VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS ri —=H SB— Vu Thi Thu Ha A STUDY ON CHANGE MANAGEMENT POST MERGER THE CASE OF PV MEDIA Major : Business Administration Code : 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisor: Dr. NGUYEN NGOC THANH A-lo/ tt — 2010 Hanoi VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS ri —=H SB— Vu Thi Thu Ha A STUDY ON CHANGE MANAGEMENT POST MERGER THE CASE OF PV MEDIA Major : Business Administration Code : 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisor: Dr. NGUYEN NGOC THANH A-lo/ tt — 2010 Hanoi TABLE OF CONTENTS RiỆTG: a PESE turnnrrssthapttooreereetOSitttG(GGSYSSGNGIGEOIDRANMGENMGEHINGGSG0/90SIG4GGHSISSNHENHSINNGG. i ABSTRACT oscommerce ein ecumeennemacae i ¡y9.
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THE NECESSITY OF MERGER ossrsnoesreerssrikiottkikeTesAEEIBSSSG100/920010. MERGER PROGGES qua Hư GHGGGHUGGAGIIGGQVG4SSNWIiGãidbiaisãtrtpsgeat 28 81a KEGIIEEBET SEĂEEioaueaeuoipdronttidtitekirDdriiertggrintGEGEEU1001609800006R000 0000445830000 0080-2213D1H00 XP 28 2.2: Dupive-Lhe-Mereer Stage con gung 6 2GGGGG1XGAYGGQHUIEEGESGINGGGH-dãthEtgjhakdgisgusagsse 29 sr3o®: PORTO CE SUA BB creesesestonoinndinatoin tenoikAoxesiiA01000001040019450000/000400980/1350029310900070037010004000/E 30 2. CHANGE MANAGEMENT POST MERGER ssi siincesscnesssssncccrwasnersesssronsenssosss32 2. Change management concerning structure in PV Media.
Change management concerning leadership in PV Media. Change management concerning “Personal” issues among staffs in PV Media48 2. Change management concerning cultural issues in PV Media. Change management concerning customer services in PV Media.
57 Vil chee để DSC} ly kiều AND RI'COMMIENDATHON.T Eaie RSHIP ASPE CD is eT ốc.33 CUSTOMER SER V HE.6504183000/0 60114064 34; CULTURE ASPECT season anemones mm. RESISTANCE MANAGEMENT AI EU Eeesenanndeeinseiserddibniidoenaveiniiasasaiedeei 66 CONCLUSION oan nụ toi tha GGG@GDREOREHERGOIANGIGRYGUNRQIGMESGGGSRQISNiGQiatse 71 E01 1Ô ne ee eee enn eye 73 AP PER DICES scconwaspnnmenamnnwennnaun emma cra rene mera ream nanemaENS 74 vill LIST OF FIGURES Figure 1.1 Leadership rating regarding addressing personal 1SSU€S.1 PV Media Structure.5 New PV Media's SHUELUTEbsaaaaaaoasaiiidtdtaiatgiit6s003i28620250G8SS016811321340040008g 34 Figure 2.6 PV Media leader's asSIignment. ác SH HH HH Hệ 39 Figure2. 7 Results of leadership rating concerning addressing personal Issues.8 Revenue in PV Media pre and post merger .9 Profit (Lost) in PV Media pres& post-merger ssicicccicccccscciissssoncascccnccwncs 55 IX LIST OF TABLES Table 1.1 Comparisons of reasons for embarking on a merger or acquisition.2 Trompenaars and Hampden-Turner's cultural dimensions.
21 Table 3:1 PV Media incoiie SIAIETHTGHĂEk::::-zzxzszeubtiiESGUGIAS8g16030023V930LA 604100206 26 Table 2.2 Survey results concerning leadership perÍormance.3 Business plan for départnents ssccowinancgsmmnmnmmmcnammauncenm aay 47 Table 2.4 Herzberg’s motivating ÍACEOTS. ch HH Hà HH Ha HH HH 49 Table 2.5 Employeeˆs questions concerning hygiene factors ‹.6 Cultural Model applied to PV Media.1 Financial items of PV Media before and post merger .2 Financial items of PVFC Media until merged time: 31/05/2008.3 Financial items of former PV Media until merged time: 31/05/2008. STATEMENT OF STUDY As nature of current competitive environment, a lot of corporations are in the position required to exercise mergers and acquisitions in order to survive or expand. These mergers and acquisitions activities are accompanied by enormous amount of changes from individual to organizational level.
Failing to cope with these changes often leads to inefficiency in management and profit loss or worse, collapse of mergers and acquisitions deal. This thesis conducts a review of basic concept of mergers, changes post mergers as well as positive & negative impacts of them on the process and organization change management practice during mergers. It also practically correspond theories with specific case: PV Media. PV Media (Petrovietnam Media JSC) is a media company resulted from the merger between the former PV Media itself and PVFC Media in 2008.
A lot of changes occurred during and after the merge which subsequently created enormous amount of problems, in term of organizational structure, workplace culture. Change management is desperately required to achieve positive outcomes that were originally expected from the merger. OBJECTIVES & AIMS Aim - To understand change management procedures for effective and successtul corporation merger. Objectives - To theoretically review merger in business and economics, also to study the motives behind each corporation merger action.
- To comprehend changes during and after merger as well as their impacts on merger. To study the necessity and the complexity of change management during the merger process, and practically the case of PV Media. RESEARCH QUESTIONS Why is it necessary that two companies need to merger? How merger of two participants could lead to greater success of combined corporation? What are the changes post merger and their impacts on performance? How to manage those changes? How theories applied to practical case: PV Media? What are some of the recommendations for PV Media? 4. SCOPE OF WORK In term of corporation merger area; acquisition (i.
takeover or buyout) is not studied: In term of change management area; the data was up until 31” December of 2009 but the analysis focused more on 2008 results. Also most of the changes are post merger (during integration process) Only focus on changes post merger in PV Media compared to right before the merger 5. DATA SOURCE Mergers and Acquisitions, a step-by-step legal and practical guide Making sense of change management Mergers, acquisitions, and corporate restructurings Advance in mergers and acquisitions The complete guide to mergers and acquisitions Reports and data of PV Media B2 6. METHOD This thesis applies literature review method and analysis, synthetic method in case study.
SIGNIFICANCE - This study will serve as future reference on the subject of corporation merger and change. - It will be beneficial in establishing effective step-by-step guideline on strategic management, corporate strategies when employing change management post merger. - It will also contribute to successful merger process at PV Media. LIMITATIONS - Lack of perspectives on long term changes as they also have impact on merger process - Limited within PV Media context 9, EXPECTED RESULTS - Clear and throughout understanding on merger, changes during merger and effective change management of successful merger process; - Helpful and reasonable recommendation for PV Media to overcome difficulties in term ofchanges post merger.
ea CHAPTER I: THEORETICAL REVIEWS 1. Definition and classification 1. Definition “A merger is defined as a combination of two companies, often same size; in which one single organization continues operating under the surviving company’s name while the other is terminated” (Gaughan, 2002, pg. Statutory merger is when the acquiring company assumes the assets and liabilities of the merged company in accordance with statues of the state in which combined company will be operated.
Stocks are exchanged from merged company to acquiring company after the approval of merge. Shareholders that are against a merger are required to accept it and exchange their shares to acquirer. When the target company becomes a subsidiary of the parent company, it is subsidiary merger. A merger is often mistaken as consolidation in which an entirely new company is created from the combination of two or more companies.
The combining companies cease to exist and only the new one continue to operate. Merger can be seen as A + B = A, where B is merged to A while consolidation is A + B = C, where C is entirely new company and A & B cease to exist. Despite the distinction between the two terms; in reality, merger and consolidation are often used interchangeably. Another similar type of transaction is takeover which often refers to hostile or unfriendly merger.
Classification According to Gaughan (2002, pg.13), the followings are classifications of merger Horizontal merger involves two companies that compete in the same industry Vertical merger involves with source of supply or ultimate consumer. Market-extension merger involves two companies that are in the same industry but different markets Product-extension merger involves two companies that are in different but related industries and share the same markets. Conglomeration involves two companies that are in different and non-related industries. Concentric merger involves two companies that are in the same general industry but do not share mutual buyer/customer or supplier relationship; for example, a bank and a leasing company.
Merger can also be classified from financing point of view. Purchase merger involves two companies that one purchases another. This transaction is either by cash or through some kind of debt instrument; the sale is taxable. Due to tax benefit (acquiring company pays reduced taxes because of the difference between the book value and the purchase price of the assets); merging companies prefer this type of merger Consolidation Merger involves two companies that after combined.
a brand new company is created. Taxes wise, it’s similar to purchasing mergers. The necessity of Merger As mentioned in section above, there are three major types of merger i. horizontal, vertical and conglomerate ones.
The motives behind these merger activities are to improve financial performance albeit the difference in operation and scope. The following motives are considered strategic and determinant in merger. Growth “The first fundamental motive in M&A is growth” (Gaughan, 2002, pg. When companies decide to expand within its own industry; they can follow either internal growth or growth through M&A.
Internal growth means companies seek expanding within their own organization in which relies mostly on their own resources and market. This is proven to be slow, uncertain and lesser approach for expansion, especially in fast-growth, time-limited and competitive industry. Growth through M&A is rapid approach for expansion. For example, when companies only have opportunity to expand in limited period of time, growth through M&A may be more suffice than internal one as the companies are able to access to more resources and market in shorter time.
Another example is when companies seek expansion to another geographic region; internal growth can be difficult and time consuming while growth through M&A may be faster and at lower-risk. However, growth through M&A has its own uncertainty, especially in management. New management is required to run a larger enterprise at greater demand from shareholders and customers. Incompetent management is one of the main reasons leading to failure in M&A.
Diversification Diversification is about growing business outside the company’s current industry. This was major motive for M&A in the third merger wave in the 1960s — the conglomerate era. Despite of several remarkable successful cases such as GE and Allied Signal; a lot of these conglomerated companies broke up through decomglomerization during the 1970s and 1980s. This in turn, raises question mark over the true value and feasibility of diversification.
In the cases of GE and Allied Signal, an impressive growth and a high market value were achieved by implementing strategy of trying to acquire a leading 6 position in cách business category. This leading position is usually first or second ranked. For example, Allied Signal reduced significant number of businesses that did not show potential sign of high earning profit (profit margin less than 15%) while expanding the ones that did. These profitable units are built up as portfolio of investment by companies, hence diversification.
“Another reason for diversification is a company’s desire to enter a more profitable industry than its current one” (Gaughan, 2002, pg.