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When analyzing the background of a potential merger (DeLong & Ager, 2004), it is important to recognize that the economic situation in 2001-2002 was unstable and evidenced of a decline. As a consequence, this fact affected the financial position of the companies operating in the art industry. Government subsidies, as well as the main sources of funding, i.e. corporate, individual and foundation investments, have declined since 2001 significantly.
It should be stated that Mr. Bailey, a Chairman of the Board of the Utah Opera, has several concerns about this merger. The main motivation that can convince him to approve it is the great potential for the expansion of the Utah Opera’s artistic power and the possibility to perform at the big stage. However, Mr. Bailey does not see any financial motives for this merger. He does not want to risk with the financial stability of the Utah Opera. The merger may be appropriate if two or more companies have some complementary resources (Stahl & Mendenhall, 2005). In our case, these two organizations have the different ways of managing its business, as well as various organizational cultures. It may be the biggest burden for the successful merger.
Moreover, it should be noted that the integration of the companies into a combined structure is usually extremely difficult. Therefore, some of the companies after the merger continue to function as a union of the separate and sometimes competing elements having different organizational structures, artistic and marketing services (Kreitner, 2010). Even the costs’ savings obtained by centralizing the certain administrative functions can be elusive. These concerns are the greatest issues for Mr. Bailey defending the profitable arts entity.
From the other hand, Scott Parker, a Chairman of the Board of the Utah Symphony, tries to save the Utah Symphony from the big deficits and inability to pay its salaries. He is an initiator of this deal. I think he has the financial motives and is also motivated to find a good CEO for the Utah Symphony. The economy on costs and attempts to change a financial situation with Anne Ewer’s help and talent to fund-raising are considered to be the main motivators for the merger. These facts will be explained to Ms. Abravanel. Naturally, business decisions on mergers and acquisitions are based on the economic feasibility. An experienced manager may improve fund-raising capabilities and decrease overhead costs being the reasons why the merger has a chance to be completed. The proposed merger is regarded to be a wise step for the Utah Symphony to keep its fiscal and artistic viability.
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It is needed to underline that Mr. Parker will explain to Ms. Abravanel that he intends to play on the ambitions of Anne to complete the merger. Personal motives of managers are the ones of the motivations for the merger of economic entities (Stahl & Mendenhall, 2005). As it is stated in the case study, the merger of such a type when a top manager of the smaller company is a leader of the merger process and integrates the bigger and more successful company is a true challenge. As a very enthusiastic, energetic and talented manager, Anne Ewers, must consider this challenge as an opportunity to demonstrate her best managerial and leadership skills. This is the opportunity to make a big step forward in her career plan. It is the possibility to challenge her ambitions above everything.
Improving the quality of management and eliminating some financial inefficiency is the motives to complete the merger. Mergers and acquisitions may aim to achieve the differentiated performance, meaning that the ineffective management of the company’s assets after the merger will be more efficient (Stahl & Mendenhall, 2005).
As a general director of the Utah Opera, Anne will apply her positional power to communicate with the representatives of the Utah Symphony in particular musicians. She understands that each person has the fear of uncertainty and the personal desire to protect the existing comfort. Therefore, as a top manager of the two merged companies, she has to communicate a clear message about the necessity and feasibility of the planned merger, of an effect of synergy that will be achieved, the advantages that will be obtained and the costs that will be incurred. As a person who has the right to take decisions for both companies concerning any organizational, financial and general issues will be given, she has to prove that she is ready to hear all concerns, to support the initiatives and to be a true inspirer of such a drastic change for both organizations.
Regarding the possible conflict of the future authoritative rights between Anne and Keith Lockhart, it should be stated the following. Anne perfectly understands that she has a low confidence and support form Keith Lockhart. Moreover, he, as the Symphony’s music director, is accustomed to be a leader and make decisions. However, Anne understands also that the merger will fail if aside from the difficulties of a transitional period there will be no agreement between the new CEO, Anne, and Keith. Applying all her personal power, her enthusiasm, the female wisdom and some evident facts stated above, she will ask Keith about the compromise.
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As it has been stated in the case study, Anne can take decisions without counselling (DeLong & Ager, 2004). I think that musicians in the Utah Symphony are used to another way of communication and decision making. They are a collective unit with a wide range of rights and claims. Therefore, Anne should take this fact into consideration when providing an integration process.
According to Kreitner (2010), there are nine influence techniques: the rational persuasion, some inspirational appeals, consultation, ingratiation, personal appeals, an exchange, coalition tactics, pressure and legitimating tactics. I am convinced that Anne should use the rational persuasion because this technique implies that definite facts will be explained to the staff, in particular, the financial issues of the Utah Symphony. Moreover, the need of the merger’s urgency will be supported by the inspirational appeals with the aim to involve the staff emotionally and change their negative attitude to a positive direction.
Regarding the financial and leadership strengths and weaknesses of the Utah Symphony before the merger, it should be pointed out the following. The biggest weakness of this company is its poor financial state in 2001 and the disappointing forecast for the next years. The most crucial issue is the unionization of the staff and contractual obligations to pay the high wages to musicians and other personnel on a constant basis despite the financial state of the company. Payroll expenses comprise more than 60 per cent of the total ones of the Utah Symphony. The other weakness of this company is a low level of its flexibility and a speed of reaction to the external market changes. The organizational culture and the established traditions have made this company very staid (DeLong & Ager, 2004).
It is necessary to highlight that despite these weaknesses the Utah Symphony and its musicians have a good reputation of being professionals. It is one of the leading orchestras in the top 20 orchestras in the country. Its artistic vision has been created by Mr. Lockhart; it is strong and finds its loyal audience. The environment inside the company has been created by its founder Mr. Abravanel; it is such that the musicians feel themselves secured. But this security means also no place for their development.
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I reckon that if the merger will be approved by the Boards of Directors, cardinal and drastic measures will be implemented by Anne to meet the biggest weakness of the Utah Symphony, i.e. its financial failure. Naturally, the staff will resist any changes; those who will not agree with the new way how Anne plans the financial expenses for payroll will resign. If she desires this merger to be successful, she has to change the organizational culture of the Utah Symphony. Otherwise, it will be two different companies with various backgrounds.
The biggest advantage of the Utah Opera is its top manager Anne Ewers. She is extremely professional in fund-raising. She is able to increase efficiency of the organization she is leading. Moreover, the Utah Opera can be very flexible whereas it has only 23 permanent employees. It can hire and order services from the outside performers. It is financially stable. It is financially supported by the nationally and locally based foundations, individuals and corporations. Anne provides the growth of the company’s annual budget. Moreover, the Utah Opera possesses the assets which are worth $4.8 million.
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It is also should be pointed out that the great attention is paid to the constant growth and development of the Utah Opera. Anne gives the opportunity for young talents to show their charisma. In addition, she makes a wise marketing step in providing and enlarging of the future audience by the means of staging performances for students.
The most essential weakness of the Utah Opera is the fact that it in contrast to the Utah Symphony is a good regional opera with the much modest scale of activity. Anne will address this weakness after the merger by expanding the opportunities to invite famous artists, improve the efficiency of planning and administration and provide the greater returns to the investors.
Regarding the balanced scorecard of the merged companies, customers, finance, the learning and development as well as internal business processes’ perspectives should be analyzed. The merged company will try to keep the level of their performance higher having the opportunities to invite world-famous artists. Consequently, the reputation of the company will be high; and the customers will be satisfied with the opportunity to be spectacular of the world-class operas and concerts.
I believe that Anne Ewers will try to implement the same approaches to the professional learning, growth and giving the opportunities to the young talents in the merged company. Regarding the internal business processes, Anne Ewers understands that two businesses are too different to try to integrate it fully. With the aim, each organization will not lose its identity; I think there will be a little transformation of the way the business is done in both organizations. In the Opera, this is more risqué than in the Symphony.
In the finance realm, the new merged company will suffer for the first year from the inflexibility of the Utah Symphony. However, after the restructuration of the payroll system of the Utah Symphony and the possibility to attract more investments as a more powerful art organization, Anne Ewers will implement a sound financial strategy.
I consider the highly probable issue that may arise during the merger process in the human resources’ field that is the potential disagreements between Anne Ewers and Mr. Lockhart. Mr. Lochart is used to have a control over the decision making process. He was highly concerned that the organizational structure of the merged company was not discussed with him. Anne Ewers is not also accustomed to share the right to take a final decision. In such a case, Anne Ewers should delegate some of her responsibilities to Mr. Lockhart, for instance, in choosing the repertoire.
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The possible change in the usual dates of performances and attempts to integrate two businesses may cause dissatisfaction with customers. However, the marketing campaign that will promote the renewed status of the Opera and the Symphony will address this issue.
A financial question will be one of the most complicated issues during the merger. It is obviously that the forecasted deficit of the Utah Symphony evidences of the inefficiency of its current business scheme. Anne Ewers will be forced obviously to take such a step as reducing the payroll expenses and reviewing the collective bargaining agreement. It will cause a big resistance. However, the facts of the poor financial condition will justify such a decision.