Mergers and acquisitions is common practice in the business world. It allows corporate ambitions to soar. M & A makes its effects in the areas of corporate finances, management and strategy dealing, human resources, marketing, sales, R&D and infrastructure of the firm. In short everything changes in the corporate entity when it gets purchased by another corporate or it joins with another corporate.

Though the two are often mentioned together, a merger is very different from an acquisition. A merger involves two corporate entities joining forces and becoming a new business entity, with a new name. It usually involves two companies of same size and stature joining hands. An acquisition, on the other hand, involves one bigger business taking over a smaller company which may be absorbed into the parent company or run as a subsidiary. The company being taken over is referred to as the ‘target company’ in the corporate world.

In India the huge and most talked about takeover or acquisition last year was seen of the seven year old Bangalore based domestic e-retailer Flipkart acquiring the online portal Myntra for an undisclosed amount which industry analysts and insiders believe it was a $300 million or Rs 2,000 crore deal.

Another one was Sun Pharmaceutical Industries Limited, a multinational pharmaceutical company bought the Ranbaxy Laboratories. Ranbaxy shareholders will get 4 shares of Sun Pharma for every 5 Ranbaxy shares held by them. The deal is worth $4 billion.

Globally, the pharmaceutical industry saw a flurry of mergers and acquisitions this year, but the biggest one was of Novartis AG (NVS) and GlaxoSmithKline (GSK) which agreed to swap $20 billion in assets in what amounted to major restructurings for both firms. Novartis bought GlaxoSmithKline’s cancer drug business, GSK took Novartis’s vaccine business, and the companies agreed to combine their respective over-the-counter and consumer drug businesses.

Facebook Inc purchased WhatsApp which saw the largest-ever purchase of a venture FB purchased whatsApp for $22 billion; $16 billion-price given at the announcement of the deal. So why did FB take this expensive plunge? As it touted at the time, WhatsApp — a free text message service — is about twice as large by user base as Twitter Inc. The M&As can happen for various reasons. Goldman Sachs was the top M&A adviser worldwide, with $623 billion worth of deals last year.

What’s considered most important in M&A is the post-M&A result which can be very exhaustive than imagination. Organisations must control effective and efficient management of merging corporate brands and their respective portfolios. Particularly for those that have an international standing. The management and building of each brand in the combined portfolio needs to be consistent around the world and needs to match its acknowledged role, the consistency needs to be maintained in every market. Still, since consumer behaviour may vary from market to market, the strategic position established for each brand in the mixed portfolio can only offer some general guidelines as no sure short solutions are available or can be offered for a successful venture raised out of the M&A.

Brand integration is priority after an M&A
The global positioning of a merged brand is quite complicated and exhaustive. Each market requires unique strategies. For sensible brand integration organizing human resources is very important. The efficacy of the merging brands and its success depends on how in fact the human resources are organised. Ford established a “Premier Automotive Group” (PAG) to be in charge of its premium brands right after the acquisition of Jaguar. Furthermore, when the company acquired Land Rover and Volvo (also premium brands), the PAG took the responsibility of brand integration.

Being equally fair to people is most important
Treating the employees with respect and fair financial benefits serves half of the problem. Given the fact that M&As often take place at corporate level, the issues regarding human resource including the necessary laying offs should be addressed first right after the announcement of the deal. These issues should be tackled rightly by taking assistance of the mature consultants or firms. The incorporation of human resources becomes an essential issue, one common response from the managers in the case studies being that groups of people embedded within particular cultures are difficult to integrate. In relation to brand integration, three important rules could be outlined from many case studies: the best people must be selected equally from both sides; people must be integrated rapidly and with sensitively; and in that order, respect and fair financial benefits must be ensured to all.

Training is crucial at this juncture
A brand acquisition comes along with its brand people, its marketing, its brand building methods, its brand ‘languages’ or terminologies and others. An essential part of brand integration consists in homogenizing all of the above – making people do brand building in a common way and speak a similar marketing or brand ‘language.’ This is a process which training can be an extremely useful tool. It’s easy for people in an organization to get caught up in the glamour of integrating two organizations. For the moment, that’s where the action is. The future shape of the company, including jobs and careers, appears to be in the hands of the integration taskforces. But if management allows itself and the organization to get distracted, the base business of both companies will suffer. If everybody’s trying to manage both the ongoing business and the integration, nobody will do either job well. This is where assigning responsibilities come in picture.

Marketing Management
Putting the customer at the centre of planning and analysis is most crucial. This begins by understanding customer profitability by segment and targeting identified markets. It requires a comprehensive evaluation of how well each brand in the portfolio compares to its key competitors in meeting the needs and preferences of these customers. A merger poses a unique opportunity to think about customers in a broader and more integrated fashion. Combining and analyzing both companies’ knowledge of their respective customer bases will provide a broader view of customer behaviour. This information can be amplified by new qualitative and quantitative research to understand category drivers and competitive positioning. Marketing research plays a very vital role here.  By developing a more comprehensive and integrated understanding of such issues as current and emerging marketplace dynamics, customer preference drivers and perceptions of brand equity, marketers can more effectively make decisions on how to structure and manage the merged brand portfolio. Optimize the brand portfolio.

The post-M&A organisation needs to conduct new market research in order to identify opportunities for the newly acquired brands and, moreover, to absorb and use the brand and market knowledge possessed by the acquired company.

In 1998, Mercedes-Benz manufacturer Daimler Benz merged with US auto maker Chrysler to create Daimler Chrysler for $ 37 billion. The merging was done for capturing the globe and to dominate the market. Things dint work out very smoothly after the merger. In 2007, Daimler Benz sold Chrysler to Cerberus Capital Management firm (a specialized financial restructuring firm) for mere $ 7 billion. Chrysler was nowhere near Daimler Benz. What did Daimler Benz try to tell world? What lessons are to be learnt for this merger and later corporate divorce?

Many research studies have proved that rate of failures is 50 percent in M&As. One recent survey has also proved that the percentage of companies that failed to achieve the goals of the merger is 83%.  Once you have achieved integration, take the time to review the process. Evaluate how well it works and what you would do next to integrate each brand.

Coca Cola imitated RC Cola in emulating its diet cola product; Visa and MasterCard copied the credit card concept from Diners Club. The most famous example of imitation is: McDonalds took the fast food chain concept from White Castle. A good number of businesses/entrepreneurs replicate another one’s technology, perception, idea or strategy. But, when an enterprise imitates a product, idea or strategy it upgrades the imitation creatively by investing resources and skills. Enterprises just don’t imitate they disrupt the innovator by reducing the product cost, the differentiation, the look, the benefits etc. This exercise is very innovative. So, inventors create the technology, but entrepreneurs turn it into economic value.

In the entertainment business an imitation or copy is called as ‘remake.’ The Bollywood hit ‘Chachi 420’ is a copy of ‘Mrs. Doubtfire’ (1993) or a ‘Pyar to hona hi tha’ is a remake of ‘French kiss’ (1995). Similarly, ‘A Common Man’ (2013) is a remake of Bollywood’s ‘A Wednesday’ (2008); ‘Fear’ (1996) is a remake of ‘Darr’ (1993). Some call it ‘inspiration’, many do it unabashedly. Music, screenplay, story, fight scenes, themes call it anything, in entertainment industry imitation or copying is passable.

No sooner an innovation ensues and becomes successful; it is out there for imitation. Many emerging and fast-growing nations have progressed from being almost pure imitators be it technology or processing. They have added value to the original products very skillfully and have grown better products.  Japan followed that path after World War II, as did South Korea a decade or so later. Even if Japanese companies are often accused of taking part in imitation warfare, it should be acknowledged that their international market success actually stimulated many European and American enterprises to study the skills and capacity behind their results in order to re-engineer their procedures and critical processes. It is without doubt that imitating a product is easier than imitating a process or a procedure. Today, China appears on a similar course. When a new product/service gets diffused, it possibly goes a stage further than its originality, this happens because people do not just invent things, such as mobile or computer, they come up with ideas for new services that consumers need and ways of providing them in a product. For example, the mobile phone shrunk the market of cameras and radios.

Many flourishing entrepreneurs have grown their businesses by reproducing what someone else has done, only bettering it by enhancing it further. Imitation is thus much trickier job than we imagine. Imitation may be extended to products and services generated by the innovator, as well as to its technologies, procedures, processes, organizational models and market strategies. What has globalization done? It reduced barriers to trade and has spread innovation. If a country opens itself to foreign imports, its domestic companies are likely to come under pressure from more sophisticated competitors. That’s upsetting, but the competition can also push the domestic companies to upgrade technologies by imitating domestic or foreign rivals. That can ultimately make them more productive in their own right by way of incrementing an existing product.

In some cases the duplicate stands out because of its quality; at times, the price of imitation is lesser than the original product. Hats off to Mark Zuckerberg; he copied the social networking idea from Friendster – the social gaming site of 2002 and Myspace and Linkedin in 2003. But, Zuckerberg’s Facebook became a super duper hit because Facebook focused on real personal information and social connections, leveraging a genuine network effect, starting with college communities, while MySpace did not. Facebook developed several features such as the news feed and photo tagging, which were novel and kept people coming back to the site. And, Facebook built a developer and technology platform for other social applications becoming the leader in the social networking on Internet.

Similarly, in the early 1980s, the two Steves who had founded Apple Computer – Steve Jobs and Steve Wozniak visited a computer research center run by Xerox in Palo Alto, Calif at “Xerox PARC,” as the laboratory was called. One of their friends who worked at Xerox took them on a historic tour. The two Steves spotted an odd computer at PARC called the ‘Star’. Practically nobody remembers the Star these days, but the guys from Apple gave it a place in history. It made such an impression on them that they decided they had to make a computer of their own that worked the same way. And, that’s how Apple was born.

Imitation concerns not only products, but also strategies, organization models and processes that bring market success to the innovator. For instance, activities related to competitive intelligence and benchmarking are undertaken to assess the market drive capacity of rivals or excellent enterprises from other industries in order to copy them. It is feasible to imitate an innovation by modifying marginal elements, developing a different design, reconfiguring the product, using new alternative materials or using different manufacture processes. From this point of view, the English coffee-shop chain “Costa” represents a marginal imitation of the innovator “Starbucks.”

Imitation does not necessarily entail clones of goods, or illegal counterfeits. The fact is that, the imitation can also be legal and very positive for the firm development. In the globalized markets consumers identify different categories of imitations. They are product pirates, forged clones, or knockoffs, design copies, creative variation and technological leapfrogging. Bogus and pirating are pure duplicating imitations and are illegal. Counterfeits are copies that resemble an original brand name but of low quality. In contrast, knockoffs are legal products, closely copying the original products in the absence of copyrights, trademarks and patents but sold with their own brand names at far lower prices. Knockoffs often present a better quality than original products. So, when it is legal, duplicative imitations are a bright strategy for the firms with low wages and mature technology.

In fact, design copies, market adaptations, technological leapfrogging, and adaptation to another industry are creative imitations. It requires lot of improvement. Design copies follow the market leader but live on the market with their own brand name and specific engineering features. Product adaptations are therefore innovative, with improvements inspired by existing products. Technological leapfrogging gets advantage with newer technology and enables the imitator to leapfrog the innovator. Imitating an original product or design and taking it to another industry takes on the application of innovations in a certain industry for use in another. In general, creative imitations are focused on generating imitative products, but with new features.

Outsourcing was introduced in Japanese companies and in ‘keiretsu’ alliances in particular, with the creation of very close relationships between companies and suppliers. Outsourcing spread after the Second World War, becoming a key global policy in all industrialized countries in the 1990s.

Numerous firms have created superior innovations that have revolutionized lifestyles of people all over the world; Frigidaire introduced refrigeration systems, Carrier brought air conditioning, Otis is synonymous with elevators and Nestlé with powdered milk. An original product or service can give the firm the first-mover advantage. Such firms do enjoy the leading position, and firms can enjoy skimming prices and generate profits; they can even go for low price strategy to rapidly acquire a high market share by which way they can raise barriers to the new entrants.

Global breakthrough product innovation generates new, formerly non-existent product classes, with innovative products and price levels that have no comparison among alternative products.  Dell Inc. and Wal-Mart have demonstrated the value associated with their business models. Dell and Wal-Mart’s business models are unusual, advanced, and require supporting processes that are hard for competitors to replicate – at least in the U.S. Elsewhere, new entrants have adopted key elements of the model and pre-empted Wal-Mart, as Steven Tindall has demonstrated it so ably in New Zealand with ‘The Warehouse’. But, the fact needs to be appreciated that both Dell and Wal-Mart have also constantly adjusted and improved their processes over time. Similarly copying Google’s business model is very difficult. The business model developed around Google’s product/service innovation required heavy investment in computing power as well as in software. Google writes its own software and builds its own computers. This is remarkable. It takes advantage of its considerable computing power to count words and links, and to combine information about words and links. Inventors must thus make ‘copying’ impracticable.

Finally, customers don’t just want products; they want solutions to their perceived needs. They are not concerned about originality or replication of a product or service. This fact has made imitation not only more bountiful than innovation; it is actually more established road to business growth and profits.

A Brand Ambassador is someone who, at the most elementary level, symbolizes a brand in a positive way; he/she embodies a brand. The brand ambassador communicates the message of a company to consumers or people who would be interested in buying the company’s brand after learning about it. Thus, BA puts a human face on the multi-million dollar corporations because consumers associate with them more effectively.

The affinity consumers have for certain celebrities can greatly influence their purchase decisions. People perhaps feel that, “If the product is good enough for her, its good enough for me.” This philosophy is often the force behind advertisements for makeup, skin creams, lingerie, banks, eatables, beverages and attire. The brand ambassadors infuse confidence in the consumers to use a product/service. Essentially, the celebrity’s testimonial adds instant reliability to a small or big brand.

That’s why brand ambassador is a part of the company’s marketing and sales team. Celebrities endorse for products in lieu of heavy money. Therefore, they automatically become responsible if the brand turns out to be spurious/bogus/contaminated. It’s simple, before endorsing a product it’s their responsibility to check the credibility of a product/service. In the recent Maggi Noodle’s fiasco, the Uttar Pradesh Food and Drug Administration’s decision to recall packets of Maggi Noodles for reportedly having monosodium glutamate and lead more than permissible limits, film star Madhuri Dixit, who endorsesMaggi’s brand of ‘nutritious’ oats noodles is in trouble. The Haridwar FDA has issued her a notice  seeking an explanation as to how the noodles are nutritious, and on what the basis Nestlé is making such a claim. If she fails to respond within a fortnight, a case could be filed against her, according to officials of the FDA.

Can ambassadors simply shrug off their responsibilities when the brands endorsed by them turn out unauthentic?  Misrepresentation of products, especially in the food sector, is a serious issue, and not as silly  as many would like to believe. In February 2014, last year, the Central Consumer Protection Council, under the leadership of former Union Food Minister KV Thomas, decided  unanimously to propose laws to hold celebrities endorsing products also liable in cases of misleading advertisements. The rationale behind this decision of the CPCC was that celebrities had considerable influence over consumer choice, and that there must be some form of liability for the endorsements being made.

In US, Kellogg’s popular Rice Krispies cereal had a crisis in 2010 when it was accused of misleading consumers about its immunity boosting properties. The Federal Trade Commission ordered Kellogg to halt all advertising that claimed that the cereal improved a child’s immunity with “25 percent Daily Value of Antioxidants and Nutrients — Vitamins A, B, C and E stating the claims were “dubious.” Ironically, just a year prior, the company settled with the FTC over charges that its Frosted Mini-wheats cereal didn’t live up to its ads. The campaign claimed that the cereal improved kids’ attentiveness by nearly 20%, and was shot down when the FTC found out that the clinical studies showed that only 1-in-9 kids had that kind of improvement and half the kids weren’t affected at all. Now, we just cannot imagine this kind of strictness and vigil in the Indian administration. Our laws are indistinct and lack spirit to take up firm steps.

There is a notion that brand ambassadors can’t generally be tamed. The ad agencies do speak in favor of their models. When the going is good, everyone wants to be party to the success, but, when the going gets bad you can test the actuality of people. The celebrities behave larger than life. They should be held guilty for false advertisements because they exploit their fan following and their popularity. The fans revere them so much; they follow their personal lives and their styles to no end. Tiger Woods was a brand ambassador for Gatorade, Gillette, Accenture, AT&T, Gold Digest and Tag Heuer. After his plentiful extramarital affairs were revealed, the majority of these brands discontinued him as they found it difficult to continue him as their brand ambassador.

In India in 2012, actress Genelia D’Souza was summoned by court for allegedly making false promises through ads and brochures for a real estate company in Hyderabad. Andhra Pradesh High Court demanded her explanation as brand ambassador for a project called ‘Anjaniputra’ located close to Hyderabad Deccan when the project seems to have gone bust. This is the latest in how society and the laws in India are dealing with the extremely doubtful advertisements. It is a matter of time before similar questions are raised by other consumers who are swayed into investing in products or services, by fraudulent advertisements endorsed by celebrities who are supposed to also be role models.

The Home Trade scam of 2002 had the celebrity endorsement  of three big celebrities, Sachin Tendulkar, Hrithik Roshan and Shah Rukh Khan. Having created not a single product, the company made away with thousands of crore rupees of investor money, and celebrity-endorsed brand building  was a crucial part of their operation. Activists have also been speaking out against ads for sauna-belts, medicines, Hanuman-chalisa yantra and gem-stones on TV screens.

How can celebrities vouch for the authenticity and effectiveness of that product with great confidence without checking them? Like with politicians, an advertisement and the celebrities involved in it can simply be voted out. They can be thrown out in disgrace. This message is clear; the company and ad agencies cannot work on the premise that the consumers are fools. They better learn to respect their constituency, i.e. the consumers.

Due diligence should be exercised before making of an ad. All stakeholders must share their responsibilities. The three stake-holders in ad making are advertiser, advertising agencies and the media. Let’s understand this straight: in advertising, there’s a big difference between pushing the truth and making false claims. Most of us have some or the other time in our life been victims of false advertising. Are we going to take it lying low or question the companies to change their marketing policies? Can we allow the companies to continue to prioritize profits over the consumers?

In progressive countries like America and Europe companies need to face harsh penalties. Companies are made to pay up the consumers for cheating them.
Dannon’s popular Activia brand yogurt lured consumers into paying more for its purported nutritional benefits when it was actually pretty much the same as every other kind of yogurt.

In Canada and America law suits were filed against Dannon for falsely touting the “clinically” and “scientifically” proven nutritional benefits of the product.  In spite of the company got a famous spokesperson, Jamie Lee Curtis, for the supposed digestion-regulator, some customers didn’t buy it. Do you know that a class action settlement forced Dannon to pay up to $45 million in damages to the consumers? The company also had to limit its health claims on its products strictly to factual ones.

In another case, hundreds of car owners were extremely disappointed to find out that Hyundai and Kia Motors overstated the horsepower in some of their vehicles. In 2001, the Korean Ministry of Construction and Transportation uncovered the parody, which for some models was as much as 9.6 percent more horsepower than the cars actually had. A class action lawsuit in southern California claimed the companies were able to sell more cars and charged more per vehicle because of the false claims. In the end, the auto powerhouses had to pay customers; the settlement estimated to be between $75 million and $125 million.

In India, to protect rights of consumers the process of filing complaint and finding resolution needs a drastic improvement. Strict guidelines should be made and law suits must be resolved in minimum a week’s time. Then, we might find respite from getting cheated recurrently by companies, their advertisements and savvy brand ambassadors.