“Merger Disaster” to “One Team, First Time, On-Time, Every Time”

The Challenge

#05

Take two large, independent companies, both manufacturing similar products, each highly profitable and between them, owning 90% of the South African market.Now bring these two companies together in a merged company that should now control all of the 90%.Wow – a highly profitable organisation that can increase margins and still retain customers.A win-win situation!

So wrong!

This often happens in mergers.This was a merger of two very different cultures where one did not fit with the other; where “us and them” divided the resources into competing camps and the Customers suffered the consequences.As a result the Customers moved their business to foreign based suppliers: meaning that expenses increased, turnover and margins disappeared.Disaster!

In the three years after the merger the merged company had three Managing Directors, a management group that did not operate as an effective team and an increasingly disgruntled workforce.Key skills and experienced resources were lost to competitors.Quality and on-time delivery disappeared – the basics were lost.

Here is what some of the merged company’s key customers said about them:

“Overall they used to have 80% of our business.It is now 25% due to poor service and quality.We are not happy and have moved to new suppliers.This is based on quality and availability.All I hear from them is “I can’t.””

“They must focus on getting the basics right first.First be an excellent supplier, deliver consistent quality and delivery, and then move to partnership issues.”

“They over-commit and over-promise!”

“I have a feeling in my gut that we’re not being told the whole truth.They keep giving me excuses and promises that aren’t met.”

“The quality of communication creates more questions than it does answers.”

“Their hearts and minds are not in the new company because of the different culture mix of the two old companies.It’s their attitude – they need to re-create themselves.”


We can certainly see the results of the first intervention

Stephen Hayton
Divisional Manager,
DaimlerChrysler, South Africa


The ARGIL philosophy

The Argil philosophy is about listening rather than talking; it’s about “them” (the Customer) ...