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Copy of MERGERS DON'T ALWAYS LEAD TO CULTURE CLASHES

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Samuel Cheng

on 22 February 2014

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Transcript of Copy of MERGERS DON'T ALWAYS LEAD TO CULTURE CLASHES

MERGERS DON'T ALWAYS LEAD TO CULTURE CLASHES
1. What is institutional and how does it affect organizational culture?
The cultures of Bank of America and MBNA were incompatible because MBNA's culture was characterized by a free-wheeling, entrepreneurial spirit that was also quite secretive. MBNA employees also were accustomed to the high life. Their corporate headquarters in Wilmington, Delaware, could be described as lavish, and employees throughout the company enjoyed high salaries and generous perks from the private golf course at its headquarters, to its fleet of corporate jets and private yachts. Bank of America, in contrast, grew by thrift. It was a low cost, no-nonsense operation.

Unlike MBNA, it believed that size and smarts were more important than speed
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When these two organizations merged, everyone thought they would not succeed. With the different cultures they had, it would have been easier to fail than to succeed.

First at all, the above-the-chart wages to MBNA’s employees were cut against all odds. A hybrid dress code was adapted and executives of both companies began by comparing thousands of practices covering everything from hiring to call-center operations. (Dash, 2007). It is clear that both organizations wanted this merge to work. By adopting some of each others’ policies and cultural practices, they managed to create a successful merger.
2. Why do you think their cultures appeared to mesh rather than clash?
3. Do you think culture is important to the success of a merger/acquisition? Why or why not?
Yes, I do.
Culture is a boundary-defining role; it creates distinctions between one organization and others. Also, it conveys a sense of identity for organization members.
Culture is probably the most important aspect to consider when looking to merge/acquire an entire different organization
4. How much of the smoot transition,if any, do you think comes from both companies glossing over real differences in an effort to make the merger work?
To try to manage the cultural transition, executives of both companies began by comparing thousand of practices covering everything from hiring to call-center operations. In many cases, BOA chose to keep MBNA's cultural practices in place. In other cases BOA did impose its will on MBNA.
THANK FOR YOUR ATTENTION
a lot of mergers lead to culture clashes and, ultimately, failure. So in 2005 when banking giant Bank of America (BOA) announced its $35 billion acquisition of credit card giant MBNA.

MBNA's culture was characterized by a free-wheeling, entrepreneurial spirit that was also quite secretive. MBNA employees also were accustomed to the high life.

BOA, in contrast, grew by thrift. It was a low cost, no-nonsense operation. Unlike MBNA, it believed that sized and smarts were more important than speed.

The cultures in the two companies were very very different.
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