4. Review attachment Chapter 12A - Global Retirement Strategies, Inc.: A Tale of Two Cities and answer the following questions:

a. Is there a compelling case for a disciplined process of organization during pre-close due diligence? What are the three benefits and three risks of embedding such a process?

b. The Red Team is having difficulty reconciling their differences.

? What are the interests of each leader?

? How are those interests not being met?

? How can their interests be reconciled?

? What is really going on here?

c. Going directly to the CEO is a risk for Theresa. Did she approach it properly? What should she have done differently?

d. Assuming she prevails in her request, how should Theresa prepared and pursue the organization design activity she feels is essential to this deal? How should she deal with her colleagues on the Red Team?

e. Finally, how does one begin to reconcile the cultural differences between a results-based U.S. culture and a relationship-based Latin American culture when considering the integration of organizations?

Please include references. Thank you!

Global Retirement Strategies, Inc. (GRS) is a U.S. company based in New York, doing business in 70 countries around the world. Its mission is to provide retirement income solutions to high net worth individuals and families. Its strategy is to protably grow through a combination of increased market share (organic growth) and expanded markets (inorganic growth), offering a portfolio of both traditional and innovative annuities, bonds, and other long- term investment products. With $75 billion in annual revenues, GRS is a Fortune 50, Global Fortune 100 public company trading on the New York Stock Exchange. Founded in 1930 as a life assurance company in the predawn of the Social Security Act, it has a long history of helping to build social safety nets for families to supplement pensions and social security payments in the United States, and similarly lling gaps left by state and nonstate plans in countries across Asia, Europe, and Latin America. GRS is led by Kenneth Stevens, who joined the company as CEO 3 years ago after a long career in hedge fund management and venture capital. His selection was quite a departure for GRS, which had never before picked an outsider as CEO, choosing instead to groom inside business unit heads who had come up through the ranks. But the board of directors was dissatised with the rm's stagnant growth over the prior 5 years and wanted a leader with a track record of aggressive and competitive market leadership. Investors and analysts have since reacted to his tenure with cautious optimism, having followed \"Killer Ken's\" Wall Street career. They hope that his aggressive style can positively inuence a conservative, careful corporate culture but recognize that preservation is a fundamental element in the nature of GRS as a provider of long-term nancial security. Back to the subject of growth, unlike smart phones, electric cars, or online retailers, the retirement income business is a rather slow-growing industrysome would say stagnant or worseiwith little consumer excitement given its nature as a long-term bet on a long life. Also, would a person rather spend $1,000 on a nice vacation or on a product that will pay off 20 years into the future? Stevens recognizes the demand problem and has formed an executive \"team of rivals\" from consumer, nancial, manufacturing, and other industries who in their respective careers have had to overcome market barriers and create customer demand. Like Stevens himself, all have had extensive mergers and acquisitions (M&A) experience on the capital side as well as the company side. GRS is the market leader in the US. retirement income business, among the top players in Europe, a rising presence in Asia, but virtually unknown in Latin America. To address this untapped market, the executive leadership team (the top seven company executives) has approved a bid to acquire Mej orVida, the largest pension provider in Chile, based in Santiago. Its current owner, a major Spanish bank, is looking to sell the asset due to unrelated losses in its core commercial lending business that require significant cash to ensure solvency in terms of new European capital standards. Unlike many business corporations, MejorVida is beloved in Chile, with net promoter scores in the 70srare for this industry. It is known for having a highly engaged, dedicated workforce, earnng it recognition by Revista Magazine as one the top 10 places to work in Chile. The deal represents a significant portfolio risk for GRS, which has no experience in the defined benet public pension business. Complicating matters is the reality that in Chile, as in other Latin American countries, pensions are big business both economically and politicallyi some of the region's presidential elections have been decided on who will best protect retirees' nancial security. And at least one former president is reecting on his failures in this regard as he spends his days in a prison cell for a conviction of corruption for illegally spending pension fund reserves. Accordingly, this newly privatized industry is closely regulated by Superintendencia Pensiones (SP), with strict rules on protecting consumers' assets and privacy. GRS's global strategy, however, calls for Latin American expansion in the short run, something only possible with a signicant acquisition that is immediately accretive to the balance sheet. There are three major GSR constituencies involved in the MejorVida deal: The Corporate Center (New York), represented by the business development, finance, IT, and investments functions The Latin American team (Santiago), represented by regional marketing, sales, and legal The corporate human resources organization development (OD) team GSR has only recently had success with acquisitions following a long history of failed integrations. There are many reasons for these failures, but all had in common a love of making the deal itself and a lack of interest and capability in what came after the deal's close. As a result, old and new organizations did not align, top talent ed, and internal squabbles led to costly mismanagement. CEO Stevens is well aware of this history and so has formed a \"Red Team\" of experts and leaders from New York, Santiago, and OD. He has charged them with using a coordinated, interconnected approach to managing the MejorVida deal from due diligence to close, from integration to operationalization. HARMONIOUS KICKOFF The concept of the Red Team is new to GRS, and comes from Stevens's war room experience leading the M& A group at Bridgeburner Capital. Leaders of the GRS team include the following: Andrew Jones, head of business development (New York) Eduardo Herrera, LatAm region general manager (Santiago) Theresa Joswick, head of OD (New York) These leaders and their appointed representatives were thrilled to be invited to join the team and eager to get started on such a high-profile project. In fact, they have a 50% bonus incentive if they can close the deal ahead of schedule. The first meeting was exciting, marked by inspiring speeches from the CEO and other New York executives, a compelling video of how Mejor Vida improves citizens' lives in Chile, and a snappy (albeit lengthy) slide presentation from the external consultant. Then, each leader made a few remarks: Andrew Jones: Folks, this is a big moment for GRS, and I couldn't be happier to be surrounded by such committed talent. I am confident we can do this deal right and set a new benchmark for deals to come. Eduardo Herrera: Andrew, I agree. LatAm has been pushing for such a significant transaction for a long time, and I think we have the players to make it happen. Chilean pensions are important to the society, and how we perform in this work will affect people's lives as well as our company results. Theresa Joswick: I have to agree with all of you and add that our two guiding principles should be that We Rise or Fall Together, for the sake of collaboration, and Create a Living System, for the sake of those who must come together to work in the new Mejor Vida-GRS organization.Kenneth Stevens: I certainly picked the right team, and with the help of McKinley, our external consultant, I am condent in a speedy and effective outcome! It ended with dinner at the Gramercy Tavern and the hopeful glow that follows such an auspicious beginning. Despite the harmonious project kickoff, there is trouble brewing. After the second meeting, it is clear that New York wants to move quickly and focus on booking the deal's nancial value as soon as possible with an early close. Santiago also wants to reap these benets for the regional scorecard but is keenly aware of the regulatory constraints and cultural challenges of a U.S. company taking over a Chilean business. OD is feeling shut out, as the other two parties do not believe that organizational concerns come into the picture until after the close happens and the champagne is poured. OD knows that while nancial components, systems platforms, and process alignments are important, it is the MejorVida people who will make or break this dealitime must be taken to assess, understand, and account for organizational alignment, consolidation, and integration: Will jobs be lost to redundancy? Are there gaps in capabilities between GRS and MejorVida? How will management governance (leadership teams) be established? How will functional departments (like nance and marketing) between the entities be connected and reconciled? How will the acquired people feel about joining GRS, and also about saying goodbye to colleagues due to redundancy? Theresa Joswick has been asking these questions. Andrew Jones sees Theresa's passion but thinks these matters will work themselves out, after the close, and that speed needs to be the primary driver. Eduardo Herrera is initially concerned about the regulators and feels that once the legal and governmental issues are settled, we can then turn our attention to organizational matters. These conicting interests became manifest in a recent phase-gate review of the Red Team: Andrew: Theresa, while I appreciate your viewpoint, there is no time and little value for doing an extensive organization assessment of Mej orVida before close. We just need your colleagues in HR to inventory the jobs, decide who stays and who goes, and make sure payroll systems are ready to run on Day One. Eduardo: I have faith that the Chilean workforce will accept the acquisition if we have enough communication. They will be happy just to have jobs once the dust has settled. We can gure out who reports to whom later, and where to move the boxes. Theresa: Gentlemen, this is exactly where GRS has failed before on other acquisitions. We must examine the organizational structures, capabilities, governance model, and resource allocation now, not later. When people show up on Day One after the close, they should know to whom they report, what their jobs are, how decisions will be made, and how changes will be managed. If we are to realize the full value of this deal, the organization must be understood and properly designed before the close. Andrew: There is money on the table, Theresa, and it's getting cold. The regulator seems ready to say yes to our deal, and other suitors for this deal are in the wings, so I don't want to risk missing the opportunity or our targets. Ken already told the investment community to expect a close within 3 months, and your organization design activity would add 2 months to that. Theresa: Yes, but not accounting for organizational needs and dynamics would kill the value you are looking to gain. It's the people that created that attractive balance sheet, and it doesn't help us if top talent from MejorVida leaves because we don't have our act together. Eduardo: You know, Theresa makes a good point, Andrewwe do have only one chance at getting this right. Ifwe lose the people, we lose the deal, and we all suffer. Chileans are not New Yorkers, and must feel connected to one another and the organization in order to perform well. The value of this asset is in the people who have built the confidence of the customer and the public. Perhaps we should take more time on the organizational preparations. I do worry that Ken and the board will not understand if we take too much time in due diligence, but I worry more that proper design and alignment of the teams have to be addressed. Andrew: I get it, folks, but I'm not about to tell Ken that we can't deliver on his deadline. Besides, we have to wrap this up. I have two other deals in the pipeline needing my attention. The meeting ended without agreement, as did others. Over time, HR was relegated to counting the heads, lining up the payroll system, and ordering the cake for Day One. Theresa was beyond frustrated and decided to speak with Ken directly, hoping to appeal to his prior OD experiences with other acquisitions. She knew from her own outside experience that a small and early investment of organization design time would help assure an intentionally built and aligned new entity, not one that is haphazardly bolted together. Good design in this confirmatory due diligence phase calls for understanding the new GRS Chilean pension strategy, defining the required capabilities, assessing the gaps, connecting the jobs and departments, and installing a management governance system and process to ensure the combined entity could perform and not simply exist on Day One and beyond. A TALE OF TWO CITIES