Mergers and Acquisitions Essay

Mergers and Acquisitions

Question 1

Just Eat.com is a renowned global online food delivery marketplace that connects consumers and other food outlets. Although it’s headquartered in London, the company operates in other countries in Europe, Asia, Oceania, and America. The platform offered by the company helps customers to search for restaurants that provide local takeaway. The clients can make orders, pay using online platforms, and select the best pick-up place or how the package is delivered.

Just Eats’ Founding Culture

Its culture has largely defined the success of the company. The business model has first defined the company’s success. The company has always endeavored to ensure that customers can order what they wish to eat with ease. The steps include introducing the postal code, searching for the restaurant, choosing and ordering meals, and lastly, introducing the shipping and making payments. These steps are designed to be easy for most customers, hence helping the company grasp a bigger portion of the target market (Just-Eat Takeway.com, 2020).

The company’s vision is brief and to the point. The company has opted not to use long dialects to communicate to the stakeholders and the public. The vision communicates the business’s essence and outlines the future plans that help the stakeholders stick to the organization’s philosophy and overall business strategy. The vision “Serving the world’s greatest menu. Brilliantly” is a brief yet informative statement that helps the company grasp the target market’s attention. The company has also been living up to its values, which are make happy and big hearted. Through its values, the company has been able to restructure its operations to meet the customers’ expectations.

Another important company culture that has helped shape the company’s business operations is that the company has a hard-working and friendly employee who comes up with inspiring and innovative strategies that can fully meet the clients’ needs and expectations. Employees are often subjected to beer fridges on Fridays, team building, and winter parties that help inspire employees to be more productive (Financial Times, 2020). Besides, the employees enjoy the autonomy that allows them free-thinking and competitively working towards making the company enjoy a bigger share in the market.

The company also has a strong dealer community. The company has come up with a culture among the distributors and dealers. The dealers are expected not only to promote the companycompany’s products but also to have the sales team educate the customer on how they can get optimal benefits from the company’s products.

Potential Implications from the Merger

Just eat.com’s merger with Takeaway.com creates one of the largest food order and delivery firms in the world with a remarkable market share. The merger is set to see Takeaway.com acquire a 15% premium on Just Eat. Just Eats’ stakeholders will receive a share ratio of 0.09744 of Takeaway.com, which translates to 52.2% ownership. The merger has already seen the company increase its market share by 23.7%, with other key stakeholders coming on board after the investment. The company’s merger will also help the company get a bigger market share. Since Takeaway.com is a well-established business with a significant market share, merging will help Just eat.com get a bigger portion of the target market and generate more revues.

Another possible implication is that the merger can reduce competition and give the new firm significant monopoly power. Since the two organizations are renown in food delivery, the merger may likely give the new firm significant monopoly power, less competition, and a significant market share. The products are likely to be more attractive to the customers as the merger seeks to understand market dynamics and use strategies that can help improve efficiency. There is also a likelihood of reduced prices from the efficiency of scale and synergy. Besides, there are economies of scale as bigger firms will be more efficient. Consequently, the new firm’s efficiency is set to improve as the two companies have an expanded and more vibrant workforce that understands and responds to market dynamics.

Another implication of the merger is that it helps improve the competitiveness of the business. In an industry where business players are always trying to invest new measures of remaining competitive, merging will result in tax benefits and help the firm be more competitive by using fewer resources than before. Additionally, entry into global markets will allow the new firm to maximize its profits (Agrawal, Cooper,  Lian and Wang, 2013).

Question 2

Many theories have been used to explain the structure and evolution of organizations. It would perhaps be prudent to start by exploring organizational structure from early contributions, as reflected in the Bible and the Roman Empire. Griffin and Moorhead (2011) argue that the largest organizations were linked to the church and the army. In both cases, the ranking was done according to one’s role and responsibility in society. Between 1900 to 1930s, early management theories emphasized the need to reduce production costs resulting in more efficiency. For instance, according to Frederick Taylor, the cooperation of management and labor are key to undertaking work objectives implemented through scientific methods.

Between 1930 to 1960s, most of the theories emphasized the need to accommodate human needs in accomplishing work practices. The 1950 to 1970 period was characterized by theories that emphasized improving the organizations’ manageability and decision-making process. This period was, however, characterized by the absence of downsizing and ineffective work in organizations. The last and most recent period that explores organizational theory’s evolution is the symbolic interpretive perspective after the 1980s.

Theories like that of Peters and Waterman emphasize the role that organizational culture has in improving organizations’ effectiveness. On the other hand, Berger and Luckman’s theory emphasizes the importance of human relations that have to be built through negotiations and a unity of purpose among employees. The theories outline these and many other aspects as the best strategy to lead a modern-day organization. Furthermore, the latest theories regard organizations as a social construct that focuses mostly on employee behavior rather than organizational structure.

There are many ways through which Just-Eat Takeway.com’s design and business model aligns with the business structure and evolution of organizations. The companies are using the ‘one company, one brand, and one I.T. platform approach in undertaking its operations. The new design guarantees that best practices are applied within the organization (Naylor, Pritchard, and Ilgen, 2013). The new design is meant to be one of the key success factors behind the merger’s success. Using a highly centralized organizational structure, branding, and detailed marketing strategy to roll out new initiatives and the public infrastructure. In centralized organizations, departments, or groups within the overall company seeks to adhere to a unified set of rules and procedures. The outcome is that the processes are more streamlined, reducing operational costs while saving time and improving operational efficiency.

The merger’s use of a centralized model aligns with the theories discussed before in many ways. For instance, the theories developed between 1950 and 1970s emphasized the need to improve how decisions are managed in organizations. Other important aspects reflected in the theories is the need for organizations to embrace the organizational culture. In a centralized model adopted by which Just-Eat Takeway.com’s design and business model, the emphasis is to have a unified system that establishes a company culture that appreciates all employees and bestows the autonomy decision-making as reflected in the theories. The centralized model also provides a clear chain of command since every employee in the organization understands who to report to improve the company’s efficiency.

Just-Eat Takeway.com’s design and business model after the merger can as well be defined in terms of Land and Jarman theory of organizational growth (Hitt et al., 2012). The theorists use the traditional S-curve, which explains the birth, growth, and maturity of organizations. Organizations must, therefore, mutate and use different strategies to attain the set goals. Such measures have been captured in the merger’s centralized model, which relies on a harmonized approach to develop strategies that ease the merging process while improving the efficiency of the merged companies’ operationalization. Additionally, the organizational culture espoused in organizational management theories is also reflected in the call for the merger’s use of best practices such as centralizing the functions, simultaneous use of initiatives, using a single technology platform, and unified brand campaigns. Integrating these approaches as part of the company culture is a good way to improve the merger’s efficiency. Additionally, the organizational structure outlines the key roles and functions that every employee must adhere to to improve its efficiency.

The use of a centralized model by Just-Eat Takeway.com is an approach that guarantees stakeholders of a well structured and unified merger meant to attain a common purpose. It also helps achieve faster implementation of decisions and reduced bureaucratic leadership within the organization. Such advantages have been outlined as part of organizational evolution, as discussed in the theories.

Question 3

Over the next five years, there are notable challenges that Just eat.com and Takeaway.com are set to face after the merger. Like in any other merger, the two players have to streamline their operations to ensure the two companies’ aspirations are not lost along the way after the merger.

Differences in Company Culture

Culture is an important aspect that companies hold on to. The culture defines the way of doing things for the two organizations. For instance, the employment procedures, salary scales, and engagement with stakeholders. However, after a merger, the two players must find common ground upon which their two cultures can be harmonized without necessarily losing value to the stakeholders. Merging may also imply that employees must be accustomed to new ways of engaging their stakeholders. Research by Gomes, Angwin, Weber, and Yedidia Tarba (2013) shows that one in three mergers are bound to fail as deals never meet the expectations. The companies are likely to find that they cannot operate together as business engagement philosophies are different. Although the business environment for Just Eat.com and Takeaway.com are similar, the corporate values that help position the individual companies can be lost, making it challenging for the companies to thrive after the merger. The visions and values for the two companies can as well be hard to merge. 

Challenges of culture and change management, which are critical components of company integration, will likely result in a toxic and inefficient work environment. The challenge can especially be compounded by the two company’s ability to plan the integration before the agreement has been signed. Therefore, the merging of the two companies can be a challenging venture to implement when the integration process has not been streamlined. Besides, since Takeaway.com and Just eat.com are from two different countries, their cultures are likely to be different, hence making it challenging for them to fully integrate individual cultural business practices without compromising the value of their products and services offer (Reus, 2012).

Managing Employee Expectations