AFTER THE DEAL

Date: 2015-10-07; view: 491.

C Complete the sentence

Use an appropriate phrase from Exercise B to complete each sentence.

1. Many countries offer companies …tax incentives…to encourage investments.

2. When we launch our new Internet service we will need to ………………… a big marketing ………………… .

3. In order to be successful, the new manufacturing plant will have to reach target ………………… within six months.

4. Assembling to order and delivering direct to each customer means managing a complex ………………… .

5. When importing is expensive due to high ………………… , the alternative is to manufacture locally.

6. In order to have free access to the EU market, Japanese car manufacturers in the UK need to ………………… minimum content ………………… .

7. In some countries the only way to ………………… well is to have local production.

8. Most countries in Europe are now part of a ………………… which allows free movement of goods.

Doing deals is easy. As mergers hit record levels, now comes the hard part

The merger wave, which in 1998 was a predominantly American affair, is now sweeping over Europe. Cross-border deals, such as Daimler-Benz's takeover of Chrysler, accounted for a quarter of mergers in 1998; more are expected as firms go global.

Success in the future will depend more than ever on the merged companies' ability to cre­ate added value. And that will depend mainly on what happens after the deal has been done. Yet many deal makers have neglected this side of the business. Once the merger is done, they simply assume that computer programmers, sales mangers and engineers will cut costs and boost revenue according to plan.

Yet, just when post-merger integration has become decisive, it has become harder to pull off. Not only are modern firms complicated global affairs, but executives are putting today's deals together in a hurry. Few give enough thought to the pitfalls.

One set of obstacles is “hard” things, such as linking distribution or computer systems. In par­ticular, many recent mergers have been undone by the presumption that information technology is easy to mesh together.

More difficult are the “soft issues”; and here the same word keeps popping up - culture. People never fit together as easily as flow charts. Culture permeates a com­pany, and differences can poison any collaboration. After one large US merger, the two firms had a row over the annual picnic: employees of one company were accustomed to inviting spouses, the others were totally against the idea. The issue was resolved by inviting spouses only in alternate years.

The second new thing is the number of cross-border mergers. In this area DaimlerChrysler may prove to be an interesting case study in differing management cultures. One worry is compensa­tion: Chrysler's pay levels are much higher than the German company's. So a US manager post­ed to Stuttgart may end up report­ing to a German manager who is earning half his salary.

Nor is pay the only difference. Chrysler likes to pride itself on its flexible approach, where speed and ingenuity are prized. When designing new models, teams of engineers, designers and market­ing people work on each model. Daimler-Benz has a more tradi­tional structure, in which design­ers and marketing people mix less and engineers are in charge.

Some recent deals will no doubt prove a stunning success. Nevertheless, there are three omi­nous signs about the current merger boom. First, much of the attention seems to be on the deal itself rather than the integration that must follow. Second, many deals are rushed. And third, mergers have too often become a strate­gy in their own right.

So the things that are so impres­sive about today's mergers - their size, complexity and daring - could count against them if the economy turns down.

From The Economist