OB - M&A

Organizational Behavior: Project Report PGDM-Exec 2012- Term I

ORGANIZATIONAL BEHAVIOR ISSUE
MERGER & ACQUISITION

Guided by:
Dr. Bindu Gupta

Submitted by:
Abhishek Rai 11EX-002
Bishnu Kumar 11EX-013
Hemant Katyal 11EX-021
Mitesh Vartak 11EX-034
Ravi Bhandari 11EX-045
Sarika Ahuja 11EX-048


EXECUTIVE SUMMARY

Effect of merger and acquisitions is felt on bottom line of the firm first which transcends into
success or failure of firm. Employees of both the organizations are put through changes which
they may or may not be comfortable with. In this report we are comparing two such
acquisitions, one by Dell and another by Parker Hannifin, for the approach they have taken to
manage the employees during and after the change. We have tried to talk to employees directly
to get their inputs on the process and difficulties faced. We have noted down different
challenges faced by senior management and various methods they have chosen to affect
change.

In the end we have tried to assess effectiveness of merger and acquisition through financial
analysis against main objective of respective firm for the decision.


TABLE OF CONTENTS
INTRODUCTION .............................................................................................................................................................4

CASE I: DELL - PEROT SYSTEMS PURCHASE .....................................................................................................................5

DEAL ABOUT GROWTH ............................................................................................................................................................ 6
STILL A SMALL SERVICES FISH..................................................................................................................................................... 6
DELL’S CHALLENGE ................................................................................................................................................................. 8
CULTURAL INTEGRATION.......................................................................................................................................................... 9
‘REACH’ program ........................................................................................................................................................... 9
One Global Certification Program ................................................................................................................................. 9
The Compensation & Benefits Policy ............................................................................................................................. 9
Operational Integration ................................................................................................................................................ 9
Retention Plans ............................................................................................................................................................. 9
Financial Integration ................................................................................................................................................... 10
Enhanced Medical Benefits ......................................................................................................................................... 10
Other Benefits program............................................................................................................................................... 10

CASE II: PARKER HANNIFIN COOPERATION- ACQUISITION OF LEGRIS .......................................................................... 12

SEVEN PITFALLS ON THE PATH TO MERGER SUCCESS ................................................................................................................... 13
Pitfall # 1: Preoccupation ........................................................................................................................................... 13
The Strategy: Acceleration.......................................................................................................................................................... 13
Pitfall #2: Conflicts in Operating Pattern ..................................................................................................................... 13
The Strategy: Concentration ....................................................................................................................................................... 14
Pitfall # 3: Change in Business Philosophy................................................................................................................... 14
The Strategy: Conversion & Adaptation ..................................................................................................................................... 14
Pitfall # 4: Organizational Proliferation ....................................................................................................................... 15
The Strategy: Accelerate, Concentrate and Adapt ..................................................................................................................... 15
Pitfall # 5: Infrequent and irrelevant communication ................................................................................................. 15
The Strategy: Accelerate, Concentrate and Adapt ..................................................................................................................... 16
Pitfall # 6: Triangulation .............................................................................................................................................. 16
The Strategy: Concentrate and Adapt ........................................................................................................................................ 16
Pitfall # 7: The Guiding Light ....................................................................................................................................... 17
The Strategy: Adapt .................................................................................................................................................................... 17
CONCLUSION ....................................................................................................................................................................... 17
Financial results of Dell ............................................................................................................................................... 17
Financial results of Parker Hannifin............................................................................................................................. 18

RECOMMENDATIONS .................................................................................................................................................. 19

REFERENCES ................................................................................................................................................................ 20


I NTRODUCTION
Mergers and acquisitions are part of the capitalism history. The 1990 decade was marked by the
rising of these processes, due to a higher competition level. Accepting change is not an easy
task, yet it is hard to imagine any organization making significant changes. It is almost
impossible to envision an organization survival without adapting to changes. As mergers and
acquisitions take place, massive amounts of uncertainties take place. During the changes, it
becomes the responsibility of the managers to support and encourage employees. It is essential
to address the impact mergers and acquisitions have on all employees within an organization,
what to investigate, ways to motivate change, and how to respond to issues.
During the merger and acquisition process, the organization will need to address organizational
behavior issues that ultimately affect the organization and its continued success. The field of
organizational behavior involves why we do things and how it affects others, the behaviors of
groups and cultures, how people influence each another, analyzing values and attitudes, and
people‘s behavior with the influence of different policies.

The operating definition for the study of organizational behavior involves the importance of the
manager‘s role, contingency conditions being accounted for, areas of interest such as diversity,
empowerment etc.

We will be discussing 2 cases in this project to analyze the change in employee behavior due to
Merger & Acquisitions.


CASE I: D ELL - P EROT S YSTEMS P URCHASE
Dell‘s $3.9 billion acquisition of Perot Systems gives the company a better foothold in the IT
services market, but it‘s really just the beginning. Dell‘s purchase of Perot Systems is a down
payment on the company‘s big plans to transform its business. Dell is paying $30 per share for
Perot Systems, which is heavily focused in the only two industries growing these days—
healthcare and government. Perot and Dell had been long-time partners. Dell had been talking
about diversifying away from its core PC and server businesses for months, but the Perot
purchase is the first move that illustrates the company is serious about its transformation.

Dell‘s Vision is to leverage Perot‘s services capability across the company‘s customer base.
Indeed, Dell is certainly focused on making sure the Perot integration goes smoothly. Perot CEO
Peter Altabef will head a services unit comprised of joint Perot-Dell services units. In addition,
the two companies—both from Texas but about 200 miles apart—hope proximity can make the
integration smooth (even though about a third of Perot‘s employees are in India). Perot and Dell
have partnerships for financing and targeting verticals like health care (48 percent of Perot‘s
annual revenue) and government (25 percent of sales).

Officials said that Perot is one of the largest IT services providers to hospitals and physicians.
President Obama has made healthcare IT a big focus to slow the rate of increasing costs.
However, there is an increased degree of difficulty for Dell. Perot has 23,000 employees. The
Principals believe that there is a good cultural fit between the two companies. That cultural fit
along with excellent retention packages should keep Perot talent on board.


D EAL ABOUT GROWTH
Aside from utilizing Perot‘s foothold in healthcare and government agencies, the two companies
can grow faster and build ―next-generation capabilities.‖

Dell also added that Perot can enhance the company‘s ability to bring next-generation data
center and virtualization capabilities to customers. Think of the deal as one big cross-selling
proposition. Dell can leverage Perot‘s healthcare and government customers to sell more
hardware. Perot, which only has 27 percent of its revenue tied to commercial accounts, gets
Dell‘s enterprise heft.

In a graphic, Dell‘s big plan for Perot looks like this:

*Source: www.dell.com

S TILL A SMALL SERVICE S FISH
While Dell‘s plan for Perot Systems looks good on paper it will remain a small services player
relative to larger rivals. As per Dell it can bolt together Perot‘s services business with its own
and create a global service company with its new set of capabilities. However, today the Dell-
Perot services business is an $8 billion unit.



Dell will have to deliver new capabilities if it‘s to enter the big leagues in services. For instance,
IBM‘s global technology services unit had $39.3 billion in revenue in 2008 with its global
business services division delivering sales of $19.6 billion. As a result, IBM doesn‘t have to rely
on its hardware business as much as Dell does.

It‘s a similar story for HP, which bulked up its services via the purchase of EDS. For the nine
months ended July 31, HP‘s services revenue was $25.7 billion. Of that sum, infrastructure
technology outsourcing and technology services represents the bulk of the revenue pie.


D ELL ‘ S CHALLENGE
Scale Perot‘s services unit with ―disruptively great value‖ so it can play catch-up to the big
services guns.


Perot is known for its rigid, by the book culture and reliance on market - Health Care, where the
PC manufacturer has little experience. Dell on the other hand was one of the world‘s largest PC
Vendor and Hardware Provider with excellent international & commercial exposure. Since the
culture and vertical focus of the 2 companies is so different, the key would be Smooth
Integration.


C ULTURAL I NTEGRATION
‗REACH‘ P R O GR A M
One Initiative by Dell Services was the launch of ‗REACH‘ Program. Responsible employees from
Dell as well as Perot who had a good rapport among their peers were brought together to form
REACH teams. The objective of these teams was to engage with different work groups and
identify barriers, to seamless integration at both ends. Employees were encouraged to voice
their concerns / issues to REACH champions without fear of being penalized for the same.

Reach was also a partner to the Global Engagement Team at Dell Services Delivery. Feedback
from REACH helped the Global Engagement to revisit the Global Organization‘s Communication
strategies and rebuild them.

O NE G L O BA L C E R T I FI C A T I O N P R O G R AM
The ISO 9001:2008 standard is a common framework that supports Dell‘s shared purpose, ties
directly with its customers and suppliers, making them a part of the company‘s commitment to
quality and provides Standardized Solutions.

This was a step taken to standardize how quality was measured across the global organization.
The Perot Service teams were integrated with the Global ISO certification.

This instilled a sense of purpose among Perot employees and made them feel a part of a brand
with a much bigger purpose. The Vision gave them a direction and reduced uncertainties and
confusion about their Job goals.

T HE C OM P E N SAT I ON & B E N E FI T S P O LI CY
Performance based Incentives & Bonus Plans were launched for Sales and Non Sales employees.
As per the Policy employees had the opportunity to earn handsome rewards throughout the
year based on their achievements. This move helped inculcate a Performance and Result
Oriented Culture among employees. HR was entrusted with the task of ensuring that each
employee not only understood the Policy but was also inspired by it.

Operational Integration
Process and Operations integration was required to achieve Long Term Goals of the New
Company. To make sure that Perot employees became a part of the Global team, Dell
introduced a Global Career Structure. The new Career Structure allowed the organization to
better evaluate compensation and benefits and identify similar levels of work, and provide team
members with flexibility and growth in their career development.

R E T E NT I ON P LA NS
Dell believes in supporting employees with longer tenure and having a strong retirement plan
for them. In line with that thinking they announced the change in gratuity plan. The maximum
pay out limit has been removed and now Dell would pay gratuity for as long as the employee is
in service of the company.

Dell rolled out Women In Search of Excellence (WISE) as an Employee Resource Groups at
Perot. The mission of the WISE organization is to build a diverse and winning workforce. WISE
has a strong collection of programs, events and communications that seek to enhance the
professional competencies of members and provide opportunities for networking across the


business. WISE activities focus on our community within and beyond Dell and development
opportunities for its members.

A key challenge for Dell was to prevent its operating expenses from ballooning as revenues
recovered in 2010. The additional burden associated with integrating a large services asset
would make this difficult.

Financial Integration
In order to control its operating expenses, Dell Services brought Structured and Cost effective
HR Policies & Guidelines into practice.

Once these policies were rolled out, there was an Organization wide drive to educate employees
and bring them up to date with the new systems & procedures.

This Top to Bottom Communication method reduced Confusion and helped orienting the
employees towards more important issues.

There were strict mandates for Code of Conduct, Use of Company Resources, Domestic /
International Travel, Expense Report Submission etc.

E N HA N CE D M E D I C A L B E NE FI T S
The employees were offered better Insurance Plans, Wider Coverage, Reduced premium burden,
improved Service by new Third Party Administrator. The management supported the HR and
finance teams in implementing these changes. The teams were able to further reduce premiums
charged, despite the fact that the claims to premium ratio for the last year were as high as
150%.

O T HE R B E NE FI T S P R OG R A M
Other Benefits program that underwent a change in the last few months

Benefit Remarks

Medical insurance policy Employer funded policy for Employee, Spouse and
Children with higher insurance coverage. Various
options for parent coverage

Life insurance policy Redefined as 2 times annual base salary or a
minimum of 5 lakhs in case of an unfortunate event

Accident insurance policy Redefined as 2 times annual base salary or a
minimum of 5 lakhs in case of an unfortunate event

Holidays Revised the policy to prioritize the holiday list as per
most preferred per location

Employee Assistance Program Introduced counseling services to cater to
employees who need support at their work or
personal front

Long Service Awards Roll out of the new 5 year Service completion
awards

Medical insurance onsite help Help desks to cater to employee queries and claims


desks reimbursement easier for Dell‘s medical insurance
program

Disability insurance Stronger disability insurance to cater to the needy


CASE II: P ARKER H ANNIFIN C ORPORATION - M ERGER W ITH
L EGRIS I NDIA
Parker Hannifin Cooperation acquired the pneumatics and actuator company – Legris SA in
2008. Legris is headquartered in Rennes, France, it manufactures fluid circuit components and
systems for pneumatic, hydraulic, and chemical processing applications. Its 2007 Legris SA was
present in 35 countries, had 10 production plants, employed 2000 employees and had revenues
worth €233m.

The purpose of the acquisition was to diversify Parker‘s operations internationally, extend and
complement its existing technologies, and take advantage of opportunities in less cyclical end-
markets, such as life sciences. The acquired company brought with it new technologies and
market opportunities. Legris enhanced Parker‘s worldwide presence in the pneumatic and
hydraulic fluid circuit systems market while significantly bolstering Parker‘s European presence.
Legris‘ strong brand recognition and innovative products and systems were widely available
through a well-established distribution network, and complemented Parker‘s ability to provide
customers with the industry‘s broadest package of fluid circuit technology.

Parker bought Legris from Groupe Legris Industries, which planned to focus on its industrial
equipment and turnkey plant engineering activities. These include: its Savoye warehousing and
distribution logistics operation; Keyria, which makes building materials; and Clextral, which is
involved in food processing and specialty chemicals. Together, these activities represent about
two-thirds of Legris group sales.

Though Legris SA was fully acquired worldwide, In India there was a merger with Parker
retaining a 74% share in the company. Up to the point in the transaction where the papers were
signed, the merger business was predominantly financial - valuing the assets, determining the
price and due diligence. Before the ink was dry, however, this financially driven deal became a
human transaction filled with emotion, trauma, and survival behavior.

Human capital challenges, such as cultural fit and leadership selection, were cited as the
primary difficulties encountered. The complication in the Merger was amplified because of cross-
cultural situations, since the companies involved were from two different countries.

In the following section, we discuss some downsides of the Merger and how the organization
coped with them. We visited Legris India Private Limited and talked to a few Line Managers and
HR Executives. The findings include problems resulting from the merger, the strategy adopted
by the organization to overcome these problems and the appropriate strategy from the
manager‘s point of view.


S EVEN P ITFALLS ON THE P ATH TO M ERGER S UCCESS
The seven pitfalls represent the critical and vulnerable areas of the Merger. These areas must
not only be valued for their negative impact on the critical success factors that drove the "deal",
they are the very agenda for the organization's action in the critical first 90 days of the new
entity.

In the case of international mergers and acquisitions, such as Parker & Legris the complexity is
often compounded by the difference in national cultures. People living and working in different
countries react to the same situations or events in very different manners.

P I T F AL L # 1: P R E O CC U P A T I O N
In Legris India, individual preoccupation with "How is this all going to impact me?" weakened
commitment to the job at hand. Employees were concerned and insecure about their and the
organization‘s future. They were concerned about the change in management styles and
reporting managers. Change in Systems and procedures of conducting business activities. This,
in turn, translated into people looking for work in other companies. The firm in the midst of
transition lost some of its own talent - strengthening the competition.

What was less apparent is the pervasive loss of productivity of those who remained. In India
where people identify largely with groups, people started to look for support within their group.
When group members and immediate managers were not able to provide answers because they
were not part of the negotiation process, they became uncooperative and unproductive. Line
employees and managers at all levels lost a minimum of 15% of personal effectiveness as a
result of rumors, misinformation, and worry. Some teams broke down and some became less
effective in the first few days after the Merger.

THE STRATEGY: ACCELERATION
The strategy adopted at Legris India was to Speed the integration to reduce the uncertainty and
anxiety. Delayed decisions to "ease the pain" only magnify and sustain the pain and prevent the
company, the individuals and /or the groups from getting on with the work and their lives.
Smooth and effective integration was thus based on acceleration; concentration and creating a
critical mass for operational change (adaptation).

Employees were trained on new Policies, Applications & Softwares, in order to productively
engage them. Off Site Meetings were organized and employees from the same departments in
the two organizations were called. These initiatives reassured Legris employees and infused a
sense of belonging among Legris in them.

P I T F AL L #2: C ON FL I CT S IN O P E R A T I N G P AT T E R N
Tolerance for uncertainty varies widely around the world and this variation can play havoc in
international Mergers like the one we are considering. For example, American employees tend
to require more structure and definition of their role and responsibilities than do French
employees. When Parker, an American Company acquired Legris a French company, Parker
managers often expected high level of Role Clarity & Delineation, Frequent reporting & Follow
up that was not forthcoming, because the Legris employees deemed it unnecessary. Legris
personnel on the other hand were more varied and autonomous in their approach. Legris
employees when instructed to institute and follow systems and be subject to controls and
checks often view this as a question on heir capability. There was a clash of opinions and
expectations and value was eroded.


THE STRATEGY: CONCENTRATION
During the first 90 days, focus and get everyone to focus on the 20% of the goals that yield
80% of the economic value. Dealing with uncertainty explicitly is critical to the success of a
Merger. Engage employees in development and change initiatives and let them not lose sight of
business goals.

It would do well to the senior management to appreciate that, the economic value of Legris may
not be where its American partners expect it. For example, an American company acquiring
Legris may find that the value of its new acquisition lies more in the Market Share and the
Brand Legris has developed for itself rather than in the proficiency of its operations.

Guidelines and Processes were introduced in critical functions. Purchase of Non Stock items &
hardware was standardized. Advanced Software and effective Applications & Tools were
launched and employees were up graded on how to use them. A Business Continuity Plan (BCP)
and Disaster Recovery Plan (DRP) were made mandatory.

A Back up Plan was made for each position, to protect the business from any exigency. 4 levels
of Audits were conducted to upgrade processes in all departments up to Parker Standards.
These were: Desktop Audits, SOX Audits, FACE Review and Statutory Audit

P I T F AL L # 3: C HA N GE IN B U S I NE S S P HI LO SOP HY
The philosophy under which Legris operated was attaining High Sales Volume. In order to
achieve this, the company extended very liberal credit terms to its Customers and Distributors.
As a result the Distribution of Legris products was very strong, the company captured the
Indian Market Share and grew very fast.

The Business Philosophy of Parker Hannifin on the other hand was more prudent. Along with
increasing Sales volume, the Company also aimed at high liquidity or Cash Flow. Therefore
apart from achieving high Sales figures, it was also important for Sales personnel to recover
payments from Distributors / Customers.

Also, the Cash locked in Inventory had to be kept under check and parameters were set up to
measure the same. Various Checks and Controls were integrated with the Software, Reporting &
Performance Management System. This necessitated frequent Inspection and Audits on part of
the managers and Reporting by the employees.

These were two entirely different approaches of doing business. The expectations from the
employees were also very different. Employee Goals had to be mapped to the new
organizational goals and it had to make sense to them. Managing this Change became central to
making the merger work.

THE STRATEGY: CONVERSION & ADAPTATION
The Organizational Structure and Compensation and Benefits Structure were revamped in order
to reflect the change in Business Strategy.

Parameters to measure Payments Realized / Payments Outstanding & Inventory Level were
instituted to appraise employee performance. These were DSO (Daily Sales Outstanding) & DSI
(Daily Sales Inventory). The impact of these constraints on business performance was
communicated and demonstrated by Senior Management.


An Online Personal Performance Plan was introduced. The employees were coached on how to
update their goals in consultation with their manager, and the assessment was done every
quarter. These changes made the Performance Review process more objective and transparent.
A Sales Incentive Scheme consistent with the new performance parameters was rolled out and
conveyed to the employees.

For Non Sales employees a half yearly Bonus Scheme called RONA (Return on Net Assets) was
introduced. The bonus paid out under this scheme was based on the Profits earned as a function
of the assets of the division.

The employees had to be convinced of the Importance and benefits of these numerous changes.
It was important to effectively communicate to the employees how these various changes would
help them develop and progress with the organization.

Increments were paid out twice in the year following the Merger. This gave rise to an optimistic
and affirmative feeling in the minds of the employees.

P I T F AL L # 4: O R GA NI ZA T I ON A L P R OLI F E R AT I ON
After the merger with Parker was formalized, few committees and integration teams were
formed. The objective of these teams was to handle the transformation and integration
initiatives. However these transition teams those were designed to be all-inclusive and to
represent a sign of "new partnership‖, started weighing heavily on an organization seeking to
keep its eye on its customers and the market. More effort was being placed on temporary rules
and reporting relationships than the work itself.

THE STRATEGY: ACCELERATE, CONCENTRATE AND ADAPT
Form small, agile, quick-acting teams, including people from both companies of the Merger,
with a clear mission, empowered integration team managers and with direct access to senior
management and to their support. Transitions do not need to be demonstrations of democracy
in action.

Clear leadership and strong support is essential to these teams; without it, they often break
down into sub-teams (one sub-team for each company in the Merger). This is particularly
common in the international mergers, since language and cultural differences create significant
communication issues.

In the case of such international Mergers Organizational change should be brought about in a
way such that it is harmony with the Organizational Culture. For example, since in Legris India
the sense of hierarchy is strong, therefore change was brought about from the top and
employees at all levels were instructed to expect new directions from their managers. This
helped in making the merger successful.

P I T F AL L # 5: I N FR E QU E NT A N D I R R E LE V ANT C OM M U NI CAT I O N
Fear and a lack of all the answers deterred top management from providing the information that
customers, shareholders and employees need to redirect their action to the value-added of the
deal. Rumor fills mystery and vacuums. When there is communication, it often lacks information
and substance that explains and supports stakeholders' interests.

Communication can break down even though the working language of the two parties in the
international merger is the same. Because Legris employees are inclined to be more


relationship-oriented while Americans tend to focus on tasks, the parties held conflicting
positions on issues like:

 Role Clarity & Delineation
 Management Style & Frequency of Reporting
 Financial Controls & Audits
 Policies and Guidelines
 Credit Terms / Payment Terms

Legris employees perceived Parker managers as very uncompromising and insistent in getting
their systems and procedures accepted. They were seen as bureaucratic and regulatory in their
management style. Parker managers in turn believed that Legris employees were very
unsystematic and unprofessional in their approach. Tension decreased when the teams realized
that their goals were the same but their ways of achieving them were quite different.

THE STRATEGY: ACCELERATE, CONCENTRATE AND ADAPT
Frequent communication, through multiple avenues - print, voice mail, e-mail, meetings, and
video should be adopted. In times of stress, the "noise" of survival and uncertainty drowns out
the message. Over-communicate and remember that responsibility for a message being
received lies with the sender as well as with the receiver. A recent PricewaterhouseCoopers
survey of 124 mergers indicates that those firms that implemented effective communications
strategies showed better results in customer focus, employee commitment and productivity
than those firms that had a delayed communication strategy.

P I T F AL L # 6: T R I A N GU L A T I O N
Without clear lines of authority and clear understanding of where they fit in, employees and
managers are caught in a web of conflicting objectives and old loyalties. This type of
organizational and personal strangulation robs the new entity of the very energy it needs to
overcome the losses in productivity.

The tolerance for "fuzzy", temporary organizational charts and decision-making processes
depends on the companies involved in the merger. In Legris, both organizational chart and
chain of command was traditionally, clearly defined. However in Parker, employees are quite
accustomed to overlapping organizational structures and Matrix roles. Since Legris employees
could not understand them, paralysis resulted. A Legris employee reporting to two managers, as
in a matrix organization will likely be quickly overwhelmed. He / she may interpret the situation
as having to meet two complete sets of expectations and perform two separate jobs. In the
Indian culture, asking managers to discuss their conflicting requests would be viewed as
insubordination.

THE STRATEGY: CONCENTRATE AND ADAPT
Concentrate on substance rather than form, and focus on helping people adapt. Management
should provide the information that people need to be comfortable with the new organization;
this information depends on people's cultural backgrounds. In Legris, people needed to know
where and how they fit in the department pyramid and objectives; such may not be the case in
other countries.

The management realized the importance of the above and all Legris employees were graded in
line with Parker Grading System. Job Descriptions, Reporting relationships and department
charts were firmed up and communicated to the employees.


P I T F AL L # 7: T HE G U I D I NG L I GH T
At the time in Legris when leadership and active management was most called for, the stress
and uncertainties associated with the merger caused an inward focus and a retreat to safe and
high ground. More leadership was needed, at this time. One of the primary expectations from
the leader was to articulate a vision and inspire others to join in that vision. Proclaiming a new
vision and handing out laminated cards, however, would not create a new vision for the new
entity. A clear new vision would capture the critical success factors and economic drivers that
brought the entities together.

THE STRATEGY: ADAPT
Only a new culture in Legris India could create the context for true change to happen and hold.
Changing culture means changing behaviour. One of the quickest way to effect change and
create the new company was to develop and place in all key positions those individuals who
were the true representatives of the new culture and who can lead effectively people on both
side of the company's cultural divide.

Few key executive in responsible and leadership roles were identified. They were required to
participate in Workshops titled ‗Developing Leadership‘ and ‗Developing Change Champions‘
These training programs would be conducted over few weeks and the participants were
groomed to be future leaders.

These people grew to become role models who would demonstrate, with the visible active
support of senior management, what the new culture was.

C ONCLUSION
F I NA N CI AL R E SU L T S OF DELL

Perot Systems
Dell
Corporation
Total
Total net
Net revenue: Gross margin: gross
revenue
margin
Total net Total gross
Product Services Product Services
revenue margin
$ 50,002 11,492 61,494 7,934 3,462 11396 NA NA
2011

% of
81.30% 18.70% 100.00% 15.90% 30.10% 18.50% NA NA
Revenue
$ 43,697 9,205 52,902 6,163 3,098 9,261 NA NA
2010

% of
82.60% 17.40% 100.00% 14.10% 33.70% 17.50% NA NA
Revenue
$ 52,337 8,764 61,101 7,667 3,290 10,957 NA NA
2009

% of
85.70% 14.30% 100.00% 14.60% 37.50% 17.90% NA NA
Revenue
$ 53,378 7,755 61,133 NA NA 11,671 2,779 482
2008

% of
87.00% 13.00% 100.00% NA NA 19.10% 100% 18.50%
Revenue
$ 50,101 7,319 57,420 NA NA 9,516 2,612 393
2007

% of
87.00% 13.00% 100.00% NA NA 16.60% 100% 17.10%
Revenue
*NA- Not Applicable/ Not Available


Apparently from finance figures, Dell was able to strengthen its position in service sector which
was main objective of the merger. Also Dell was able maintain margins in the business and with
the passage of time was able to improve on the margins. In the hindsight Dell utilized this
opportunity very well to further diversify its portfolio.

F I NA N CI AL R E SU L T S OF P A R K E R H A NNI FI N

PARKER HANNIFIN
(millions)
2010 2009 2008 2007 2006
Sales
North America $3,624 $3,735 $4,250 $4,064 $3,993
International 3,811 3,896 5,006 3,901 2,903
Operating income
North America 487 395 608 598 597
International 394 351 789 533 354
Operating margin
North America 13.40% 10.60% 14.30% 14.70% 15.00%
International 10.30% 9.00% 15.80% 13.70% 12.20%
Legris
Sales NA NA NA 232.9 222.3
Operating income NA NA NA 42.2 33.8
Operating margin NA NA NA 5.90% 9.70%
*NA- Not Applicable/ Not Available

Parker was able to reduce its dependence on North America through acquisition of Legris,
though it could not drive home the advantage due to global recession. Still we could see larger
portion of sales and income from international markets than North American market from 2008
onwards. We could not gather data on how technically this merger benefitted Parker Hannifin.


R ECOMMENDATIONS
These pitfalls of mergers and acquisitions challenge today's leaders to a new standard of
managing change. The strategy is clear - accelerate, concentrate, adapt, and in the case of
international M&As, consider cultural differences. The human and cultural issues that separate
the successful from the unsuccessful mergers and acquisitions are not about some abstract
values or the "soft stuff", but the concrete reality of productivity, economic value and sustained
growth.


R EFERENCES
http://content.dell.com/us/en/corp/about-dell-investor.aspx

http://www.dell.com/

http://www.hoovers.com/

http://www.legris-industries.com

http://phx.corporate-ir.net/

OB - M&A

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