Zappos success from 1999 to 2009 can be attributed to its exceptional customer service. Being an online shoe seller, the company relied on clients orders. However, Zappos struggled with increasing their customer base. In order to fix this issue, management changed its marketing strategy it decided to offer free shipping and free returns, which was an unprecedented practice in the industry at that period (Harnish & Collins, 2021). The success of this strategy was evident in the drastic increase in growth gross revenue from 2000 to 2009 as well as the reputation as one of the most customer-oriented companies (Collier et al., 2018). As a result, the use of free shipping in both customer service and marketing was a successful strategy that ensured its growth.
Discussion
The Service Triangle model will showcase the current strategic positioning of the company. The specific action that ensured Zappos success in external marketing was free shipping and free returns, which significantly increased the companys attractiveness. Interactive marketing was accomplished with the implementation of a user-friendly interface, which facilitated browsing the products. The introduction of a hiring policy directed at people who are a little weird ensured internal marketing, because it attracted psychologically compatible employees (Broadbridge & Fielden, 2018, p. 320). As a result, the Triangle is well-aligned, but the longer the company prioritizes the satisfaction of customers, the less attractive to employees it becomes, thus forming an internal marketing threat.
The Zappos blueprint would likely consist of three foundational elements. The first is customer service, which would encompass website support, which would be expected to be available 24/7 to help customers choose a product, thus constituting the first critical moment of truth. The second element would be a corporate culture that appeals to people with unusual and creative mindsets, thus minimizing turnover of valuable employees. The final element would be the fulfillment process, which would stem from the satisfaction of quick browsing and free shipping, which would be the second critical moment of truth expected by customers.
Acquisition of Amazon by Zappos presented two important challenges for Zappos. First, Amazon is known for its cost-effective deliveries, which are an important component of its profit (Aimovi et al., 2020). Yet, it may come into conflict with Zappos policy of free shipping and free returns. The second challenge would be changing the corporate culture Amazon is a publicly traded company that makes decisions based on data and efficiency. Meanwhile, Zappos was a private company, which made its most important decision to offer free shipping in spite of the data and costs. The most likely way for Zappos to continue the same strategy under Amazons umbrella is to increase the price of products, which will inevitably alienate many customers.
Conclusion
The most evident element of the Zappos website reinforcing its service marketing is a large banner, offering hassle-free returns in a variety of options (Zappos, 2021). They include using a QR code or a box to return a number of goods. The introduction of E-commerce is the logical continuation of Zappos trademark service easy and free returns. As Zappos culture is built around convenient customer service, the use of online communication and QR verification of returned goods aligns with the companys management style. This is also the reason why the company hires employees with unusual personalities they make customers interaction with the company more enjoyable.
Harnish, V., & Collins, J. (2021). The greatest business decisions of all time: How Apple, Ford, IBM, Zappos, and others made radical choices that changed the course of business. Fortune Books.
The Valve Corporation is a video game developer and a digital distributor. A number of computer games created by this enterprise, such as Half-Life, Counter-Strike, and Portal, are some of the most popular video games in the world. The Valve L.L.C. was created in 1996 in Kirkland, WA, by two former Microsoft employees, Mike Harrington and Gabe Newell. In 2003, it moved to Bellevue, WA, and was incorporated; the name of the organization was changed to Valve Corporation.
Since its inception, the company managed to become one of the most well-known video game developers and earn tremendous revenues while retaining relatively small size; it is a medium business, consisting of only a few hundreds of employees. Further, the company became known for the creation of its digital platform for gaming called Steam; today, it unites thousands of users from all around the world and a huge catalog of games.
These days, Valves leaders are focused on a set of new objectives concerning the expansion and development of their business. To be more precise, the company is looking to expand to the new niches of the gaming industry and add the gaming hardware and the supportive software to its line of products. These additions could help Valve strengthen their existing market presence and increase their revenues.
How was Valve able to achieve such success? An attempt to answer this question is made below.
The Challenge
The company, as was stressed, was started in 1996. Its first significant game was released in 1998, which provided the enterprise with the recognition of the gaming public, as well as with a large number of sales. However, it is stated that the organization was still just one of the companies that produce video games, and it was needed to find a business model that would allow it to be different from its rivals and gain a sustainable competitive advantage. In addition, the company needed to address the problem of digital piracy, which posed a considerable threat to the profitability of the business.
There was also another issue. For any company, the organization of the working process is of paramount importance if it is to be efficacious. While it is considered an obvious truth that an enterprise needs to have a hierarchical structure of leaders and subordinates to operate effectively, the creators of Valve decided to utilize a different way to organize the working process of its employees.
As for the organization of the working process, the members of the Valve enterprise disliked the idea of the traditional hierarchy in the company. Thus, it was decided to build a company in which there would be no traditional hierarchy. This turned out to be a highly effective solution for Valve. Instead of establishing a more traditional top-down system of management, supervision, and responsibility, the leaders of Valve, made a risky and challenging decision to embrace the organizational structure without any strict supervision where the empowerment and inspiration are self-enforced by the developers.
The employees handbook of Valve describes the work process in the company as A fearless adventure in knowing what to do when no ones there telling you what to do. This approach may be considered as controversial and highly impractical; however, it has proved effective for Valve. Also, the company structure is called Flatland due to its absence of hierarchy and superiority. Basically, the company operations and interactions are built based on absolute equality, and there is no manager or boss of any kind. The employees are provided with the unlimited freedom of how they want to work and where they are free to move around the company space and choose the most convenient locations for work. The projects on which the workers decide to focus are also of their choice. No one reports to anyone at Valve.
In this way, the company operations are organized in a way as flexible as possible. In other words, the leaders decided to invest in the motivation strategies and the provision of free space for creativity for all the employees in return for cooperation based on inspiration. The workers of Valve are powered by positive motivation. They do not work under the fear of getting fined or fired; they are not pressured to fit into tight schedules and deadlines. Instead, the working process at Valve is free from stress and pressure.
The empowerment comes from positive reinforcement, encouragement, mutual support, collaborative projects, and teamwork. The leaders and employees of Valve believe that being mutually invested in one another and working together on common creative projects is the key to success.
The approach practiced by Valve is cost-effective and helps the company invest its resources is the most efficient manner. To be more precise, the work, the employees of Valve, do on a daily basis is focused on creativity. The leaders are aware that creativity is only possible in a stress and pressure-free environment and a collaborative setting where everyone is interested that motivation and inspiration never end.
In comparison to the non-creative projects that can be speeded up through negative motivation such as a fear of losing the job or money, the creative projects cannot thrive under heavy supervision and tight schedules. This is why the leaders of Valve invested in as much freedom for their employees as possible. The workers are provided with the opportunities to be mobile, flexible, and creative even the furniture in the office space is equipped with wheels so that the workers could move around without being limited.
The Journey
In order to become one of the leaders of the video games market, Valve took a risky step, which would potentially differentiate it from most other computer game developers. Namely, the company decided to create a new digital distribution platform; this platform was named Steam. It was intended that Steam plays the role of a game update interface that would be user-friendly, but another aim of the project was to permit for considerably limiting the online piracy that Valve was suffering from. A significant problem related to this was that customers might have dislikes having to use the online platform in order to play the games; in addition, the whole model was new, and the clients were not accustomed to it.
The Steam platform was initially met with suspicion, for gamers do not usually like the necessity to register online in order to play a game. However, although this step was quite risky, it was hypothesized that the convenience of the platform would win the customers over and that ultimately it would allow the company to win its battle with the online pirates while not losing a significant amount of clients.
In addition, as was mentioned previously, the organizational structure of Valve is quite unusual. To be more precise, the company adopted a horizontal, hierarchy-free structure of its workforce from its very inception. Every worker of the enterprise is free to start their own project if they are able to find colleagues who would also become interested in that project. There are no managers or bosses in the company; the pay for a particular employee is decided by the whole collection and is based upon ones performance. In fact, there is virtually no structure; the company is anarchic. However, this company organization must not be perceived as chaotic and disintegrated.
Interestingly, some of the analysts theorize that Valve should not be a successful company when it comes to the creation of complex and long-term projects that require a lengthy focus and dedicated cooperation of many professionals. Practically, the employees of Valve are expected to abandon their jobs at some point in order to move on with their careers and start their own creative business projects.
However, in reality, this does not occur, on the contrary, the employees at Valve explain that the biggest and most serious projects appear due to the formation of what they call critical mass. In other words, in theory, this phenomenon is recognized as non-leadership, a form of organization that is based on collective engagement. It is possible that Valves free company organization has been successful for such a long time because the company specifically targets only the highest performers and the best professionals in the field.
However, there is an interesting motivational aspect within the organization that may be responsible for the group effectiveness of the teams. To be more precise, the team members working on the same project are asked to rank one anothers performances according to technical skills, teamwork skills, productivity, and other types of contribution these ratings and evaluations serve as the future basis for the payment allocation. This way of work assessment is rather effective because it works as a serious motivational factor and an accurate way to evaluate the talents, performance, and contribution of different employees based on real-time experiences and unbiased characteristics.
Problems and Solutions
In the contemporary world where the industries are known to be driven by the forces of globalization, the best option for the companies and businesses to multiply their revenues is to expand. Since Steam is the platform that is based online, the expansion in terms of geography is not a challenging task. Steam can go wherever there is the internet regardless of the countries and cultures. The other type of business expansion that Steam is more interested in is the expansion of the industry niche the company occupies currently.
In other words, the businesss ultimate goal is to expand its line of products and services provided so that they could attract and retain as many consumers as possible. In a way, this strategy could be compared to the creation of a so-called business ecosystem where one company takes over as many roles and tasks as possible. A good example of this type of business expansion is that of Apple. The business that initially focused on computer building took over the sales and marketing tasks.
Further, their line of products expanded to a variety of other devices such as music players, smartphones, television sets. Apart from hardware, Apple began to produce software and provide maintenance for it. That way, becoming a user of one Apple device, a person automatically becomes the user of its software, service centers, online store, and multiple applications.
Valves leader Gabe Newell announced that the upcoming decade is going to be filled with innovative approaches and expansion strategies for Steam. To be more precise, Newell announced that Steam is going to attempt to cross the boundaries of a closed gaming platform and expand the user opportunities providing a service that would provide that grand unification between mobile, the living room, and the desktop. Putting this idea into practice would require an outstandingly creative approach and a lot of effort.
The solutions to the task the leaders of Valve have developed are visible today, but the paths towards the final results are rather vague and complicated. The current most visible solutions for Steam to move to the users living rooms is only possible with the help of a brand new technology a device developed specifically for gaming that would be self-sufficient and able to carry out all the necessary functions for the transfer of the gaming experience from desktop computers to television sets. In our age of new technologies, and the rapid development of digital systems, the creation of this new device does not seem like a very complicated task. However, considering the multitude of challenges Valve developers would have to overcome, building this device makes the path rather confusing and experimental.
Steam Machine and SteamOS
Steam Machine is a term created to refer to the future device that would enable gaming through the use of the Steam platform but without the reliance on desktop computers. This device is also known as Steam Box. Based on its perceived future functions, Steam Box is likely to be very similar to the existing Xbox and PlayStation. As a result, it is possible that the new device is going to face serious difficulties attempting to compete with the well-known and very powerful rivals in an oligopolistic field. Basically, the consumer base is already divided between the two existing products with a powerful brand reputation and strong image.
Finding its own niche and customer segment is going to be extremely difficult for a Steam box. In that way, there is a chance that the costs of product development may take the time to produce the return on investment. The production of new hardware is a great expansion solution, especially when it is supported by the specifically developed software such as SteamOS.
The Price
However, due to the fact that the new products would have to compete with rather popular and strong rivals such as Xbox and PlayStation, it is important to solve the issue of price an expensive product would not be likely to find its customer base, so it would need to combine quality, relevance, and availability in order to win the consumers and start generating profit as soon as possible.
In the gaming industry, there exists competition between gaming consoles and gaming PCs. Basically, the main competitive advantage of the consoles is the lower price. To be more precise, in order to build a good gaming PC, a user is to purchase multiple powerful and expensive items. Besides, because the technologies and game requirements change or develop quite often, it makes financial sense to buy the most recent items so that they remain usable and competitive for a long while. In other words, the approximate price of a good gaming PC is about 700 dollars. At the same time, gaming consoles do not need to be built and have a price of about 400-500 dollars.
That way, in order to be competitive and win a segment of the gaming consumer base, the new Steam console is to fit within the price range or be cheaper. In case if the product turns out more expensive than the two rival consoles, its developers would have to offer significant improvements in the form of functions or characteristics that Xbox and PlayStation do not have. In terms of the competition between the two gaming consoles, a price gap as tight as 100 dollars is already a significant point of difference. That way, if the Steam consoles price exceeds reaches 600 dollars it would be extremely difficult to market.
The fact that Steam machines are going to use a Linux-based operational system called SteamOS is likely to become a powerful advantage in terms of cost. To be more precise, Valve needs to offer a combination of powerful hardware that, in some aspects, could outperform those of Xbox and PS4 and cheaper software that would also be either equal to OS Windows or more efficient in terms of productivity. This is the only way for a Steam machine to be able to compete with the famous and reliable brands on the market. In other words the primary points of difference and sources of the competitive advantage of Steam machines are the positive correlation of the price and hardware quality, portability, and the claimed productivity of the operation system.
Games
Even though Windows 8 was widely recognized by the computer game developers as a catastrophe for the game developing businesses in the PC space, the vast majority of product manufacturers still rely on this OS. As a result, the number of games that support OS Linux is limited. This issue is going to be one of the major concerns for the Steam machines aiming to win customers. After all, their target segment is the gamers who are interested in having access to as many games are possible, and having such a serious limitation is going to slow down the marketing of Steam machines.
At the same time, Steam machines will be able to compete with PS4 and Xbox in this aspect. Currently, the two consoles have about 25-30 games in their lineups, whereas SteamOS can run several hundreds of different games natively. However, the Steam libraries that the game players would have to abandon include about three thousands of game titles, compared to that number, fully available on the Windows-based PCs, the hundreds of games that run natively on SteamOS lose their competitive advantage completely.
One of the most powerful solutions to the competitive advantage and marketing issues of Valves new products is the development of Half-Life 3 the game that has been expected for many years. Creating a strong continuation of the Half-Life series could help Valve attract a huge number of game players to SteamOS and Steam Machines. In addition to the Half-Life 3, Valve could use the existing games that are extremely popular (such as Left for Dead and Portal) and boost them by means of adding content or features.
The combined power of the three franchises is likely to create hype in the gaming industry massive enough to help Valve bit deeply into the gamer customer market and steal some clients from their powerful rivals with strong brand images and reputations.
Valve has the potential and resources for the creation of a successful new product and the expansion of its business to the new profitable niches in the oligopoly of the computer and video gaming industry.
The Implementation
Therefore, Steam was made the basic platform for the games created by Valve. In spite of the fact that the clients had to register, it became widely liked by the clientele because of its convenience; it allowed for easy access to digital content, permitting the clients to download it without any problems, as well as providing the features of cloud storage, customer profiles, tracking of gamers achievements, and so on.
It is also important to stress that Valve provided its clients with high-quality customer support. The enterprise participated in the creation of game mods and made efforts aimed at the incorporation of the mods created by fans into its games. This also considerably improved the favorable attitude of consumers towards the organization.
The hierarchy-free structure that was implemented in Valve allowed for ensuring that workers only do what they want to do and what they consider interesting. The workers in Valve do not have to follow the directives of managers who, due to the fact that they do not possess expertise in software development, often may not understand the nuances of the work. The projects which find not support do not waste the time of the employees, whereas interesting projects with great potential get much attention and interest, ensuring that the results of the collectives efforts are of high quality.
Moreover, the development of a qualitatively new line of products that allow the company to expand to the new sphere and attract a huge segment of new customers is a significant change for Valve that is likely to either strengthen their business financially or stress it out and cause a serious financial crisis. In other words, the company is taking a serious risk while working on new products. The projects very large and lengthy it is expected to take several years to develop the new hardware and the supporting software. At the same time, the company game developers are focused on the work on the existing games and the support of Steam the digital platform for gaming.
The competition is rather serious because the new Steam machine is going to be sold alongside its very powerful competitors Xbox and PlayStation. Besides, the advantages of the machine are still unclearly defined, and it complicates its marketing and promotion. The development of Half-Life 3 could become a massive booster on the way to the promotion of Steam machine because if this legend of a game was released and made available only via the machines, the purchase of this hardware would not become a significant obstacle on game players way towards the desired third part.
In addition, according to one of the companys leaders, Gabe Newell, none of the projects and choices of the business are based on financial analysis. In fact, financial analysis is not even considered one of the primary strategies of project assessment and future solutions and projects. This approach may seem risky from a practical and pragmatic perspective. However, it is perfectly aligned with the companys philosophy and the leaders vision that is based on the unlimited creativity. In other words, as soon as the financial planning and assessment become the companys basis for the future choices and decisions, this will serve as the ultimate limitation of the employees creativity and freedom to decide on which projects to work.
The Results
Therefore, it is possible to state that the steps taken by the company allowed it to become one of the most widely known game developers in the world. The profits of the company are also estimated to be very high. Unfortunately, Valve has always made a considerable effort in order to hide its revenues, so it is difficult to precisely assess its profitability. However, there exist numerous estimates of the companys financial situation.
For instance, it is stated that in 2014, Valve made a revenue of approximately $730 million. Out of these, the revenue made from Steam was neat $330 million, and the gross sales from Steam were equal to $1.5 billion. Simultaneously, it is claimed that in 2015, the gross earnings from Steam in 2015 were $3.5 billion. Here, it should be noted that the number of company employees is equal to only a few hundred.
The anarchic structure of the organization also proved to be extremely efficacious for Valve. In fact, it allowed for the creation of a friendly and enthusiastic atmosphere where each employee is empowered to do what they are interested in, yielding high workforce output and permitting for the creation of high-quality products only.
SWOT Analysis
Strengths
The Steam platform still remains the major strength of the Valve Corporation, allowing for profound and effective customer support, as well as safeguarding the company form the attacks of digital pirates. Clients are able to purchase games from their home, which provides them with additional ease. The company pays much attention to its clientele, taking into account the desires of their games fans. The company is looking to expand its product line and integrate itself into the new niches of the gaming industry by developing software and hardware. The organizational structure of the company ensures ongoing motivation and creativity and enforces an active and productive working process.
Weaknesses
The products created by Valve require their users to have access to the Internet in order to enjoy the full experience of gaming. In addition, this means that the clients cannot enjoy the games when the companys servers are down.
Also, the company has only developed a relatively small number of original games. The company is relatively small with a limited number of employees, and it attempts to expand its business significantly, which is likely to make its staff insufficient for all the operations and maintenance with would be required in the future.
Opportunities
The enterprise has a variety of opportunities. In fact, numerous fans of their products are eagerly awaiting the creation of sequels to their favorite games. However, Valve makes no haste to create sequels or new games, probably due to the fact that the revenues of the enterprise are rather high even without them. In addition, because the Internet and computers become more and more widespread, Valve has all the chances to gain even more new customers in the future. Valve has a chance to launch its new products and promote them successfully, thus encouraging the increase in revenues. It is possible that the Steam machine will attract a significant number of new customers and eventually grow into a powerful new branch of Valves business.
Threats
It is possible to hypothesize that most important threats for Valve come from other online gaming platforms, such as Battle.net, Windows Live, and EA Origin. However, the organization has all the chances to deal with these threats, for, as it was stated, there are numerous fans awaiting the release of new games and sequels from Valve. The Steam machine will compete with two extremely powerful gaming consoles and also with the PC gaming that is majorly supported by Valves own digital platform that is suitable for the computers running on Windows. That is why it is possible that the new products would not have enough advantages to outperform the competitors that have been dominating the industry for many years.
Conclusion
Thus, since its creation in 1996, Valve was able to become one of the leading game developers in the world. Its online gaming platform, Steam, was met with approval by its customers, simultaneously allowing for safety from piracy. At the same time, the horizontal, anarchic structure of the company permitted its employees to take great joy in their work and ensured that only interesting and promising projects were developed, leading to a high-quality product. In spite of the fact that the company is a medium-size business, its revenues are very high, and appear to be growing further from year to year.
Mergers and acquisitions are increasingly becoming a novel approach for companies to wade through the competitive pressures of todays globalized society. The increase of mega-mergers in todays corporate world demonstrates the entrenchment of such transactions in modern business practices. Since many companies prefer approaching mergers and acquisitions from a professional point of view, the role of advisory firms in supporting companies that intend to merge is evident. This paper investigates the critical success factors for mergers and acquisitions by understanding how merger and acquisition advisory firms measure the success of merger and acquisition projects. This paper also seeks to establish the factors that guarantee the success of mergers and acquisition projects. After conducting a comprehensive literature review and an online survey to gather the views of experts concerning mergers and acquisitions, this paper highlights eight critical success factors for mergers and acquisitions competence and commitment of project manager, cultural integration, adherence to psychological contract, environmental scanning, human resource competence, identification of the right buyers/sellers, effective coordination of merger and acquisition activities, and meeting the clients expectations as the main critical success factors for mergers and acquisitions.
Introduction
Objective and Motivation
There is little contention regarding the idea that most mergers and acquisitions are strategic tools for companies to survive in todays globalized business environment (Hoang & Kamolrat, 2008). The importance of mergers and acquisitions in the corporate world stems from their variable advantages, which include increased economies of scale, expansion of the economy of scope, increased revenues, increased market share, development of synergy, geographical diversification, brand strengthening, and reduced taxation.
The financial benefits of mergers and acquisitions stem from cost reductions and increased revenues. Cost reductions may occur in several ways including the elimination of redundant costs and the realization of economies of scale. In terms of increased revenues, mergers and acquisitions may increase the revenue of a company through increased market share, increased customer numbers, and the expansion of company networks (Kim, 2010). However, the realization of economies of scale is perhaps the most important advantage that most companies enjoy from pursuing mergers or acquisitions. As will be mentioned in this paper, the development of economies of scale may occur in several ways including the elimination of duplicate departments or operations and the combination of assets. Companies may also enjoy economies of scale by lowering company costs, relative to the same revenue stream that they may pursue by combining their operations with another company. This way, they improve their profit margins.
The enjoyment of economies of scope closely resembles the realization of economies of scale because economies of scope normally entail changes in demand-side outcomes, while economies of scope include changes in supply-side outcomes. In detail, the economy of scope occurs when demand-side outcomes are made to be more efficient. For example, by increasing the scope of marketing or distribution, a company may make its demand-side outcome more efficient. The increase and expansion of economies of scale and scope normally result in increased revenues and increased market share. However, increased revenue is always a product of increased market share. The main assumption that underlies this relationship is the belief that a merger or acquisition contract eliminates major competitors in the market, thereby increasing the market shares of the remaining companies. Through an increased market power, the dominant company may have more power to control prices and therefore, increase its revenue. This way, companies that have a stronger market share easily enjoy increased revenues.
Close to the concept of increased market share is the advantage of diversification. Diversification often occurs when companies merge or acquire new companies that are not involved in their primary product or service lines. The main aim of pursuing a diversification strategy is to balance the earnings of a company and improve its share price. Some companies also use this strategy to convince conservative investors to invest in their companies (unfortunately, the shareholder value often remains constant in such transactions) (Desai, 2011). Therefore, even though diversification through mergers may be an important concept to adopt, especially in times of economic downturn, it fails to create value because shareholders may similarly enjoy the same advantages of diversification by simply diversifying their portfolios.
The financial benefits mentioned above overshadow other indirect benefits that some companies pursue through mergers and acquisitions. For example, Desai (2011) says that increased synergy and reduced taxation are often elusive advantages that only a few companies enjoy after they merge or acquire another company. As this study will show, synergy occurs when employees work together to attain organizational goals. For example, when companies merge and improve their managerial specializations, there will be increased synergy in the organization. Most companies strive to attain this advantage, but few are successful (Desai, 2011). Besides increased synergy, companies may also enjoy reduced tax burdens when they merge or acquire another company. For example, if a company acquires a loss-making entity, it may receive tax exemptions (Desai, 2011). Lastly, since it is often rare for two (or more) companies to have the same distribution of resources. Mergers and acquisitions provide companies with an opportunity to integrate and distribute their resources in a way that they create value through the process. For example, Desai (2011) says overcoming information asymmetry in todays world creates value for organizations. The above insights (concerning the benefits of mergers and acquisitions) show that many companies see mergers and acquisitions as possible means to improve their economic and financial positions.
A critical constituent of the success of a merger or acquisition is the role that advisory firms play in M&A transactions. Indeed, as the trend to support mergers and acquisitions increase, advisory firms have been reaping from the trend by earning huge fees for easing the closure of such deals. A common category of advisory firms is investment banks, which provide the financing and expertise to companies that intend to merge or acquire other companies. However, there is a long list of advisory firms because Hoang & Kamolrat (2008) say M&A advisors may comprise investment banks, corporate lawyers, accountants, stockbrokers, strategy consultants, investor relations and public relations consultants, and environmental consultants (p. 1). The influence of this group of firms in M&A transactions has captured the attention of many researchers who say that investment banks and brokerage firms may cash in more than $20 billion in M&A transactions alone (Hoang & Kamolrat, 2008). This figure has soared almost every year because many companies believe that by seeking the services of advisory firms, they will enjoy better terms, conditions, and advice from such firms.
The involvement of advisory firms in M&A transactions is especially profound for small and medium-sized enterprises because they rarely have an in-house advisory department that would guide their managers in making M&A decisions. However, large firms are normally oriented with such transactions and may maintain an advisory department to implement M&A deals. Nonetheless, the maintenance of an in-house advisory department (for large firms) does not mean that the firms do not need the services of advisory firms. On the contrary, large firms sometimes employ the services of advisory firms to better maximize their networks. Similarly, they may use the same firms to enable them to better maximize the potential of their human resource.
Based on the importance of advisory firms in M&A transactions, it is crucial to outline the definition of advisory firms as the person or company responsible for making investments, and providing advice to investors (Hoang & Kamolrat, 2008, p. 1). Nonetheless, regardless of the categorization of M&A transactions, the description of advisory firms in this paper includes firms that act as intermediaries between the parties involved in a merger or acquisition transaction. These firms then decide to take the role of carrying out the transaction for the client. Examples of transactions that may be undertaken by the firms include buying or selling a firm, advising the client regarding the purchasing or selling process, and structuring or executing the merger.
The main difference between seeking the services of an advisory firm and conducting the M&A transaction without their participation in the provision of in-depth services in the M&A project. Through the provision of such services, many researchers consider the roles of advisory firms to be critical success factors in M&A transactions (Hoang & Kamolrat, 2008). Stated differently, these critical success factors include the deliverables that most companies have to meet before people can say the projects are successful, or not. Consequently, before project managers guarantee the success of their projects, they must ensure that they understand the role that critical success factors play in their success. Since clients often assign the role of ensuring the critical success factors are met, it is important to comprehend the role of critical success factors, based on the understanding of the role of advisory firms in executing quality and successful M&A transactions. Furthermore, since mergers and acquisitions are highly important for many companies, it is crucial to understand the operational and regulatory challenges that prevent most companies from realizing the benefits of mergers and acquisitions.
Problem Statement
Today, most companies prefer to solidify their market shares, maintain sustainable growth, and overcome their competition through mergers and acquisitions. However, the success of a merger or acquisition depends on many critical success factors that may be elusive for most companies. The failure to understand these critical success factors pose an obstacle for companies that intend to use mergers and acquisitions as strategies for overcoming the pressures of globalization and the intense competition that accompanies it (indeed, globalization may be termed todays most common accelerator for the adoption of mergers and acquisitions).
Despite the quest by many companies to use mergers and acquisitions as growth and survival strategies, research shows that a few M&A transactions meet their intended objectives (Desai, 2011). For example, Lau, Liao, & Wong (2012) believe that more than 60% of M&A transactions fail to meet their desired goals. Relative to this assertion, Lau et al. (2012) believe that only a paltry 17% of the total M&A transactions (of a global nature) can increase shareholder value. Indeed, history has provided us with several examples of unsuccessful mergers and acquisitions. For example, the airline industry has witnessed several unsuccessful mergers and acquisitions in the recent past, such as the unsuccessful merger between Southwest Airlines and Airtran Airlines, where the companies spent about $0.03 for every $1 they made in the merger (Desai, 2011).
In a similar misfortune, Delta Airlines spent more than $2 for every dollar that is made in a merger with Northwest Airlines (Desai, 2011). In the same merger, Northwest Airlines spent $1.6 for every dollar it made in the merger (Desai, 2011). From these statistics, not every merger amounts to increased profitability or better fortunes for a company. Instead, Desai (2011) persuades us to believe that every merger or acquisition deal has its unique dynamics that inform its success or failure. For example, most mergers and acquisitions are praised because of increased market shares and increased volumes of trade. However, in the airline industry, increased volumes of trade do not suffice as an advantage, but rather, as a disadvantage. Several airline companies have learned this lesson through unsuccessful mergers (like the merger between Southwest airline and Airtran Airline) (Desai, 2011).
From the above statistics, doubtless, firms may fail. However, few people would admit this fact, especially because mergers are known to reduce costs and increase profitability (Desai, 2011). In theory, this may be true because most mergers and acquisitions are designed to merge a few departments and create a giant system of organizational departments that would justify the price premium. This logic sounds simple, but in reality, the success of mergers and acquisitions may not be straightforward (Lau et al., 2012). Certainly, If not the elusive goals of mergers and acquisitions, Lau et al. (2012) say that most of such transactions will have their unique disappointments. For example, such disappointments may lead to the plummeting of company stocks. Lau et al. (2012) say that the above outcomes are plausible because the intention of managers to engage in M&A deals may be flawed, or the potential benefits to be derived from such deals may be elusive to many companies. The elusive success of M&A deals informs the purpose of this research paper as it exposes the need for understanding the critical success factors that lead to the success of mergers and acquisitions.
Research Questions
How do merger and acquisition advisory firms measure the success of a merger & acquisition project?
What guarantees the success of merger & acquisition projects?
Methodology
This paper relies on case studies, self-completed questionnaires, and semi-structured interviews as the main data collection tools. Through a mixed research approach, this paper analyses information from advisory firms, interviewees, and respondents who give their insights regarding the research topic.
Validity of Data and Sources
Semi-structured interviews and case studies are the main data collection tools for this paper. However, the inclusion of self-completed questionnaires upholds the validity of the information obtained from the semi-structured interviews and case studies. In addition, to guarantee the validity of the information gathered, the findings of the interviews were sent back to the interviewees to ascertain their validity. Most of the findings obtained from the interviews were obtained from the assertions of the respondents, but occasionally some of the findings were inferred, based on the assumptions of the respondents as well. The respondents were carefully selected to participate in the study, based on their knowledge of the research topic.
Mergers & Acquisitions
Mergers and Acquisitions Overview
In the past few years, there has been a significant rise in the number of mergers and acquisition projects in the corporate world. Kim (2010) reports that the increase in the total value of transactions related to mergers and acquisitions highlight the high number of mergers and acquisitions in the business world. For example, in 2007, the value of merger and acquisition transactions was more than $4 trillion (Kim, 2010). Compared to the past years, this value has increased sharply, especially since the same figure was only about $28 billion in the eighties (Kim, 2010).
Similarly, Kim (2010) says that if we compare the proportion of merger and acquisition transactions today and the eighties, we can attest to a significant rise in the share of M&A transactions as a proportion of the sum of business deals. For example, in the eighties, the percentage of M&A transactions was only 0.3%, but this figure has steadily risen to about 10% today. The number of completed M&A transactions within the same period also supports the sharp increase in M&A numbers. For example, only about 10,000 M&A transactions were announced in the eighties, but since 2000, more than 45,000 M&A transactions were completed (Kim, 2010). Kim (2010) has computed this increase and says that M&A transactions grow by about 42% annually.
Since there is a sharp increase in M&A transactions, cross-border transactions have become easier to execute. For instance, businesses have used M&A transactions as a common mode of entry into new markets. Relative to this observation, Kim (2010) says, The ratio of the value of cross-border M&A transactions to world FDI flows reached 80% in 2007 (p. 432).
Since M&A transactions have become a common part of todays globalized society, this second part of the thesis aims to explore the nature of M&A transactions and their scope. From this aim, this section includes a comprehensive definition of mergers and acquisitions, an analysis of the different types of mergers and acquisitions, an evaluation of the merger and acquisition process, and an analysis of the development of mergers and acquisitions.
Definitions of Mergers and Acquisitions
One plus one equals three (Kim, 2010, p. 1). This statement defines the main logic that informs merger and acquisition transactions. This logic stems from the fact that most companies aim to create a bigger shareholder value than the sum of the shareholder value that would ordinarily be realized if two corporate entities merge. The reasoning behind merger and acquisition transactions therefore stems from the fact that there is a greater value when two companies work together, as opposed to two companies working in isolation. Mergers and acquisitions are therefore joint activities where the activities of two or more companies merge to create one common purpose for both companies.
The purpose of engaging in mergers and acquisitions, as two different business processes, has increasingly become unclear for most businesses. The ambiguities regarding the purpose of both transactions come from the fact that both mergers and acquisitions pursue one ultimate economic outcome increased profitability. Despite the commonality of purpose, mergers and acquisitions have slightly different meanings, based on their modes of finance.
Mergers normally occur when two companies (usually of equal size) decide to merge their operations. This type of merger is called a merger of equal value; however, such mergers are often rare because, ordinarily, most companies do not have equal value. Instead, one company will purchase another by merely requiring it to state that it is a merger of equal size (although this may not be the case) (Lau et al., 2012). Companies prefer to call such hostile takeovers mergers, to sound politically correct, because buying out other companies often bears negative connotations. Concisely, companies often try to disassociate themselves from these negative connotations to make the buyout more acceptable to all the parties involved. Therefore, the correct term to refer to such a transaction is an acquisition.
However, the difference between mergers and acquisitions does not only rest in semantics. The modes of agreement between the two or more companies that will merge mainly define the distinction between mergers and acquisitions. Acquisitions differ from mergers because they are often agreeable, unlike mergers where the parties may not be completely conformable with the deal. Sometimes, in mergers, two parties may merge merely because of convenience, or because they have no other alternative, but to do so.
Legally the difference between mergers and acquisitions manifests when one party seizes to exist and another party establishes itself as the new legal entity (this is commonly true for acquisitions) (Kim, 2010). However, for mergers, two companies may decide to conduct businesses as one legal entity, instead of conducting their businesses as two entities. Here, both companies may decide to surrender their stocks and issue new stocks that symbolize the merger between the two companies. Therefore, the legal differences between a merger and acquisition stem from the fact that merging companies may retain some unique operational distinctions, as opposed to acquisitions that completely dissolve the distinctions between the parties. A common example of a merger is the merger between Daimler-Benz and Chrysler. In the merger, both entities were legally seized to exist and a new company, DaimlerChrysler, emerged. Comprehensively, regardless of the nature of the association between two or more companies, the nature of their association mainly defines if the association is a merger or an acquisition. If the association is friendly, then people should regard it as a merger; however, if the association is hostile, people should conceive the association as an acquisition.
Classification of Mergers and Acquisitions
The classification of mergers and acquisitions depends on the nature of the industry and the types of players in the industry.
Types of Mergers
There are different types of mergers, including horizontal mergers, vertical mergers, and conglomerate mergers. This paper explains them below
Horizontal Mergers
Horizontal mergers normally occur when two or more companies that produce similar products merge. Ordinarily, such companies compete against one another and produce similar (or almost similar) products and services. Horizontal mergers are often common in industries where there are only a few players. This type of industry is characterized by intense competition. Therefore, the potential gains of market share in such industries tend to be greater for participating firms. The main motivating factor for companies to pursue a horizontal merger is to create more economies of scale. Again, the merger between Daimler-Benz and Chrysler is an example of a horizontal merger.
The merger between Dubai Aluminum and Emirates Aluminum is also another example of a horizontal merger of different companies that operate within the same industry. The details of the merger show that both companies disowned their individual identities to form a larger company, Emirates Global Aluminum Company (analysts expect the companys total value to be more than $15 billion, setting it among the biggest aluminum companies in the world) (Cooper, 2013). Analysts also expect the new company to start its operations in the first half of 2014 (Cooper, 2013). The horizontal merger has also received immense support from the government.
The CEO of Dubal company will manage the new company, but he will be helped by the management teams of Emal Company as well. Consequently, many observers say that the horizontal merger will benefit from a very diverse management team that has a lot of experience in the aluminum industry (Cooper, 2013). This merger has created a whirlwind of speculation regarding more impending mergers between other UAE and Middle East companies. For example, since the Dubal and Emal merger is set to reduce the cost of operations for both companies, some analysts say Emirates Airlines and Etihad airlines should also merge in the same fashion and enjoy the same advantages (Desai, 2011). Nonetheless, these mergers show classic examples of horizontal mergers of companies that operate in the same industry.
The prospective merger between Al Dar Properties and Sorouh real estate is also another example of another horizontal merger because both companies operate in the real estate sector. This merger was only recently approved by the board of directors of both companies and is now awaiting the approval of the government (through the approval of the Abu Dhabi Executive Council) (Peters, 2012). Unlike most mergers that involve two companies with unmatched economic potential, the merger between Al Dar Properties and Sorouh Real estate is a merger of equals. The boards of directors of the two companies therefore believe that the merger will create a reliable platform for the development of sustainable growth (Peters, 2012).
Even though there is a lot of optimism surrounding the merger, it is also important to mention that the merger has been proposed when the industrys performance is still low. The performance of the sector is low because the UAE real estate sector has never really recovered after the 2008 economic downturn (Peters, 2012). The poor performance of the sector has caused many companies in the industry to restructure their operations and devise better ways of managing their debts (this is why horizontal mergers are common in the industry). The idea behind merging the two companies when the industry is not at its best is therefore appealing to some of the proponents of the merger because they expect that the merger may decrease overheads by combining some assets. In the same way that this merger may be beneficial for both companies, some of its proponents say that it may provide a better platform for the emerging company to control prices (Peters, 2012).
However, despite the existence of extensive optimism about the merger, an independent researcher, Peters (2012), says mergers may not necessarily solve the problems they are designed to solve. Instead, the mergers may merely create a larger company that buries old problems but fails to solve them. For example, a proposed merger between two equally big real estate companies, Emaar and Dubai properties was rejected by shareholders when they realized that the merger would create serious operational and shareholder issues (Peters, 2012). Peters (2012) fears that the merger between Al Dar Properties and Sorouh Real Estate Company may lead to a similar outcome.
Horizontal mergers are often criticized for their ability to reduce competition (Cooper, 2013). This outcome often manifests because the number of potential rivals in the industry declines significantly if two or more mergers occur in an oligopolistic market. Even though the creation of anticompetitive effects may be true, horizontal mergers do not necessarily have a bad effect on the economy. For example, Desai (2011) posits that horizontal mergers decrease average costs of operations and increases the market power of companies in the industry (especially those that have merged). Nonetheless, Desai (2011) cautions that market power and cost savings are not easy to determine. Similarly, market power and cost savings are often not typical for most mergers.
Vertical Mergers
Vertical mergers normally occur when different companies in a production chain merge their activities to make the production process more efficient. There are numerous examples of vertical mergers. Among the oldest and most common examples of a vertical merger is the merger between Carnegie Steel Company merger and several associate companies to control the entire chain of its production process (Marks, 2013). The vertical merger allowed the Carneige Steel Company to control the steel production mills, the extraction of the iron ore process, the supply of coal, the transportation of iron ore, and the coal cooking process. Furthermore, through the same vertical merger objective, the Carneige Steel Company started to develop its internal talent as opposed to searching for the same talent outside the company.
Conglomerate Mergers
Unlike horizontal mergers, conglomerate mergers normally occur when two or more firms, operating in different industries, merge. A classic example of a conglomerate merger occurred in the early sixties when a telecommunications company, ITT, diversified its operations by merging with Bought Hartford Fire Insurance, Continental Baking, Sheraton Hotels, Avis Rent-A-Car, Canteen vending machines, and 100 more companies (Marks, 2013, p. 19).
Some people consider conglomerate mergers to be important types of mergers because they increase managerial efficiencies. This outcome often suffices because the failure to increase managerial efficiencies may result in hostile takeovers or the replacement of inefficient managers with efficient managers. The following table shows the classification of M&A transactions
Classification of M&A.
Value Chain
Relationship
Economic Area
Horizontal M&A
Friendly M&A
Domestic M&A
Vertical M&A
Hostile M&A
Cross-border M&A
Conglomerate M&A
Types of Acquisitions
The main types of acquisitions are asset acquisitions and stock acquisitions.
Asset Acquisition
In an asset acquisition, one company normally sells strategic assets to the acquiring company. Such an asset acquisition process occurs when the acquiring company prefers to choose specific assets of a company and shuns other assets that it does not want responsibility for. The types of assets to be acquired may include tangible assets, such as office furniture, and intangible assets, such as goodwill. It is often difficult to transfer these assets because of the difficulties in valuation, the payment of transfer taxes, or the involvement of interested parties (especially in government contracts) (Marks, 2013).
Stock Acquisitions
Stock acquisitions involve the transfer of stocks of the selling company to the acquiring company. Unlike asset acquisitions, stock acquisitions are not difficult to execute because stocks are often transferable based on their current values (Marks, 2013). As such, there is no tedious process of valuing the assets. In addition, unlike the asset acquisition process, the seller does not receive any asset step-up tax; instead, the seller incurs the tax on a carryover basis (usually the goodwill created from a stock acquisition is not tax-deductible) (Marks, 2013).
Merger and Acquisition Process
The process of completing a merger or acquisition is often a significant undertaking for any company. Therefore, it is usually important for companies to ensure that the process of merging or acquiring a new company is flawless. However, this task is usually very intimidating for most companies, but fortunately; the process is a detailed step-by-step undertaking.
Many observers have used several M&A models to explain the M&A process. For example, the Watson Wyatt Deal Flow Model contains a five-step model that has been used to explain most M&A processes (Hoang & Kamolrat, 2008). The model involves the analysis of the different stages that occur in the same horizon, but have a strong goal of ensuring there are correct and timely inputs into the entire M&A process. These stages are explained below
Step 1: When companies intend to make M&A transactions, they consult advisory firms to guide them through the entire process. The main role of these advisory firms, as explained in subsequent sections of this paper, is advisory. It is through this role that the advisory firms establish the main vision of the company, its goals, and how the company may attain these goals through strategic foresight (Hoang & Kamolrat, 2008). The advisory firms, therefore, provide the clients with a strategic foresight to show the M&A process flow and how this flow helps the company to achieve its goals. Occasionally, some companies may decide to sign the consultancy contract before the advisory firm provides them with a clear strategic forecast of the M&A transaction, but often most companies prefer to see this forecast to evaluate their needs, viz-a-viz what the company offers, to determine if they should sign the contract, or not.
Step Two: The evaluation process is the second step of Watson Wyatts Deal Flow Model. The evaluation process involves the evaluation of the companies involved in the merger or acquisition process, based on their assets, liabilities, or equity, to establish how the optimum value of the company may be realized (Hoang & Kamolrat, 2008). Taxation and legal matters of the deal may be explored at this stage. The wishes of the companies involved in the merger, and the nature of the intelligence gathered during the evaluation stage, often forms the premise for understanding how the execution of the merger will occur.
Step Three: The execution stage outlines the third step of Watson Wyatts Deal Flow Model. The execution stage is often very important for merger and acquisition transactions because advisory firms recommend the course of action to take during a merger or acquisition at this stage (Hoang & Kamolrat, 2008). For example, an advisory firm may recommend that a company should sell its equity to the public, or to another company at this stage.
Step Four: The harvest stage outlines the fourth step of Watson Wyatts Deal Flow Model. The role of the advisory firm is often complete once a company sells to the public or the merger deal is complete. However, some advisory firms may participate in the integration process to ensure that the full implementation of the details of the merger. Regardless of the situation, the completion of a merger is a learning lesson for advisory firms. Indeed, by knowing all the details surrounding a merger or acquisition, the firm may refer to these details for the execution of future contracts. A snapshot of the above merger and acquisition process is as designed below
Besides the outline of Watson Wyatts Deal Flow Model, Snow (2013) outlines a different set of steps that different companies should follow in the M&A process. He says that the first step in any merger or acquisition process is the identification of a suitable buyer or seller. The second step of the process is contacting the seller about the deal. This process is often crucial for the future of the deal because, at this point, it is easy to determine the level of interest for the seller or the buyer. This way, it can be equally easy to establish if proceeding with the process is feasible, or not. Snow (2013) says that pitching the right deal for a seller or a buyer is often a difficult process, especially for the buyer.
The third step of the M&A process involves receiving or sending a teaser (executive summary) of the entire deal. This teaser provides the customer with just enough information to capture the interest of the buyer or the seller. The aim of the teaser is to make the seller, or the buyer, want to learn more. Later, both parties should sign a confidentiality document to affirm that the contents of their discussions will be confidential. Both parties should also review the confidential information memorandum (CIM) that discloses important information about a company (such as the products, financials, and history of the company) (Snow, 2013). The aim of this process is to pre-empt an offer. After making an offer, either the seller or the buyer should make the offer with a specified range of valuation, as opposed to a specific price.
After comparing the compatibility of the intentions of the seller and the buyer, based on the contents of the CIM, the seller or buyer should submit a letter of intent. Usually, the seller or buyer quotes a fixed price in this letter (Snow, 2013). Depending on the addressee of the letter, the seller/buyer should conduct due diligence to ensure that all the information provided in the agreement is accurate. After confirming the details of the agreement, both parties should draft the purchase agreement and sign it. The acquisition or merger is thereby completed and the seller/buyer evaluates how the new entity fits into the existing business model.
The Development of Mergers and Acquisitions
The history of mergers and acquisition transactions date back to the formation of companies in the 19th century. Among the earliest forms of mergers and acquisitions occurred in the late 1700s, but among the earliest waves of mergers and acquisitions occurred in the late 1800s and early 1900s (Hoang & Kamolrat, 2008). The earliest merger wave mainly involved small companies in America, which merged to form bigger and more powerful companies. Historians estimate that about 1900 small firms in the US consolidated their operations during the same period and gained significant market share as a result (Hoang & Kamolrat, 2008). The small companies merged through the creation of small amalgamation bodies trusts.
To understand the sheer volume of mergers and acquisitions that happened during the late 1800s and early 1900s, it is important to mention that the total value of all the firms that were acquired in the mergers reached 20% of Americas Gross Domestic Product (GDP) (Hoang & Kamolrat, 2008). Comparatively, this value was only 3% in 1990, and only about 10% in 2000 (Hoang & Kamolrat, 2008). It is therefore inevitable to say that the volume of mergers and acquisitions that happened in the late 1800s and early 1900s was among the largest in history.
The significance of the 1800/1900 wave of mergers can be felt today through the dominance of companies that were formed during this period. For example, DuPont, US Steel, and General Electric (GE) are some of the companies that emerged during the 1800/1900 merger period and they still dominate their markets, somewhat, today. Other companies however collapsed on the way because of intense competitive pressure. For example, International Paper, and American Chicle are examples of some strong companies that emerged during the merger period but collapsed along the way because of intense competitive pressures (Hoang & Kamolrat, 2008). It is important to mention that most of the companies that merged during this period merely did so because it was the trend at the time, but not because they wanted to improve the managerial efficiencies (Hoang & Kamolrat, 2008).
Since the 1800/1900 merger wave, several waves of mergers have occurred later. The second wave of mergers happened between 1916 and 1929 (many of these mergers were vertical mergers because horizontal mergers mainly characterized the first wave of mergers) (Hoang & Kamolrat, 2008). Later, between 1965 and 1969, the third wave of mergers occurred. This wave of mergers included diversified conglomerate mergers. The fourth wave of mergers occurred in the late eighties when congeneric mergers and hostile takeovers occurred in the corporate world. However, as globalization started in the nineties, cross- border mergers characterized most types of mergers. This period was later replaced by shareholder activism, and private equity development, which characterizes most of the mergers we see today (Hoang & Kamolrat, 2008).
Critical Success Factors for Projects
Critical Success Factors for Projects
To understand the critical success factors that inform M&A projects, it is crucial to highlight the distinction between critical success factors and project success criteria. Critical success factors are mean to determine the success or failure of M&A projects because they can either simplify or impede the realization of M&A goals. Project success criteria are management tools that show if a project is successful, or not. Critical success factors and project success criteria share a close relationship because the proper execution of critical success factors normally leads to a positive rating of project outcomes (through the project success criteria). To affirm the distinction between CSFs and project success criteria, Hoang & Kamolrat (2008) elaborate that critical factors can be perceived as catalytic or impeding conditions which influence the project outcome, while project success criteria can be viewed as a set of measurements agreed among stakeholders to assess the project outcomes (p. 17). Broadly, project managers may use critical success factors as possible tools for influencing project success criteria. In addition, project managers may use critical success factors as a set of measurements to define the project success criteria.
This section of the thesis divulges details regarding project management as a critical component of understanding the factors that inform the success of mergers and acquisitions. To draw the relationship between these project factors and M&A decisions, this section of the report outlines the critical success factors, lists and frameworks for project success, critical success factors for a particular industry, and the critical success factors for mergers and acquisitions
Critical Success Factors, Lists, and Frameworks
Project managers have always tried to encompass the concept of critical success factors (CSF) in its philosophical framework. Initially, the concept of CSF mainly depended on theoretical assumptions, but later, this changed. Now, CSF mainly depends on empirical facts. In the late seventies and early eighties, CSF was mainly approached through the understanding of the factors that influence project success (Marks, 2013). Such factors included time, cost, quality, stakeholder satisfaction (among other factors). The project implementation profile (PIP) model was the first framework that outlined a set of reliable CSF factors that would assess project success. The same model also provided project managers with a reliable set of measurement tools for assessing project success. The CSF factors that the PIP model identified were project mission, top management support, project schedule/plan, client consultation, personnel, technical tasks, client acceptance, monitoring and feedback, communication, and troubleshooting (Hoang & Kamolrat, 2008, p. 22). The importance of the above CSF factors is crucial for the entire period of the project, although their relevance varies, depending on the lifecycle of the project. The importance of the above CSF factors also varies, depending on the nature of the organization, its direction, and where it intends to be.
Hoang & Kamolrat (2008) say that the above CSF factors may subdivide into strategic factors and tactical factors. They say Project mission, top management support, schedules, client consultation (Hoang & Kamolrat, 2008, p. 21) are strategic factors, while tactical factors define the rest. The relevance of a strategic or a tactical factor varies in importance, depending on the project stage and the type of project performance measurement.
The main weakness of the PIP model is its failure to consider external factors of project management, like the competence of the project manager, political activities within the organization, external organizational and environmental factors, and response to the perceived need of project implementation (Hoang & Kamolrat, 2008, p. 21). These weaknesses have a significant impact on project success because Marks (2013) says the ignorance of external factors in project management may cause adverse project outcomes. Conversely, if project managers consider these external factors in project management, they are highly likely to realize a favorable project outcome.
Many researchers who delved into the issue of CSF in project management (in the nineties) intensely explored the impact of stakeholder involvement in project success (Hoang & Kamolrat, 2008). The same group of researchers also recommended that it is important to integrate CSF categorizations with project success factors to have a comprehensive framework for assessing project success. Marks (2013) say that most of the CSF factors that have been proposed by previous researchers have adopted a narrow scope of project success factors because they have only focused on project managers and project organizations. They have therefore failed to include other key project success factors, such as the characteristics of the project, the commitment of team members, and other external factors in their analysis of project success factors (the inclusion of these factors would provide a new categorization of CSF factors). The outcome would be the inclusion of four categories: project, project managers and team members, organization, and external environment (Hoang & Kamolrat, 2008). The formulation of these new categories also gives room for the project manager to assess the different intra-relationships that define project success.
In the above analysis, it is important to classify which project factors explain the success of an individual project and which success factors are critical to the overall success of the project management process. In the same lens of analysis, it will be easy to establish which factors lead to consistent project success. Some researchers have further differentiated factors that lead to project success and the factors that lead to project management success. The main basis of distinction is the measurement tools used to assess both categories. For example, Hoang & Kamolrat (2008) say that the success of the project management process mainly depends on evaluating if it meets the criteria of time, cost, and quality. However, the criterion for assessing project success depends on its extent in meeting project objectives.
Researchers who support the above views have come up with 12 CSF factors that they have developed from years of practice, by evaluating different projects in large multinational organizations (Marks, 2013). The researchers also developed these critical success factors by changing project scopes and maintaining the integrity of the performance measurements. In detail, the researchers have shown that most people factors are important in understanding project success (Hoang & Kamolrat, 2008). Relative to this assertion, Hoang & Kamolrat (2008) outline four critical success factors that should inform project success. They include,
A common understanding of the success criteria before starting a project, a high level of collaboration between the project manager and the project owner, adequate empowerment for project manager, and sufficient project performance (Hoang & Kamolrat, 2008, p. 22).
In terms of solving the problems related to project management, Hoang & Kamolrat (2008) propose that project manager should involve effective communication, clear projects objectives and scope, decomposing projects into manageable sizes, and using project plans as working documents (p. 22) to solve project management problems. A similar set of CSF factors for project management has been proposed by a renowned researcher, Nicholas (cited in Marks, 2013) when he proposed that CSFs may be classified into three categories project participants, communication and information sharing and exchange, and the project management/systems development process (Hoang & Kamolrat, 2008, p. 22).
The focus on critical success factors in project management has led to the diversification of disciplines, including the development of total quality management (TQM). The European Foundation of Quality Management and the Formal System models have also developed from the same focus (Marks, 2013). Researchers have developed these models to improve the project management process (Hoang & Kamolrat, 2008, p. 22). For example, several researchers have used the European Foundation of Quality Management Model to construct the framework of critical success factors that concern an organization, such as leadership and team development, policy and strategy development, stakeholder management, resource use, contracting, and project management factors (Hoang & Kamolrat, 2008, p. 22).
Some analysts have compared the European Foundation of Quality Management model to other models such as Pinto and Slevins model of quality management (Marks, 2013). However, the difference between Pinto and Slevins model and the European Foundation of Quality Management model is the absence of resource and contract factors. The European Foundation of Quality Management model is also unique to other models because it not only includes project success criteria but also includes external factors that affect the project success criteria. In a study conducted by two researchers, Fiortune and White (cited in Hoang & Kamolrat, 2008), it was established that most projects which have a lot of CSFs have a higher degree of success than the projects that have few CSFs (Hoang & Kamolrat, 2008). The researchers established this finding after comparing two information system projects (Marks, 2013). In this regard, it is correct to say that CSFs do not merely guide project managers to undertake successful M&A projects because they also provide a reliable set of standards for the evaluation of M&A projects.
As witnessed in the above analogy, many researchers have mentioned critical success factors in their analyses. The mentioning of these critical success factors in extensive literature has prompted many project managers to conceptualize them as critical success processes. Their importance especially manifests in the planning stage. At this stage, the project managers outline the processes that need to be followed to achieve the objectives of the project. Hoang & Kamolrat (2008) say that it is usually prudent to pay close attention to these processes at the planning stage, as opposed to the execution stage because it would be expensive to change the direction of the project at the execution stage. Above all, the planning process is critical to the effective execution of the project.
Regardless of the importance of CSFs at the planning stage, it is of grave importance to understand that not all CSFs have the same relevance during the planning stage. Two researchers, Zwikael and Globerson (cited in Marks, 2013) have conducted research to evaluate the significance of CSF factors in the project planning phase and found out that there are six important CSF factors, activity definition, schedule development, organizational planning, staff acquisition, communication planning, and project plan development (Hoang & Kamolrat, 2008, p. 23).
Hoang & Kamolrat (2008) noticed a significant weakness of past literature regarding critical success factors. They noticed that past literature disregarded project success criteria in their analyses. However, recent studies have tried to solve this problem by bridging the gap between project success criteria and CSFs because many modern researchers agree that both concepts have a significant impact on project management studies (Lau et al., 2012). Nonetheless, there is no standard definition of critical success factors because different projects require different critical success factors to succeed. Hoang & Kamolrat (2008) argue that most present-day critical success factors are more dynamic and complex than previous CSFs. Relative to this claim; they say that past CSFs never included the hard and soft aspects of project management (Hoang & Kamolrat, 2008). Comparatively, many CSFs today include hard and soft aspects of project management, such as, the competence of the project manager and the project team members, leadership, behavior, and address all perspectives of project management such as quality management, risk management, stakeholder management, project portfolio management, and program management (Hoang & Kamolrat, 2008, p. 23).
Critical Success Factors for a Particular Project/Industry
Researchers who have studied CSFs have developed vast literature to conceptualize different critical success factors for different industries. Depending on the nature and type of industry, different researchers have compared the CSFs for different projects. For example, Jang and Lee (cited in Lau et al., 2012) have tried to understand the CSFs for consulting projects by coming up with three sets of CSF variables. These variables are the competence of the consultant, consultation mode, and the characteristics of the clients organization (Hoang & Kamolrat, 2008). However, Jang and Lee (cited in Lau et al., 2012) say that these CSFs do not necessarily have to be found within the project organization because external factors also have the same significance in project management. Nonetheless, project success mainly depends on the interaction between different sets of variables project manager, team members, parent organization, and customer organization (Hoang & Kamolrat, 2008, p. 26).
Many groups of researchers propose that CSFs often vary in importance, depending on the industry where they operate. For example, in the manufacturing industry, the skills of the project manager surface as the most important critical success factor. Similarly, in the construction industry, weather-related factors surface as the most important CSFs (Marks, 2013). In the information technology industry, all factors are considered to be CSFs, except for client acceptance, but in the engineering sector, client acceptance and project mission surface as the most important critical success factors (Marks, 2013). In the same industry, scope definition and cost planning also emerge as important critical success factors. The importance of client acceptance as a pivotal CSF factor in many industries also surfaces as an important critical success factor in the construction industry, especially when it merges with monitoring and control factors.
Based on the relative importance of critical success factors of different industries, Zwikael and Globerson (cited in Hoang & Kamolrat, 2008) establish that project planning is an important CSF that transcends different projects, regardless of the industry (they made this realization when they tried to rank CSFs). The definition of activities and the development of project schedules however surface as more important CSFs, especially in the service sector. Similarly, in the same service sector, quality and communication planning have also surfaced as important critical success factors in the industry. The nature of the service industry as a platform for stakeholder interaction informs the importance of quality and communication planning as critical CSF factors in the service industry (Lau et al., 2012).
The understanding of CSFs is often a very dynamic undertaking because there is no common framework for understanding CSFs. Similarly, different researchers often propose unique sets of CSFs, depending on their conceptualizations of the same (Hoang & Kamolrat, 2008). Nonetheless, the project management theory is the main point of commonality between a practitioner and a researcher. The project management theory suggests that the process of understanding CSFs needs to comprehend three main issues their relative importance in different phases of the project cycle, the importance of understanding the interrelationships among different CSFs to achieve project success, and the varying importance of different CSFs across different industries (Lau et al., 2012).
Critical Success Factors for Merger & Acquisition Projects
Understanding the critical success factors for a merger or acquisition mainly depends on a thorough understanding of the factors that lead to M&A failures. Indeed, albeit it is important to adhere to CSFs for M&A success, it is also important to avoid the pitfalls of M&A processes. In the spirit of understanding the possible pitfalls that lead to M&A failure, many researchers have tried to investigate the main causes of M&A failures. Most of them have come up with varied findings. In one study, a consultant who has specialized in mergers and acquisitions, Gadiesh (cited in Hoang & Kamolrat, 2008), says the poor understanding of the strategic levers, overpayment for the acquisition (based on overestimation of enterprise value), inadequate integration planning and execution, a void in executive leadership and strategic communication, and a severe cultural mismatch (Hoang & Kamolrat, 2008, p. 28) are the main causes of M&A failures.
Similarly, another researcher, DiGeorgio (cited in Hoang & Kamolrat, 2008) also argues that inadequate due diligence, lack of compelling strategic rationale, overpayment for the target company, conflict between corporate cultures and failure to meld two companies (Hoang & Kamolrat, 2008, p. 28) are the main causes of M&A failures. Meanwhile, Hoang & Kamolrat (2008) posit that The inability to realize projected economies of scale, and the failure to integrate people, processes and systems (p. 28) explain why many M&A deals fail to achieve their objectives.
Lau et al. (2012) also, believe that booming financial markets often create the platform for the development of flawed intentions among company mergers when they engage in M&A deals. In other words, many companies are motivated to merge when the stock market is vibrant, even though the strategic thoughts behind the mergers may be weak. Such cases are often characterized by corporate trends that symbolize a common peer attitude, whereby business executives participate in mergers because other companies are doing the same. Here, such mergers pursue glorious outcomes, as opposed to the development of successful business strategies. Lau et al. (2012) especially highlight ego boosts as possible benefits that most executives pursue, simply because they have managed to buy out a competitor from the market. An assortment of legal minds and bankers who earn huge fees from such mergers often fuel this trend by giving wrong advice to business executives for financial gain. These business executives also fall for these advisors because they want to be the greatest and the best in the business. Unfortunately, most of these executives receive a huge bonus after securing such flawed deals, even when the deals turn out to be harmful to the company in the end.
In an unrelated context (and what drives most companies today), the failure to merge or assent to an acquisition deal evokes a strong fear that it may mark the end of a company (Lau et al., 2012). This fear informs most merger and acquisition deals. Such generalized fears have emerged from the rapid entrenchment of globalization, the development of technology, and the growth of competitive pressures. Such pressures often give defensive managers a reason to assent to merger and acquisition deals. The idea behind such a decision is the assumption that only big players survive in a competitive world and small companies have no choice, but to merge with another company, or wait for a hostile takeover.
Comprehensively, the above researchers agree that M&A failures mainly stem from one (or a combination) of the following factors The lack of the right strategic rationale, insufficient analysis or assessment during the early stage, overpayment which cannot be justified, and poor management in the integration phase as a result of lack of experience and prior planning (Hoang & Kamolrat, 2008, p. 28). The understanding of the factors that lead to M&A failures therefore provides the bedrock for understanding the critical success factors for mergers and acquisitions as outlined below.
Environmental Scanning
Lau et al. (2012) strongly believe that if managers decide to conduct a thorough environmental scan before they commit themselves to mergers and acquisitions, they would possibly avoid the failures associated with M&A transactions. Environmental scanning is used in this context to refer to the understanding of social and cultural factors that affect M&A decisions. The concept of environmental scanning also involves understanding the trends and relationships that characterize the external environment of an organization. The comprehension of these environmental factors should be a pillar for supporting key managerial decisions (M&A decisions). The importance of this process mostly suffices in turbulent economic times because continuous environmental scanning is an important tool for informing managerial decisions.
Lau et al. (2012) propose that, in todays information age, managers should use internet tools such as web 2.0 to gather information regarding the market, before they sign M&A deals. Web 2.0 tools could easily help to provide user-generated qualitative information that would be useful in executing M&A transactions. Indeed, it is easy to find huge volumes of information regarding socio-cultural and political issues about specific companies or industries online. Relative to this assertion, Lau et al. (2012) say, Top executives and M&A consultants have unprecedented opportunities to tap into valuable business intelligence (for example, the socio-cultural knowledge about a targeted market) by continuously scanning the Web 2.0 environment (p. 1263).
Grounded in the porters five force analysis Lau et al. (2012) propose that the novel due diligence scorecard is useful in improving managerial decision-making skills, especially in improving or executing merger and acquisition transactions. In the same context of improving managerial decision-making processes, Lau et al. (2012) propose that an adaptive BI 2.0 tool should be used to support the scorecard model. The BI 2.0 tool is beneficial for scanning the environment using web 2.0 tools because it is effective and has outperformed other Known base-line methods of scanning the business environment.
A look at M&A transactions in the Chinese business context shows that prototype systems may be useful in streamlining the environmental scanning process to make it more efficient (Lau et al., 2012). This way, decision-makers find it easier to make M&A decisions. A plausible advantage that is associated with this method is its adaptability to different business contexts. Moreover, since BI 2.0 technology works through unsupervised sets of statistical techniques, it may be easy for managers to apply this tool across other business activities that are related to M&A transactions, such as financial risk identification, bankruptcy prediction, and investment portfolio management (Lau et al., 2012, p. 1264). Based on these capabilities, it is correct to say that BI 2.0 technology is very useful, especially in situations where there is scanty information regarding the target market.
Psychological Contract Violation
Every year, thousands of companies participate in merger and acquisition deals that redefine their business processes. However, beyond the economic cost of such a deal is the human aspect of merger and acquisition projects. Most of these human aspects of M&A deals revolve around the prevailing consequences of M&A transactions for individuals and organizations alike. Concisely, M&A transactions affect millions of people and organizations because of Roundy (2010) says M&A transactions are synonymous with layoffs, intercultural conflicts, redefinition of employee roles and responsibilities, and the imposition of new forms of managerial structures.
Most employees do not know if a merger or acquisition may bring the above ramifications or how the implications of these ramifications may affect their careers. These uncertainties may lead to the development of individual uncertainties that may manifest in the alteration of several individual outcomes such as job satisfaction, job performance, stress, and turnover intentions (Roundy, 2010, p. 88). Mergers and acquisitions especially have a profound impact on these outcomes.
There is a great consensus among most researchers that M&A transactions have a significant impact on employees commitment to an organization (Roundy, 2010). This effect manifests because M&A transactions affect the emotional commitment of workers to an organization. The commitment of an employee to an organization is important to the success of a merger or acquisition because employee commitment affects the behavior, perceived organizational support, job satisfaction, and the job performance (Roundy, 2010, p. 89) of workers. More specifically, the level of employee commitment to an organization may lead to the success or failure of a merger or acquisition. Usually, low levels of commitment to an organization lead to unfavorable outcomes in M&A transactions. This relationship means that the companies that engage in M&A transactions have a difficult task ahead of them because their M&A transactions are bound to decrease employee commitment to the organization. Unfortunately, a reduction in employee commitment reduces the performance of M&A transactions. To support this assertion, Roundy (2010) argues that
By choosing to engage in a merger, a firm is setting into motion a process that, in its typical course, limits the success of its primary outcome. And, given the precarious success rate of M&As, organizations certainly do not benefit from an additional factor that negatively influences the likelihood of M&A success (p. 89).
The problems facing most organizations in M&A processes concern how they can increase the level of employee commitment to the organization. Furthermore, if a company manages to do so, the second dilemma that would affect such an organization is the identification of the right mechanism for improving employee levels of commitment. After evaluating these dilemmas, Roundy (2010) does not hesitate to say, M&A transactions decrease the level of affective commitment. In part, this outcome suffices through the shift in employee regulatory focus.
The anxiety and uncertainty that characterize mergers and acquisitions also have a negative impact on the performance of the transactions because employees tend to prevent their success, as opposed to promoting them. Relative to this observation, Roundy (2010) suggests that most companies should strive to influence (positively) the perception of their employees, regarding mergers and acquisitions, so that the employees may equally improve their levels of affective commitment. The best way to do so is by changing the communication strategy between the company and the employees because effective communication strategies can adequately influence employee perceptions regarding the merger or acquisition process. Researchers have specifically highlighted communications with a narrative structure as the best type of communication strategy for improving the level of an employees affective commitment to the organization (the advancement of promotion-focused narratives should prevent the negative influence of merger and acquisition activities, thereby boosting the performance of M&A transactions) (Roundy, 2010).
A key issue that most researchers have neglected in the above analysis is the influence of psychological contract violation in influencing the perception of employees in M&A transactions. Analysts outline the psychological contract violation as the perception among employees that M&A transactions have failed to honor their psychological contracts (Roundy, 2010). The psychological contract violation has a close relationship with trust because trust is the willingness of new employees to accept frangibility, based on the intention and the aims of the companies involved in the merger or acquisition. The psychological contract violation may manifest in different aspects of M&A transactions, including transactional violations and relational violations. The transaction violation normally occurs when the employees have a strong belief that the merger or acquisition ignores their material or economic interests, while relational violations refer to the belief that the merger or acquisition fails to provide the employees with a stable relationship for their interaction with the company (Roundy, 2010). Yan & Zhu (2013) say that the perceptions of both violations cause employees to experience disappointment, resentment, and to perceive unfairness (p. 494).
The impact of the above violations on the success or failure of M&A transactions manifests when such violations affect the tasks, responsibilities, and interpersonal relationships among employees. Usually, when this happens, the human resource of an organization is severely affected. This effect may manifest in different forms, but the resignation of workers is perhaps the most common effect of such violations. Indeed, Kim (2010) says that psychological contract violations in mergers and acquisitions have in the past led to the resignation of managers and employees. Although unspecific on the reason for resignation, Kim (2010) says that most mergers and acquisitions lead to the resignation of directors and ordinary employees. For example, a study by two researchers, Franks and Meyer (cited in Kim, 2010), in the UK, showed that about 88% of directors resigned when there was a hostile takeover in their companies. Similarly, 50% of directors resigned when there was a friendly merger between two or more companies (Kim, 2010). Past literature shows that most mergers and acquisitions in the UK have a negative impact on the labor market because they lead to the reduction of labor demand. Past literature that has focused on the US manufacturing sector also shows that most mergers and acquisitions may lead to severe job losses. Given that most mergers and acquisitions lead to significant job losses, it is unsurprising that many workers perceive M&A transactions with a lot of suspicion and mistrust, especially about their well-being.
The importance of psychological contract violation manifests as an indicator of the failure of managers to include the non-financial aspects of M&A mergers into the execution of the deals. Yan & Zhu (2013) have investigated the effect of psychological contract violations in M&A transactions by understanding their effects on the attitudes and motivations of employees. The researchers said that the nature and characteristics of M&A transactions have a significant psychological impact on the workers involved (Yan & Zhu, 2013). M&A transactions, therefore, provide a lot of uncertainty for workers, especially regarding their fates in the organization or the future of the company.
Yan & Zhu (2013) also say that since M&A transactions may mean unstable transitions, the feelings of the workers may be affected. Often, most workers are more loyal to their careers than to their organizations; therefore, whenever a merger or acquisition transaction threatens their careers, they are more likely to frustrate it (Yan & Zhu, 2013). The attitudes and motivation of the workers are important factors to consider in evaluating the success of M&A transactions because their activities are the binding forces that outline the successful integration of organizational activities. Indeed, most M&A transactions aim to acquire knowledge and knowledge workers. Therefore M&A contracts are bound to affect psychological contracts between employees and their companies. Since the psychological contracts that different companies have with their employees contain different sets of beliefs about mutual obligations, it is inevitable for any contract violation to affect the level of trust that the employees may have with the employer (Yan & Zhu, 2013).
Usually, when a merger or acquisition occurs, new employees may experience conquests or similar tussles in their new job environment because new and old job employees may form hostile workgroups that distrust one another. The outcome of such distrust may be disastrous if the new knowledge workers consider there is a psychological contract violation because they may eventually distrust the organization altogether. If this distrust persists, it may affect other groups in the organization, thereby affecting interpersonal trust within the organization (Yan & Zhu, 2013).
The influence that M&A transactions have on interpersonal trust has been rarely investigated by researchers because most researchers have only analyzed the extent that M&A transactions lead to psychological contract violations. Nonetheless, Yan & Zhu (2013) say that there is still hope for organizations if they experience such mistrusts in the organization. For example, they may use appropriate human resource practices to manage such distrusts, especially because their intentions in the merger may not necessarily be the perception created among the employees.
Competence and Commitment of Project Manager
Several researchers have said that the competence and commitment of a project manager to a merger or acquisition process are critical for the success of the merger or acquisition (Hoang & Kamolrat, 2008). The competence and commitment of team members also surface in the same context as an important factor that influences the success of M&A transactions. However, the competence and commitment of a team member are unequal to the importance of the project managers commitment to the merger or acquisition. Therefore, if the team members are highly competent and committed to a merger or acquisition, the lack of commitment by the project manager may still fail the process.
A managers commitment to a project may manifest through the evaluation of different factors, such as his ability to motivate team members to succeed, his ability to coordinate different project activities, and his ability to organize project tasks. The commitment of the project manager should suffice throughout all stages of the merger or acquisition process. The project manager should also demonstrate that he/she is deeply committed to achieving the goals of the merger or acquisition. Relative to this assertion, Hoang & Kamolrat (2008) claim the project manager should be people-oriented, result-oriented, diplomatic, and hard driving (p. 59).
The competence and skills of project managers often revolve around the management of human interactions because several researchers believe that project managers mainly have to handle human aspects of project management, such as manager-client interaction and communications with the target firm (and the likes). For example, a common skill that many researchers identify as an important factor to consider in project management is negotiation skills. The inclusion of such skills as part of a managers competence shows that negotiation skills are important in closing merger and acquisition deals. The same skills are crucial in realizing customer satisfaction, especially because the project manager may use the same skills to bargain for better terms and conditions that favor the client during a merger or acquisition deal (Hoang & Kamolrat, 2008). Above all, there is little contradiction among researchers regarding the importance of recruiting project managers who have a wealth of experience regarding mergers and acquisitions (Hoang & Kamolrat, 2008). Many researchers, therefore, hold the view that a merger or acquisition process needs to be overseen by people who have the necessary skills and competence to undertake such a process. Essentially, the skills and competence of the staff should both be perceived as important prerequisites for the success of a merger or acquisition project.
Cultural Integration
A common school of thought that has been touted by many researchers, as a possible reason for the high failure rate of M&A transactions, is the belief that many companies wrongly focus on the financial rewards of M&A transactions (Lau et al., 2012). Specifically, researchers who share this school of thought posit that the ignorance of non-financial factors, social factors, and cultural factors in M&A transactions inform the high number of M&A failures. It is from this basis that cultural integration emerges as a critical success factor for mergers and acquisitions.
Deloitte Development (2009) says the failure to integrate different cultures during a cross-border merger or acquisition process creates a strong force that could counter the value-creating outcome that often characterizes mergers and acquisitions. Deloitte Development (2009) mentions one study which showed that about 30% of all failed mergers and acquisitions stem from improper cultural integration. Certainly, companies that experience improper cultural integration find it difficult to formulate effective decisions or operate their departments efficiently (during mergers and acquisition processes). Before divulging the details surrounding cultural integration as a critical success factor, it is important to understand culture as a set of beliefs, values, and assumptions that inform peoples attitudes and work practices. Since culture is implicit, it is often difficult for people who share the same cultural background to criticize their culture or understand how their cultures inhibit them. Usually, only people who come from outside the sphere of cultural understanding may effectively understand the inhibitions that a specific culture may pose to an organization (Deloitte Development, 2009).
The main reason why culture affects the success of a merger or acquisition is its ability to influence peoples perceptions and understanding of their actions in the organization. It is therefore easy to understand why cultural beliefs lead people to believe that their actions are right, even when the actions may not make sense to them in the first place. The effect of a bad cultural influence is often difficult to eliminate because cultures are often resilient. Therefore, unlike other organizational influences that may manifest as products of trends, cultural influences are normally long-standing. The resilience of culture often stems from its implicit nature (indeed, it is difficult for people to comprehend why their cultures may be wrong, or how they exert negative influences on their organizational actions).
Deloitte Development (2009) explains the effect of culture on mergers and acquisitions by arguing that most mergers and acquisitions would be successful if people reasoned logically. However, people do not always base their actions on rational decisions alone; their shared cultural beliefs and individual personalities also affect their actions. Culture significantly underpins these effects. Based on this understanding, the impact of cultural integration in mergers and acquisitions is expansive.
The impact of cultural effects on the performance of a merger or acquisition manifests in different ways, depending on the nature of cultural influence. Deloitte Development (2009) explains that culture influences decision-making styles, leadership styles, how people work together, the beliefs regarding personal success, and an employees ability to change. These factors eventually affect the performance of a merger or acquisition contract. For example, if a manager operates in a culture that prefers a top-down decision-making style, effective integration in the organization will mainly depend on the managers effective decision-making skills. Similarly, in this cultural environment, the decision-making style may affect the ability to make and implement decisions (Deloitte Development, 2009). Through the same lens of analysis, it is correct to say that cultural influences may similarly affect the decision-making process of an organization, such as dictatorial or democratic leadership styles. This analogy is especially true for valuable employees in the organization because their labor mobility is often high (Deloitte Development, 2009). High labor mobility is often undesirable for mergers and acquisition processes because the loss of intellectual talent may significantly undermine the value of a merger or acquisition.
The influence of culture in affecting peoples ability to accept changes and risk new things also affect the performance of mergers. Its effect arises when employees are motivated to implement or oppose, new changes in the organization. Similarly, its effect manifests when gauging an employees commitment to stand with a company as it wades through the challenges of integrating with a new company. This effect also manifests through the influence of cultures in affecting how people work together in an organization (especially after a merger). In detail, cultural influences are bound to affect role definitions, depending on if it supports an informal, or formal, company structure.
Lastly, the beliefs regarding personal success also significantly affect the success or failure of mergers or acquisitions because such beliefs may lead to breakdowns in organizational synergy (especially among employees). For example, if a merger integrates people who believe that individual performance is superior to team performance, there is bound to be conflict in the organization, thereby undermining organizational success. Here, personal dislikes and internal oppositions are likely to brew in the organization. The influence of cultural beliefs and its antecedents therefore surface as critical success factors for mergers and acquisitions, especially concerning the implementation of M&A deals.
Research and Data Collection
This chapter of the paper elaborates on the methodology adopted for coming up with the findings of the research. Based on this understanding, this paper focuses on outlining the research design, data collection methods, and the findings of the research.
Semi-Structured Interviews
Before conducting the research, there existed a potential problem in accessing credible respondents, as the research was very particular to consult interviews and respondents who had adequate knowledge regarding mergers and acquisitions. However, this limitation did not compromise the quality of information obtained from the sample because this paper ensured that all the respondents were credible. Two criteria were used to source the interviewees and the respondents. First, all the participants had to be involved in merger and acquisition activities (presently, or in the past). The purpose of ensuring the involvement of the respondents in M&A activities was to find only those respondents who had enough experience regarding M&A activities. Secondly, the participants had to come from different departments within M&A advisory firms. The importance of this criterion was to obtain different views from varied levels of employee groups in an organization. There was therefore no limitation regarding the job description of the respondents. The respondents, therefore, varied from departmental managers, project managers, and even ordinary employees in an organization.
The potential respondents were contacted through phones and emails (depending on which method was appropriate for the respondent). After establishing the willingness of the respondent to participate in the study, an introductory letter was dispatched to the respondents. This letter outlined the purpose of the study and the research process (the snowball technique was used to identify the right participants who had been involved in merger and acquisition projects). The snowball technique helped to establish rapport with a small group of people who were of interest to the study. By establishing a rapport with this small group of people, it was equally easier to get the contacts of other people who also met the criterion for participating in the study. Since the interviewing technique was the recommended data collection method, all the respondents were required to support this method.
The format for the interview questions followed an outline provided by two researchers, Bryman and Bell (cited in Hoang & Kamolrat, 2008). The questions were standardized to create uniformity in data collection. Three parts characterize the research questions, participants, M&A services, and M&A projects. The nature of the questions outlined in the questionnaire was broad, but they later narrowed to answer the research question. The questions were designed to be of an open-ended nature so that the respondents could feel free to share their knowledge and experiences regarding M&A projects.
In detail, the respondents were asked to outline what factors they believed to inform the success of their merger and acquisition projects. Since this paper identified a list of independent CSF factors (from the literature review), the respondents were also asked to rate the relevance of the identified CSF factors according to their perceptions of relevance in informing M&A success. This process was only a guiding framework for the respondents. This way, it was easy to draw comparisons and create an integration of the responses provided by the participants and the independent findings of the study.
The procedures adopted during the interviews mainly depended on the preference and the nature of the respondents. For example, the geographic distance between the researcher and respondent played a key role in determining the procedures adopted for the interviews. However, on average, each interview took about 30 minutes to complete. The mode of conducting the interviews also varied from telephone interviews, phone interviews, and online interviews. Telephone interviews came in handy where there a great geographic distance between the interviewee and the interviewer. The same data collection method was also useful when there were budget constraints. Although telephone interviews are not effective (compared to face-to-face interviews), it was still possible to enjoy some of the benefits of face-to-face interviews, such as evaluating the respondents reactions through their voices. Occasionally, telephone clarifications were made to confirm, or clarify, some of the responses given in the interviews.
Since the disadvantages of note-taking during interviews are common in face-to-face interviews, permission of recording the interviews was sought from the respondents. This way, it was possible to avoid some of the distractions associated with taking notes during face-to-face interviews. Recording the interviews was also beneficial when interpreting the responses because it eliminated memorization bias and reduced interpretive bias as well. The use of the recording technique to improve the data collection and analysis process was made through the surety that all the information recorded would be strictly confidential and would not be disclosed without the permission of the respondent. The recorded information was later summarized and transcribed to create a workable framework for the data analysis process. To guarantee the validity of the information gathered, the findings of the interviews were sent back to the interviewees to ascertain their validity. Most of the findings obtained from the interviews were obtained from the assertions of the respondents, but occasionally some of the findings were inferred, based on the assumptions of the respondents as well.
Case Studies
The main purpose of adopting the case study approach was to get a more significant insight into some of the issues that emerged when conducting the study. Most of these issues emerged during the interview process. For example, CSFs and the role of a companys best practices in M&A activities emerged as the most critical issues in the interview process. The main basis for choosing the case study approach was to get explorative information regarding the research topic.
Self-Completion Questionnaires
Most researchers use self-completed questionnaires to evaluate the validity of information obtained from semi-structured questionnaires (Hoang & Kamolrat, 2008). This was also the main purpose of using self-completed questionnaires for this study. In detail, the self-completed questionnaires tested the set of CSF factors proposed in this study by requiring all respondents to complete the questionnaires, individually.
The sample recruited for this process was sourced through a recruiting website. This website provided a list of firms that specialize in M&A activities. The volume of transactions for the companies provided the right classification for these firms. Since our respondents worked in middle-level firms, the research also focused on sampling middle-level firms. The justification for selecting this group of firms was the high concentration of middle-level firms in the global and national market. Through this process, the selection of a firm depended on the evaluation of its website and the evaluation of its respondents (if possible). Again, the main criterion for selecting the respondents was their experience in M&A transactions.
The online administration of self-completed questionnaires excluded firms that did not have an email address on their company websites. Furthermore, companies that had generic email addresses on their websites were also eliminated because these email addresses were mainly designed to handle general inquiries. Therefore, if the research questions were sent through these email addresses, it would be difficult to believe that they would reach the intended audience. After refining the sample, 20 emails were sent to different firms. Five of the emails were sent back because some of the addresses became spam mails. The inability to permeate through some of the respondents firewalls also prevented some emails from reaching the respondents.
The selection of the online survey method was strategic to the researchers because it was relatively cheap and easy to administer. Indeed, unlike the traditional postal method, online surveys came at a cheaper cost to the researchers. The online surveys also provided a short response time. An online survey tool was used to administer the survey by sending the self-completed questionnaire to all the respondents at the same time. All the respondents received an invitation letter from the researcher, outlining the details of the study and the questions that would be posed to them. The respondents could easily access the questionnaire through a hyperlink address. When the respondents completed the questionnaire, they would click on the submit button, which would later upload the survey to the online survey tool. The self-completed questionnaires comprised of closed-ended questions. The respondents were however given the option of responding further to the questions if they wished. In sum, there were five questions asked. Two of the questions aimed to identify the background of the firm, while the last three questions aimed to identify the critical success factors for these firms.
Hoang & Kamolrat (2008) say that the self-completed questionnaire is an important survey tool as it is easy to administer to several respondents at the same time. This is one advantage that the use of the self-completed questionnaire provided for this study because it enabled the researcher to obtain information from several people at the same time. The efficient design of the questionnaire also made the data collection process to be time-efficient. Anonymity was also a great advantage of the questionnaire, especially because the nature of the research topic was sensitive to the firms (analysis of their critical success factors). Hoang & Kamolrat (2008) says that the anonymity of researches often encourages respondents to answer the questions more truthfully. The use of the self-completed questionnaires also reduced the room for bias because the researcher could not influence the views of the respondents through facial expressions or tonal variations (as witnessed through face-to-face interviews). Interviewer bias was therefore eliminated in this regard.
One possible limitation to the use of the self-completed questionnaire is the lack of depth and subtlety in the responses provided (Hoang & Kamolrat, 2008). Indeed, it was difficult to verify if all the answers provided by the respondents were truthful, or factual. Occasionally, there were cases where the respondents had to be reminded to complete the questionnaires and submit them (some of the respondents were forgetful). This process was somewhat taxing for the researcher.
Results
The roles of M&A advisory firms emerged as important critical success factors for our research participants. They said the importance of M&A advisory firms in M&A transactions has transcended from advising companies that intend to acquire other companies, to including even those companies that intend to be acquired as well. A major finding that manifested in the research process is the affirmation that albeit many companies maintain an in-house advisory department, they still seek the services of external companies in making M&A transactions. The roles of these advisory firms were therefore highlighted by most respondents as part of the key for succeeding in M&A transactions, especially because most of the respondents believed these advisory firms provided a strong network among companies that intended to engage in such transactions. In their view, the inclusion of advisory firms in M&A transactions increased the performance of M&A transactions (the main role of the advisory firms was to advise the clients regarding the best approaches to take in completing M&A transactions). The respondents claimed that these roles mainly ranged from lead advisors to supervisory advisors.
The respondents also said, occasionally, these advisory firms would collaborate with other firms to ensure that they have undertaken the proper due diligence process that is involved in M&A transactions. For example, the companies would involve the services of accounting firms to ascertain the proper records of the companies involved in a transaction. The respondents said such types of additions were complementary roles of M&A advisory firms.
When the interviewees and the respondents were asked to give their views regarding the measurement of the success of mergers and acquisitions, their answers revolved around the completion of the M&A deal and the attainment of M&A objectives. Many respondents (about 70%) claimed that the success of mergers and acquisitions mainly depended on the completion of the merger or acquisition deal. Three of the respondents claimed that the achievement of the M&A objective was the most practical measure for assessing the success of M&A transactions. A small group of respondents however highlighted customer satisfaction as the main criterion for assessing the success, or failure, of M&A transactions (the respondents who made this claim referred to M&A transactions that involved advisory firms because advisory firms had the duty of ensuring their customers were satisfied with their work). Relative to this assertion, one respondent said, even though advisory firms, like banks, have the knowledge and negotiation skills by completing or sealing M&A deals, their abilities to add value to their clients are perhaps the best criteria for evaluating their success in this undertaking. From the above analogy, it is correct to say that the three most commonly cited tools for measuring the success of M&A transactions include the closure of M&A deals, achievement of the clients objectives, and customer satisfaction.
When the respondents were asked to state their views regarding the factors that affect merger and acquisition transactions, 80% of the respondents interviewed said that the failure to agree on the correct price for the merger or acquisition transaction was perhaps the biggest issue that affected the success of M&A transactions. One respondent said,
The seller or buyer may have unrealistic expectations regarding the merger or acquisition, and the other party may not offer the price that the seller or buyer wants. Negotiation is therefore perhaps the biggest issue that stands between the start and the completion of a merger or acquisition process.
Managing a clients expectation regarding the timing and the nature of the merger or acquisition also emerged as a significant challenge that plagued the success of M&A transactions. For example, four of the interviewees claimed that their clients were often too optimistic about the merger or acquisition transactions; therefore, whenever they did not find a counter deal, which fit their interests, they quickly turned it down.
Issues of coordination between the client and the advisory firm also emerged as significant barriers to the smooth implementation of M&A deals. For example, two respondents claimed that the start and completion of M&A deals often involved a lot of research, but there was very little time available to complete these processes. One respondent said, When this issue merges with another unpredictable external market factor, such as price fluctuations and currency variations,especially in international mergers and acquisitions, it becomes very difficult for a merger or acquisition to be executed without any hitches.
While trying to identify the views of the respondents regarding the critical success factors identified in this paper, there was a deliberate attempt by the researcher to ask open-ended questions regarding what factors they believed would be the most significant CSF factors in their view. Later, they would rate our list of CSFs to establish how they resonated with their experiences. Among the most common critical success factors identified by the interviewees and respondents were the skills of the project manager and his team, the identification of the right type of buyer/seller for the merger or acquisition, a proper coordination within and outside the organization, good communication skills, meeting and aligning clients expectations, a clients commitment to the project, and the flexibility in structuring merger or acquisition deals.
There was a small distinction between the views of the respondents and the views of the interviewees because the respondents identified human resource competence, identification of the right buyers/sellers, effective coordination, and meeting clients expectations as the main critical success factors in mergers and acquisitions, while the respondents mainly highlighted project team competence and the ability to meet clients expectations as the main CSFs.
Besides the main issues identified as the main critical success factors for mergers and acquisitions, it is crucial to consider some of the issues that emerged in the interviews as important factors that also inform the success of M&A transactions. For example, since some of the critical success factors identified in this research focus on the reception of employees to the merger or acquisition deal, it is important for project managers to treat M&A negotiations with utmost discretion (at least in the initial stages of the negotiations). The right time for allowing other employees to understand the deal is when the transactions have been completed. The details of the merger or acquisition transactions therefore should remain a managerial secret because managers have the sole duty of making decisions in the company. The importance of the tight secrecy also surfaces alongside the importance of making timely decisions on M&A transactions. The interviewees admitted that these factors increased the likelihood of completing the deal. Therefore, to this extent, it is critical to mention that closing a deal is not the only measure for evaluating the success or a project, but making a timely closure is.
One critical realization that emerged through the process of sampling the views of the interviewees and respondents is the realization that both groups of participants paid little attention to resource capabilities of advisory firms, the development of the project plan, and risk management, as important factors for determining the success of M&A transactions. Instead, what emerged from the process was the understanding that the experiences of advisory firms and a careful comprehension of the details surrounding the merger or acquisition informed success of M&A transactions.
Based on the views obtained from the respondents and the interviewees, the participants were required to rate our four critical success factors, as identified in the literature review (cultural integration, competence and commitment of project manager, psychological contract violation, and environmental scanning). The respondents were required to rate the CSFs, based on five scales, 5 very important, 4 important, 3 fairly important, 2 not very important, and 1 not important.
Through the rating process, none of our critical success factors were rated as not very important or not important. Except for psychological contract violation (which the respondents rated as fairly important), the other critical success factors were rated as very important. Despite the positive ratings of our critical success factors, it was interesting to note that our critical success factors differed, at least structurally, from their perceptions of the main critical success factors. Here, it is crucial to mention that their perceptions of the critical success factors mainly stemmed from their practical experiences in mergers or acquisition contracts. For example, the identification of the right type of clients, management of clients expectations, and miscommunication between the clients and the advisory firms are practical CSFs. Our views of CSFs were therefore more theoretical.
Conclusion
After weighing the findings of this paper, it is crucial to say mergers and acquisitions have found a place as common business strategies of modern society. This realization especially informs the high number of mergers and acquisitions we see today. Advisory firms play a significant role in easing the completion of M&A deals. Through the intensive review of literature regarding project management and M&A transactions, this paper demonstrates that cultural integration, psychological contract violation, identification of the right types of clients, competence and commitment of project manager, environmental scanning, management of clients expectations, customer need satisfaction and the coordination between the clients and the advisory firms as some of the main CSFs in mergers and acquisitions. These findings have been developed through the analysis of data from professionals who have an immense wealth of knowledge regarding M&A transactions and the evaluation of case studies that highlight the perceptions of advisory firms regarding mergers and acquisitions. Lastly, online surveys also highlighted the practices of advisory firms and their perceptions of the critical success factors in mergers and acquisitions.
This triangular approach of deriving the research findings provided some important steps that complemented every stage of the research. For example, the interviews and case studies provided some useful insights regarding the type of services that M&A advisory firms provided their clients. The interviews and the case studies also provided a comprehensive understanding of M&A transactions and the roles played by M&A firms in completing these transactions. Through this analysis, it was easy to see how the theoretical constructs of this study fit with the practical applications of the same. Similarly, through the same process, it was easy to establish how companies measured the success of M&A transactions. Through this analogy, this paper identified the attainment of project goals and the completion of merger or acquisition transactions as the main measures of M&A success. The main problems identified as the possible barriers that inhibit the realization of M&A success stemmed from internal issues, the conflict between the advisory firms and their clients, and the market environment.
Focusing on the research questions, we see that there were no significant differences between the views of the respondents regarding the main CSFs of mergers and acquisition and the critical success factors identified through the literature review process. The only difference that emerged through this analysis is the understanding that the issues identified by the respondents mainly stemmed from a pragmatic point of view, while the CSF factors identified through the literature review process centered on a theoretical understanding of M&A transactions.
Based on the understanding that most of the critical success factors highlighted in this paper concern non-financial factors and the reception of employees to mergers and acquisitions, it is crucial for managers to realize that their synergy and the synergy of other employee is very important for the success of a merger or acquisition project. Differences in top management should therefore not be allowed to bleed over all other operations of the company. More specifically, companies should avoid having unclear objectives regarding M&A deals and the future direction of the transactions.
Selfish objectives of managers should also be isolated from the process of formulating the objectives of engaging in mergers or acquisitions. Instead, good corporate governance principles should provide a strong pillar for realizing the objectives of the transactions. Part of the objectives that should inform the activities of a project manager is the retention of valuable employees and the best talents in the organization. Employees should therefore not be divided by managerial differences and operational anxieties that could divert their attention from working towards achieving the objectives of the organization. To avert such an outcome, managers should realize that they need to have a proper plan when they are formulating the merger or acquisition deal. The managers should also know that a drastic change of company culture may potentially affect the performance of the M&A transaction. Nonfinancial and financial factors should therefore balance as companies ponder on the decision to merge or acquire other companies.
References
Cooper, P. (2013). Dubai Sells Half Of Dubal To Abu Dhabi In $15bn Merger With Emal Raising Around $5bn To Help Repay Its Debts. Web.
Deloitte Development. (2009). Cultural Issues in Mergers and Acquisitions. Web.
Desai, J. (2011). Mergers & Acquisition in Aviation Industry: Issues & Concerns. Web.
Kim, D. (2010). Making or Breaking a Deal: the Impact of Electoral Systems on Mergers & Acquisitions. Kyklos, 63(3), 432449.
Lau, R., Liao, S., & Wong, K. (2012). Web 2.0 Environmental Scanning And Adaptive Decision Support For Business Mergers And Acquisitions. MIS Quarterly 36(4), 1239-1268.
Peters, T. (2012). Aldar Merger With Sorouh May Be Rejected Like Emaar And Dubai Properties. Web.
Roundy, P. (2010). Can Stories Breed Commitment? The Influence of Mergers and Acquisitions Narratives on Employees Regulatory Focus. Journal of Behavioral Applied Management, 12(6), 88-98.
Yan, S. & Zhu, Y. (2013). Impact of Psychological Contract Violation on Interpersonal Trust during Mergers and Acquisitions. Social Behavior And Personality, 41(3), 487-496.
Many projects fail to achieve their objectives because of several reasons. Some of the reasons identified by researchers are the poor undertaking of duties by the project officers, poor leadership of project tasks, lack of adequate resources, poor planning, lack of adequate time and the likes (Project Smart 1). Ensuring a project achieves its intended tasks is therefore not an easy task since several project areas ought to be properly managed and coordinated. Because of this need, there is usually a strong need to employ proper project management skills.
Project management normally encompasses tasks undertaken by all project officers including the project manager and his team (Project Smart 1). The project manager, in particular, has been identified in many studies as a critical factor to project success (Project Smart 1). It is therefore paramount that for any project to succeed there ought to be a shrewd project manager. However, the roles project managers undertake to ensure project success are not clearly defined, and therefore vary from one project to another. Project success is quantified in various ways and normally, success levels are varied, and not easily determined. This has necessitated the development of various project criteria to measure project success.
From a general point of view, this study will analyze the role of project managers in the realization of project success and later, an analysis of how project rating is done will encompass the last segment of the study. This will be done by referring to at least three project examples and analyzing how they were rated, and ought to be rated. This study framework will then define a blueprint through which project managers can use to rate project performance.
Role of Project Managers
Project Smart explains that The project managers role, in a nutshell, is the overall responsibility for the successful planning, execution, monitoring, control and closure of a project (1). The project manager is therefore perceived by many project experts like the one who holds the key to the success or failure of a project. Apart from the above tasks identified by Project Smart (1), the project manager has several other roles to undertake if the successful completion of a project is to be realized. First, he or she has the role of integration management (Jacowski 1).
Such a task does not differ much from the conventional roles attributed to any person in a leadership position because the task entails the development and management of project directions. This task is augmented with the second task of scope management (Jacowski 1). This task includes roles like planning the project in its entirety and defining the scope, execution or development of the project.
Thirdly, the project manager has the role of managing time and cost as two important resources in project management (through tools like scheduling and resource allocation, which assist in the proper management of project tasks) (Jacowski 1). Fourthly, the project manager is usually mandated with the task of ensuring the project quality is within the acceptable standards (Jacowski 1). This is a critical role especially in the rating of project success because various project rating criteria are based on project quality. Fifthly, the project manager is mandated with the task of managing the human resource of the project (Jacowski 1).
This task encompasses the role of ensuring the team is properly motivated and moving in the right direction (towards project success). Another task entrusted with project managers is communication management which entails either a vertical or horizontal communication channel (Jacowski 1). This role is important because it defines how well the project will be coordinated. Lastly, the project manager is tasked with the role of risk management and procurement management (Jacowski 1). Under risk management, the project manager is supposed to identify the project risks and devise ways of mitigating them through the development of a contingency plan. Under procurement management, the project manager is tasked with the responsibility of negotiating with suppliers and vendors for the availability of project materials.
Project Rating
Some projects often fail to realize their intended objectives and therefore suffer poor project ratings. However, those that meet the project rating criteria enjoy good project ratings. Project ratings are defined through several criteria, some of which will be identified in subsequent sections of this study. In doing so, we will study three examples of poorly rated projects and evaluate if they were correctly rated or if they could have been rated otherwise.
Example 1
Black and Veatch, a United States (US) construction company working in Afghanistan received poor project ratings for its project performance in Afghanistan (Taylor 2). Some of the contracts the company received from the US government involve the development of a power plant in Kabul and the development of a natural gas plant in Northern Afghanistan (Taylor 2). The company received poor project ratings from USAID which termed their work unsatisfactory because the project suffered immense delays; was of poor quality and failed to adhere to its required schedule (Taylor 2).
I would rate the project as poorly done because projects which suffer excessive delays and are of poor quality cannot enjoy good project ratings. This is according to project rating criteria developed by Government of Alberta (11) which affirms that good project ratings are only achieved if the project can be completed in the given schedule, and even if delays are experienced, they should not be excessive. Moreover, Government of Alberta (11) notes that well-rated projects cannot receive bad quality ratings by all stakeholders and because Black and Veatch received poor quality ratings by both the US government and non-governmental organizations (USAID), its performance rating was below par .
Example 2
Certain federal Information technology (IT) projects identified in DIANE (3), and overseen by OMB (which is a federal oversight body for such projects) were poorly rated by the US government. These projects were financed by the US government in the year 2008 (DIANE 3). Areas identified as reasons for poor rating were lack of adequate planning and poor performance of project objectives (DIANE 3). The Department of Treasury Electronic Fraud system (one of the IT projects) was especially identified as poorly performed and poorly planned (DIANE 3).
I would rate the project as unsatisfactory, considering it failed to please the client (the government). In other words, the project was ultimately inefficient and could not realize its intended purpose. This opinion is supported by IDB (11) which identifies that well-rated projects normally achieve their intended purpose and are quite efficient (when referring to their intended objectives). The project, therefore, failed to meet this criterion because the US government termed it as poorly performed and planned.
Example 3
In the recent Tsunami disaster, there was an unnamed international organization which was undertaking a project to build new houses for the local inhabitants, since their previous houses were in a deplorable state (The Charity Rater 14). The project was majorly aimed at building new toilets to replace old ones which were built near the locals houses, using reeds.
The toilet refuse was easily being washed away with strong tides. The project was poorly rated because it failed to change the traditional habits of the people who preferred to use the newly built structures as storage rooms, instead of toilets (The Charity Rater 14). However, the problem of the high tide washing away the refuse was solved, but other problems to do with insect infestation and sanitation concerns arose (The Charity Rater 14).
I would rate the project as satisfactory because the problems realized after the completion of the project did not pertain to the performance of the project, but rather the traditional attitudes of the people intended to benefit from the project. For instance, the turning of the toilets into storage rooms was not a problem of the project officer but rather a communal problem which was to be solved by the government or any other relevant body. I term the project satisfactory because it was intended to stop the washing away of wastes by high tides, which it did. This analysis is supported by Stevens (2002, p. 87) who affirms that once the project achieves its intended aim, it should be termed satisfactory. The intended aim here was to avoid the toilet refuse to be washed away by tides; a problem which was solved by the project.
Conclusion
This study identifies that the rating of project success depends on the efficiency, implementation and effectiveness of the project. So long as the project achieves its intended objectives and is satisfactory to its intended purpose, the project ought to be perceived as having a good rating.
However, there are instances where unforeseen problems result after the realization of the project objectives (such as cultural inhibitions in project uptake). In such a situation, this study identifies that it is important to treat such factors as independent from the project rating process. With regards to the roles of the project manager, this study points out the fact that the project manager is mandated with the responsibility of evaluating, monitoring, planning, controlling and executing the project. Comprehensively these study dynamics define the roles of the project manager and project rating criteria.
Works Cited
DIANE. Information Technology; Further Improvements needed to Identify and Oversee Poorly Planned and Performing Projects. New York: DIANE Publishing, 2010. Print.
Government of Alberta. Program Criteria and Project Rating Criteria Affordable Supportive Living Initiative (ASLI). 2011. Web.
Immigrant families meet a number of challenges when moving to the USA, including a language barrier, the lack of a job, social insecurity, and others. While adults struggle to overcome these obstacles on the way to acclimatizing to a new environment, children face their own struggles. Specifically, many school-age immigrants have difficulty learning English as a second language and communicating in it with their peers. The purpose of the research is to identify the problems pertaining to the child from the case study and suggest solutions to them. The analysis will be based on the following research questions:
What issue is the most challenging for the student, and what factors could have caused it?
How can Christians teachers and family promote the boys acculturation and foster the highest academic achievement?
Literature Review
Scholarly articles on the topic encompass a variety of issues related to the problems immigrant children meet in the new educational and social environment. Both the needs for adjustment in general and those specific for Latino students are discussed in the research. Makarova and Birman (2015) note that the process of acculturation serves as the major barrier for immigrants underachievement at school.
One of the prominent factors impacting acculturation is a psychological adjustment, which involves self-esteem, life satisfaction, and mental stability (Makarova & Birman, 2016). As Maynard, Vaughn, Salas-Wright, and Vaughn (2016) report, minority students are likely to become victims of bullying. Thus, research indicates that for the majority of immigrant children, psychological well-being is hard to achieve.
Studies focusing on Puerto Rican/Latino immigrants emphasize the role of family and community in the promotion of childrens acclimatization (Harris & Kiyama, 2015; Quiñones & Kiyama, 2014; Santiago, Gudiño, Baweja, & Nadeem, 2014). Scholars emphasize the role of a father in family-school engagement (Quiñones & Kiyama, 2014). Early linguistic experiences are reported to have a profound effect on success in high school (Zarate & Pineda, 2014). Overall, researchers consider the role of family and school, as well as the collaboration between these two entities, highly crucial in promoting immigrant childrens adjustment in the new environment.
Methodology
The child in the study is an eight-year-old Puerto Rican boy who moved to the USA a few years ago. His family consists of a mother, a sister, and grandparents. Christians mother was the one who paid the most attention to his literacy skills development at an early age. Upon immigration to the USA, the boys grandparents also became involved in the process of acculturation. The elementary school teacher is concerned about Christians achievement and analyzes the boys behavioral and academic challenges related to his cultural and linguistic background.
The data on Latino immigrants challenges in the US schools indicates that the predominant use of Spanish at home and the lack of fathers participation in his life serve as barriers to adjustment (Quiñones & Kiyama, 2014; Santiago et al., 2014; Zarate & Pineda, 2014). Researchers suggest that school-based programs may enhance Latino students achievement (Harris & Kiyama, 2015).
Analysis
Findings on Research Question 1
Christians most challenging issue is the lack of background knowledge of English. According to the case study, no literacy education was provided to the boy in Puerto Rico before moving to the USA ( case study, n.d., p. 2). This issue is complicated further by the fact that the boy has only one good friend at school and does not participate in any organized extracurricular activities ( Case study, n.d., p. 2). Makarova and Birman (2015) note that cultural changes are central to the experience of ethnic minority students (p. 305). Thus, it is necessary to encourage the boy to communicate with native speakers and take part in group activities.
Another problem is that Christian lacks the involvement of a father in his life. Christian spends small amounts of time with his father and speaks to him rarely ( Case study, n.d., p. 1). Meanwhile, fathers in immigrant Puerto Rican families are reported to play an important advocating role in the parentschooldistrict system (Quiñones & Kiyama, 2014, p. 149). Also, immigrant children may face bullying (Maynard et al., 2016). Meanwhile, fathers can protect their children from racism and negative impacts (Quiñones & Kiyama, 2014). Hence, the absence of the father in his life makes Christian more vulnerable than other children both of the US and Puerto Rican descent from complete families.
Findings on Research Question 2
The teachers role in the process of Christians acculturation is highly crucial. It is evident from the case study that the teacher is concerned with the boys low achievement. Research indicates that the development of school-based programs helps children like Christian to address personal and school barriers (Harris & Kiyama, 2015, p. 182). The boys teacher pays much attention to group work and cooperative learning ( Case study, n.d., p. 2). Thus, the cooperation between school and family is necessary for the boys easier acculturation.
Christians familys values have a considerable effect on the boys acculturation. The family is very supportive of the boys learning of English ( Case study, n.d., p. 1). Education is a high priority for Christians mother ( Case study, n.d., p. 2). These issues align with research in that high levels of parental monitoring are associated with better acculturation (Santiago et al., 2014, p. 735). Moreover, early acculturation has the potential to affect high school completion (Zarate & Pineda, 2014, p. 1). Thus, it is crucial for Christians mother and grandparents to continue encouraging the boy in speaking English and communicating with native speakers.
Recommendations and Conclusions
Base on the analysis of the case study and scholarly literature, it is possible to conclude that the process of Christian acculturation is restricted by several factors. First of all, the boy does not have enough background knowledge of English, which makes him shy and unwilling to communicate with native speakers. Secondly, the lack of his fathers involvement in Christians life makes the boy more vulnerable to bullying than children from complete and non-immigrant families. At the same time, Christians family and teachers are rather supportive of the boy.
The first recommendation for Christian is to join some community- and school-based activities involving group collaboration and communication. That way, the boy will become more self-confident and less shy. Another suggestion is to enroll Christian in extracurricular activities where he will be able to arrange friendly relationships with more than one classmate. Finally, the boys grandfather should pay more attention to their man-to0man relationships since he is the main role model the boy has to follow.
References
Case study: Christian Fernandez (Puerto Rican). (n.d.).
Harris, D. M., & Kiyama, J. M. (2015). The role of school and community-based programs in aiding Latina/o high school persistence. Education and Urban Society, 47(2), 182-206.
Makarova, E., & Birman, D. (2015). Cultural transition and academic achievement of students from ethnic minority backgrounds: A content analysis of empirical research on acculturation. Educational Research, 57(3), 305-330.
Makarova, E., & Birman, D. (2016). Minority students psychological adjustment in the school context: An integrative review of qualitative research on acculturation. Intercultural Education, 27(1), 1-21.
Maynard, B. R., Vaughn, M. G., Salas-Wright, C. P., & Vaughn, S. (2016). Bullying victimization among school-aged immigrant youth in the United States. Journal of Adolescent Health, 58(3), 337-344.
Quiñones, S., & Kiyama, J. M. (2014). Contra la corriente (against the current): The role of Latino fathers in family-school engagement. School Community Journal, 24(1), 149-176.
Santiago, C. D., Gudiño, O. G., Baweja, S., & Nadeem, E. (2014). Academic achievement among immigrant and U.S.-born Latino adolescents: Associations with cultural, family, and acculturation factors. Journal of Community Psychology, 42(6), 735-747.
Zarate, M. E., & Pineda, C. G. (2014). Effects of elementary school home language, immigrant generation, language classification, and schools English learner concentration on Latinos high school completion. Teachers College Record, 116(2), 1-37.
Arguably one of the most epic accomplishments of the 21st century was the invention of the computer and the subsequent creation of the internet. These two entities have virtually transformed the world as far as information processing and communication is concerned. Organizations have extensively employed the use of computer systems as efficient global communications became the defining attribute of successful organizations.
Key among the systems is the integration of information technology in project management. However, despite its advantages, numerous IT project have in the recent past failed due to various socio-technical issues. The human factor has been credited for most of the failures. This paper shall in detail reflect on a recently failed IT project. Reasons as to why the project failed shall be provided. In addition, the similarities of the root causes as compared to those of other IT projects shall also be highlighted.
IT project failure: A brief overview
The Standish group (1995) report has for a long time been noted as the landmark report on IT project failures. The report displayed results gathered from executive managers who had invested in various IT projects across different sectors. The results indicated that: 31.1% of projects will be canceled before they ever get completed.
Further results indicate 52.7% of projects will cost over 189% of their original estimates (Standish Group, 1995) . In regards to success rates, the report indicated that; only 16.2% for software projects that are completed on-time and on-budget (Standish Group, 1995) . Ever since the report was presented, the number of failed IT projects across different sectors has been increasing at an alarming rate.
Case study: Queensland Health Government of Queensland Australia
Queensland Health is an organization dedicated to the provision of healthcare services to the Australian community. In a bid to improve its efficiency, accuracy and cost reduction in service delivery, the organization thought it wise to modernize its payroll system (ERP). As such, the project which cost the organization $64.5 Australian dollars was expected to end by June 2010.
However, the project which aimed at replacing the aging payroll system that had been in use ended up as a major failure for the organization. This failure not only had serious financial repercussions to the organization, but also left thousands of employees with little to no pay due to major cut-over. Even though, the organization is yet to provide a conclusive report accounting for this failure, the press and business analysts highlighted the major mistakes that were made during the project.
Contributing factors as reported by analysts and the press
Key contributing factors as documented in various literatures included but were not limited to: poor project planning, lack of clear roles and responsibilities for project team members, poor communication skills and training. In addition, the stakeholders were not engaged effectively in the project and there was evidence of tension between government departments. On the same note, the project managers failed to resolve the complex business processes before implementing the new system.
Finally, reports indicate that the project requirements and alignment did not meet the needs of the business. In summary, the project failed due to poor planning, communication, managerial and, risk management skills. The same factors have been documented as being among the core factors that lead to IT project failures in most businesses.
IT Project failure: A literature review
According to Ledingham and Bruning (2000), good communication is considered to be one of the fundamental building blocks of a successful organization. If efficient communication is to take place, there must be some levels of trust exuded and mutual respect by parties involved in any given project. Ledingham and Bruning (2000) advance that interaction with each other leads to greater appreciation and hence building of mutual respect and eventually establishment of trust.
Considering the adversarial communication currently exhibited in the organization, team building exercises e.g. sporting activities, interdepartmental parties and other social events would have averted the communication hurdles that led to the project failure.
In addition, Hashmi (2010) reiterates that project failures are in most cases as a result of poor planning, managerial skills and conflicts. As such, the author proposes that an exemplary project manager should ensure that his team has a sense of purpose and is working towards the achievement of some organizational goals.
He/she should also set out to generate and sustain trust between the administration, employees, stakeholders and clients. This results in the promotion of hope and confidence amongst the organizations worker force. These qualities heighten the levels of optimism within the organization all the while boosting employees morale and guarantees future success in all organizational endeavors (Hashmi, 2010).
Conclusion
The number of failed IT projects has been a cause for alarm in many sectors. The causes of these failures are well known and should be used by others as lessons on what not to do during a project. In this regard, organizations should not shun away from IT projects but rather, they should implement the measures recommended in this report so as to avoid failure.
References
Hashmi, M. (2010). Identification of the Root Causes of Software Project Failure. USA: Lap Lambert Academic Publishing.
Ledingham, J. A. & Bruning, D. S. (2000). Public relations as relationship management: a relational approach to the study and practice of public relations. NY: Taylor & Francis.
Standish Group. (1995). Chaos (Application Project Failure and Success). Web.
The article A revaluation of the criticality of the project manager to the projects success by Alvarenga et al. (2018) presents a thorough investigation of the project managers role in the organizations success. The authors first provide details of a quantitative study that proves the significance of project managers in the companys success and then discuss the theoretical perspectives of their findings. The latter include the aspirations for acknowledging the role of the soft skills of project managers success, the need for balanced training, and the dangers of pressure for project managers psyche in the event of failure.
This article is fascinating given that, according to the authors, there is a severe shortage of quantitative research that supports the importance of project managers role in the organizations success. The study results showed that out of 740 participants randomly selected among project managers, managers, supervisors, consultants, more than 49% named the project managers role as very much related to the companys success. Moreover, the project manager was named one of the seven hypercritical success factors among the total number of 35 critical factors. Interestingly, the scholars defined a new theoretical perspective by acknowledging that more attention to project managers soft skills should be paid. These skills are closely related to other hypercritical success factors: communication, top management support, project commitment, and client acceptance.
The scholars suggested that organizations should address more attention to providing training for the project managers to develop both hard and soft skills. It is imperative to overcome the historical gap between the traditional role of the project managers as administrators and their new role as managers and leaders. Pressures put on the project managers due to the increased levels of responsibility were also considered. The scientists noted that a substantial percentage of projects end up as failures, and project managers are often devastated by such outcomes. The scholars advised that project managers should receive organizational support to maintain their psychological health and stability.
Reference
Jefferson Carvalho Alvarenga, Robson Rosa Branco, André Bittencourt do Valle, Carlos Alberto Pereira Soares, and Wainer da Silveira e Silva. A revaluation of the criticality of the project manager to the projects success . 2018.
A planned change is a change executed systematically in tandem with organizations future goals and expectations. It ensures an organization moves steadily in its processes of implementing a given solution. In IT project management, change refers to project management process, where the perceived change facets to a project are officially presented and ratified to encourage change.
This paper addresses IT as an agent of change in an organization. The paper also elaborates on the sequence of events which can be utilized by IT manager in creating a planned change. Further, the paper explores IT manager as an agent of change, and effort which has to be asserted to ensure effective change implementation occurs in an organization.
Planned Change Management Process
IT projects have contributed in altering organizations structures. This is due to the fact that, they bring about new responsibilities and duties besides improving efficiency in an organization. Though some IT projects may seem complex and uncontrollable, effective team structure and administration may help strive for their success (Cornelius & Associates, 2004). A well-defined proposed change can help IT managers to amicably implement a project in an organization. According to Netlinkblue (2010), the IT manager should be familiar with techniques of change management; this reduces employees resistant besides improving efficiency and productivity. A clear pattern of design practices for change should serve as a guideline for success project execution.
Identifying a Need for Change
Organizations are ever altering their system to align with existing changes in information technology. This has been through IT projects. Well, to successfully plan and implement change in an organization, the IT manager in partnership with senior management in an organization, must determine why a change is imperative. In this case, problems and opportunities have to be critically evaluated, and define change in aspects such as technology, structure and organization culture (Cornelius & Associates, 2004). Moreover, the manager has to determine whether a change is due to internal or external influence or is just an obligation to stay at par with technology.
To familiarize with why change is required, a manager has to embrace assessment methods to ascertain the ability of organization readiness. The assessment can entail assessing the magnitude of change in terms of how big or complex it is, evaluating the organizations impact as a result of the change. This can include the value and background it brings to affected groups, the competency of change management team, and the influence of sponsors.
Communication
Communication helps in assessing people thought about the anticipated change. An IT manager needs competent skills to effectively communicate efficiently the need for change to the organization (Cornelius & Associates, 2004).
The manager needs to embrace three important elements to confirm what he or she communicates is understood. The first element is communicating with the audience. According to Goman (2000), the manager has to ensure that he or she communicates clearly with the audience on what is said and when. The initial communication is characteristically planned to craft around the organizations business goals and the possibility of not embracing change. Similarly, all stages of the communication process should be planned to share accurate message at the precise time.
The second step is communication planning (Goman, 2000). Communication designs start with careful analysis of audiences, important messages and preparation. The project manager should fashion a communication procedure which involves and addresses the need of entire organization. This is because each group needs a particular kind of information based on the role played in implementing the change
Establish a Change Culture
Creating a changing culture in an organization helps in simplifying change process. Communicating with senior leadership in the organization to determine the value of change as an organization culture helps in identifying better management practices in line with organization culture (Netlinkblue, 2010). Some organizations have a fixed culture, thus hindering change process, however, as an IT manager, you need to create a clear timing with the organization leadership to acquire the necessary needs such as project budget, right people and support. The timing will help eliminate rigid culture that some organizations may have (Myers & Guzman, 2007).
Clear Plan
Smooth planning needs to be written. The IT manager and project team should have a list of tasks which should be accomplished under a given time frame. A detailed diagram showing the entire milestone will be appropriate. The plan should be in tandem with inter-operability of the project and other system within the organization. A better plan will put into consideration backup plans once the proposed change takes effect (Netlinkblue, 2010).
The plan should factor in technical, social and economic aspect of the organization. It will be important for Project team to determine the drivers and resistors and the measures which have to be instituted to accommodate them. Drivers in this sense are aspects which are believed to strengthen success whereas resistors are aspects which can have adverse effects on the proposed change (Netlinkblue, 2010). The plan serves as a guide for project leader, thus it aids in identifying good drivers hence sustaining them whereas mitigating resistors. The plan can become an indispensable tool which can provide essential information for sharing with senior leadership in the organization thus simplifying change management (Myers & Guzman, 2007).
Explaining What Wont Change and Managing Resistance Management
Planning and implementing change in an organization is challenging. Managers and employees feel threatened. This may be required for a variety of reasons such as they will lose control, job and prestige among other reasons (Penrod, 2007). The manager therefore has to identify and provide mitigation measures to counter resistance in the organization. To have a smooth transition, project teams have to explain what the proposed change cannot achieve. This will help reduce resistance. The project teams should formulate plans to involve affected employees. Employees should be encouraged to get involved, cooperate and communicate freely during the project development (Penrod, 2007).
This will generate less resistance during the change process. Consequently, change management practices should be part of the project initiative right from the start. This can entail utilizing a planned change management attitude, dynamic and manifest input by senior management leaders, support by all line management managers and supervisors and communicating that need for change. These processes can reduce resistance and establish a planned change occurs as scheduled (Penrod, 2007).
Training
Training is important in enriching the needed knowledge for change. The project manager in collaboration with change management team has to develop training needs anchored on knowledge, skills and behaviors needed for effecting change. According to McNamara (n.d), the team will benefit by embracing five important steps to ensure the planned change is implemented in the desired manner. The first step will involve assessing and agreeing on the training needs of the project (Penrod, 2007).
This stage will incorporate the project team conducting training needs analysis. Training needs analysis will help in prioritizing joint and individual training desires thus helping both parties to understand the operations and dynamism of the proposed change. Furthermore, the training will help strengthen organization values such as values, ethics and compassion and skills in the organization besides identifying employees needs. Secondly, creating training specifications will support the change management team to break down the requirements into small, manageable units. Thirdly, the team has to consider training styles which are better suited to the organization (McNamara, n.d).
Organizations learning styles primarily affect the type of training to be used, hence, the organization has to understand which training styles suit and embrace it. Fourthly, the team has to plan training and evaluation strategy of the training. This is to determine its effectiveness and value to the organization. Lastly, the change management team has to plan for materials and deliver the training (Penrod, 2007). The team might mind modern creative methods, of delivering the training such as using presentation, workshops, organizing meetings or involving a training consulting firm.
Monitoring
The change process should be monitored to ascertain if it adheres to preliminary plans, or other barriers have crept in. Monitoring should be a continuous process, hence this will ensure any slight discrepancy is noted and appropriate measures instituted (Myers & Guzman, 2007). Effective monitoring will entail taking notes or keeping activity logs as the change proceed.
IT Manager as an Agent of Change
IT manager encompasses many roles in his or her duties to establish organization information needs have been met besides managing complex projects. In this regard, the managers needs to have essentials skills to get all groups affected due to change are involved to get their backing and commitment. This therefore, calls for competency as a cornerstone for acceptance besides soft skills commonly summarized as emotional intelligence (Penrod, 2007).
The Manager thus needs to possess the ability of communication, understanding, team building skills, negotiation skills, managing and factoring the views and fears of other people. Change in IT projects encompasses a variety of forces. The factors do not necessary encompass the reasons and aims for change, but they can involve organizations culture of the organizations employees (Penrod, 2007). Various change projects contest the prevailing cultural context of the organization. Hence, energies to modify such prolonged values culminate in combat and renunciation. IT projects therefore, needs the backing of affected people to make them viable. As IT manager, he or she should endeavor to generate this acceptance to simplify implementation of a planned change with the people (Myers & Guzman, 2007).
Conclusion
Planning change in IT projects like any other similar projects is a complex activity. Thus, competent skills and practices play a pivotal approach. However, adhering to discussed practices and ethics, any IT manager or project manager will find it stress free and enjoyable, thus convincing the like-minded professional to verify the competency and proficiency. Besides, IT managers should promote a culture of understanding new evolving trend of technology to enhance their creativity in fostering change. Thus, this will add value to their skills besides convincing the relevant expertise in their areas of execution.
Reference List
Cornelius & Associates. (2004). The Role of Leadership. Web.
Goman, C. K. (2000). The Biggest Mistakes in Managing Change. Web.
Myers, K. & Guzman, I. (2007). Is Your Next IT Project Scheduled for Failure? . Web.
McNamara, C. (n.d.). Basic Context for Change. Web.
Netlinkblue. (2010). IT Project Success Means Planning for Organizational Change. Web.
Penrod. (2007). Coping with Poorly Planned Change. Web.
In his 2008 article, How to Be a Success, Michael Gladwell contemplates on the essential attributes of a successful person in the 21st century. Pursuing success, both in social interactions and in business is currently seen as one of the main goals for an individual to achieve. According to Gladwell (2008), the formula for success incorporates talent, experience, and a proper sense of timing.
Despite the undeniable significance of being in the right place at the right time and possessing the required extent of talent being crucial parts of success, Gladwell also demonstrates the importance of diligent work. Starting with the example of a fellow student at the university of Michigan, who had a Major in Computer Studies, Gladwell (2008) emphasizes the immense dedication of his friend to learning and working as the vital steps toward becoming an expert in his field. Likewise, the necessity of practice is emphasized in the example of hockey players. Gladwell (2008) specifies that none of the leading teams contains players that were born after September, 1 since younger athletes have disadvantages compared to their peers that have developed physically.
Introducing the concept of success s as the ability to be in the right place at the right time, Gladwell (2008) pinpoints the quintessence of success both in personal interactions and in a business context. Although the author admits that success also depends heavily on ones personality, he makes it explicitly obvious that hard work and determination constitute a crucial part of ones future prospects.
Response
Reading Gladwells (2008) piece leaves rather mixed feelings. On the one hand, his statement concerning the importance of hard work as the cornerstone step in advancing in any field is quite inspirational since it implies that one can succeed even without substantial financial resources. The idea that one can bypass the rigid social hierarchy and teh constraints of the social class by using ones creative and business potential does seem to be quite positive. The specified idea encourages hope and invites one to explore the full extent of ones creative potential, as well as build substantial business processs.
On the other hand, the emphasis on continuous hard work might seem to be not only discouraging but also slightly misleading to some people. Specifically, Gladwell (2008) is quite right to outline the role o persistence and diligence in building ones personal and business success, yet he significantly downplays the role of social connections. Moreover, Gladwell (2008) omits the fact that, along with productivity, diligence, and proficiency, one also needs to have a clear sense of direction, strong leadership skills, and a proper grasp of the situation in teh target market, where one can offer ones product or service. Therefore, the article in question is not inspiring and contentious. The points that Gladwell (2008) makes are admittedly true, yet him overlooking other major success factors might seem as disingenuous. Therefore, Gladwells (2008) article raises a remarkable debate on a rather important topic on the role of social networking in developing business success.
Reference
Gladwell, M. (2008). How to be a success. MacLeans. Web.
The books The Dreams of Two Yi-min by Margaret Mai and Philip Vera Cruz: A Personal History of Filipino Immigrants and the Farmworkers Movement by Lilia Villanueva and Craig Scharlin have many vital points in common. In their stories, the authors reveal the lives of people who arrive in the United States from remote countries in the hopes of a better future. However, both protagonists of the books face numerous barriers before they manage to reach success and capture the desired American dream. Margaret Pais father, Mr. Kwon, and Philip Vera Cruz were both immigrants, the lives of whom had many parallels, even though their ways never crossed and took different turns and directions. However, the social backgrounds of both individuals have been shown to have a significant influence on them, particularly in the context of facing racial bias and social discrimination.
Mr. Kwon came to the US from Japan in search of job opportunities that would turn his life around because he was tired of living in the restricted socio-economic environment of the country at that time. While he considered moving to his homeland, Korea, going there presented many challenges. Aged around seventeen years old, Mr. Kwon met some farmers who were looking for laborers from Korea to work on the sugar plantations in Hawaii, as mentioned by Pai (4). A similar situation occurred to Philip Vera Cruz, who was among the many Filipino men who left for the US. Born in an impoverished neighborhood, he struggled to go by, and eventually, his family lost everything they had. Therefore, both mens socioeconomic background was very similar they came from no wealth, with no opportunities available to them apart from hard physical work that could allow them to get by.
When Mr. Kwon started working at the plantations, he received an extremely low wage. The small one-room apartment he had with his wife was poorly furnished, and they had to cook food, entertain, and sleep in the same place. Philip was very young when he had to start working on the farms and was unprepared for such an occupation. While Mr. Kwon rented an apartment after living behind his employers mansion, Philip lived in the camps for workers. The conditions there seemed to be even worse than the other characters living environment. The author described the camps as being filthy and overcrowded, there was no toilet in the house, and the workers had to dig holes (Villanueva and Scharlin 20).
The socioeconomic backgrounds of both individuals took a toll on them when they arrived in the States as they faced bias and ignorance because of their low position. Philips experience was similar to what the majority of Filipino men went through they were seen as only physical labor workers who had nothing else to offer. His wife was not treated as an American citizen even though she had already lived there for several years. Even when she was officially allowed to obtain an American passport, she was denied from streamlining the process, with the Immigration Office officials claiming that they could not guarantee that she would ever be able to have the document issued. Such an example shows that immigrants were not treated the same as other citizens, which prevented them from reaching their desired position in society.
The importance of both stories is illustrated in the positive but gradual changes that began occurring in the characters lives. While Philip became engaged in protesting against the injustices that he and his peers encountered when coming to America, Mr. Kwon focused on working hard and providing the best life for his family. He opened a ship that later transformed into a factory while Philip was the founder of the Agriculture Workers Organizing Committee and engaged in ongoing volunteer and advocacy work. He later became the highest-ranking Filipino officer at the organization and worked hard on improving the living and working conditions of both farm workers and underserved populations.
To summarize, both Mr. Kwon and Philip had similar socioeconomic backgrounds upon their moves to the United States. In the hopes to improve not only their living situations but also have greater access to more opportunities, they faced discrimination and injustice. While both of them started their careers as simple laborers who were not regarded as parts of society, their paths expanded gradually to include more turns and stops. One cannot deny that both the social status of the characters in their homeland and upon arrival to the US prevented them from being successful in life without proper education, the range of their opportunities was highly limited. However, through dedication and perseverance, Mr. Kwon and Philip got what they wanted; otherwise, their stories would not be as compelling. The Dreams of Two Yi-min and Philip Vera Cruz teach readers that social inequality is a real problem that should be taken lightly. No matter how eager a person is to be successful, their socioeconomic background could act as the critical barrier to accomplishment.
References
Pai, M. K. (1989). The Dreams of Two Yi-min. Amsterdam University Press.
Villanueva, L., & Scharlin, C. (2000). Philip Vera Cruz: A Personal History of Filipino Immigrants and the Farmworkers Movement, Third Edition (Third ed.). University of Washington Press.
