The Urge To Merge

The dairy industry’s doing it, elecommunications, media and finance industries are doing it, even book giants Borders and Amazon.com are talking about doing it.
They’re all merging, converging and collaborating.
This merging behaviour is fast becoming an essential element of corporate strategy. But as many researchers have found as they explore the variations of this activity, it’s often high risk strategy that’s successful less than half the time.
Still, there are companies that manage the challenges of working together, and come through the process with the results they anticipated.
There are many reasons why companies go down the merging and converging road. “The problem is that all too often companies view this as the strategic end game,” say researchers Viscio, Harbison, Asin and Vitaro in their best practice study of mergers in 1999. “This is particularly true in consolidating industries such as banking, where every company seems to be competing just to get big.
“Successful companies understand that the deal is means to an end and not an end in itself.
This was the philosophy behind the merger of Compaq, Digital and Tandem five years ago.
As our cover story reveals, there are number of variables to making merger work, but in New Zealand, Compaq identified that key success factor would be the rebuilding of strong corporate culture, and quickly. CEO Russell Hewitt takes us through the process of how they’ve brought three different cultures together under the one brand.
In another story this month, Mark Story asks how business will be affected if the Privy Council is scrapped, as the Attorney-General has indicated.
As he discovers in ?Tug of Law,’ while politicians may be pushing to sever the link with the Privy Council in London, beyond Wellington the view is quite different. One critic argues that scrapping appeals to the Privy Council is not only dangerous but runs counter to global migration towards harmonising conventions.
If the government has its way, the next question is who, or what, we replace the Law Lords with.