CaseStudy: Going Global
CaseStudy: Going Global
of the case background
Thecase study is about the intention of a Chinese company, Bon VivantSpecialties to enter the U.S. market by acquiring a local firm,PetGourmand’s. PetGourmand is a manufacturer and a seller ofhigh-quality pet feeds, but it only focuses on the local marketsegment. BVS, on the other hand, is a multinational corporation withheadquarters in Hong Kong, but it has offices in Australia andEurope. PetGourmand has been operated as a family business since itwas established. This means that the acquisition of PetGourmand willcall for a complete change of the management style, which is asurprise to most of the employees who have served the company with ahierarchical structure for decades. This paper will address theproblems, challenges, and opportunities available in thisacquisition, and propose solutions that can help in addressing theseproblems.
Problems,challenges, and opportunities
Thetype of the organization structure adopted by firms determines theefficiency of their operations. PetGourmand uses a hierarchicalstructure, which is based on rigid family management divisions andreporting policies. Consequently, the firm operates in a traditionalfashion, where employees in the manufacturing, research, marketing,and sales department report to the mid-level managers or thesupervisors. This is a problem because the rigid structure denies thejunior staff autonomy and authority to make decisions and interactwith the senior management.
Thenews about the acquisition of PetGourmand by BVS has dispiritedPetGourmand’s employees. From the cases, there are four potentialfactors that contributed towards employees’ dispiriting. Thesefactors include the fear of losing jobs, potentially negative effectof the acquisition on the reputation of PetGourmand, fear of workingfor a foreign firm, and product quality implications of theacquisition. This is a significant challenge that BVS will have toaddress in order to maintain the reputation of PetGourmand andenhance the competitiveness of its new acquisition.
Thelanguage barrier is a challenge that the two firms, PetGourmand andBVS, should not overlook. BVS, which is a Chinese company, is managedby the Chinese who many are not fluent in English. This means thatcommunicating with employees of PetGourmand will be a challenge. Thiswill affect the flow of orders and instructions from BVS toPetGourmand.
Theacquisition of PetGourmand by BVS is a significant change that willaffect nearly all aspects of the new acquisition, including themanagement style, flow of orders, and organization’s operations.For example, PetGourmand employees will be communicating with BVSusing telecommunication technologies, instead of face-to-face. Tothis end, BVS will face the challenge of managing the change in orderto help PetGourmand’s employees cope with the new reforms andmaintain their performance.
Thereare three major opportunities associated with BVS’s acquisition ofPetGourmand. First, financial constraints that PetGourmand has beenfacing following the great recession present an opportunity for BVSto acquire it with ease. Secondly, technological advancementpresented BVS with an opportunity to manage its new acquisition usingtelecommunication technology. This will reduce worries aboutgeographical distance between BVS and PetGourmand headquarters. Thefact that PetGourmand had an established reputation and competitiveadvantage is an opportunity for BVS to expand its customer basethrough PetGourmand’s acquisition.
BVSshould replace the hierarchical organizational structure withself-managing teams. According to Saylor Foundation (n.d)self-managing teams are effective tools that reduce the negativeeffects of hierarchical and bureaucratic control. This means that BVSshould focus on establishing self-managing teams in PetGourmand,where the teams will be given the responsibility and authority ofmaking decisions on issues affecting their work. Team members willmonitor their own behavior and performance, which will make it easyfor BVS to manage its new acquisition in spite of the geographicaldistance. In addition, allowing the team members to make decisionswill motivate them since they will feel that their contribution isappreciated.
Creatinga common opposing force to overcome uncertainties
Thenews about the acquisition of PetGourmand by BVS has created a lot ofuncertain issues among the PetGourmand employees. For example,PetGourmand’s employees do not know how the acquisition will affectthe quality of their products, their job security, and the overallreputation of their employer firm. These doubts have createdintrapersonal conflicts among the PetGourmand’s employees, whichoccurs when one is uncertain about what is wanted or expected (SaylorFoundation (n.d). BVS should use effective communication to clearthese uncertainties. For example, the management of BVS can organizea meeting with PetGourmand employees and inform them about theprocess of acquisition, their fate, and strategies that BVS will useto maintain PetGourmand’s reputation. By doing this, BVS will beable to create a common opposing force, which is to safeguardPetGourmand’s going concern and divert their attention away fromuncertainties.
Thefact that BVS is located in Asia and PetGourmand operates in the Westsuggests that employees from the two firms will experience somedifficulties in communicating. There are effective strategies thatBVS can use to reduce the chances of communication barriers. First,BVS management should embark on creating awareness of the culturaldifferences. According to Smith (2014) training employees indifferent cultures enhance their capacity to communicate acrosscultures, increase their understanding of different cultures, andpractice patience with people from different cultural backgrounds.Therefore, BVS should organize training programs to train the Chineseand American employees on cross-cultural communication. Secondly, BVSshould demand for tolerance between PetGourmand employees and theChinese employees. This will be achieved by offering some trainingprograms on existing cultural differences between the two groups ofemployees from different cultural backgrounds. Training programs helpemployees understand co-workers from different cultural backgroundand work hard to comprehend different means and needs that can beused to achieve common goals (Smith, 2014). In essence, worries aboutpotential difficulties associated with cross-cultural communicationwill be addressed effectively through training.
BVS’sacquisition of PetGourmand will be accompanied by significantchanges, which will in turn disrupt the status quo of employees whohave worked with PetGourmand for about 40 years. The environmentaladaptive strategy is the most appropriate change management strategyin the case of PetGourmand’s acquisition. The strategy is usedwhere radical change is called for (Nickols, 2010). The environmentaladaptive strategy is based on the assumption that individualsdisruption and loss, but they are willing to adapt to newcircumstances. Consequently, BVS should embark on building a neworganization and transferringPetGourmand employees gradually fromtheir old mindset to the newer way of doing things. This will shiftthe burden of change management from BVS’s leadership toPetGourmand’s employees by exploiting their adaptive nature.
Manyorganizations internationalize their operations through theacquisition of other firms that are located in the target marketsegment since this is a cheap and a faster entry strategy. In thecase of BVS, the acquisition of PetGourmand comes with severalopportunities (such as ease of expanding its consumer base), butthere are some problems and challenges that should be addressed. Someof the key problems include the change of the organizationalstructure, motivating dispirited PetGourmand employees, uncertaintiesabout employees’ fate, and cross-cultural communication barriers.These problems and challenges will be addressed by establishingself-managing teams, training employees to enhance their culturalcompetence, and using the environmental adaptive strategy to managethe overall change.
Nickols,F. (2010). Fourchange management strategies.London: Distance Consulting LLC.
SaylorFoundation (n.d). Communication.Washington, DC: Saylor Foundation.
Smith,C. (2014). Cross-culturecommunication: Good collaboration is a must.London: Mind Tools Ltd.