Questions for other groups:

1. What strategic advantage, if any, does the Yummy Company gain by

acquiring the small canning factory in Davao City?
>> The availability of fruits (i.e., marang, durian, mangosteen) where the
factory is located in Davao City, will be a strategic advantage for Yummy.
2. If the acquisition is implemented, how will HR go about ensuring that this
occurs with the least organizational disruptions?
>> Pre-acquisition:
1.HR should be involved in the negotiation process in order to understand
and map out the culture of both companies and if necessary, develop a
culture that fits the merged entity.
2.HR will develop a new Organization Chart and detailed evaluations of
the competencies of employees to link their roles and responsibilities to
the new organization chart.
Post-acquisition:
I. Cultural Integration:
Ask for guidance on cultural issues. Understand that cultural differences
can exist within the same country
Have a strategy for overcoming cultural conflicts. Remain alert to the
symptoms of the post-deal cultural clash
Steps:
1. Determine degree of organizational integration
2. Assess organizational behavior
3. Develop change hypothesis
4. Determine drivers of behavioral change
5. Implement change
6. Measure and reinforce change outcomes
II. Integration of Management styles.
Existing Management style of Yummy Corporation will be applied to the
newly acquired company in Davao and in Japan. The regional plant in
Davao would still be headed by the existing leader. However, he should
learn a participative type of management where subordinates are included
in discussions. Greater results will be achieved if more people will
contribute ideas to the success of the company.
III. Integration of Human Resource policies and procedures.
Since the Davao branch doesnt have a clear and formal HR policies and
procedures, Yummy Corporation should adopt its existing policies. An HR
staff should be placed in each regional area in order to give venue for
resolution of HR issues. HR should also go online in order to deliver fast
response/actions to any of its regional areas.
IV. Change management.
Conflict in change management can be avoided by solving them as early
as before the acquisition is finalized. Reduction of workforce due to the
acquisition of new equipment in Davao and other HR related issues can be

insisted by Yummy Corporation that they be settled as a pre-requisite to

close the deal. Yummy should involve the management of the acquired
company since they knew their people more. Bringing another leader to
the acquired company might create resentment.
The following should be done by Yummy Corporation:
Communicate with employees on the necessity of acquisition
Explain how it will benefit them
Establish a clear and visible tie between change and business
improvement.
V. Downsizing of workforce.
Since the acquisition of equipment would reduce number of persons in
the company, it would be best to inform them of such downsizing ahead of
time. Selection procedures of employees to be retained should be
communicated so that the employees would be aware of where they
stand. The HR should draft retrenchment packages of those who will be
eliminated. Probationary period of 6 months whether or not the equipment
is operational would give employees the chance to improve themselves.
VI. Communication
1.There should be a focal person of the acquired company of whom
employees could talk and seek clarifications, and answer their queries.
This person should have easy access to the Senior Management team to
get their views clarified.
2. A strong communication system should be put in place. Plan of actions
should be communicated to be clear.
3.If needed, external person or team could be used to act as neutral
entity.
VII. PAYSCALE
1.Organizational capability- whether or not the company has capacity to
pay.
2.Work intellectual, working condition, decision-making, problem solving,
skills
3.Employee education, experience, skills
4.Legal implications Labor Code in the Philippines, PD 4425.Market and
country difference
3. What is/are the main reason(s) attributed for the failure of the previous
acquisitions to go smoothly despite a well-planned strategy?
>> Main reason(s) attributed for the failure is that the strategic planners
were mainly concerned about financial implications of the move and ignored
the suggestions and advice of the HR department head and Yummy company
was faced with challenges regarding managing people related issues.

Transcript of CASE: YUMMY COMPANY GOES TO DAVAO

MERGER
The problem: A merger oc Pre-acquisition processcurs when one company is
combined with and totally absorbs another. Operations, facilities, and functions are
rationalized and combined for maximum efficiency. The cultural beliefs, norms, and
infrastructure of the acquired organization generally change to the acquiring culture
for the integration purposes. The acquired organization effectively loses its identity.
The main objectives for mergers:

Horizontal mergers for market dominance or economies of scale

Vertical mergers for efficient channel control
Hybrid mergers for spreading risk, cutting costs, creating synergies, or could
also be a defense mechanism to survive against competition
Growth for global reach
Survival by developing a critical mass
Acquiring cash, deferred taxes, or even excess debt capacity
Acquire a bigger asset base to leverage borrowing
Top line growth objective, financial gains and personal power
Adding a core competency to provide more combinations of products and
services
To acquire talent, knowledge, and technology (lately, this is becoming a very
important reason)

The Problem: Despite a well-planned strategy acquisitions have found to be a

failure, and the main reason attributed for the failure is the challenges faced in
managing people related issues.
QUESTION 1: What HR-related issues will Mrs. De La Cruz bring to the strategic
planning sessions?
ANSWER: Degree of involvement of HR (directors) of acquired company in
negotiation process.Cultural Differences Conflict of Management stylesDiversity
in Managing Human Resource, HR policies, procedures, and Hiring processFailure
to manage change resulting to loss of employee morale and productivity and key
employeesDiversity of performance management systemsDownsizing of
workforce
QUESTION 2: Discuss the implication of Yummys business plans for its human
resource plan for next year?
ANSWER: Pre-Acquisition & Post-Acquisition
Pre-acquisition process:
1.HR should be involved in the negotiation process in order to understand and map
out the culture of both companies and if necessary, develop a culture that fits the
merged entity.

2.HR will develop a new Organization Chart and detailed evaluations of the
competencies of employees to link their roles and responsibilities to the new
organization chart.

Post-Acquisition
I. Cultural Integration: Ask for guidance on cultural issues. Understand that cultural
differences can exist within the same country. Have a strategy for overcoming
cultural conflicts. Remain alert to the symptoms of the post-deal cultural clash

Steps:
1. Determine degree of organizational integration
2. Assess organizational behavior
3. Develop change hypothesis
4. Determine drivers of behavioral change
5. Implement change
6. Measure and reinforce change outcomes
II. Integration of Management styles
Existing Management style of Yummy Corporation will be applied to the newly
acquired company in Davao and in Japan. The regional plant in Davao would still be
headed by the existing leader. However, he should learn a participative type of
management where subordinates are included in discussions. Greater results will be
achieved if more people will contribute ideas to the success of the company.
III. Integration of Human Resource policies and procedures.
Since the Davao branch doesnt have a clear and formal HR policies and procedures,
Yummy Corporation should adopt its existing policies. An HR staff should be placed
in each regional area in order to give venue for resolution of HR issues. HR should
also go online in order to deliver fast response/actions to any of its regional areas.
IV. Change management Change management can be avoided by solving them as
early as before the acquisition is finalized. Reduction of workforce due to the
acquisition of new equipment in Davao and other HR related issues can be insisted
by Yummy Corporation that they be settled as a pre-requisite to close the deal.
Yummy should involve the management of the acquired company since they knew
their people more. Bringing another leader to the acquired company might create
resentment.
The following should be done by Yummy Corporation:Communicate with
employees on the necessity of acquisitionExplain how it will benefit themEstablish
a clear and visible tie between change and business improvement.

V. Downsizing of workforce
Since the acquisition of equipment would reduce number of persons in the
company, it would be best to inform them of such downsizing ahead of time.
Selection procedures of employees to be retained should be communicated so that
the employees would be aware of where they stand. The HR should draft
retrenchment packages of those who will be eliminated. Probationary period of 6
months whether or not the equipment is operational would give employees the
chance to improve themselves.

QUESTION 3: If the acquisition is implemented, how will HR go about ensuring that

merger occurs with the least organizational disruptions?
ANSWER: 1.There should be a focal person of the acquired company of whom
employees could talk and seek clarifications, and answer their queries. This person
should have easy access to the Senior Management team to get their views
clarified.
2.A strong communication system should be put in place. Plan of actions should be
communicated to be clear.
3.If needed, external person or team could be used to act as neutral entity.

QUESTION 4: If the acquisition is implemented, how will HR go about ensuring that

merger occurs with the least organizational disruptions?
The best pay scale should consider the following:
1.Organizational capability- whether or not the company has capacity to pay.
2.Work intellectual, working condition, decision-making, problem solving, skills
3.Employee education, experience, skills4.Legal implications Labor Code in the
Philippines, PD 4425.Market and country difference

A canned jams, packaged dried fruits, producer and marketer named Yummy
Company and all their products are made from pure natural exotic tropical juice.
The company is in good performance. From the field distribution, marketing, price,
imports and exports aspects all are excellent. They also experienced massive
expansions to the other part of the Philippines during past two years. They also
have a workforce over 1, 200, from the scenario, the regular employees are 900 and
about 300 are seasonal or temporary employees. Yummy Companys workforces are
currently non- unionized and its revenue has increased by about 20% in year 2004.
On year 1990, yummy company bought two small companies located in southern.
As time goes by, the acquisition did not go smoothly since one of the acquired
companies had unionized employees and their human resource was not able to

handle the situation. The human resource was not able involved in strategic
planning process. As the result of this lack of human resource performance, the
company deal several human resource related problems for at least three years,
and result to detrimental to employee morale and productivity, with this experience
the companys top management should hire the right person in a certain position so
that they could avoid any inevitable situations that they could encounter. However,
unionized and non-unionized employees can be considered as the strength,
weaknesses, threats and opportunities that could possibly help nor can be a
problem in the past, present or future. With this particular problems encountered,
the human resource management should plan some alternative solutions on how
solve the dilemmas which can affect their performance as a company. As the top
management of the Yummy company is concerned, it should be strict in
implementing their rules and regulations or by laws, they should also implement
strict written communications to avoid miscommunication. And for the unionized
employees of the company, it can be advantage for their part, but for the
companys point of view, as their primary goal is to earn more profit, it may be
disadvantage for their part.
II.Statement of the Problem
Managing people related issue result by company expansion. Companys HR
problem due to: unionized employees, lack performance management system,
hiring practices that allowed members of the same family in a supervisor- employee
relationship, inconsistent enforcement of employee discipline procedure despite the
presence of a collective bargaining agreement, high incidence of theft, informal and
autocratic manner, no written HR policies, procedures and communications flow and
unequipped human resource.
Lack of performancenon-unionized employees
Management system
Incidence of theftunionized employees
Harmonious relationship betweencompanys by-laws proper Employee and
employerimplementation
Hiring practices:workforce proper selection
Same family member
Detrimental to employee morale
III.Areas of Consideration
Strength
Unionized employees
Non-unionized employees
Harmonious relationship between employee and employer
Attained companys Vision Goals Mission Objectives

Strong communication
Culture innovation
Experience in people related issue on merger/expansion.
Excellent Manpower and technology Weaknesses
Unionized employees
Unequipped HR
Lack of concern of HR issues
Detrimental to employee morale
Lack of performance management employee system
Hiring practices: same family member
Lack of employee discipline
High...