Holiday Seekers and Small World Agencies Merger Report

Introduction

In the modern world of business, a variety of factors might drive companies to merge; nevertheless, it ultimately comes down to the goal of making (more) profit. However, the process of merging is difficult and often may lead to undesirable consequences. This report provides recommendations for two hypothetical travel agencies, Holiday Seekers and Small World, on how to successfully merge into a single organization, Zephyr Travels. The issues of stakeholders, leading the change, organizational culture, and maintaining the change are discussed.

Effects of Change on Stakeholders, and Ways to Deal with These Effects

It is clear that the merger of the two organizations will have a major impact on all the stakeholders of both companies. Therefore, it is important to assess these effects and take steps allowing for decreasing the likelihood of the situation in which these effects lead to negative consequences for the new organization. To do this, the impact on all the stakeholders and the respective measures to minimize the negative influences will be considered separately.

Owners (Stockholders) of the Organization

On the whole, it is usually expected that a merger will have a positive impact on the price of the stocks of an organization in the long term. In fact, the decision of two firms to merge is usually made on the basis of the desire of major shareholders to make additional profit. It is, however, stressed that a merger can result in the volatility of the prices of stocks of a business (Jain & Sunderman 2014). In order to ensure that this volatility does not adversely affect the resulting incomes of shareholders, it is important to efficaciously run the new organization so that it brings steady profits, thus also making the stocks stable again, and increasing the long-term profits of the stockholders (Jain & Sunderman 2014).

Managers of the Organization

Because most branches of Holiday Seekers will be closed, it is clear that a large proportion of its managers also will have to be made redundant. The remaining administrators will have to adapt to the new conditions, learn the peculiarities of the new business, and provide guidance for the employees of the new company (Conway & Monks 2011). The remaining top managers will have the most significant degree of responsibility. In particular, the remaining CEO will be forced to manage a whole new part of a business which will differ from their old business considerably and will need to orchestrate (together with a change team) the process of uniting of two companies so that the new people can all work together in one organization (Tanner n.d.).

Managers will wish to keep their position and their salary and will experience stress due to the additional workload (Miles 2013). It will also be within their responsibility to teach the employees new skills (Conway & Monks 2011). Therefore, the CEO should create a plan which will include guidelines for merging all the aspects of the two organizations, including the ways to integrate the management. The new mission and vision will need to be shared with managers, and their commitment to them will have to be ensured (Palmer 2004), which, again, can be done via communication. Additional change managers can be used to reduce the workload on the managers who are part of the staff.

The Top Management

One of the CEO of the merging companies will have to quit. It might be offered that the CEO of Holiday Seekers leaves and the CEO of Small World remains with the firm. Even though the part of Holiday Seekers that will remain in Zephyr Travels will consist of a greater number of people than there are in Small World, in which no layoffs are planned, the 65 employees of Small World all work in one location (Dubai), whereas the workers of Holiday Seekers are dispersed among numerous locations. Therefore, it is likely that the CEO of Small World has much more contact with their employees than the CEO of Holiday Seekers has with theirs; and thus, the employees of Small World will feel abandoned by their CEO if that CEO leaves, whereas for the remaining ≈120 employees (40% of the 301 initial workers, because only 20 physical branches, or 40%, remain) of Holiday Seekers, the change of CEO might simply appear to be an event which is distant from them.

In addition, because a part of Holiday Seekers will be closed, it might feel more natural for all the employees that the CEO of Holiday Seekers also leaves; besides, it might be possible that some of the workers of the remaining branches will leave, or new employees will be hired to help to deal with the online branch of Zephyr Travels. The remaining CEO will have to establish and maintain constant contact with the physical branches (Palmer 2004), which can be done via online methods such as video conferences, or even via e-mail when more personal contact is not crucial.

The CEO, therefore, will have to carry out an extensive amount of communication with the managers. Training will also need to be organized for these administrators so that they could teach the employees the necessary skills (Conway & Monks 2011), for knowledge plays a critical role in the success of any organization (Monroe & Pagliari 2008). It is also recommended that managers of the two branches of Zephyr Travels communicate extensively, via online methods (e.g. video conferences) when live communication is not possible, and exchange their experience in managing the workers.

It should be noted that it is useful to take into account the performance of CEOs before choosing which one of them has to leave, but in this case, such data is not available.

Employees

The employees (and low-level managers of the enterprises which merge) will perhaps suffer the most from the merger, for a large proportion of them will have to be laid off, whereas the rest may experience distress due to the fear of being made redundant, as well as because of the need to adapt to the new situations and new routines. Therefore, it is possible to make the merger as painless as possible for the remaining employees by changing their routines in a minimal way (as far as this allows for the effective functioning of the new company). In addition, the workers should also be extensively communicated with by the management of the organization, and taught the necessary skills to do their new jobs; if left on their own in the issues of training, the employees may not reach the minimum required level of skills and knowledge (Conway & Monks 2011), and also will feel abandoned by the management of the new business, possibly leaving their jobs.

The change in the workers’ routine can be minimized by leaving most own them in their old positions where possible. This can be done because out of the 50 branches of Holiday Seekers, 30 will be closed completely, but 20 will remain in their old locations and will not have to change considerably, apart from adapting to the online branch of Zephyr Travels (e.g., they will need to learn to communicate with their clients using online methods). The Small World will also not need to change considerably, apart from adapting to the collaboration with the physical branches.

Therefore, the workers of the two branches of Zephyr Travels will need to be taught to collaborate with one another, and to get used to the fact that the company now also has a physical/an online branch. As in the case with the managers, the employees will also need to be communicated extensively and to be helped to develop enthusiasm and commitment to the new organization (Palmer 2004).

Customers

It is most likely that the clients of Small World will not suffer at all, for the online branch will be preserved in the new company. The old customers will still be able to use the services of the new enterprise. However, these old clients (especially those who were loyal to Small World) should be reached by utilizing the electronic means of communication, and informed that Small World now becomes a part of Zephyr Travels, so that they know to which company the old brand belongs (McLelland, Goldsmith & McMahon 2014); to keep them, a discount might be offered to them if they use the services of the new travel agency.

On the contrary, the customers of those physical branches of Holiday Seekers which will be closed will be unable to use the services of the company anymore, at least in the same way as they did in the past. The clients of the closed branches of Holiday Seekers (especially the loyal ones) will also need to be contacted and informed that the firm will no longer operate in their location due to the merger, but that the new company will still be happy to provide them with services by utilizing the online means, and might offer discounts.

Suppliers

The regular suppliers of travel agencies are mainly comprised of transport companies and hotels. For the suppliers, the firms which they supply are customers. Therefore, due to the merger, the suppliers might lose their client or a part of the volume of products/services this client purchases. However, this should not have a considerable impact on Zephyr Travels.

Nevertheless, it might be advised to continue using the services of the old suppliers of both Holiday Seekers and Small World, especially the services of hotels and similar organizations, for it is possible that the list of destinations to which Zephyr Travels will send their customers will consist of the destinations to which the old travel agencies sent their clients. However, it might be needed to re-negotiate some old contracts if there were any. On the other hand, it might be better to limit the use of the services of the transport companies operating in places in which the physical branches of Holiday Seekers will be closed. Switching live communication with suppliers to the online relationship might lead to a decrease in the trust of the suppliers (Andreu et al. 2010); furthermore, it is likely that Zephyr Travels will lose a part of the clients living in places where the old branches were situated. And still, the news organizations should not stop using the services of these suppliers altogether, for it might be possible that the company will retain some of the customers from those locations by offering online services to them; also, new clients might still be found in those places via online means.

The Community

It might be possible that the community of the locations in which the offices of the organizations are situated will not have a major impact on the future of Zephyr Travels. The communities in which the branches of Holiday Seekers that are to be closed are located will, in fact, stop being an influence at all (Murphy & Murphy 2004). The communities in which the offices of Zephyr Travels will be located will also not be an influential factor. It is recommended, however, to announce the change in the organization to the local communities so that their members would know the new company as the successor of the old one, and possibly use its services as clients.

Leading the Change, and the Type of Leadership Style Required

In most cases, the top executives of an organization and senior managers engage in leading the change in companies; the assistance of project managers and change managers might also be used (Higgs & Rowland 2010; Pollack & Algeo 2016). Change management could also be consulted because the “regular” managers are likely to be overloaded by work due to the new conditions (Miles 2013).

It might be recommended that the CEO of Zephyr Travels takes the responsibility of managing change in the new organization. These administrative measures will include such issues as the communication with and between the employees of the enterprise, sharing the new vision and mission of the organization and making the workers committed to it in order to engage them and minimize the resistance, overseeing the necessary training for the employees who require it, and so on (Ford, Ford & D’Amelio 2008). The CEO will also be the main controller of the whole process of implementing the elements of change in the organization (Palmer 2004).

The CEO will have to utilize the help of the managers of all levels, especially the senior managers. The assistance of change managers may also be useful (Crawford & Nahmias 2010). It will be needed to create a program of training for the workers of the former Holiday Seekers in order to help them adapt to the new online branch of the organization and to be able to utilize if efficaciously. It is recommended that managers deliver such training programs; the delivery should begin from the top managers of the company and stream down to the “local” team or project managers. In the case of physical branches, the managers of each of the separate branches will need to be contacted and trained, and then they will need to deliver training to their subordinates (Conway & Monks 2011).

The leadership style that might be recommended for this occasion is the transformational leadership (Akther 2015), for this style is best for creating a new vision in an organization and for inspiring the workers so as to allow them to implement the change effectively. Such a leader will be able to motivate the workers and help them to keep their morale on a high level, which is of paramount importance in a situation when a merger has occurred, many employees were laid off, and the remaining workers have to strive to adapt to the new situation at their job (Jóhannsdóttir, Ólafsson & Davidsdottir 2015).

Preparing the Culture for Accepting the Change

According to Marks and Mirvis (2011), there are a number of ways in which the cultures of two organizations can be managed to prepare them for the merger. However, before considering the ways to prepare these cultures, it is needed to decide what the final step of the cultural integrations should be.

Marks and Mirvis (2011) offer four main frameworks for integrating cultures after a merger; these are assimilation (one of the cultures absorbs the other one), integration (two cultures are blended together), pluralism (the two different cultures coexist), and transformation (both merging companies adopt new elements of culture). It should also be stressed that, according to Donnely (2011), it is not recommended to attempt to completely change both cultures after the merger; on the contrary, the two cultures may have common features, and they should be preserved, especially if they are beneficent.

In this case, it even appears reasonable to choose the way close to that of the pluralism of cultures, also labeled by Marks and Mirvis (2011, p. 866) as preservation; however, the culture of Holiday Seekers might still be partially transformed to match that of Small World. This is because both the local branches of Zephyr Travels and its central office in Dubai (where Small World was previously located) will mainly keep doing the same type of business (with local and online clients, respectively). However, it will still be needed to integrate the two companies, and it will be easier to adjust the culture of the small collectives of the local branches (consisting of approximately six people each) than that of the large workforce of the office in Dubai.

To prepare the cultures for mergers, it will be needed to communicate with employees and instill a sense of urgency of the need for change (Marks & Mirvis 2011; Palmer 2004). This can be done by demonstrating to the employees that their companies could perform much better, and that, consequently, they would also gain from it, also explaining the adverse consequences of not merging. The same reasons which drove the two companies to a merger may be used, but carefully, so that the staff does not become aware of the planned merger before they are ready. This will allow for a more painless integration of the two companies.

The managers will have to understand the culture of both Holiday Seekers and Small World, thus performing cultural learning, and then drive both cultures towards the established goal (Marks & Mirvis 2011). There should not be many cultural conflicts between the physical and online branch of Zephyr Travels, because each of the offices will mainly keep operating in their domain. However, the elements of the new culture can be promoted in the local offices, for example, while providing the training that was discussed above for the members of physical branches, or while maintaining communication.

A Change Model to be Followed, and the Ways to Achieve Each Phase of the Model

According to Appelbaum et al. (2012, p. 776), Kotter’s eight-step model for implementing change can considerably improve the likelihood of successful change, even though it does not always guarantee success. Tanner (n.d.) states that the Kotter’s model for change consists of eight distinct steps (see Fig. 1), and can also be utilized in a situation when two companies merge.

These steps may be achieved as follows:

1. Establishing a sense of urgency: as has already been stressed, the employees can be shown that their companies can perform considerably better, and, as a result, they might get better working conditions or higher salaries. (Of course, if such promises are made, they will have to be kept). In addition, the convenience of having an online service might be demonstrated to the employees who work in physical branches, whereas the benefits of having physical branches may be shown to the worker of the central office.
2. Creating the guiding coalition: the CEO of Small World (the one who remains) will have to gather a coalition consisting of senior managers, as well as technicians (to design the way in which online and physical branches will be integrated) and financiers (to consider how to manage finances in the new Zephyr Travels company). This coalition can design the details of the future merger.
3. Developing a vision and strategy: these will be designed by the coalition that was discussed in item 2 of this plan.
4. Communicating the vision: the CEO and the senior managers will communicate with lower managers, as was discussed above; apart from providing training, they will communicate the vision to the rest of the staff.
5. Empowering action and removing barriers: it will be needed to carry out the processes which will later allow the members of the new company to work together as one organization successfully. This step also involves training the employees, which was mentioned above, and explaining to the workers who show resistance that their work in the new organization may bring them additional benefits.
6. The short-term wins might be generated when the two companies engage in collaboration. For instance, the workers of physical branches might learn to properly use the online means for communicating with their clients.
7. Consolidating gains, implementing further change: finally, when the critical mass of the members of the staff is ready for the merger, the complete integration of the two companies may be carried out. At this point, the already probed cultures of the two companies may also be driven to the goal which was established before (Marks & Mirvis 2011).
8. Anchoring the new approaches: the employees of the new company, Zephyr Travels, need to become accustomed to the new ways of doing business. In other words, standard procedures of doing work in the organization need to become routine for its workers.

Maintaining the Change in the Organization

To maintain the change in the new business, it is needed to reach the state in which most workers, or, rather, the critical mass of workers, have all the necessary skills and knowledge (Monroe & Pagliari 2008), are accustomed to the new ways of doing their job, and do not conflict with one another. In order to maintain such change, as it was already stressed, it will be needed to train and prepare the workers (Conway & Monks 2011), which can be done in the way proposed above: the top managers (perhaps with the help of the guiding coalition, change managers, and so on) create a list of competencies which are necessary for working in the new organization, and then the adequate training procedures are developed and delivered all the way from the top administrators to the local (team, project, or branch) managers, who will then help their employees learn the new aspects of their job (Conway & Monks 2011).

In order to maintain the “spirit” of the workers, managers will have to work with them; it will be necessary to respond to the problems of individual employees and help them adapt. It is paramount that the top managers (including the CEO) will also have to take into account the issues of their subordinates and spend a considerable amount of time on constructive communication. It will also be necessary to continuously assess the situation in the organization, address any deviations from the planned course of events, and take the needed action if any problems arise; for this purpose, a variety of tools for assessment of organizational progress can be used (Keenan et al. 2015).

Conclusion

Therefore, if Holiday Seekers and Small World are to merge successfully into Zephyr Travels, a number of steps require being taken. The impact of the merger on stakeholders needs to be considered, and any negative consequences should be addressed. The CEO of Small World ought to remain in the company and lead the change; a change team needs to be gathered, and managers should provide the necessary motivation, training, etc. for their employees. The culture of the organizations should be prepared for accepting the change. The Kotter’s eight-step model can be utilized for implementing the merger of the firms, and the change should be preserved by creating new routines, motivating and training workers, maintaining contact with the staff, and addressing any arising problems.

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