K-Mark Influx of Human Capital on Sears

Today, mergers and acquisitions become a mainstream trend which can be traced in different industries. Many companies tend to mergers and acquisition because in such a way they can enhance their marketing performance and open larger opportunities for the market expansion as well as to save costs by means of optimization of the performance of two companies which are restructured into one company. On the other hand, in spite of considerable benefits of mergers and acquisitions, there are a number of flaws which accompany this process. In order to understand possible flaws of mergers, it is possible to refer to the example of K-Mark and Sears’ merger. In this respect, it is necessary to underline that human resources proved to be the most affected by the merger. In fact, the merger produced a negative impact on human resources and rather created new problems the new company had to overcome, instead of a consistent improvement of the position of the new company on the market.

On analyzing the impact of merger on Sears and K-Mark, it is necessary to refer to major reasons which actually stimulated the merger of two companies. First of all, it is important to underline that the ultimate goal of both companies was the improvement of their marketing performance through the consolidation of their efforts, human resources and structure. In this respect, companies apparently took into consideration both internal and external influences which actually affected the decision taken by the companies. On the one hand, the management of both companies felt the lack of internal potential for the further growth of companies. In other words neither material nor human resources of either company could provide Sears and K-Mark with sufficient opportunities to increase their production capacity and enlarge their market share. In such a situation, the merger was considered by both companies as the most effective way of the improvement of the internal situation, because it opened larger opportunities for the use of the intellectual potential of human resources of both companies and optimized their work through the introduction of more effective models and approaches to the management of organizations.

On the other hand, the growing competition and deterioration of the situation in the national economy created unfavorable conditions for operation of companies separately. In fact, the pressure from the part of competitors constantly grew and companies needed to strengthen their position and enlarge their market share in order to maintain their competitive position. In such a situation, the merger was a logical step because the new company increased its production potential, its network and market share.

At the same time, both companies naturally attempted to improve their operations and perform effectively their current tasks by means of using the resources and experience of each other. To put it more precisely, the company could implement the knowledge share management in order to increase the productivity and effectiveness of work of their employees. In addition, they could enlarge the number of customers since either company had loyal customers.

However, the merger raised a problem, which companies did not expect to face or, at any rate, they came unprepared to this problem. What is meant here is the problem of the integration of human resources of K-Marks into Sears. In fact, the problem of integration was provoked by a substantial difference of the organizational culture of Sears and K-Marks as well as by different management style, traditions and standards established in either organization. As a result, the overcoming of organizational culture’s and managerial barriers became the main challenge to the new company.

In fact, Sears faced a serious problem since, on the one hand, it has increased its human resources’ potential, but, on the other hand, employees working at K-Marks needed either to adapt the organizational culture and management style of Sears or the entire organization should develop an alternative organizational culture and management style which could meet needs and expectations of employees of both companies. At the same time, Sears faced another important threat ”“ the threat of the loss of well-qualified specialists working at K-Marks who were uncertain in their future in the new company and were willing to leave the company and find a new job. This risk increased consistently because any merger is traditionally accompanied by job cuts (Clarke, 2000). The latter is quite natural because the new company does not need to duplicate its personnel when several employees are doing the job one employee suffice to do. Therefore, to optimize the performance of each employee the organization cuts jobs and some employees naturally are fired. Obviously, this effect of the merger increases the uncertainty of K-Marks employees that is particularly dangerous in relation to well-qualified employees who can change the job and get employed at the rival company. As a result, Sears risk to lose well-qualified employees and, what is even more important, to strengthen its competitors that will definitely lead to absolutely opposite results compared to the goals set before the company prior to the merger.

In such a way, the merger and the difference of the organizational culture and management style can undermine the internal stability in the organization, increase conflicts between employees and between employees, especially those who worked at K-Marks, and managers of the company. On the external level, the internal crisis may be accompanied by the strengthening of major competitors of Sears (Breneman & Taylor, 19996. Consequently, it will practically impossible for the company to performs its current tasks and achieve its strategic goal because the restructuring of the company and integration of new employees can weaken the company, at least in a short-run.

In such a situation, it is extremely important for Sears to smoothen the transition period and restructuring of the company. To achieve this goal, it is possible to recommend maintaining the organizational culture and managerial style of K-Marks and gradual introduction of new rules and norms in order to avoid shocks from a rapid change of the management style and organizational culture (Keener, 1999). At the same time, Sears can use some elements of the organizational culture and management style of K-Marks in its own structure in relation to its employees.

Therefore, through sharing positive experience of both companies, it is possible to minimize the negative effects of the merger.

Thus, taking into account all above mentioned, it is possible to conclude that mergers and acquisitions do not always have positive effects only. In stark contrast, they may be accompanied by substantial difficulties which can provoke an internal crisis within the organization and deteriorate its position on the market. Therefore, companies need to plan carefully mergers and acquisitions.