Strong leadership is crucial for the success of takeovers and mergers as it motivates and inspires staff to work towards the firm’s goals and objectives. This can be seen in the example of Kellogg’s acquisition.
One of the main factors that contributed to the success of Kellogg’s several acquisitions was the leadership skills of CEO John A. Bryant. In 2001, he directly managed the planning and execution teams responsible for integrating Keebler Food Company, resulting in successful takeovers both in the short and long term. Through this integration, Bryant created numerous synergies, including a revenue synergy of nearly $4 billion. Kellogg’s success can be attributed to its democratic leadership approach, as the company engages in discussions with its employees before implementing communication programs to empower the workforce.
The organization values its employees and rewards them for their performance, which fosters a highly motivated workforce and increases productivity. Furthermore, this approach encourages collaboration among employees and cultivates the culture of Keeble Food Company, leading to synergistic outcomes. This was demonstrated in the acquisition of Pringle’s by Kellogg’s. Initially, Procter & Gamble planned to sell Pringle’s to Diamond’s but faced account-related complications that resulted in the deal collapsing. Kellogg’s promptly capitalized on this situation and extended an offer to acquire the American company.
The rapid reaction of Kellogg’s CEO to the huge opportunity for external growth in the merger showed excellent leadership skills. John A Bryant took risks to make his company bigger and more dominant, successfully integrating Pringle’s after its purchase in 2012 for $2.7 billion. In the long term, the takeover is expected to result in cost synergies of 50 to 75 million. Chris Gent, CEO of Vodaphone, also demonstrated great leadership skills in the successful Mannesman’s takeover in 1999.
The acquisition of Orange, a UK firm, by a German company has created direct competition for Vodaphone. Chris Gent, however, believes that this violates their agreement to not encroach on each other’s market. Despite opposition from the German public and government, Chris Gent is determined to acquire Mannesman. The European Commission will closely examine the deal for any potential monopolistic implications.
The German firm eventually agreed to an offer of £112 billion, demonstrating Chris Gent’s significant influence on the Mannesmann board’s decision and highlighting the importance of leadership skills in successfully orchestrating a takeover or merger. In contrast, Randall Stephenson, the CEO of AT&T, displayed poor leadership abilities during the failed deal with Deutsche Telecom for T-Mobile, which was attributed to high prices, limited options, and a decreased likelihood of new product development.
However, the CEO should have displayed more persistence as there were genuine concerns about his leadership. Leadership skills are crucial for effectively leading a company, but various external and internal factors, such as time constraints for decision-making and the economic environment, can determine the most suitable approach in one situation while being inappropriate in another. Moreover, factors other than leadership also impact the success of takeovers and mergers, including the type of integration involved in the merger or takeover.
In 2012, Google acquired Motorola, which serves as a significant example of the merging of telecom and multimedia industries. This acquisition demonstrates the integration of companies within this industry and involves the convergence of customer and business interests. It also provides Google with access to Motorola’s intellectual property, especially their patents. Through this acquisition, Google not only expects future income generation but also gains a foundation for developing new products by incorporating Motorola’s handsets into their Android operating system.
The takeover’s success will be impacted by the two firms belonging to the same industry. This allows for smoother integration and time-saving in the short term. Moreover, Google can leverage Motorola’s technology to boost competitiveness and introduce new products in the market. This aligns with product development according to the Boston Matrix, leading to external growth and long-term revenue synergies for the company.
The success of takeovers and mergers is influenced by various factors. One factor is exemplified by Microsoft’s partnership with Nokia, which involves using Microsoft’s operating system on Nokia handsets. This move aims to enhance competitiveness, improve products, and increase revenue. Additionally, the success of these business combinations also depends on the alignment of visions, objectives, and culture between both companies. When both firms achieve their short-term objectives and experience growth based on a shared vision, it positively impacts the success of mergers and takeovers.
The main objectives of Kellogg’s were to establish a snacks platform that spans the globe and to concentrate on the Asian market in order to boost their revenue in that region, since cereals are not very popular there. With Pringle’s global presence, they have the potential to become the second largest brand in the worldwide savory snacks category. Moreover, in the United States, Pringle’s will offer Kellogg’s a strong new source of growth that complements their already successful position in the snacks category. The shared culture, vision, and heritage of both companies have enabled their employees to collaborate and ensure a smooth transition in the short-term while also creating long-term synergies.
Leadership is a vital factor in the success of takeovers and mergers. In my opinion, this holds particularly true in the short-term. The mentioned examples illustrate that strong leadership skills are especially crucial during the negotiation phase of mergers and takeovers. For example, in Vodafone’s case, Chris Gent’s persuasive abilities played a pivotal role in the company’s successful takeover of Manneslan in 1999 and its subsequent external growth. However, leadership is also indispensable at all times as it provides guidance, inspiration, and sets an example for other staff members. This enables them to perform at their best and make sound management decisions.
The leadership style differs based on different factors and should be adjusted to fit the challenges faced by various companies. Moreover, there are other elements that affect the long-term success of takeovers and mergers, including integration type, alignment of visions, objectives, and culture. Maintaining consistent integration streamlines transactions and promotes enhanced product development for firms, resulting in revenue synergy.
In order to facilitate the regroupment of the two workforces and improve motivation and productivity, it is important for the firm to have shared visions, objectives, and cultures. The success of mergers and takeovers depends on the timely consideration of important factors, such as strengths and threats identified in a SWOT analysis, before proceeding with the deal.
