Business merger

Running head: SAMSUNG AND APPLE INC. MERGER
Samsung and Apple Inc. Merger
Student’s Name
Institutional Affiliation
Date of Submission
1
SAMSUNG AND APPLE INC. MERGER
2
Introduction
Undoubtedly, the world we live in today has experienced significant economic change.
Mergers have proved to be vital and common business tools (Wiley, 2011). They are
implemented by many companies and organizations across the world. Driven by the philosophy
of shareholder value, they not only form new cultural, social and economic environment, but also
enable big organizations and companies to scale their operations faster giving them a competitive
edge and also rewards entrepreneurs for their hard work, ensuring smaller and weaker
organizations are swallowed or made irrelevant (Miller, 2018).
Significant economic changes have led to an increase in competition and interdependence of markets for various services and goods (Wiley, 2011). Miller (2018) notes that
many organizations and business enterprises are doing their best to grow and expand their
geographical reach. Organizations that chose to grow, normally make an effort to gain additional
market share, improve their profits, reach new customer bases, and offer good returns for their
shareholders (Wiley, 2011). The ones that choose not to grow risk losing their customer bases,
market shares and destroy stakeholder and shareholder values (Wiley, 2011). Growth in the
current era occurs through mergers. Mergers have potential benefits that include boosting
shareholder value and profits through economies of scale due to the increase in market share,
increased use of the available networks of distribution, accession of new product capabilities and
variegation of market risks and existing products (Wiley, 2011). This report will assess the
merger between Apple Inc. and Samsung.
Apple Inc.’s Mission Statement
SAMSUNG AND APPLE INC. MERGER
3
The mission statement for Apple Inc. is “To bring the best user experience to its
customers through its innovative hardware, software, and services” (Aljafari, 2016)
Samsung’s Mission Statement
Samsung’s mission statement is “We will devote our human resources and technology to
create superior products and services, thereby contributing to a better global society” (Jung,
2014).
New Mission Statement
To devote our resources and innovative technological practices to create superior
products and services in order to bring the best user experience to our customers
Comparison of Organizational Structures of Apple Inc. and Samsung
Mechanistic vs Organic
The most noteworthy part of Apple’s business is design and planning and this office has
an organic structure (Aljafari, 2016). Representatives’ thoughts and structures are regarded and
they have the opportunity to use these thoughts in the tasks they seek to undertake (Aljafari,
2016). The organization likewise energizes inventiveness and development. All items are
planned by a little group made up of up to 20 people and these originators settle on their own
choices (Aljafari, 2016). In generally speaking, the organization has a progressively natural
structure while offices like operations, sales and retail have a mechanistic structure portrayed by
unified dynamism by the senior administration.
Then again, Samsung’s authoritative structure is mechanistic in nature (Jung, 2014). The
organization’s authoritative structure is profoundly separated into a various leveled structures
SAMSUNG AND APPLE INC. MERGER
4
both on a level plane and vertically (Jung, 2014). The individuals from the organization are
exceptionally restrained from making their own decisions and taking necessary actions unless
authorized by the management (Jung, 2014). There is likewise high inclination for formalization
inside the company and the administration style is profoundly bureaucratic (Jung, 2014). There is
likewise solid restrictiveness and hesitance to redistribute (Jung, 2014).
Task Role Rigidity
As far as task role rigidity is concerned, the company’s corporate structure has low
adaptability (Aljafari, 2016). The top administration forestalls lower levels of the hierarchical
structure to react to the present market requests and business needs (Aljafari, 2016). For instance,
the organization’s item based divisions need to sit tight for guidelines and mandates from the
senior administrators before they actualize changes pointed in tending to the present market
drifts in the electronic world (Aljafari, 2016). Be that as it may, the present CEO has organized a
few upgrades planned for improving coordinated effort inside different offices (Aljafari, 2016).
Such coordinated efforts have improved adaptability yet at the same time the present structure
doesn’t bolster fast changes (Aljafari, 2016).
Regarding task role rigidity, Samsung’s hierarchical structure is exceptionally inflexible
(Jung, 2014). All systems and procedures have been authoritatively approved (Jung, 2014). The
organization considers all strategies and procedures outside the set up conventions as fluctuations
and they must be managed (Jung, 2014). This inflexibility and formalization is driven by
productivity (Jung, 2014). Change decrease nurtures consistency which thus empowers
enhancements in proficiency (Jung, 2014).
Communication
SAMSUNG AND APPLE INC. MERGER
5
Correspondence inside Apple Inc. is multi-directional (Aljafari, 2016). The organization’s
structure can be seen as generally complex however basic in nature. This communitarian
structure has empowered lower level representatives to speak with both center level
administrators and top level chiefs (Aljafari, 2016). The association’s business techniques are
flawlessly lined up with the authoritative structure and its levels of leadership (Aljafari, 2016).
This proficiency empowers the top administration to designate obligations to center level
supervisors who thusly suitably pass on the business targets to low level representatives
(Aljafari, 2016). In this manner, there exists cooperation incorporated with proficient joint effort
and coordination. The free progression of data between different degrees of the organization has
empowered the organization’s activities to be adjusted near the company’s targets and objectives
(Aljafari, 2016).
In Samsung’s authoritative structure, correspondence is vertical (Jung, 2014).
Correspondence includes transmission of data and different reports to the administration for
thought and action (Jung, 2014). Coordination is generally kept up through a hierarchy of
leadership (Jung, 2014). For instance, the senior administration is liable for cross coordination in
useful divisions, for example, the joining of deals estimates with creation plans.
Decision Making
Apple Inc.’s structure bolsters a unified dynamic system whereby supervisors in all levels
allow workers participate in the decision making procedure (Aljafari, 2016). This system
empowers Apple Inc. to handily recognize the shortcomings and qualities of the organization and
how to suitably figure the improvement plans (Aljafari, 2016). A unified dynamic structure
spurred by a shortsighted beginning up situated authoritative structure has empowered the
administration to plan and actualize viable business methodologies (Aljafari, 2016).
SAMSUNG AND APPLE INC. MERGER
6
The process of making decisions in Samsung is highly centralized (Jung, 2014). There is
a weight on the centralization of the board authority (Jung, 2014). The top level administration
offers distinctive data and orders from their degree of the executives to the subordinate
administration levels (Jung, 2014). This empowers the lower level representatives to play out
their assignments or exercises at the best of their insight and with high effectiveness (Jung,
2014).
New Organizational Structure
The merger will form a company with an organizational structure that is both mechanistic
and organic. Building the new organization on asymmetric adaptability, the new organization
will structurally arrange its teams in order to maximize both on structural adaptability and
performance. The adaptation of both mechanistic and organic structures will offer the much
needed flexibility and ability to perform excellently in different situations and environments
(Wiley, 2011). This will also help in the utilization of team based structures in handling various
tasks most of which demand flexibility and efficiency. Different environments will require
different levels of adaptability, flexibility and efficiency.
The key departments of product design will have an organic structure. The ideas and
structures of these employees should be respected and they should have freedom to use their
ideas in projects aimed at improving the organization’s product portfolio. This freedom and
flexibility will inspire and foster innovation and creativity (Aljafari, 2016).
SAMSUNG AND APPLE INC. MERGER
7
New Organizational Chart
CEO
VP RESEARCH &
DEVELOMENT
DIRECTOR
ENGINEERING
SOFTWARE
DEVELOPMENT
HARDWARE
DEVELOPMENT
GENERAL
GENERAL
COUNSEL
COUNSEL
VVVV
VP OPERATIONS
DIRECTOR
HR
DIRECTOR
COMMUNICA
TION
REGIONAL
HR
DIRECTORS
SUPPORT
TEAM
DIRECTOR
SALES
DOMESTIC
SALES
ENVIRONMENT,
ENVIRONMENT,
POLICY
POLICYINITIATIVES
& SOCIAL
&SOCIAL
INITIATIVES
DIRECTOR
AUDIT
COMPLIANCE
TEAM
INTERNATIONA
L SALES
CFO
REGIONAL
FINANCE
DIRECTORS
SALES SUPPORT
TEAM
DESIGN
A number of departments such as operations, sales and regional stations will a
mechanistic structure characterized by centralized decision making. This structure will ensure the
organization makes decision as a unit will encouraging its members to implement their
innovative ideas where possible.
SWOT Analysis of the New Organization
Strengths
➢ Large product portfolio
Weaknesses
➢ High prices
SAMSUNG AND APPLE INC. MERGER
➢ Development of new products
➢ Strong brand image
➢ Financial strength
➢ Large distribution networks
➢ Amazing product design
8
➢ Damaged image due to infringement
lawsuit (Samsung)
➢ Heavy dependence on consumer
electronics
➢ Software limitations for Apple Inc.
products
➢ Niche customer target
Opportunities
➢ Globalization and emerging new
markets
Threats
➢ Increasing popularity of Chinese
brands
➢ Increasing technological dependency
➢ Emergence of new competitors
➢ Investment in research and
➢ Lawsuits
development
➢ Product diversification strategy
➢ Changing consumer tastes
➢ China tariffs
➢ Acquisition of new companies
The two companies’ combined hold the largest market share in the mobile phone
industry. They both have the financial strength. Apple has the most valuable brand and has been
ranked first for the past seven years (Zhang, 2019). Its estimated annual revenue is $260 billion
while its market cap by late 2019 was $1.19 trillion (Zhang, 2019). On the other hand, Samsung
has an annual revenue of about $225 billion and a market cap of about $326 billion (Jung, 2014).
Samsung occupies the second position in technology companies that manufacture electronic
devices (Jung, 2014). Merging the two companies will form an organization recognized for its
SAMSUNG AND APPLE INC. MERGER
9
evolutionary advancements in the technology world. Samsung has the largest portfolio for
consumer products and both companies have large distribution networks across the world (Jung,
2014).
The new organization can leverage its strengths to exploit the numerous opportunities
across the world. The strengths include large product portfolio, development of new products,
financial strength, strong brand image, large distribution networks and amazing product designs
(Miller, 2018). Apple’s key marketing strategy lies in its product design (Zhang, 2019). Also, in
regard to consumer products across the world, Samsung has a wide range of excellently designed
high end products including television sets, mobile gadgets and refrigerators among others (Jung,
2014). Banking on this strength, the organization should exploit opportunities and untapped
global markets. Currently, India and Africa are emerging as popular markets for electronic
products due to their high population and an ever increasing middle class population. The
organization should set up regional markets in the two regions and scale up their marketing
efforts in order to gain a significant market share (Zhang, 2019). There should be an investment
in research and development aimed at production of electronic devices that meet the consumer
demands of these two regions.
Weaknesses might affect the pursuit of opportunities for this new organization. The
weaknesses include high prices for some of their popular products, patent infringement cases and
lawsuits filed against the two companies, software limitations for Apple Inc. products and heavy
dependence on consumer products (Zhang, 2019). Patent infringement cases often lead to the
disruption of products and damaged reputation which in turn affects sales and profits (Jung,
2014). Also these suits sometimes result into companies being heavily fined. Also, high prices
SAMSUNG AND APPLE INC. MERGER
10
for some of their popular devices may become an obstacle in venturing into the new markets in
India and Africa (Zhang, 2019).
Communication Plan
The perception created by mergers for employees may be doubt, fear and uncertainty due
to the changes within the new environment (Piesse, Lee, Lin & Kuo, 2013). In this new
environment, the new employees are expected to continue working and flourishing (Piesse et al.,
2013). The mention of the term “merger” can lead to half-truths or misinformation. The clarity
about the intent and motives, as well as the timing of the communication during a merger,
requires strategic management (Piesse et al., 2013). The timing of the release of the information
and the communication channels used are all vital. Therefore, communication is viewed as a
crucial antecedent of mergers’ performance and presumed to contribute to their success (Piesse
et al., 2013). It is viewed as the backbone of the new organizations and one of the key reasons
why some mergers fail (Piesse et al., 2013). The main question is, who needs to know what, by
when and how they need to hear it?
Contents of the Communication Plan
The communication plan will contain the initial announcement, the second
announcement, closing letters to all impacted stakeholders, the welcome letter after the signing
of the deal, human resource updates that include information regarding to the changes in the
employees’ compensation and benefits, and continuous communications regarding the success of
the merger and the alignment of the employees with the new objectives or strategies.
Types of Resistance and Strategies to Manage Resistance
SAMSUNG AND APPLE INC. MERGER
11
One of the key responsibilities of managers is to facilitate changes smoothly. Change is
always inevitable and resistance always accompanies change (Val & Fuentes, 2003).
Organizations must work hard to adapt to change if they want to be successful. The following are
the types of change experienced in organizations:
Psychological Resistance
This form of resistance happens purely on psychological and mental factors (Val &
Fuentes, 2003). Individuals who display this form of resistance do it because of reduced
tolerance to change, fear of unknown, dislike towards the management (Val & Fuentes, 2003).
Sociological Resistance
This form of resistance not to persons but customs of groups and common values (Val &
Fuentes, 2003). Individual members may be willing to change but fail to due to peer pressure
from the group (Val & Fuentes, 2003).
Logical Resistance
This form of resistance arises basically from the time individuals take to adjust and adapt
to changes (Val & Fuentes, 2003). A good example is the adoption of technology leading to the
phase out of accounting on paper.
Managing Resistance
Managers must work hard to help their employees in adjusting to changes and facilitate
new variations in functioning (Val & Fuentes, 2003). The first step is for the management to
convince the employees that the changes being undertaken are necessary (Val & Fuentes, 2003).
The management should explain the benefits of these changes to the organization and the
SAMSUNG AND APPLE INC. MERGER
12
employees (Val & Fuentes, 2003). The management should note that for resistance to be
addressed, the changes should happen in stages, the changes should not pose a security challenge
to the workers and the managers should lead by example by becoming the first one to adapt to
the changes (Val & Fuentes, 2003). Finally, employees should undergo sufficient training in
order for them to accept the changes with confidence (Val & Fuentes, 2003).
Employees Engagement and Strategies to Keep Employees Engaged
Mergers provide excellent opportunities for organizations to venture into new markets,
acquire skills and infrastructure (Miller, 2018). If not carefully conducted, the activities can lead
to a disjointed mess of different systems, cultures and processes (Miller, 2018). This mess will in
turn affect operational efficiency and lead to the creation of unnecessary work. It will also
present serious challenges to the human resource department with regards to employees’
engagement, benefits and rewards (Lipatov, 2019). Those responsible for employees’
engagement should work closely with the managers, who have a clear understanding of their
needs (Lipatov, 2019). Launching unpopular approaches to benefits and engagement will cause
more harm than good. Therefore, continued engagement is vital in ensuring continuation of
operations with minimum disruption (Lipatov, 2019).
The strategies to keep the employees include: involving the employees in the decision
making process, stepping up rewards for personal sacrifices and excellent employee
performance, encouraging the senior management team to check in with and recognize
employees more frequently, ensuring proper training for all new duties and offering vital
information on how the merger will affect the career paths of the employees (Lipatov, 2019).
The focus should be on the staff affected directly by the change.
SAMSUNG AND APPLE INC. MERGER
13
Ethics and Values of Apple Inc. and Samsung
Apple Inc. has tried to ensure that all those they partner with including employees display
appropriate conduct (Aljafari, 2016). The main principle contributing to its success include
compliance, honesty, confidentiality and integrity (Aljafari, 2016). Apple has a code of conduct
applicable to all operations including the overseas ones.
Samsung’s organizational culture, on the other hand, involves core values, customs and
traditions expected and applied to the employees (Jung, 2014). Its corporate culture is part of the
company’s design that lays emphasis on the employees’ abilities, knowledge and skills for
innovating the company’s technology products (Jung, 2014). Its culture lays emphasis on passion
for excellence, development of opportunities for all staff, constant change, ethical foundation for
integrity, and emphasis for prosperity for all (Jung, 2014).
For the merger to be successful, the ethics and values of the two companies must be
aligned together. Both organizations’ code of ethics and values complement each other in a way
that favors prosperity within the new organization. While Apple Inc. bases its values on
compliance, honesty, confidentiality and integrity, Samsung’s lays emphasis on integrity,
prosperity for all and passion for excellence.
Conclusion
Mergers play a vital part in external corporate expansion as they offer strategy for
corporate control and restructuring. Mergers facilitate fast growth for firms and also act as a
mechanism for capital market discipline which in turn improves efficiency in management and
maximizes public welfare and private profits. Merging the two companies will form an
organization recognized for its evolutionary advancements in the technology world. The merger
SAMSUNG AND APPLE INC. MERGER
will help in boosting shareholder value and profits through economies of scale due to the
increase in market share, increased use of the available networks of distribution, acquisition of
new product capabilities and variegation of market risks and existing products.
14
SAMSUNG AND APPLE INC. MERGER
15
References
Aljafari, A. (2016). Apple Inc. Industry Analysis Business Policy and Strategy.
Jung, S. (2014). The Analysis of Strategic Management of Samsung Electronics Company
through the Generic Value Chain Model.
Lipatov, S. (2019). Relationship of Work Engagement and Organizational Identification with
Employees’ Extrarole Behavior. doi: 10.26226/morressier.5cf632c1af72dec2b05548a4
Miller, K. (2018). Mergers & acquisitions 2018: advanced trends and developments. NY,
NY: Practising Law Institute.
Piesse, J., Lee, C.-F., Lin, L., & Kuo, H.-C. (2013). Merger and acquisition: Definitions,
motives, and market responses. Encyclopedia of Finance. doi: 10.1007/0-387-263365_2253
Val, M. P. D., & Fuentes, C. M. (2003). Resistance to change: a literature review and empirical
study. Management Decision, 41(2), 148–155. doi: 10.1108/00251740310457597
Wiley. (2011). Mergers and acquisitions. Hoboken, NJ.
Zhang, Z. (2019). Investment Decision Based on Value Factor and Financial Criteria—Taking
Apple Inc. as Analysis Sample. Proceedings of the 2019 International Conference on
Economic Management and Cultural Industry (ICEMCI 2019). doi:
10.2991/aebmr.k.191217.150
Name:
Description:
…