Mergers Don't Always Lead to Culture Clashes Paper - Essay Example

People thought the two cultures would clash but it was successful. Q1. What ways were the cultures of BANK of America and NMBA incompatible? In the year 2005, Bank of America acquired MBA at a cost of 35 billion dollar (More, 2006). MBNA’s employers had accustomed their employees to high salaries packages. Their headquarters were an example of luxury at its best. They had private jets and yachts, and enjoyed a company golf course. They had adopted a formal mode of dressing and it was strictly suit and tie.

Bank of America on the other hand, paid its employees’ salaries that were in line with the market figures. They had a casual approach towards their mode of dressing. They also preferred simplicity of premises in terms of the architecture. The differences between the cultures of the two companies were based on the social interactions. MBNA accuses its counterparts of being bureaucratic and BOA terms the MBNA directors as being arrogant. The companies approach to the corporate image is the bottom line of the differences. Q2. Why do you think their cultures seem to mesh and rather than clash?

The two companies were quite compatible. Their different approaches were put together and each adopted the other company’s culture. They both compromised on their stands. The two corporate cultures meshed due to the fact that their differences were only prevalent on the corporate image. The differences lay on issues that could be dealt with easily. The adjustment of the two companies to the new corporate culture did not need time or negative financial complications for the company. For example, the issue of salaries was handled by adopting the market figures; thus, the MBNA staff had to suffer from pay cuts.

The golf course and private jets were disposed, but one private jet was retained. The issue of dressing was handled with adopting MBNA official setting for the public relation department. BOA’s casual approach was adopted for the other departments. Each company policies were evaluated and the best solution was used. Q3. Do you think culture is important to the success of a merger/acquisition? According to Deal and Kennedy (2008), dealing with the corporate culture when merging two companies is very important.

It is essential due to the fact that it will determine the success of the new company. The corporate culture of a company contributes to the profitability of accompany to some extent. It is therefore, important to ensure that you incorporate both cultures and blend them in a way that the profit attributed to the two companies corporate culture will be retained. The accomplishment of the acquisition will depend on the way the two companies deal with the different corporate cultures. The other reason as to why it is important to ensure the success of merging is to achieve the best value of the new company.

The deal value should not be eroded with the new merger. It is crucial that the new company’s corporate culture is not undermined or lacks consideration. The new employees should feel comfortable in the new working environment for the best results to be achieved. The new corporate culture should be accepted by the employees freely. Q4. How much of the smooth transition if any, do you think comes from both companies glossing over real differences in an effort to make the merger work? Both companies’ ability to compromise was the factor that contributed to the smooth acquisition of the two compan