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Leadership and Ethical Decision Making

It is very difficult to achieve acquisition success. According to Fleuriet (2008), 50% of all acquisitions were unsuccessful. In fact the process of acquisition is very complicated in business. It has many dimensions that exert influence on its outcome. According to knowledge-based views, companies can create greater values by means of the retention of resources that are knowledge-based which they integrate and generate and integrate (Rumyantseva, Enkel, Back, Von Krogh, & Gurgul, 2002). Knowing that merger of Paledenim and Uwear may require a dramatic change in company culture, many factors which matter the success of this merger and the key risk factors that may influence the effectiveness of the merger should be considered. Therefore, it is needed to cover any government regulations and compliance issues that may be pertinent to our business or current business climate as a whole. In order to achieve the benefit for both companies, the management team must be prepared to development of new HR-strategy. Taking into consideration the fact that Paledenim has always been a privately-owned company and will now merge with Uwear which is publicly-owned, it is necessary to develop new effective HR strategy.

Taking into account that both the employees and managers of each company have different philosophies and expectations, the main purposes of HR managers of the company should be:

  1. Changing of organizational design. Changing of organizational design includes optimization of the organizational structure, business processes, decision making support systems, information management, support for redundant workers.
  2. Coordination or adaptation of management systems, talent, and human capital. It can include the following: appointment of key management positions, movement of staff at equivalent grades; integration into a new process model of career management and professional development; retention of key employees in the short and long term; harmonization of the rewards and benefits.
  3. The transformation of corporate culture. According to the difference in corporate culture of both companies, Paledenim and Uwear, there is a need to develop a new strategy to transform the corporate culture of the new company after the merger. This can be expressed in the following issues: understanding of the culture of the organization paledenium (as Paledenim employees and managers have a kind of done-for-all and all-for-one attitude and it is private and has only 15 employees); assistance in integrating into a new cultural environment: the history, principles, language and tradition, corporate standards and policies; adherence to high ethical standards before, during, and after integration.

The management teams of Paledenim and Uwear must be introduced to all the government regulations on merger and acquisition today. When the customer wants to purchase a particular company’s unit or division that is not a separate legal entity, an asset purchase structure can also be used. There are many challenges to this transaction type, comprising determining whether the unit utilizes services from other units of the selling company, isolating the specific assets and liabilities that pertain to the unit, transferring permits, licenses, and employees, and ensuring that the retailor does not compete with the purchaser in the same business area in the future (McKenna Long & Aldridge LLP, 2011). If the corporate cultures are incompatible, one organization can be rejected as a foreign body. To avoid this situation management team must support new HR strategy in order to make this merge more effective and successful. The purpose of mergers and acquisitions are discussed below. First of all, the value of the company as well as its profitability can be increased in the short to medium term due to expanding portfolio of products / services, adding new (complementary) categories / product brands, penetrating new markets (segments), reducing costs (research and development acquired products / services), purchasing competitive advantage (distribution network, unique technology, skills of employees, etc.).

The most important factors for success are organizational integration and human capital.


Fleuriet, M. (2008). Investment banking explained: An insider’s guide to the industry. McGraw Hill Companies.

McKenna Long & Aldridge LLP. (2011). Mergers & acquisitions quick reference guide. Retrieved from–acquisitions-quick-reference-guide-by-mckenna-long–aldridge-llp?q=Public+policy&platform=0.

Rumyantseva, M., Enkel, E., Back, A., Von Krogh, G., & Gurgul, G. (2002). Knowledge integration after mergers & acquisitions. Institute of Management, University of St. Gallen.