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Posted By Admin @ Feb 25, 2022
Posted By Admin @ Feb 25, 2022
Title: Case Study of The Merger between Al Mada and Al Shurooq
Type: Case study
Case Study of
The Merger between Al Mada and Al Shurooq
Introduction of The Merger between Al Mada and Al Shurooq
A merger can be defined as an agreement that combines two current enterprises into one new enterprise. A merger is basically the deliberate mixture of two enterprises on generally equal terms into one fresh legal company. The companies that make an agreement to merge typically have similar points in the contexts of customers, size, operation scale, and so on. Mergers are most broadly conducted to get attain the share in the market place, reduce the business operation costs, develop the profits, and also combine the similar products generated by the companies, included as well that all of these should able to deliver the benefit the shareholders of both companies (Bergamin & Braun, 2017).
In the case study of the merger between Al Mada architecture company and Al Shurooq. In this case, even though both companies are working in the same architecture industry, but there is a big difference in the context of business operations presented by each company. Al Mada which was established in 1970 is known as a traditional architecture company that not really use the software in a big range. On the other hand, Al Shurooq which was launched in 2000 is a modern company has always been implementing advanced software to develop its business. Thus, this issue has challenged both companies and needed to be solved. This report covers up the complete situation, along with the methods to manage this challenge.
What are the possible impacts of the change on ALL stakeholders and how to deal with these impacts?
Due to there is a difference in the context of the ways the two companies are running their business, this merger has a big capability to cause some impacts of the change on the entire stakeholders. Some of the possible impacts of this merger are as mentioned below (Gaughan, 2015).
• Voting Power and Weakening of Shareholder
The shareholders of both Al Mada and Al Shurooq architecture companies might will have to experience a weakening of voting power. The reason is due to the enlarged number of shares which unconstrained throughout the process of merger. This marvel is a noticeable thing within the stock-for-stock mergers, at the time the new company will offer part of its shares in exchange for the target company’s share notwithstanding at a specified conversion rate (Baglioni, 2011).
• Changes in Management
One important from a merger is that, once the merger has been completed, then the new company will potentially get modified by some noticeable changes in the terms of leadership and management. Some businesses will typically conduct some negotiations, but still, the executives and board members of the new company will definitely change to some extent, no matter at the beginning of the merger, or as a future plan (Chalmers, et al., 2010).
• The impacts in the performance of both companies
A decision to merge two companies will deliver some impacts that needed to be realized by both companies. The impacts will present hugely in profits, productivity, and the growth rate which will lead to the performance of both companies that merged as well.
Based on some of the possible impacts of the changes on all the stakeholders, there are some methods that can be done by both companies to manage these impacts such as (DePamphilis, 2019):
• Recognize the skill gaps along with the overlaps
As mentioned in the case study, that Al Mada and Al Shurooq have a big difference regarding their style of business operations, then it is quite important for both companies to recognize the skill gaps and overlaps. Both companies should be able to communicate with the entire employees from both companies to recognize these skill gaps and overlaps and assure them that they will have a better future ahead (Ybarra, et al., 2007).
• Put the focus on organizational culture
Bring together two companies is not an easy task to do, especially with the case of Al Mada and Al Shurooq. For this reason, both companies need to make sure to combine their different styles of organizational culture, which seems to be the biggest challenge from this merger. In fact, both companies have already realized that this might trigger some huge and complicated problems in the future. To overcome this situation, both companies need to sit down, discuss, and put the focus on which type of organizational culture that they both want for the new company (Bargain & Kwenda, 2014).