Analyse two possible disadvantages to AP of a merger with SC.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2022). The mark or mark type is shown in brackets.

1. [K] Understanding of merger and types of merger. Merger is when two businesses join together under one ownership.
2. [K] Understanding of process of merger – agreement by directors/shareholders, share transfer.
3. [K] Issues associated with merging include: difficulties of rationalising workforce, including redundancy due to role duplication.
4. [K] Issues associated with merging include: possible conflicts of objectives.
5. [K] Issues associated with merging include: miscommunication with workforce.
6. [K] Issues associated with merging include: integration of cultures producing inefficiencies.
7. [K] Issues associated with merging include: Requirement for speed of implementation.
8. [K] Issues associated with merging include: Difference in products and marketing difficult to integrate.
9. [App] AP is a plc, SC a cooperative, with different cultures.
10. [App] Conditions of the takeover – 2 divisions or one enterprise.
11. [App] AP hard HRM, SC a decentralised cooperative.
12. [App] Possible new structure (two divisions or combined).
13. [App] Different markets; AP play equipment, SC components.
14. [App] Both AC and SC make components.
15. [App] SC workers are skilled and flexible; AP workers are unskilled.
16. [App] Both AP and SC manufacture components.
17. [An] Resentment from employees leading to negative effect on efficiency in the new organisation.
18. [An] Redundancies due to role duplication, such as in component manufacture will lead to job insecurity and demotivation.
19. [An] Costs of integration are higher than expected and remove or work against expected economies of scale.
20. [An] Difficulty in integrating cultures and work practices means production and sales targets may not be achieved.
21. [An] Customers not buying from the new brand/organisation due to lack of recognition, leading to lower sales than expected.
22. [An] Difficulties of the change meaning synergy benefits not achieved.