Implementation Bright Food and CSR

IMPLEMENTATION PLAN Memorandum

“Merger between BRIGHT FOOD and CSR (SUGAR)”

The key elements of Bright Food and CSR (Sugar) are

analyzed on the purpose of identifying similarities and key

impediments that affect the successful integration. Concrete

steps to be taken and the time frame for both companies would

then be recommended accordingly to allow the new entity to

achieve its goal of becoming the third largest sugar producer in

the world in 4 years time.

Using Jay Galbraith’s “The Star Model”, the report will assess the driving and restraining forces of the new merged entity in order to achieve successful integration. The culture difference is also an important issue despite not being a factor in the model.

1. Similarities

1.1 Strategy

Bright Food and CSR (Sugar) are both companies that specialize in the sugar industry in China and Australia respectively. The two firms focus on creating a strong dividend growth and superior return to investors, with long-term strategies to build resource related businesses, including food and advanced technology (The Australian Business Journal, 2010). In addition, they acknowledge that people are the most important resources to achieve a successful integration.

Both firms also possess a strong presence across their brand portfolio, with extensive networks and distribution channels to their products and services (CSR 2009, Bright Food 2010). With the increase in global competition, Bright Food and CSR (Sugar) are aware of the need to strategically expand their core brand to the sugar renewable business or core food segment. Hence, this implies that the merger is consi stent with both organizations’ strategies.

1.2 People

In Bright Food Company and CSR (Sugar), people are considered to be the driving forces in developing its operations. According to the employment concept in Bright Food, the company puts people as a priority and focuses on creating harmonious co-existence between the employees and corporation (Bright Food 2010). Bright Food also organizes and coordinates professional training to employees, especially senior managers. Similarly, CSR (Sugar) provides job training and coaching to all employees (CSR 2009). In the CSR sustainability report (2008), over 100 apprentices were given special training at its sugar mills to enhance leadership and management development, along with skills and experience. Hence, the merger will encourage a stronger employee system with both companies training techniques, resulting in compelling technical specialists for further development.

2. Main Impediments

2.1 Unclear Structure and process

Bright Food and CSR (Sugar) share the similar centralized structure whereby communications flows from the top management to the operational staff. However, in terms of departmentalization, Bright Food utilizes the Matrix structure due to the multiple previous merger and acquisitions with other national and global client groups, while CSR (Sugar) adopts divisional departmentalization (M-form) in which department is form according to the brands and product natures. This might contribute to confusion and lack of collaboration, as employees in CSR (S ugar) would find

themselves reporting across 2 hierarchies and 2 bosses as compared to a single corporation headquarter, producing insurmountable problems (Collis & Montgomery 2005).

2.2 Employee s Re sistance

Even though both companies believed people is the most important factor within the organization, the merger creates redundancies. According to Strebel (1996), most of individuals are comfortable with current state and resist organizational change due to uncert ainty. Even though Bright Food had stated that CSR (Sugar) could operate in Australia after the merger, layoffs may still occur due to cost cutting and only retaining top employees in the merged entity. Therefore, the fear of layoffs will result in resista nce of change by both companies’ employees, which consequently increase the difficulties in merger.

2.3 Different Reward Systems

In Bright Food, gaining high recognition in the company motivates the employees. This would increase in their status and repu tation in the Bright Food Company’s reward system. However, the reward system for CSR (Sugar) differs. Instead of recognizing the efforts of individuals publicly, CSR (Sugar) gives cash incentives and company shares to the employees when they show excellent performances in the company. Therefore, this might pose as a problem in coordinating the reward policies into one rational reward system that meets the expectations of both companies’ employees.

2.4 Incompatible Culture

Other than the workforce culture, there will be a clash in cultures as Bright Food is a China-based firm while CSR (Sugar) is an Australian-based firm. China’s first language is Mandarin and Australia’s English, thus this might pose a difficulty in cross cultural communication and information sharing within the firm (Mavondo & Rodrigo, 2001). Bright Food has already mismanaged communications with CSR during the proposed merger negotiation, proving it to be an issue (https://www.360docs.net/doc/ae5721795.html,). Moreover, Australian managers are often seen as more inflexible and resort to confrontational methods of resolving problems, while flexibility and compromise is preferred by Chinese managers to save “face” (Maclnnis, 1993). Therefore, this is an impediment to the firm as there is a need for specific tone of voice and strategy to encourage employees about the new merger.

3. Implementation Steps

Feasible concrete steps are needed to achieve a successful integration between Bright Food and CSR (Sugar). The recommendations will focus on the critical approaches most relevant to the merger through Kotter’s Change Theory. The integration of Bright Food and CSR (Sugar) is expected to be completed in 4 years, as it normally consumes most time for employees to accept the change and firm to consolidate short-term achievement and re-producing new changes.

3.1 Create a Common Vision (4 months)

The first step for Bright Food and CSR (Sugar) would be to build a common vision in the company. As the evaluations of vision statements would vary in the different firms, this would help to direct the change effort and clarify the direction to move (Larwood, Falbe, Kriger & Miesing 1995). Bright Food should create a specific and detailed implementation plan on guiding the effectiveness of executives and managers, performance level of work units and process management required, and informing it well across the merged entity. Consistent appraisal systems to assess performance should also be arranged in view that strategic direction be met. This ensures that employees of the merged entity are aware of the undertaking processes, and work towards the common vision of serving the new management as tools to control the overall performance, reducing the impediments.

The common vision has to be built based on the agreement between both firms in order to be reached effectively. Bright Food should hold a dialogue with CSR (Sugar) to convey the plan even though they are acquiring the firm. This is to build the trust through transparency in the processes, and also reduce the uncertainty that might result in talents leaving after the merger.

3.2 Communicate the Common Vision (6 months)

The communication process needs to be well articulated and provide a clearer vision to reduce uncertainty in the change. This is important for Bright Food and CSR (Sugar) due to the issues in the cultural barriers and organizational structures, resulting in a potential lack of internal communication in future coordination. Hence, direct channels of communication are recommended to form cohesion and contribute to the common vision.

?As both firms are centralized, the beginning stages should be focused on training the top management on effective communication skills to “walk the talk” and influence the employees (Kotter 2007). Communication programs should be des igned as to plan, initiate and put the vision into action.

?Videoconferences can assist communication across the merged entity so that the China and Australia management are informed of the ongoing processes within quick time.

?Frequent face-to-face meetings still play a major role in directing information and timely feedbacks of performances, preventing miscommunications especially due to difference in the organizational structures. The meetings would also address unfavorable rumors by showing the short-term success of the merged entity, increasing the willingness of the employees to work alongside with the new merged entity.

?Surveys could be conducted monthly to obtain employee feedbacks on their feelings, which are assessed by coalition teams to improve on.

3.3 Empowering Others to Act on the Vision (1 year)

In order to sustain a smooth merger process, the combined entity would need to reduce obstacles to change. Employees’ resistance plays a significant role as a barrier for integration, and this would be an issue especially during the downsizing of the workforce at different regions to reduce the costs from the merger. Therefore, face-to-face communication or employee survey could be conducted to acquire information on the reasons for resistance such as being insecure about their job safety and thereby opposing the merge. In order to retain the right people, the merged entity could carry out employee interviews to identify high performance and efficient employees, securing their positions. Bright Food and CSR (Sugar) would just need to make them feel secure about their job and need not do anything extra as these people are already working towards the common vision of the merged entity, in fear of losing their jobs otherwise. As for the employees who are facing layoffs from their jobs, they would be the ones resisting change most, thus the merged entity could refer them to their partner firms for career opportunity or compensation.

3.4 Integrate Organizational Culture (2 years)

Organizational culture difference is critical as it could be the biggest source of conflict and failure in the merger. The top management has to value and respect cultural differences as sources of synergy and efficiency in order to manage the acquisition process effectively. In or der to integrate the culture, it is recommended for the firms to conduct a comprehensive culture audit of each other to understand how to structure the post-merger plan. This may include the employees’morale and commitment, barriers to engagement, leadership profiles, company mission, strategic development goals, performance appraisals and reward systems (Fletcher & Jones 1992). Hence, in order to sustain the change in the merged entity, it needs to become “the way we do things around here” and seep into t he main corporate body (Kotter 2002). Bright Food should establish the combined entity as an organization with shared values and shared culture that are easily communicated and understood, and also ensure that the next generation of top management understands the new vision and culture. Therefore, since the adjustment of the culture between two companies is a long-term process, it requires the post-merger to contribute large amount of time and efforts.

Reference List

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