Morris & Co the people challenges of internationalization Question 1 Nowadays mergers and acquisitions are becoming more widespread.

. The process of globalization which results in better integrated markets and increased competition from abroad, as well as lower barriers to market entry, encourages firms operating in same industries to pool their resources together. This allows companies to benefit from mutual expertise and reduce their costs, such as research and development and value chain costs. Also, acquisitions act as stabilizers of the market, by posing a threat of a takeover to badly managed entities. This essay presents a discussion of the Morris & Co acquisition of the US company, critically evaluating the risks of acquisition and proposing the ways to overcome those risks by employing popular HR practices, which proved to be successful in similar cases in the past. Firstly, general information about mergers and acquisitions is given with reference to their sometimes lower-thanexpected profitability and efficiency. Secondly, this lack of efficiency is linked to human resource problems arising on such occasions, especially cross-border M&As, with a short review of HR risks faced by Morris & Co case in undertaking the US acquisition. These risks are further analysed with respect to the good practices proposed by HR academics and practitioners, and a presentation of the steps to be taken in order to mitigate risks before and after the acquisition. Finally, the concluding remarks are presented in the summary. Discussion Before conducting an analysis it seems necessary to review M&A nature. Mergers occur when it is a combination of two companies to form a new company, while acquisitions are the purchase of one company by another. Opportunities to reduce costs, more efficient use of capacity, reach new markets, exchange valuable experiences and knowledge and other causes are pushing companies to integrate their business by achieving synergy. Nevertheless, studies show that only few of the companies have achieved their objectives in full. For example, according to Strategic Management Journal, 61% of mergers does not pay back money invested in them (Walsh, 1988) and the statistics collected by PwC, shows that 57% of the combined companies are lagging behind in their development and continue operations as separate commercial entities (PwC, 2009). Analysts discuss numerous reasons for this failure of mergers and acquisitions, one of them being the reaction of staff. Experience shows that, contrary to valid financial calculations and market estimates, the process of integration does not correspond to what is expected by senior managers. Resistance of staff prevents the creation of a single coherent organization and limits sharing of knowledge and experience among employees (Aguilera, 2004). Burgio (1990) presents interesting factors of such staff resistance. For instance, during the first 4-8 months after the merger, productivity reduces almost by half. Also, 70% of the synergies expected from mergers and acquisitions are not achieved. The role of HRM in cross-borders mergers and acquisitions is important, for example by managing personnel conflicts, strengthening corporate culture to reduce turnover. To achieve the effectiveness, companies should create and then follow an operational integration plan (Jackson and Schuler, 2001). There are three main stages: pre-merger, merger and post-merger which help to identify and minimize the strategic risks early in the process. The pre-merger period involves an

assessment of organizational culture, management styles, and human resource planning in the companies (Appelbaum et al, 2000). The merger stage is characterized by changes in HR policies. The post-merger stage includes such HR issues as a reinforcement leadership and staffing, communication and corporate responsibility (Appelbaum et al, 2000). Considering the pre-merger issues of M&As, one of the risk which Morriss international HR manager can face is lack of communication between employees which, according to Appelbaum et al. (2000), can lead to employee absenteeism and staff turnover. Communication should be taken seriously from the early stages of the planning. Early communication failures can cause consequences such as employee feeling anxious, reduction in productivity, job losses. In the example of Renault and Nissan acquisition, the Global Alliance Committee first met in France to define joint strategy. They create 12 Cross Company Teams to coordinate the mutual problems where almost 150 employees from Renault and Nissan were involved (Chanaron 2006). It might be good example for Gordon Kane when starting negotiations with Fenwick & Edges. However, communication should not only be dealt on early stages, but also after closing the transaction. During the post-merger stage, it is also important for the Morris&Co manager to keep communication channels with employees for improving the integration. Another important risk of mergers and acquisitions is corporate culture changes. The differences in the cultures can produce the feelings of adversity and inconvenience, which can impact on staff collaboration. Employees have to accept new culture and different policies which are always stressful for them in both companies. As a result, the organizations, along with turnover are slowing down production processes (Aguilera, 2004). According to Weber (1996), the greater the cultural differences between top management teams, the lower the effectiveness and financial performance of the merger. If companies of large size merge, as in the case of Morris&Co, the differences which exist in the practices, feeling of adversity could be a reason for employees to leave the company. A good strategy in the stress period is to persuade the employees that their concerns will be intensely cared. Gordon Kane should understand that managing employees like Morris&Co should be a well planned process. He could also use an experience of good M&A examples. For instance, the case of Nissan and Renault M&A, Alliance Charter was created for members for both companies. It was aimed to promote the new group's common values, shared ambition, mutual trust and a balance between the two partners, together with operating rules. Nissan and Renault managers and engineers have rapidly established a close working relationship marked by their joint determination to succeed. The quality of such relationship is a key asset in making a success of the M&A (Chanaron 2006). Conclusion. This essay has reviewed the HR risks facing Morris&Co upon the acquisition in the US. A framework aimed at mitigating these risks, both before and after the acquisition has been provided, based on the practices that proved to be successful in the past. If the company adopts such a framework it increases the chances of acquisitions being more successful and, therefore, it is reasonable to expect that higher profits and better efficiency will be realized.

Question 4 Analyse why managers in organisations operating in an international context are confronted by especially complex ethical challenges? This essay concerns the issues of ethical challenges facing managers who operate internationally. Firstly, consideration of the ethics on international arena is presented. Secondly, ethical complexities and challenges facing managers of multinational corporations are discussed. Finally, the discussion of ethical challenges is summed up in conclusion. Ethics and morality are classified as philosophical rather than economic terms and for many people business and ethics are two mutually exclusive concepts (Fisher and Lovell, 2006). Some experts believe that the concept of "business ethics" came into mass usage relatively recently in the process of globalization of the economy, increasing the number of firms and their level of responsibility to society. Nevertheless, the basic principles of ethics, which is now possible to apply in business, have been formulated thousands years ago. Roman philosopher Cicero limited an assertion that large profits made great deception. However, today this axiom sounds more and more controversial. Civilized economics, formed in developed countries, requires a civilized approach to business (Fisher and Lovell, 2006). Ethics in the broadest sense refers to a system of universal and specific ethical requirements and standards which being implemented in human life. The ethics of the business relationship highlights one of the spheres of public life. Based on universal norms and rules of conduct, ethical standards have distinctive features. Many companies consider business ethics in terms of administrative compliance with legal standards to internal norms and regulations (Kaptein, 2004). Compliance with ethical business practice is one of the main criteria of professionalism as for individual employee and for the organization as a whole. Implementation of employees of organizational norms and rules of business relations determines effective relationships between an external partner and internal company in the future. Effect of perception amplifies in many times, if ethical behavior becomes natural. This happens when the rules of ethics are an internal psychological human need and also when it is well organized in the process of systematic training. Attention to business ethics increased when many companies realized that in order to succeed, they should earn the respect and confidence of their customers (Kaptein, 2006). Corporations try to improve their business practices to give importance to legal and ethical behavior as demand grows for higher standards of corporate responsibility. First responsibility is the affect that culture has on ethical behavior. Managers of corporations in the international context should realize and evaluate the cultures of the people in order to ensure good transactions (Crane and Matten, 2010). For example, Western and Eastern countries have different approaches to cultural relationships between management level and staff. Eastern companies are often use high context cultures where collectivism is important. In high context cultures it is more likely to use indirect and nonverbal communication. In contrary to Western companies where approaches are more individualistic and people use low negotiations, trying to have direct communication to get their point across. Ethics and etiquette rules of US business are characterized by a deep focus on individualism. In the system of ethical norms and values of Americans industriousness, ambitions, thrift, sober thinking and pragmatism are take place. Ethical challenges can be divided into company and government level. On the company level one of the important challenges facing corporation leaders is creation codes of conduct and ethics which includes set of ethical norms and standards that will be accepted by both companies in their

future relationship. Codes of conduct and ethics include loyalty, respect for individual employees, respect for the law, good relationships with stakeholders, etc. Writing codes of conduct and ethics are necessary for HR managers to maintain consistency in the employees behavior as they can be an aide-memoire for employees, especially when facing complex ethical challenges. Farell and Cobbin (1996) identified established differences between UK, American and Australian codes of conduct and ethics. Studies have shown that Australian codes more concentrate on legal environment aspect and focus on importance of not disserving the reputation of the company and employees. American codes pay attention to reputation of customers and in providing equal opportunities. UK codes refer to community, welfare and environment. On the government level, the moral challenge is more intense for multinational companies who need to justify moral expectations both in the UK and in host foreign countries. One of the issues of unmoral behavior is corruption. Corruption takes place all over the world. According to Davis (2003), giving bribes, kickbacks or gifts is flagrant unethical and unmoral in cross-border business. Corruption may be different in various countries. Cultural differences may be the reason to predict perceived ethical beliefs. Cultural differences of countries can be analyzed by means of Hofstedes dimensions. He revealed 5 dimensions; they are power distance, individualism, masculinity, uncertainty avoidance and long-term orientation. Analysts consider that power distance and uncertainty avoidance are associates with corruption. In the countries with low power distance everyone acts equal in power; this means that there is more harmony and mutual respect which results in lesser corruption. To the contrary, in the countries with high power distance, where hierarchical system occurs, corruption is higher. Corruption Perceptions Index is the main assessment tool developed by Transparency International. According to Transparency International (2008), there is a distinct connection between the living and efficient system of state power and corruption. Transparency International survey showed that Iraq, Burma and Somalia close the list compiled by the organization. However, countries such as Norway and the UK lost their positions because of connection with several cases of possible corruption, which are now being investigated in the countries and because of the scandal around the suspicious contracts of the British company BAES (British Aerospace Systems) with Saudi firms. Trying to improve the ethical climate, organizations are taking a variety of steps: make moral and ethical codes, create ethics committees involved in social audit and provide training on ethics issues (Crane and Matten, 2010). Ethical issues have to become an essential element of corporate planning of multinational corporations. Otherwise, the problems arising from their actions are subject to a greater regulation by the host government or major regulatory bodies, such as OECD or the UN, endowed with regional or global powers. Consequently, in the interest of every multinational organization to develop uniform ethical guidelines for the operations in all regions of the world, setting the highest possible standards, and strictly comply with them. This essay has reviewed the issues of ethical challenges. In connection with globalization, on an example the EU, these problems are beginning to be resolved. Hopefully, they will be lesser in the future.

Reference list

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