The Merger Between Alcatel SA and Lucent Technologies

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Alcatel SA was a successful French company. It was a telecommunications company. Lucent Technologies was an American telecommunications company. The merger between the two companies was supposed to yield great success in their business model. The paper would discuss the resulting changes after the merger.

The merger would result in major challenges. The two companies originated from two distinct cultures. The American system and the French culture differed in their view of culture. America was an English speaking country while France’s national language was French. The merger seemed to indicate that both of them were equal entities. But they had to move the head office to Paris. The Chief Executive Officer, Patricia Russo came from America.

They had to realign their differences in the markets and form one formidable strategy (Pedersen 109). They had to do away with about 88,000 staffs and overlapping functions to save approximately $2 billion annually. Frances’s Alcatel was the larger of the two companies and had to lead the way. They listed the company on the stock exchange in Paris. There had been a history of Multinational mergers involving the USA companies that had failed. The French laws favored the French workers and dealing with the deduction of employees would prove to be a daunting task.

Differences in culture normally cause many cross-border mergers and transactions to fail (Vachon 250). It is not easy for corporate leadership to suddenly change their cultures just because of a merger with an international company. Cross-border mergers increase these differences when they appoint a leadership that is strange to the local employees. During the mergers, the top leadership sometimes make mistakes by making decisions based on their views in disregard of the employees. The employees then begin to resist the changes in the system because of lack of consultation (Hesselbein and Goldsmith 216).

Another reason is the differences in policies of the origin countries of the merging companies. For instance, in America companies can reduce the number of employees based on the company’s policy (DePamphilis 177). But in France, there is the need to put the labor unions into perspective. They are very powerful there. The market is competitive. Sometimes the mergers end up discouraging the customers. They start feeling that part of what was theirs is gone. They begin to shift their purchasing preferences to other local companies. Therefore, instead of gaining the market, the new company begins to lose the previous markets considerably.

The acquirer and the target companies normally have the concerns of the two markets they previously held before the mergers. They have to communicate to them in the language that would convince them that the reason for the mergers is to improve their service and product offerings. Therefore, their communication normally seeks to make the people think that the combination of the two companies is a merger of the equals. They also seem to want their markets to understand that they join to complement their weaknesses. For instance, Alcatel had not yet gained the USA market fully, while Lucent had gained the USA market except other markets. They had to gain the presence in all the markets. Another reason is to build confidence in the staffs of the target company. The mergers sometimes tend to do away with the staffs of the target company because the acquirer may boast of better staffs (Ibeh and Davies 510). The merger may also result in lowering salaries of the staffs of the acquiring company in the process of harmonizing the salaries and duties. By stating that it is a merger of equals the acquirer and the target encourages the current staffs. It is also supposed to build the trust of the company suppliers (O’Sullivan 398). They normally want to make it a smooth transition from the previous state to a higher state of affairs.

The merger between Alcatel and Lucent is a merger of equals because of the potential for growth that each company has. Alcatel has a sizeable market all over the world while Lucent has a bigger market in the USA market. Lucent provided the company’s Chief Executive Officer while Alcatel provided the company’s Board Chairman. They both agreed on the decisions to move forward. For instance, the decision to reduce the number of staffs was acceptable by both sides.

On the other hand, it seems that the communication strategists did not mean what they said. The merger seemed to put the French company at an advantage over the target. They moved the headquarters to France. They also listed the company on the stock exchange market in France and not USA. The merger also enabled Alcatel to appoint its staff to high ranking positions. For instance, the chief operating officer, the chief financial officer, the head of the key emerging markets units, and the director of human resources all came from Alcatel. The two independent directors hailed from the European countries. All these made the merger look biased towards the French company.

References

DePamphilis, Donald M. Mergers, Acquisitions, and Other Restructuring Activities, Amsterdam: Elservier/Academic Press, 2008. Print.

Hesselbein, Frances, and Marshall Goldsmith. The Organization of the Future 2, San Francisco, California: Jossey-Bass, 2009. Print.

Ibeh, Kevin, and Sheena Davies. Contemporary Challenges to International Business, Basingstoke,England: Palgrave Macmillan, 2009. Print.

O’Sullivan, Kevin. Strategic Knowledge Management in Multinational Organizations, Hershey, PA: Information Science Reference, 2008. Print.

Pedersen, Torben. Orchestration of the Global Network Organization, Bingley, United Kingdom: Emerald, 2014. Print.

Vachon, Dana. Mergers & Acquisitions, New York: Riverhead Books, 2007. Print.

Click Here To Order Now!

The Merger Between Alcatel SA and Lucent Technologies

Do you need this or any other assignment done for you from scratch?

We have qualified writers to help you.

We assure you a quality paper that is 100% free from plagiarism and AI.

You can choose either format of your choice ( Apa, Mla, Havard, Chicago, or any other)