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The merger between two of Australia’s wine companies, Southcorp and Rosemount, is evaluated in the case study written by Rice and Galvin (2005). In the case study, the respective histories for the two companies, the problem that emerged in the merger, and the potential benefits are discussed. Despite the potential advantages identified for the merger, the problems serve as important points that need to be addressed because of the insights that these experiences have in relation to successful operations and mergers for both companies and for the other parties who are expecting or undergoing a process of merger or acquisition. Difficulties are usually associated with the course of merger, which is considered to be an affair that is not oftentimes simple and problematic (Barzel, 2002; Hopt, 1982). Based on the experience of the two companies, problems with merger between two domestic companies prove to be problematic because of the changes made to staffing patterns, information management systems, and the relationship with external entities. In addition to the factors mentioned, problems related to the cost of the merger also arise, especially when the financial condition of the company is evaluated.
The report will address the problems related to the staffing, information management systems, cost of merger, and relationship with external entities that arise during mergers. The report will show the experience of Southcorp and Rosemount as a springboard for research that will identify the difficulties associated with mergers based on the three factors mentioned above. Thus, the research goals, which will guide the report, is bound by both theoretical and practical studies done in relation to the factors of staffing, information management system, and relationship with external entities as it relates to Southcorp and Rosemount. The importance of addressing the issue lies mainly on providing the companies involved with additional knowledge and perspectives that can be used to make amendments in line with the merger that the two parties are involved in. Likewise, it sheds light on the need for better management and operational strategies during mergers, which will also serve as a precaution for companies who will engage or are engaged in a merger with a company in the similar industry.
Outline of Major Points
The report focuses on identifying the problems of mergers in relation to the factors of staffing patterns, information management systems, cost of merger, and the relationship with external entities in consideration of the Southcorp’s and Rosemount’s experience. Based on the case study of Rice and Galvin (2005), these factors prove to have both internal and external relationships with the merger process and are found as post-merger variables that determine the success or failure of the cooperation. From the experience of the two companies, these serve as important and critical factors that should be considered when making decisions related to merger. In relation to this, these factors also play an important role in the determination of management and operation decisions after the merger has occurred. Under each of the said factors are other relatively significant elements. For example, staffing issues include the organizational culture of each of the companies.
Mergers are usually considered as complicated processes that gives the notion that there are several factors that affects the process (Hopt, 1982). Nonetheless, its complex nature is not considered to be problematic or disadvantageous. On the other hand, Barzel (2002) argued that it is a problematic process, which recognizes the presence of issues that need to be resolved and adds to the definition of Hopt (1982).
Barzel, Y. (2002). A theory of the state: Economic rights, legal rights, and the scope of the state. Cambridge, UK: Cambridge University Press.
Hopt, K. (1982). European merger control. Berlin: Walter de Gruyter & Co.
Rice, J. & Galvin, P. (2005). Grape expectations: A case study of the Southcorp-Rosemount merger. The Management Case Study Journal, 5(1), pp. 1-10.