1: Why do project managers tend to focus so little time on the Project Closure phase? What are some of the deliverables and processes done in project closure? Does Agile or Hybrid have a formal process to close projects, why? What is a step that can be added to the closeout process to add value to an organization?

 

QUESTION 2: 

Read the below case study Acquisition Problemand answer the following questions IN ESSAY FORM BY UTILIZING AT LEAST ONE PEER-REVIEWED JOURNAL. 

Acquisition Problem

BACKGROUND All companies strive for growth. Strategic plans are prepared identifying new products and services to be developed and new markets to be penetrated. Many of these plans require mergers and acquisitions to obtain the strategic goals and objectives rapidly. Yet often even the bestprepared strategic plans fail when based on mergers and acquisitions. Too many executives view strategic planning for a merger or acquisition as planning only and often give little consideration to implementation, which takes place when both companies are actually combined. Implementation success is vital during any merger and acquisition process.

PLANNING FOR GROWTH Companies can grow in two waysinternally or externally. With internal growth, companies cultivate their resources from within and may spend years attaining their strategic targets and marketplace positioning. Since time may be an unavailable luxury, meticulous care must be given to make sure that all new developments fit the corporate project management methodology and culture.

External growth is significantly more complex. External growth can be obtained through mergers, acquisitions, and joint ventures. Companies can purchase the expertise they need very quickly through mergers and acquisitions. Some companies execute occasional acquisitions while other companies have sufficient access to capital such that they can perform continuous acquisitions. However, once again, companies often neglect to consider the impact on project management after the acquisition is made. Best practices in project management may not be transferable from one company to another. The impact on project management systems resulting from mergers and acquisitions is often irreversible, whereas joint ventures can be terminated.

Project management often suffers after the actual merger or acquisition. Mergers and acquisitions allow companies to achieve strategic targets at a speed not easily achievable through internal growth, provided the sharing or combining of assets and capabilities can be done quickly and effectively. This synergistic effect can produce opportunities that a firm might be hardpressed to develop by itself.

Mergers and acquisitions focus on two components: preacquisition decision making and postacquisition integration of processes. Wall Street and financial institutions appear to be interested more in the nearterm financial impact of the acquisition rather than the longterm value that can be achieved through combined or better project management and integrated processes. During the mid1990s, companies rushed into acquisitions in less time than the company required for a capital expenditure approval. Virtually no consideration was given to the impact on project management and on whether project management knowledge and best practices would be transferable. The result appears to have been more failures than successes.

When a firm rushes into an acquisition, often very little time and effort are spent on postacquisition integration. Yet this is where the real impact of the acquisition is felt. Immediately after an acquisition, each firm markets and sells products to each other's customers. This may appease the stockholders, but only in the short term. In the long term, new products and services will need to be developed to satisfy both markets. Without an integrated project management system where both parties can share the same intellectual property and work together, this may be difficult to achieve.

When sufficient time is spent on preacquisition decision making, both firms look at combining processes, sharing resources, transferring intellectual property, and the overall management of combined operations. If these issues are not addressed in the preacquisition phase, then the unrealistic expectations may lead to unwanted results during the postacquisition integration phase.

STRATEGIC TIMING ISSUE Lenore Industries had been in existence for more than 50 years and served as a strategic supplier of parts to the automobile industry. Lenore's market share was second only to its largest competitor, Belle Manufacturing. Lenore believed that the economic woes of the U.S. automobile industry between 2008 and 2010 would reverse themselves by the middle of the next decade and that strategic opportunities for growth were at hand.

The stock prices of almost all of the automotive suppliers were grossly depressed. Lenore's stock price was also near a 10year low. But Lenore had rather large cash reserves and believed that the timing was right to make one or more strategic acquisitions before the market place turned around. With this in mind, Lenore decided to purchase its largest competitor, Belle Manufacturing.

PREACQUISITION DECISION MAKING Senior management at Lenore fully understood that the reason for most acquisitions is to satisfy strategic and/or financial objectives. Table I shows the six reasons identified by senior management at Lenore for the acquisition of Belle Manufacturing and the most likely impact on Lenore's strategic and financial objectives. The strategic objectives are somewhat longer term than the financial objectives, which are under pressure from stockholders and creditors for quick returns.

Lenore's senior management fully understood the longterm benefits of the acquisition, which were:

Economies of combined operations Assured supply or demand for products and services Additional intellectual property, which may have been impossible to obtain otherwise Direct control over cost, quality, and schedule rather than being at the mercy of a supplier or distributor Creation of new products and services Putting pressure on competitors by creating synergies Cutting costs by eliminating duplicated steps TABLE I ACQUISITION OBJECTIVES

Reason for Acquisitions Strategic Objective Financial Objective Increase customer base Bigger market share Bigger cash flow Increase capabilities Become a business solution provider Larger profit margins Increase competitiveness Eliminate costly steps and redundancy Stable earnings Decrease timetomarket for new products Market leadership Rapid earnings growth Decrease time to market for enhancements Broad product lines Stable earnings Closer to customers Better price-quality-service mix Solesource or singlesource procurement Lenore submitted an offer to purchase Belle Manufacturing. After several rounds of negotiations, Belle's board of directors and Belle's stockholders agreed to the acquisition. Three months later, the acquisition was completed.

POSTACQUISITION INTEGRATION The essential purpose of any merger or acquisition is to create lasting value and value that would not exist had the companies remained separate. The achievement of these benefits, as well as attaining the strategic and financial objectives, could rest on how well the project management valueadded chains of both firms are integrated, especially the methodologies within their chains. Unless the methodologies and cultures of both firms can be integrated, and reasonably fast, the objectives may not be achieved as planned.

Lenore's decision to purchase Belle Manufacturing never considered the compatibility of their respective project management approaches. Project management integration failures occurred soon after the acquisition happened. Lenore had established an integration team and asked the integration team for a briefing on what critical issues were preventing successful integration.

The integration team identified five serious problems that were preventing successful integration of their project management approaches:

Lenore and Belle have different project management methodologies. Lenore and Belle have different cultures and integration is complex. There are wage and salary disparities. Lenore overestimated the project management capability of Belle's personnel. There are significant differences in functional and project management leadership. It was now apparent to Lenore that these common failures resulted because the acquisition simply cannot occur without organizational and cultural changes that are often disruptive in nature. Lenore had rushed into the acquisition with lightning speed but with little regard for how the project management valueadded chains would be combined.

The first common problem area was inability to combine project management methodologies within the project management valueadded chains. This occurred for four reasons:

A poor undherstanding of each other's project management practices prior to the acquisition No clear direction during the preacquisition phase on how the integration would take place Unproven project management leadership in one or both firms The existence of a persistent attitude of "we-them" Some methodologies may be so complex that a great amount of time is needed for integration to occur, especially if each organization has a different set of clients and different types of projects. As an example, a company developed a project management methodology to provide products and services for large publicly held companies. The company then acquired a small firm that sold exclusively to government agencies. The company realized too late that integration of the methodologies would be almost impossible because of requirements imposed by government agencies for doing business with the government. The methodologies were never integrated and the firm servicing government clients was allowed to function as a subsidiary, with its own specialized products and services. The expected synergy never took place.

Some methodologies simply cannot be integrated. It may be more prudent to allow the organizations to function separately than to miss windows of opportunity in the marketplace. In such cases, pockets of project management may exist as separate entities throughout a large corporation.

Lenore knew that Belle Manufacturing services many clients outside of the United States but did not realize that Belle maintained a different methodology for those clients. Lenore was hoping to establish just one methodology to service all clients.

The second major problem area was the existence of differing cultures. Although project management can be viewed as a series of related processes, it is the working culture of the organization that must eventually execute these processes. Resistance by the corporate culture to effectively support project management can cause the best plans to fail. Sources for the problems with differing cultures include a culture that:

Has limited project management expertise (i.e., missing competencies) in one or both firms Is resistant to change Is resistant to technology transfer Is resistant to transfer of any type of intellectual property Will not allow for a reduction in cycle time Will not allow for the elimination of costly steps Must reinvent the wheel Views project criticism as personal criticism Integrating two cultures can be equally difficult during favorable and unfavorable economic times. People may resist any changes to their work habits or comfort zones, even though they recognize that the company will benefit by the changes.

Multinational mergers and acquisitions are equally difficult to integrate because of cultural differences. Several years ago, an American automotive supplier acquired a European firm. The American company supported project management vigorously and encouraged its employees to become certified in project management. The European firm provided very little support for project management and discouraged its workers from becoming certified, arguing that its European clients do not regard project management as highly as do General Motors, Ford, and Chrysler. The European subsidiary saw no need for project management. Unable to combine the methodologies, the American parent company slowly replaced the European executives with American executives to drive home the need for a single project management approach across all divisions. It took almost five years for the complete transformation to take place. The American parent company believed that the resistance in the European division was more of a fear of change in its comfort zone than a lack of interest by its European customers.

Planning for cultural integration can also produce favorable results. Most banks grow through mergers and acquisitions. The general practice in the banking industry is to grow or be acquired. One Midwest bank recognized this and developed project management systems that allowed it to acquire other banks and integrate the acquired banks into its culture in less time than other banks allowed for mergers and acquisitions. The company viewed project management as an asset that had a very positive effect on the corporate bottom line. Many banks today have manuals for managing merger and acquisition projects.

The third problem area Lenore discovered was the impact on the wage and salary administration program. The common causes of the problems with wage and salary administration included:

Fear of downsizing Disparity in salaries Disparity in responsibilities Disparity in career path opportunities Differing policies and procedures Differing evaluation mechanisms When a company is acquired and integration of methodologies is necessary, the impact on wage and salary administration can be profound. When an acquisition takes place, people want to know how they will be affected individually, even though they know that the acquisition is in the best interests of the company.

The company being acquired often has the greatest apprehension about being lured into a false sense of security. Acquired organizations can become resentful to the point of trying to subvert the acquirer. This will result in value destruction where selfpreservation becomes paramount, often at the expense of project management systems.

Consider the following situation. Company A decides to acquire company B. Company A has a relatively poor project management system, where project management is a parttime activity and not regarded as a profession. Company B, in contrast, promotes project management certification and recognizes the project manager as a fulltime, dedicated position. The salary structure for the project managers in Company B was significantly higher than for their counterparts in Company A. The workers in Company B expressed concern that "We don't want to be like them," and selfpreservation led to value destruction.

Because of the wage and salary problems, Company A tried to treat Company B as a separate subsidiary. But when the differences became apparent, project managers in Company A tried to migrate to Company B for better recognition and higher pay. Eventually, the pay scale for project managers in Company B became the norm for the integrated organization.

When people are concerned with selfpreservation, the shortterm impact on the combined valueadded project management chain can be severe. Project management employees must have at least the same, if not better, opportunities after acquisition integration as they did prior to the acquisition.

The problem area that the integration team discovered was the overestimation of capabilities after acquisition integration. Included in this category were:

Missing technical competencies Inability to innovate Speed of innovation Lack of synergy Existence of excessive capability Inability to integrate best practices Project managers and those individuals actively involved in the project management valueadded chain rarely participate in preacquisition decision making. As a result, decisions are made by managers who may be far removed from the project management valueadded chain and whose estimates of postacquisition synergy are overly optimistic.

The president of a relatively large company held a news conference announcing that his company was about to acquire another firm. To appease the financial analysts attending the news conference, he meticulously identified the synergies expected from the combined operations and provided a timeline for new products to appear on the marketplace. This announcement did not sit well with the workforce, who knew that the capabilities were overestimated and the dates were unrealistic. When the product launch dates were missed, the stock price plunged and blame was erroneously placed on the failure of the integrated project management valueadded chain.

In this case the problem area identified was leadership failure during postacquisition integration. Included in this category were:

Leadership failure in managing change Leadership failure in combining methodologies Leadership failure in project sponsorship Overall leadership failure Invisible leadership Micromanagement leadership Believing that mergers and acquisitions must be accompanied by major restructuring Managed change works significantly better than unmanaged change. Managed change requires strong leadership, especially with personnel experienced in managing change during acquisitions.

Company A acquires Company B. Company B has a reasonably good project management system, but it has significant differences from Company A's system. Company A then decides, "We should manage them like us," and nothing should change. Company A then replaces several Company B managers with experienced Company A managers, a change that took place with little regard for the project management valueadded chain in Company B. Employees within the chain in Company B were receiving calls from different people, most of whom were unknown to them and were not told whom to contact when problems arose.

As the leadership problem grew, Company A kept transferring managers back and forth. This resulted in smothering the project management valueadded chain with bureaucracy. As expected, performance was diminished rather than enhanced, and the strategic objectives were never attained.

Transferring managers back and forth to enhance vertical interactions is an acceptable practice after an acquisition. However, it should be restricted to the vertical chain of command. In the project management valueadded chain, the main communication flow is lateral, not vertical. Adding layers of bureaucracy and replacing experienced chain managers with personnel inexperienced in lateral communications can create severe roadblocks in the performance of the chain.

The integration team then concluded that any of the problem areas, either individually or in combination, could cause the project management value chain to have problem areas, such as:

Poor deliverables Inability to maintain schedules Lack of faith in the chain Poor morale Trial by fire for all new personnel High employee turnover No transfer of project management intellectual property Company A now realized that it may have bitten off more than it could chew. The problem was how to correct these issues in the shortest amount of time without sacrificing its objectives for the acquisition.

2. Why do you think senior management finds it difficult to consider the impact on project management during pre-acquisition decision-making?
4. How should the two project managers handle the differences in the project management approach?
6. How should Lenore handle disparities in leadership style?