hard look at business unit functionality from the top down, from the bottom up, and from all sides will help to ensure that new and exciting problems are not created by focusing on a single aspect of a current or impending issue.

 

  • Is the organization structured in a manner that facilitates communication? The purpose of a corporation is not to manufacture widgets, provide information, or fix problems. The goal of every corporation is to generate profit, and each individual and group within the enterprise should be as effective as possible in attaining that objective. Lack of communication can be an overwhelming obstacle to profitability; proper organizational structure is an absolute necessity for successful communication.

 

  • Is the organization invested in the concept of education? Nothing is quite as frustrating to the workforce as being expected to execute new processes and procedures, or implement new technologies without advance notice and proper instruction. Too often, individuals and groups within the organization find out about changes to process and procedure when the old methods fail to achieve the expected results.
  • Is the corporate culture amenable to objective evaluation? While internal perspectives are vital to effective management of the organization, they are, by their very nature, subjective viewpoints. Inviting outside management consultants to periodically assess the operational efficiency of the enterprise will prove to be of tremendous value to the corporation.

The merging of two large organizations into one presents a number of daunting challenges. Understanding and applying the principles of change management is vitally important in this scenario. There exist interdependencies between the areas of concern discussed that will drive all related undertakings and determine the level of success or ultimate failure of the endeavor. The purpose of this series of articles has been an exploration of these key topics; hopefully one that will provide insight to management teams that can lead to greater achievements. They are faced with the difficult assignment of making the whole greater than the sum of the parts.

Change management should never be considered a corporate objective, but viewed as an integral part of the vehicle that will carry an enterprise on the road to success. Following these guidelines, and adapting them to the specific situation at hand will help to ensure a safe journey.

References:

Shukla, M. (1994). Why organisations fail to learn. Retrieved September 5, 2004, from http://www.geocities.com/madhukar_shukla/corpfailures.html

Pace, W. R., & Faules, D. F. (1994). Organizational communication (3rd ed.). Englewood Cliffs, NJ: Prentic-Hall.

Project management training – The matrix management approach. (n.d.). Retrieved September 4, 2004, from http://www.project-management-training-online.com/Project%20Management%20Training%203.htm

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