Title

Challenges that might be faced by Maersk & Damco mergers

Introduction
The topic of this proposal is to research is particular challenges that Maersk and Damco mergers might face. Maersk and Damco are the companies leading in logistic sector. Soon, on 9
th

of September, there will be integration among two companies. In the process of

merging these companies, the merger might face challenges and problems.

Statement of the problem

This research will address particular potential problems and challenges of Maersk Logistics and Damco, into a single brand responsible for handling companies and their supply chain management activities as well as its freight forwarding business. The concern here is if they will be able to integrate their supply chain strategies efficiently and if they will be able to synergize their cultures in terms of management and new employers steps.

Project Background Background to the Problem

It is important to consider the extent to which a merger may lead to positive synergistic effects. For this, the strategic advantages and distinctive competencies of the merging firms have to be analyzed. Besides these, there has to be a match between the objectives of the firms. The mergers should ideally lead to the generation of strengths that would help the postmerger organization to achieve objective of the integration in a better manner. (Kozami, A., 2002) It is believed that merging two companies as one might be beneficial and advantageous. It may have the synergy advantage for both companies as it means the merging of the two companies best employees, best resources, best technologies and best strategies. There are many issues that are needed to be addressed in mergers or alliances as it means merging the cultures of Maersk and Damco and synergizing operation processes of two these two companies. However, while it provides the, synergy advantages, it also has certain disadvantages such as the problem of merging the two companys culture. The merging of culture is one of the main issues in integration process. The chances for success are further disadvantaged if the corporate cultures of the companies are very different i.e. employee, working ethics issues, etc. For instance, employees at the other firm might be accustomed to easy access to top management, flexible work schedules or even a relaxed dress code. These aspects of a working environment may not seem significant, but if new management removes them, the result can be resentment and shrinking productivity. This concerns the

employees because they are the ones who execute every process and interacts with every person or environment. So there is this relation between synergizing culture and strategy that any failure of culture has major effect on operation and so companies strategy. Logically, this type of problem cannot be avoided by the merger between Damco and Maersk since they are from two different distinct cultures.

Maersk Logistics resorted to strategic alliance which is a common strategy used by shipping and logistics companies today to sustain operation. One of their strategies and a prevalent strategy in the industry is alliance or merger. So, one of the most affected factors should be the management of new employees, specifically how they can be united as one so that the management of synergizing strategies will be affected positively. This can be addressed by considering the specific cultures of the two merged companies and examine assess closely on how those two cultures can be synergized. Synergizing a companys culture is up to the new company formed by the merger. One of the ways to which culture can be addressed is by reviewing the cultural dimensions theory. This is important for Maersk logistics and Damco managements since most of their partnerships and acquisitions are with foreign shipping companies. Employees from those companies adhere to their specific cultural dimensions. By reviewing these dimensions, Maersk and Damco can easily unitize and synergized cooperation between their employees.

From the point of fitting strategies, it can lead to creation of synergy through integration of value enhancing activities among two or more units or business. For example operations synergy results from economies of scale and scope or shared R&D or technology programs that lead to advantage that are not generally available to competitors. Also, marketing synergy is possible when the firm successfully links various marketing related activities including sharing of brand names, distribution channels, advertising and promotion campaigns and even sales forces. In addition, management synergies are typically gained when competitively relevant skills possessed by managers independent companies are transferred successfully between units within the newly formed one firm. (Hitt, Freeman, Harrison, 2001) So this is the method for mergers of Maersk & Damco during this integration process in order to synergize their strategies efficiently.

So basically, specified plan of how the merger process will take place and which possible new changes which might occur, will simplify the integration process further for all involved parties. The plan involves some key methods which Maersk and Damco managers should apply during merging their companies such as integration of the employees,

acknowledgement of progress and a regular feedback on the achievement.

Project Aims and Objectives Research Objectives

When companies go through a merger or an acquisition all involved parties within the organizations becomes affected. These changes can affect the company in many areas which could create tensions and anxiety among employees which could create strong negative forces at the end and prevent the new organization to function at its best. In service companies this could be of great importance to overcome since they often are dependent on functional organizations to help them create a wanted quality. This study will address this problem and will do so in a case study performed on transportation companies which have gone through a number of mergers. Due to these mergers, the company has also grown in both numbers of employees and in financial conditions.

Research Questions
What kind of challenges will management face?

What are the challenges that affect employers?

How do challenges or problems of merging affect operation of companies?

Will Maersk & Damco integration be able to synergize their strategies?

How should Maersk & Damco expanding company manage the integration of acquired companies and at the same time maintain a sought identity within the organization, in order to synergize their cultures and strategies?

Can employers of Maersk and Damco keep up step with new environment?

Significance of this project

This study refers to the challenges that company might face in a merging environment. It helps to overcome particular problems such as synergy of strategies, employers, and alternative ways for managers and mergers. Integration among companies or industries are

commonly happening in global market. So, what managers should know is how to synergize them efficiently in a short time period.

Deliverables Expected Results

The expectation of this research study is to maintain how to handle merging process. Merging companies and strategies always come with challenges. This research refers the importance of considering challenges during integration process. So mergers and managers will be able to know how to handle these challenges or problems which are the lack of communication between the manager and the employees and new strategies to synergize merging companies. This research also claims that the companies when divided between the two offices have created a cultural gap between the wanted culture and the actual culture which affects productivity by the way of employers. So that the quality thinking permeates trough the entire organization and all of the respondents have described the importance of achieving a high quality service within the organization.

Resources References
Hoskisson, R. E., 2008, Strategic Management - Concepts And Cases: Competitiveness And Globalization, 8th Edition, South-Western College Pub, USA

Kozami, A., 2002, Business policy and strategic management, 2nd Edition, UK, Mc-Graw Hill

M, A. Hitt., Freeman, R. E., Harrison, J. S., 2001, The Blackwell handbook of strategic management, 2nd Edition, Blackwell Business, Oxford Shim, J. K., Siegel, G., 1999, Operations Management, Barrons Business Review Series, USA

Waters, D., 2002, Operations management, 2nd Edition, Price Water House Coopers, Australia

Peder, F., Margarita, H., 2007, A coalition collision: A case study on organisational alterations, [Online], Available from: http://umu.diva-portal.org/smash/record.jsf?pid=diva2:140591, Accessed on: 17.08.2009