Cross Functional Teams Purchasing and Acquisitions Management Term Paper - 1

Cross Functional Teams Purchasing and Acquisitions Management - Term Paper Example The researcher states that the incidence of M&A has continued to increase significantly during the last decade, both domestically and internationally. The sectors most affected by M&A activity have been service and knowledge-based industries such as banking, insurance, pharmaceuticals, and leisure. Although M &A is a popular means of increasing or protecting market share, the strategy does not always deliver what is expected in terms of increased profitability or economies of scale. While the motives for mergers can variously be described as practical, psychological, or opportunist, the objective of all related M&A is to achieve synergy, or what is commonly referred to as the 2+2 = 5 effect. However, as many organizations learn to their cost, the mere recognition of potential synergy is no guarantee that the combination will actually realize that potential. Most people have difficulty stating their organization’s strategy: what the organization wants to become, how it would li ke its people to behave, and what it will provide to which customers. In the future, the reality is that the organization’s business and operating units march to priorities different from, if not contradictory to, those implied by its strategy. The majority of the people in an organization focus on day-to-day operational matters and their individual aspirations. Consequently, the strategy is never realized. Frustrated by the lack of forward progress, executives launch new communication, reorganization, process redesign, or technology initiatives. Everyone is doing more, and yet performance stagnates or even declines. AKPMG report found that, though 82% of respondents believed the deal they had transacted was a success, 83% of the same mergers failed to increase shareholder value. Of these transactions, 30% produced no discernible difference in shareholder value and 53% actually reduced value.