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WHY DO MERGERS OR ACQUISITIONS TAKE PLACE? A Merger is a legal transaction in which two or more organizations combine operations through an exchange of stock. In a merger only one organization entity will eventually remain. An acquisition is a purchase of one organization by another. In recent years, there were quite a few acquisitions in which the target firms resisted the take-over bids. These acquisitions are referred to as hostile takeovers. It is natural for the target organization’s management to try to defend against the takeover. Although they are used synonymously, there is a slight distinction between the terms “Merger” and “Acquisitions”. When a company takes over another to become the new owner of the target company, the purchase is called an acquisition. For the legal angle, the “target company” ceases to exist and the buyer “gulps down” the business and stock of the buyer continues to be traded. It is believed that mergers and acquisitions are strategic decisions leading to the maximization of a company’s growth by enhancing its production and marketing operations. For example, it is recommended that mergers and acquisitions are indented to:  Limit competition  Utilized under-utilized market power  Overcome the problem of slow growth and profitability in once own industry  Gain economies of scale and increase income with proportionately less investments  Circumvent government regulations  Reap speculative gains attendant upon new security issue or change in P/E ratio  Create an image of aggressiveness and strategic optimism , empire building and to amass vast economic power of the company

 Provide a larger and growth oriented company for the people and same shall be in large public interest. the merger will  Create the largest airline in India and comparable to other airline in Asia  Provide an integrated international/ domestic footprint which will significantly enhance customer proposition and allow easy entry into one of the three global airline alliances.PROBLEM DEFINITION The merger of both the companies i. capabilities and infrastructure. erstwhile Indian Airlines Limited and Air India to form a new entity namely NATIONAL AVIATION COMPANY OF INDIA LIMITED.e.  Enable optimal utilization of existing resources through improvement in load factor and yield on commonly serviced routes as well as deploy ‘freed up’ aircraft capacity on alternative routes. along with a comprehensive transformation program.)  Provide maximum flexibility to achieve financial and capital restructuring through revaluation of assets  Provide an increased thrust and focus on airline support businesses.  Potential to launch high growth & profitability businesses (ground handling services.  Provide an opportunity to fully leverage strong assets. is imperative to improve competitiveness.  Provide an opportunity to leverage skilled and experienced manpower available with both the companies to the optimum potential. It will provide an opportunity to leverage combined assets and capital better and build a stronger sustainable business. maintenance repair and overhaul etc. .

It may arise from a genuine understanding of the change or from misunderstanding. or don't understand the change and its implications. most people are reluctant to alter their habits. or even almost total ignorance about it. and knee-jerk resistance PEOPLE SUPPORT CHANGE WHEN . People don't like change because they don't like being changed. fear and resistance to change follow – often despite its obvious benefits. resistance to change is even stronger. What worked in the past is good enough. in the absence of a dire threat. or don't think that the change makes sense.RESISTANCE TO CHANGE Most people prefer predictability and stability in both their personal and professional lives. People fight against change because they: • • • • fear to lose something they value. increase stress or involve risk. Resistance emerges when there is a threat to something the individual value. assuming that he or she is "just like all the others" Calls for sacrifice and self-discipline are met with cynicism. When change comes into view. threaten their self-interests. When faced with changes to the status quo. A legacy of disappointment and distrust creates an environment in which employees automatically condemn the next turnaround champion to failure. The threat may be real or it may be just a perception. people usually resist initially. People typically avoid situations that upset order. skepticism. WHY IS CHANGE SO HARD? First of all. or Find it difficult to cope with either the level or pace of the change. employees will keep doing what they've always done. And when an organization has had a succession of leaders.

While Indian Airlines operated in the domestic sector. Now that it is a merged organization. They respect the person who is championing the change. There existed a difference of opinion over the reason for the merger in the 2 organizations. They believe that the change makes sense and is the right thing to do.• • • • • • They expect that it will result in some personal gain. the MANAGEMENT OBJECTIVE of the company was: To determine ways to minimize the resistance of the employees towards the merger and therefore make it an acceptable change process. Such a study would help in identifying problems unique to each company as well as each department and help in devise specific plans to minimize the resistance in the organization. RESEARCH METHODOLOGY Management questions are basically restatements of the management dilemma in question form. They were given an opportunity to provide input into the change. They believe it is the right time for the change. . Each has been affected in a different way. They expect a new challenge as a result. Keeping in mind all this. coherence is required therefore it was essential to compare and study the employees’ perceptions of both the companies separately and as a whole. The merger was between Air India and Indian Airlines each having different work cultures and market operations. SCOPE OF THE STUDY The target segment of my study included the employees of the two organizations across different departments. Air India was in the international sector. Hence it was natural that the resistance to the change process would not be identical owing to these differences.

so as to see if there is any variation amongst responses of people in both the organizations. Secondary sources are interpretations of primary data where as tertiary sources aids to discover primary or secondary sources or an interpretation of a secondary source. .RESEARCH OBJECTIVE A research question is one which best states the objective of the study. In addition a lot of primary sources of data. why mergers and acquisitions are required” “To study what are the factors leading to mergers etc. This study will be extended to employees of both Air India and Indian Airlines.” • • “To determine. the methodology of which is explained in the next section. It is an extremely sensitive topic and the employees’ perspective (which was the need of the hour) was not taken into consideration. Based on the information collected at this stage it is decided to proceed with the construction of the questionnaire. By asking the right research questions I arrived at my research objective which is stated as follows: • “To understand the employees’ perspective of the merger and analyze the factors responsible for resistance to the merger.” The research objective was formulated keeping in mind that the merger was a current happening in the organization. The data generated were both nominal as well as ordinal. secondary sources of data like the newspapers. magazines and tertiary sources like the internet to find out about the latest happenings in the aviation sector is utilized. Primary sources are original works of research or raw data without interpretation or pronouncements that represent an official opinion or position.

A single open ended question will be designed keeping in mind the difficulty in analyzing them as well as their usefulness in conveying information. . In addition the study is needed to find out whether there was a difference in perception of the employees’ of the different departments as well as the two organizations i. randomized procedure that assures that each population element is given a known. DATA COLLECTION The main objective of the study is to understand the employees’ perspective on the merger. The objective of this research is to collect as many samples as possible whose responses reflected that of the majority of the population. non zero chance of selection. Judgmental sampling is a type of non probability sampling in which the researcher arbitrarily selects sample units to conform to some criterion. This task will reveal that whether some minor changes is required in the questionnaire. Having chosen the sampling technique I had to decide on the sample size. Since non probability sampling met those requirements and also because of the cost and time constraints it is chosen over probability sampling. Probability sampling is a controlled. After the initial preparation of the questionnaire. a pilot survey will be conducted on 20 respondents to study the short comings of the questionnaire. Non probability sampling is an arbitrary and subjective sampling procedure where each population element does not have a known. Air India and Indian Airlines. non zero chance of being included. This technique will be used keeping in mind its simplicity and accuracy. SAMPLING TECHNIQUE AND SAMPLE SIZE: The sampling technique used for data collection is judgmental sampling which is a type of non probability sampling.e. Hence the data collection is planned in such a way that a number of samples from different departments collected. A clear study of this is needed to understand the reasons for the resistance to the merger.

htm Change management. a lot of them may refuse to fill in the questionnaire. 3. The shortage of time is the major limitation to carry out such a study. Also owing to the time constraints a larger sample size would not be possible.. By: Garvin. David A. 83. Issue 2 Database: Business Source Premier Changing minds and persuasion.rationale for resistance Limitations of the Study: 1.html 2.Garrison Wynn http:/www. . Harvard Business Review. Also they might have been a bit apprehensive and hence not given the exact responses. Roberto. Feb2005.It is advised to sample about 200 employees. 100 each of Air India and Indian Michael A. As the level of fear and mistrust in the employees may be very high and the scope of the project misunderstood./managingchange. Vol. Chapterization Chapter 1: Introduction Chapter 2: Review of Literature Chapter 3: Organizational Profile Chapter 4: Research Methodology Chapter 5: Data Analysis and Findings Chapter 6: Conclusion and Suggestions References 1. The major limitation of the study is that the results will be skewed towards the employee perception in Northern region only. 00178012. This was done on the advice of the industry guide as that sample size would be representative of the organization. 2. 3. Change Through Persuasion .

Edward Amoroso.7th Edition 2004 By: Thomas. J. 9. J. Organizational Development and change.Understanding and Overcoming Human and Organizational Barriers.rediff. Maurer and associates.html Worldwide Member Firms 2005 Review: Air France/KLM — A complex merger http://www.htm Overcoming Resistance to Change: by A. 22/07/07 http://www.htm management resistance to change . March Psy. 2006 http://www. Thomas Publications .change without migraines http://www. 7. PIB Press Release. Christopher.An integrated approach. 13. Worley.htm 12 manage the executive fast track 12. Schuler. David.htm Press information bureau.air france-klm. G. Organizational behavior and analysis.htm Coping with challenges of organizational change April 2007 Dr. Indian merger work? Business Standard. Aysen Broadfield. Edwards Adison Wesley Publication. 14. D. http://www. Change management article human resources and organizational change. 6. 11. 1998 By: Derek Rollison. Taking Advantage of Resistance to Change. 8.4.12manage.PIB press release.J. Cummins. 10.h tml Will Air India. Resistance to Change: Understanding and Overcoming Human and Organizational Barriers http://www. AT&T http://nysfirm.