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BACKGROUND

Yummy Company is producer and marketer of fruit juices, packaged dried fruit and canned jams made from all natural exotic tropical fruit. Established since 1960 and primary plant is located in Tagaytay City, Cavite.

It distributes locally and exports dried fruits and jams to Japan.


In 1990, Yummy bought 2 small canning companies in Southern Luzon. This acquisition resulted to problems on lack of performance management system, formal pay scale, hiring practices that allowed members of the family, absence of training facilities, inconsistent enforcement of employee discipline procedure and high incident of theft.

YUMMY COMPANY GOES TO DAVAO

TIME CONTEXT: 2000

VIEW POINT: CEO Nicholas Santiago & VP-HR Mrs. Dela Cruz

YUMMY COMPANY GOES TO DAVAO

CENTRAL PROBLEM
Managing people related issue result by company expansion.

STATEMENT OF OBJECTIVE
MUST: Smooth company expansion. WANT: Want fast and smooth transition.

YUMMY COMPANY GOES TO DAVAO

AREAS OF CONSIDERATION
WEAKNESSES OPPORTUNITIES STRENGTH

THREATS

Labor unrest. Cultural diversity.

Domestic and International Market network. Productivity and efficiency in operations.

Negative implication of the merger.

Existing plant and facilities. Manpower and technology. Experience in people related issue on merger/expansion.

YUMMY COMPANY GOES TO DAVAO

ALTERNATIVE COURSE OF ACTIONS


1. Proceed with the expansion to both Davao & Japan.

POSITIVE

NEGATIVE

1. Diverse market network. 2. Improved productivity and efficiency in canning productions. 3. Governing rules and company policy for control. 4. Formal pay scale which will benefit the employees

1. Cultural difference. 2. No guarantee transition will be smooth. 3. May result to labor unrest.

YUMMY COMPANY GOES TO DAVAO

ALTERNATIVE COURSE OF ACTIONS


2. Not to proceed with expansion.

POSITIVE

NEGATIVE

1. No people management issue to resolved. 2. Save on possible lost.

1. No growth in market. 2. No improvement in production and efficiency in operations. 3. No profit increase.

YUMMY COMPANY GOES TO DAVAO

ALTERNATIVE COURSE OF ACTIONS


3. Expand business in Japan only.

POSITIVE

NEGATIVE

1. May diverse market reach in Japan. 2. Increase market share in Japan. 3. Possible increase in profit.

1. Cultural differences. 2. Legal requirements. 3. Increase in demands may not be accommodate by existing operations. 4. No assurance it will be successful.

YUMMY COMPANY GOES TO DAVAO

RECOMMENDATION

ACA 1

Proceed with acquisition

YUMMY COMPANY GOES TO DAVAO

ACTION PLAN
Person Responsible
CEO & VP HR

Activities
Strategic Planning: Degree of involvement of HR (directors) of acquired company in negotiation process. Cultural Differences Conflict of Management styles Diversity in Managing Human Resource, HR policies, procedures, and Hiring process Failure to manage change resulting to loss of employee morale and productivity and key employees Diversity of performance management systems Downsizing of workforce Pre-acquisition: 1.HR should be involved in the negotiation process in order to understand and map out the culture of both companies and if necessary, develop a culture that fits the merged entity. 2.HR will develop a new Organization Chart and detailed evaluations of the competencies of employees to link their roles and responsibilities to the new organization chart. I. Cultural Integration: Ask for guidance on cultural issues. Understand that cultural differences can exist within the same country Have a strategy for overcoming cultural conflicts. Remain alert to the symptoms of the post-deal cultural clash Steps: 1. Determine degree of organizational integration 2. Assess organizational behavior 3. Develop change hypothesis 4. Determine drivers of behavioral change 5. Implement change 6. Measure and reinforce change outcomes

Time Frame
7 Days

VP HR

30 Days

VP HR

30 Days

YUMMY COMPANY GOES TO DAVAO

ACTION PLAN
Person Responsible
VP HR

Activities
II. Integration of Management styles. Existing Management style of Yummy Corporation will be applied to the newly acquired company in Davao and in Japan. The regional plant in Davao would still be headed by the existing leader. However, he should learn a participative type of management where subordinates are included in discussions. Greater results will be achieved if more people will contribute ideas to the success of the company. III. Integration of Human Resource policies and procedures. Since the Davao branch doesnt have a clear and formal HR policies and procedures, Yummy Corporation should adopt its existing policies. An HR staff should be placed in each regional area in order to give venue for resolution of HR issues. HR should also go online in order to deliver fast response/actions to any of its regional areas. IV. Change management. Change management can be avoided by solving them as early as before the acquisition is finalized. Reduction of workforce due to the acquisition of new equipment in Davao and other HR related issues can be insisted by Yummy Corporation that they be settled as a pre-requisite to close the deal. Yummy should involve the management of the acquired company since they knew their people more. Bringing another leader to the acquired company might create resentment. The following should be done by Yummy Corporation: Communicate with employees on the necessity of acquisition Explain how it will benefit them Establish a clear and visible tie between change and business improvement.

Time Frame

VP HR

VP HR

ACTION PLAN
Person Responsible
VP HR

Activities
V. Downsizing of workforce. Since the acquisition of equipment would reduce number of persons in the company, it would be best to inform them of such downsizing ahead of time. Selection procedures of employees to be retained should be communicated so that the employees would be aware of where they stand. The HR should draft retrenchment packages of those who will be eliminated. Probationary period of 6 months whether or not the equipment is operational would give employees the chance to improve themselves. VI. Communication 1.There should be a focal person of the acquired company of whom employees could talk and seek clarifications, and answer their queries. This person should have easy access to the Senior Management team to get their views clarified. 2. A strong communication system should be put in place. Plan of actions should be communicated to be clear. 3.If needed, external person or team could be used to act as neutral entity. VII. PAYSCALE 1.Organizational capability- whether or not the company has capacity to pay. 2.Work intellectual, working condition, decision-making, problem solving, skills 3.Employee education, experience, skills 4.Legal implications Labor Code in the Philippines, PD 4425.Market and country difference

Time Frame

VP HR

VP HR & FINANCE