Executive Summary
Alliances in business are a common practice that intends to benefit all people in the business. Business wants to undergo alliance because they believe that alliance can benefit both companies in diverse ways. The paper will discuss about the alliance of Lojack and Micrologic. The paper will also discuss strategy related questions about the case.
Introduction
External analysis pinpoints major opportunities and threats posed by the environment. It analyzes those external factors the community or public sector jurisdiction cannot control but which nevertheless affect its ability to achieve strategic objectives. Internal analysis provides an objective understanding of the controllable factors in the public sector jurisdiction’s internal environment, identifying those with the greatest long-term impact on a community’s or organization’s position (Mercer 1991). The objective of this analysis is to identify the organizations or community’s major strengths and weaknesses with respect to its overall mission or relative to each of the strategic issues it faces. The usefulness of the internal analysis depends on objectivity and completeness and identifies strengths and weaknesses of the organization as it attempts to implement strategic plans, goals and objectives, and its overall mission. Organizations need to be aware of what is happening in their environment that might affect them. In other words, they should continually survey and monitor the outside as well as the inside of the organization (Mercer 1991).
Five separate but overlapping environments should be monitored. These include the macro environment, the government environment, the competitive environment, the citizen environment, and the organization’s internal environment. These areas should be surveyed in depth. Environmental scanning will also identify a variety of factors, both internal and external to the organization. In fact, one of the benefits of strategic planning is that an organization will gain a better understanding of how environmental scanning should be done and be able to manage more effectively as a result. Factors to be considered as part of the macro environmental scanning process include social factors such as demographics, financial factors such as interest rates, and political factors such as increasing government deregulation, changing federalism and state government’s trends, and regulations (Mercer 1991). The competitive-environmental scan includes consideration of general competitor profiles, market segmentation patterns, research and development, and others (Mercer 1991). The combination of environmental assessment and forecasting, and the strength and weakness evaluations is often referred to in the strategic planning process as the situation audit or the environmental scan. The basic purpose of the environmental scan is to assess the environment within which strategic planning will be conducted and to develop a set of strategic issues (Mercer 1991). Strategic Issues comes out after environmental scanning is done. The strategic issues provide information to companies on what problems they have to find solution for and what strategies should they focus on so that they can have advantage over competition.
Leading successful change
Over the last two decades of the twentieth century, theories of organizational changes have had a tremendous impact on business and not-for-profit companies. Many of the top corporations, have implemented one or other change program over the last twenty years, often at the cost of millions of dollars, and involving large-scale restructuring and extensive job losses (Mills 2003). At the end of the day, while it is generally agreed that certain change programs have become widely popular, there is considerable debate about the success or failure of the subsequent changes themselves. Business critics blame suggested failure on incorrect implementation. Other business critics are less convinced, questioning the lack of evidence of a clear link between the implementation of selected change program and subsequent business success. It is argued that, within management thought and practice, the notion of organizational change has changed in significance over the last two decades, from one of many potential strategies of managing to a key influence on organizational effectiveness and survival. The focus has shifted from the strategic choice of the actor to one of incontrovertible external forces that managers need to anticipate, react to and manage. It is contended that organizational change as imperative has become an important management discourse that can be witnessed in the discursive practices of companies (Mills 2003).
Explaining the popularity of organizational change in sense making terms it can be argued that change has become a conventional management practice, developed and sustained through a powerful management discourse, whose on-going character influences the decision-making of large and small companies, profit and not-for-profit companies alike. Whether or not the adoption of a particular program of change is the right course of action for some companies doesn’t seem to matter. Decisions to implement change programs are based on plausibility rather than accuracy. Prior to 1980, within business texts, organizational change as a management technique was either not mentioned at all or was limited to discussion of group dynamics and employee resistance to change (Mills 2003).
Over time, the emphasis on change programs has switched focus from ways to improve employee satisfaction to a goal today of customer-driven corporate effectiveness. But something more than a change in focus has occurred. The notion of organizational change has taken on new meaning. Since the early 1980s, it has become an imperative rather than a technique to be considered at appropriate times, a holistic rather than a piecemeal approach to organizational effectiveness (Mills 2003). Organizational change is done by a company when it believes that the company is not adjusting to the new trends in its environment. To turn the division around the management must make sure that the changes will help the members of the organization to easily adjust. The management must also make sure that there are back up plans in case the changes that the company intends to make will fail. An organizational change done by companies involves mergers and acquisition.
Mergers and Acquisition
It is difficult to justify lies or deceptions at any time during the merger and acquisition process. However, they are most likely to occur during a negotiations process in an attempt to make the acquisition more attractive to the other party. It is not necessarily unethical to pursue one’s own benefits at another’s expense, but the manner in which the gain is pursued and obtained affects the degree to which the actions are considered unethical (Harrison, Hitt & Ireland 2001). Coercion can occur at several points in the merger and acquisition process. Statements made by both parties prior to the completion of a merger or acquisition process often emphasize participation by both parties in implementing appropriate organizational change, yet the process of such change can be tightly controlled by the managers of the acquiring firm. Sometimes the acquirers can act like victors and simply demand that the acquired firm’s employees make the necessary changes (Harrison, Hitt & Ireland 2001).
In these cases, they are coercing a change in culture and procedures along with other types of changes being implemented. Although such changes may not be unethical, coercive changes often lead to ineffective integration. In these cases, employees frequently resist the changes, sometimes in subtle or tacit ways. Consequently, the changes may be less effective than they would be otherwise. Furthermore, if employees feel they are being coerced, the best ones are likely to leave, causing the newly merged firm to lose valuable human capital (Harrison, Hitt & Ireland 2001). These outcomes represent voluntary but undesired turnover and the inadvertent loss of human capital. When units from the two firms performing the same or similar tasks are combined, economies of scale are often created. In these instances, some employees become expendable after the two firms are integrated. These terminations should be handled in a sensitive and humane manner (Harrison, Hitt & Ireland 2001).
As mergers and acquisitions are announced and implemented, employees can feel stress, anger, disorientation, and sometimes fright. When this occurs, employees may reduce their commitment to the organization and lower their productivity as well. The employees’ psychological states can produce potentially dysfunctional behaviors. The integration process in mergers and acquisitions is difficult enough without including questionable management tactics and decisions (Harrison, Hitt & Ireland 2001). Mergers and acquisitions often involve long waiting times with high uncertainty, frenzied activity, minor and major changes, and tensions and conflicts in the best of circumstances. These conditions create uncertainty and stress. If, prior to mergers and acquisitions, promises are made for both parties to participate in the implementation process, changes should not be forced on the other party after the merger or acquisition contract has been completed and signed (Harrison, Hitt & Ireland 2001). Mergers and Acquisitions fail because some companies force other companies to instantly adjust to the culture of the more powerful company. When a company is forced to change the tendency is for the said company to commit more mistakes. The company must take the changes brought in by the mergers and acquisitions slowly.
Benefits of the alliance
A new business undertaking such as a merger, acquisition, or alliance in the competitive landscape can impact the competitive behavior of other players. One move by one or two major players influences the existing competition pattern in that industry. In general, the reasons for mergers and acquisitions include achieving competitive advantages through market power, overcoming barriers to entry, increasing the speed of market entry, the significant cost involved in developing new products, avoiding the risk of new product development, achieving diversification, and finally avoiding competition (Culpan 2002). Although small and medium-size firms with product and market niches continue to compete in domestic and global markets, they will have a rough time against mega companies that have plenty of resources. The major driver of strategic alliances, the emergence of intense global competition, has rendered less effective the simple generic strategies that have been the staple of many U.S. firms (Culpan 2002). In order to employ inter firm collaboration as a strategy, managers of firms should change their conventional thinking about competition and reorient themselves to collaborative ways of operating in the global economy, because resources and capabilities of firms are so diverse that no single firm has all the necessary ingredients to develop effective global strategies. Firms are realizing that drawing on the competence of others around the world to compete effectively is not only feasible but also often necessary (Culpan 2002). Alliances provide numerous opportunities to businesses. Alliance can provide the necessary assistance of companies to each other.
Background of Lojack
Lojack is the business that produces car products that helps in making sure that any car stolen can be brought back to its owner. Lojack creates a small radio frequency transmitter that provides information to police when a car is stolen. After reporting a stolen car to the police, the law enforcers use a specialized device that can receive inaudible signal coming from the car that has Lojack product in it. The inaudible signal helps the police determine the location of the stolen car
Background of micro logic
Currently, the application of new technologies involves such things as keying in characters on a computer keyboard, mobile phone, or through touch pointing, using voice-recognition software and such like. These technological developments suggest that multimedia, multi-disciplinarity and oracy will become more prevalent. If holistic multi-skilling applications and interactions become more valued, it is possible that the act of writing music will in future become a backup system to the new technology (Ellis & Loveless 2001). Micro logic creates innovative products and productivity software that caters to the need of their clients. The company creates product that is not only easy but powerful as well. This product comes with powerful software that enables the user to fully appreciate the company’s products. The company’s products have been introduced and circulating in the market for so many years and most of the products have been granted patents.
Question 1
Strategic Thinking
There was no fancy terminology for corporate thinking. From committees to consolidation, from being union-whipped to market-driven, from the urgency of profitability to customer focus, the corporation mentality was thoroughly and only reactive. Opportunism was the epitome of intervention. Most recently, it has become painfully obvious that all of the late corporate machinations reinventing, restructuring, downsizing, merging were not the result of strategic thinking but of episodic reaction. The legacy of the corporation is that radical innovation always comes from the outside. Of all the attributes of leaders, risk most readily informs strategic thinking (Cook 2000). No doubt that is the reason corporation and administration model organizations produce no real leaders. That is not to say that there are no leaders in these organizations, only that they were not produced by those systems. Leadership training, so called, is the most effective known prophylactic for the prevention of leaders (Cook 2000).
The corporate administrative mentality results in anti-leaders, those who by their presence, attitude, and activity suppress or, in some instances, oppress the authentic leaders among the social clusters within the organization (Cook 2000). In the case strategic thinking was used to decide whether or not the two companies would undergo the alliance. Although the alliance is generally a good thing, there are some complications that can come out of it. Such complications include both companies being implicated in the image of the other.
Strategy formation
The term strategy is used far differently by authors who espouse incremental theories than by those who follow deterministic models. According to most incrementalists, strategy usually is something that occurs intuitively spontaneously, insightfully, and opportunistically but neither deliberately nor necessarily rationally. Strategy formation is an essentially inductive process for the incrementalist. Conversely, the deterministic model is much more rational and deductive, taking account of internal capabilities, external opportunities and alternative means of reconciling the two so as to accomplish a mission successfully. A chief executive must choose the relative degree to which autonomous strategy formation from within the organization will be encouraged, and the extent to which strategy first will be determined in a more formalized way at the top (Roney 2004). Before the alliance was finalized, the two companies formulated strategy formation so that the negative effects of the alliance can be known and given proper solution. Strategy formation is a vital thing done by a company to ensure that there are lesser consequences for its actions.
Strategic Change
A variety of labels have been used for the newer organizational change as opposed to Organizational Development frameworks, but the ones, which seem to have gained most currency, are the emergent approach or contextual processual approach to organizational change (Preece & Steven 1999). Here, as contrasted to the planned approach to change, organizational change is seen as an open-ended, continuous process of response to changing contexts, where the focus is on the temporal and interconnected nature of change, and the influence of subjective attitudes and perceptions on the history and outcomes of change. The processes by which strategic changes are made seldom move directly through neat, successive stages of analysis, choice and implementation (Preece & Steven 1999). The Alliance between Lojack and Micrologic bring a different kind of strategic change since it creates newer environment and image to the company. The combination of two companies brings about newer environments for employees to adjust and a possibility of better competitive advantage for the two companies.
Question 2
Strength of the alliance
The alliance helps the two companies in supporting each other financially. The two companies have lesser financial worries and its financial duties are lessened. The alliance also helps both companies to complement their respective products. Moreover the alliance gives the two companies competitive advantage over rivals. The combination of the individual strength of both companies can be used so that both can have advantage over competitors.
Weakness of the alliance
A weakness of the alliance is the negative image of one of the companies may be transmitted to the other company. A negative image of Micro logic or Lojack can affect the image of the other company. It may change client’s perspective of the company. Another weakness of the alliance is the individual identity of the company may be lost. The individual identity of one of the companies can be the one that attracts clients and the alliance creates a reason for clients not to acquire the companies’ services.
Opportunities
An opportunity of the alliance is for both companies to use each other resources for them to achieve benefits. Since alliance can be compared to partnership of individuals, some resources the company has can be used by the other company for its own benefit. Another opportunity of the alliance is for both companies to brainstorm new products that can provide better services to their clients. The alliance can produce newer ideas for products that can help in providing customer satisfaction.
Threats of the alliance
A threat to the alliance is the competitors of both companies. The competitors they have might find a way to equal or exceed the performance of the companies in the future. This could cause them problems or major hindrances to achieve their goals. Another threat of an alliance to both companies includes the laws in the country they are operating in. These laws can hamper business transactions to be completed and it may cause hard business transactions in the alliance. Lastly a threat to of an alliance to both companies is the tariffs and taxes that the companies have to pay in different countries, each countries has its own rate of taxes and tariff. The taxes and tariffs collected by a country is a threat because this causes expenditures to both companies and the alliance may increase the taxes to be paid.
Question 3
Future strategic direction
The early stages of integration require strong and decisive leadership. People on both sides of the merger need to know who will be responsible for establishing their strategic direction and guiding them through the transition. There are a number of crucial decisions that remain essentially on hold until the senior management team is announced; the appointment of this team is one of the first and most critical steps in the merger process. In some cases, the entire top team is announced before the deal closes. In others, the leader is announced first, with the rest of the senior management team appointed soon after (Wall, SR & Wall, SJ 2000).
Sometimes, the top team is announced even later, after much of the transition work has begun. As you can imagine, this typically causes great confusion, and integration teams may have to redo many of their plans. A business is not well served by a leadership team composed of people who are carbon copies of one another. Even the most entrepreneurial start-up business benefits from having some leaders who are inclined toward standardization and the establishment of replicable business processes. Likewise, a business that is focused on maintaining an already strong market share via proven, efficient methods can always use some innovative thinkers and new perspectives (Wall, SR & Wall, SJ 2000). The future strategic direction of the alliance is strengthening both the good things for the company and giving appropriate responses to its weakness. Another future strategic direction of the alliance is competitive advantage for the company.
Conclusion
Mergers and Acquisitions fail because some companies force other companies to instantly adjust to the culture of the more powerful company. When a company is forced to change the tendency is for the said company to commit more mistakes. The company must take the changes brought in by the mergers and acquisitions slowly. One company that underwent alliance is Lojack and Micrologic. Lojack is the business that produces car products that helps in making sure that any car stolen can be brought back to its owner. Lojack creates a small radio frequency transmitter that provides information to police when a car is stolen. Micro logic creates innovative products and productivity software that caters to the need of their clients. The company creates product that is not only easy but powerful as well. In the case strategic thinking was used to decide whether or not the two companies would undergo the alliance. Although the alliance is a good thing, there are some complications that come out of it.
Credit:ivythesis.typepad.com
0 comments:
Post a Comment