In the ever-changing, cutthroat business world, effective business communication skills are vital if a company is to survive. Organizational behavior deals with various issues regarding diversity, motivation, communication, leadership issues and so on. Few months back, I read about HP Compaq merger and I found that story very interesting. It raised lot of questions on my mind about the issues of communication and leadership skills. The story is all about Carley Fiorina, who was the former CEO of Hewlett-Packard. Fiorina rose quickly through the ranks at AT&T and Lucent Technologies to become the most powerful businesswoman in the United States when she took the helm at HP in 1999. She prevailed in a bitter proxy fight over the firm's merger with Compaq Computer. However, she was abruptly fired in 2005.
Organizational change, specifically to the management of the company’s corporate culture, has brought about much of the criticism. Fiorina made a controversial move in 2001, when she announced HP's plans to acquire Compaq. The sons of the company's founders, who sat on the company's board, opposed the $19 billion purchase but it narrowly passed, with 51 percent of the company's shareholders voting in favor of the deal. Walter Hewlett, son of founder William Hewlett, sued Fiorina and HP, alleging manipulation in the vote. While the merger signaled a victory for Fiorina, HP's performance in the wake of the deal was erratic. "HP shares are worth less today than on the day before the merger was announced or on the day it closed," The Economist said in 2004.
In an Organization behavior, the practice of ethical leadership includes two pillars: the moral person and the moral manager. Ethical individuals behave morally in their leadership roles and, at the same time, promote ethical conduct in followers. Fiorina acted as an ethically neutral leader who gained a reputation for being self-centered. She was perceived as lacking compassion, integrity, and humility. Her focus on the bottom line and individual rewards weakened the firm's ethical culture. Knowing the financial condition of HP in 1999, In my opinion, Fiorina had drawn criticism for what was seen as an imperious leadership style.
What are your opinion about that? Did Fiorina go wrong on the decision of merger? What are your opinions about the impact of her decision on both the companies?
References: http://www.alwebtechnology.com/mergers-and-acquisition-a-case-study-and-analysis-of-hp-compaq-merger/
Hi ,
ReplyDeleteI think that Fiorina decision and confidence about the merger of the two companies was good and well thought , She opposed all the people who were not believing in the merger and then she was also made to resign because of this but she was firm with her thoughts and that merger proved to be a success after so many years whether measured by market share, market leadership or increased shareholder value.
In my opinion, I think that Fiorina should not merge Hp and Compaq this two company. For internal management, she can't deal with well for two groups in HP. For the family group, which was charged by the HP founder Walter Hewlett, their main enterprise culture is pursuit "quality"and"innovation " and hopes that HP can continue to grow continually step by step. For enterprise group, which was charged by Fiorina, they just want to merge the Compaq so that they can upgrade the industry position and marketing HP to meet the triple bottom line and get profit as much as possible.
ReplyDeleteFor external management, HP and Compaq merger is a very complicated step so that competitors can take advantage of this short term. For example, when HP and Compaq need to deal with some integration work, competitors such as Dell and IBM can use this chance to attract some customers from HP. Also, employees will worried about their job so that they will not have commitment with new HP and will not have better performance.
In the past, there are only few successful merge case in technology company because different enterprise culture and conflict between different assemble line. What's more, when this two company are dealing with internal issue, they always neglect some important step such as innovation to increase company competitiveness. Therefore, the company might lost some customers and it will decrease the company's gross margin.
So in my opinion, I don't think Florina is doing the right decision.
i agree with you Kochen..i think decision made by fiorina was totally against HP. She even didnt bother to inform HP brothers about the merger. In the board meetings, most of the board members were against her decision. The merger failed to deliver the results Fiorina had promised. Instead, HP's profitable core printer business continued to sustain the firm.Fiorina decision raised lot of questions regarding her leadership style..
ReplyDeleteI agree Florina didn't make the right decison. I looked further in to HP for my article and they are still cleaning up the mess she left. Isn't a board members job to help make sure the correct things are done with the company? If she did not tell them before it was started they didnt have time respond. As a board member that would make me wonder what else she she done with out telling us first.
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