Brand and product integration in horizontal mergers and acquisitions

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European Journal of International Management (EJIM) ISSN (Online): 1751-6765 ~ ISSN (Print): 1751-6757

EJIM is the first international journal devoted entirely to fostering an understanding of issues in international management theory and practice in the newly expanded European arena — including the underrepresented regions of Northern, Central and Eastern Europe — and to providing both conceptual and functional implications useful for the further development of research, teaching practices, and manugerial techniques

EJIM also solicits literature that allows for a broader interpretation of research ~ it welcomes not only papers which adhere to the most common research standards (i.e., largely based on hypothesis testing using quantitative methods), but also those that introduce a more European perspective through qualitative and interdisciplinary contributions

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European Journal of International Management (EJIM) Volume 4 - Issue 1/2 - 2010 Special Issue on International Mergers and Acquisitions Guest Editor Peter J Buckley Table of ® Contents Introduction Pages Title and authors 3-29 Anoperations process framework for international

M&A value creation Jagjit Singh Srai, Andrej Bertoncelj, Don Fleet, Mike Gregory DOK: 10.1504/EJIM.2010.031270 what factors influence the performance of

target firms in advanced

countries?

Peter J Buckley, Stefano Elia, ‘Mario Kafouros

DOI: 10, 1504/EJIM.2010.031272 48-55 Acquisitions versus licensing

agreements as vehicles for technology transfer

Nicolas Forsans, V.N

Balasubramanyam

DOI: 10.1504/EJIM.2010.031273 56-78 Network integration for

international mergers and acquisitions

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fal of International Management (EJIM) - 4 - 1⁄2 'upz//Avwvw.inderscienee.corybrowsse/index.php?journalID=216đ:y

acauisitions

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European J International Management, Voi 4, Nos 1/2, 2010 T9 Brand and product integration in horizontal mergers Dũng Anh VG, Yongjiang Shi* and Mike Gregory Institute for Manufacturing, University of Cambridge, CB3 OFS, UK Email: vudung@vau.edu.vn Email: ys@eng.cam.ac.uk Email: mjg@eng.camac.uk *Corresponding author

Abstract: This paper ams to understand integration of brands and products after Mergers and Acquisitions (M&As) The paper identifies four different strategies fr integrating brands and produets: ‘Choice’, "Growth Maximisation’ ‘Harmonisation’ and “Foundation” These strategies act as strategie directions for firms to follow and to iniegrate brands and products in postherzontal M&As in onder to create and deliver value and competitiveness Each main {integration strategy contains a set of different sub-srategies (18 in total) which sm to achieve the same objective set by its umbrella integration strategy The builds the linkage between the inegraion sub-strategies and the wo se views ~ positionng and resource-based ~ from the se ‘management perspective Through in-depth case studies and analyses, a broader view towards "brand” 1s developed and discussed in which the successful ‘management of brands requites paying close attention to both the external customer franchise andthe intemal organisational system and culture

Keywords: brand; product integration: M&As; value creation; competitiveness Reference to this paper should be made as fllows: VO D.A Shi, Y, and Gregory M (2010) “Brand and product integration in horizontal mergers and acquisitions’, European J International Management, Vol 4, Nos 12, PP7I-1I9

Biographical notes: Dũng Anh Vũ is Vice Dean of International Economics Faculty, College of Eeotomics ~ Vietnam National University, Hanoi He -was a member of Centre for Intemational Manufseturing at the Institute for ‘Manufacturing, University of Cambridge His rescarch focuses on the links ‘between product and brand management strategy implemented through M&AS in both diversified and homogenous conglomerates In particular, he hopes his work leads to a better understanding of how to manage the synthesis between {the existing portfolio and recently acquired produets and brands and operations ‘ystems,

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S0 DA Va ¥ Shand M Gregory

<conceptuslsation and delivery ofthe Centre's research programme His research ‘interests include global manufacturing virtual networks and the strategies of multinational corporations in China Mike Gregory leads the Institute for Manufacturing, University of Cambridge and is Head of the Manufacturing and Management Division within the Department of Engineering He has researched and published in the areas fof, manufacturing” strategy, technology management and snterational ‘manufacturing

1 Brand and product integration as a key issue and a research gap in mergers and acquisitions

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Brand and product integration in horizontal M&As gì

an increase in value nor do they lead to strong financial performance In addition, Brewis (2000) and Habeck et al (2000) show that the majority of M&As actually result in a decrease in shareholder value and only 20% of all deals are ‘successful The reasons for the failure of M&As have been the subject of much attention from ‘both academic and managerial commentators Child et al (2001) demonstrate that the ‘post-merger integration in both domestic and cross-border M&As is vital for success This is in agreement with Keamey (1988), which shows that integration accounts for the highest percentage of the weighted success factors in the entire merger process, and Haspestagh and Jemison (1991) who state that ‘aif value creation takes place after the ‘acquisition’ At the same time Shimizu et al (2004) claim thatthe quantity of research in ths Cntegration) area is to limited and normally fall into one of three main topies (challenges in post-M&:A integration caused by differences in culture; (2) the integration process and control system as crucial for success and good performance of acquisitions; and (3) the types of integration processes and control systems as a result of the nationality ofthe acquiring firms Similarly Child etal (2001, p.24) also find that “The study of post-acquisition change has beem rather fragmented Most attention has been ‘given fo human resource issues, which include HR planning and downsizing, training ‘and changes in communication and reward systems There is remarkably litle research into other changes following acquisitions In fact, successfil integration relies heavily on the integration of many other factors: ‘brands and products, production, management of information systems, and purchasing and logistics (Ashkenas et al, 1998; Vester, 2002; Burgelman and McKinney, 2006) According to Perrier (1997) the research from Interbrand shows that the sources of ceamings for an organisation come trom three types of assets ~ brands, tangible assets and other intangible assets Of these, the earnings which are attributed to the brand can account up to 70% depending on the market (Lindemann, 2003) Therefore, brand integration is certainly one of the most important areas to consider in M&AS MBAs can be classified into three categories ~ horizontal, vertical and conglomerate ~ by the Federal Trade Commission (Stacey, 1966, p.33) This classification has also ‘been applied to cross-border M&As (UNCTAD, 2000, p.101) horizontal M&A is when to companies in the same industry with similar brands or products combine According to UNCTAD (2000) horizontal M&As accounted for approximately 80% of all M&A transactions in 1990s-2000s, By the very nature of a horizontal deal, acquiring and acquired firms have similar or related brands or products In addition, brands and products play a central role in most organisations, Fombrun and van Riel (2004) demonstrate that brand favourable reputations (which are driven by well-managed brands) result in higher financial retums Therefore, the value generated in a horizontal M&A deal seems to be strongly related to the ‘management of merging brands and products owned by the acquiring and acquired firms ‘Areas such as brands and products, production resources and management of information systems must be rationalised; customer-related and back-office functions need to be synchronised; purchasing and logistics must be reviewed to bring down costs; and as much of the other redundancy as possible must be removed,

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$3 ĐA Vũ Y Shiand M Gregory

Inthe area of product or brand integration, the amount of the research is rather small Only a few (ie three) research studies are found, such as Clemente and Greenspan (1998) and Basu (2002, 2006) These works do suggest some strategies for integrating products or brands in post: M&As (cg stretching the product line upward ot downward more produets and eliminating products; positioning management of merging brands) However these are very limited in terms of implementing product and brand integration in M&As and by no means comprehensive They provide neither stategies nor specific guidelines for integrating brands and products effectively, Further research is urgently required to fill this gap

2 Research focus

“This paper focuses on horizontal M&As because this M&A type very often leads to resource overlaps (¢.g brands and products) which are required to be resolved in the integration phase

Both terms ‘product’ and “brand” are central to this peper However, itis cracia) 10 clarify the two terms "product" and ‘brand’ The former refers to the unadorned entity (whether physical object or service) that is created and offered by a company For instance, Aaker and Joachimsthaler (2000) define a product as consisting of scope, attributes, uses, quality and value, and functional benefit According to Kotler (2001) 8 product consists of three layers: core product, actual product (packaging, features, brand name, quality level and design) and augmented product (installation, delivery and credit, warranty and after sales service) These definitions conceptualise a product as an artifact with features and functional attributes that meet consumer's rational needs,

However, the later term ~ brand ~ is considerably more complex In this regard this, paper oniy considers brands of piysical goods rather chan service, people or places

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r

Brand and product integration in horizontal M&As 8 Table] Brand definition

Auho ‘Existing approach iowordk 'hngng' ty the irlng Tyeronre) Gardoer and ‘Brand contains social and psychological aspects beyond the physical Ley 955) characteristics of products,

Park etal (1986) A brand comprises functional, emotional and experiential benefits ‘Amold (1992) {personality of the brand), benefits (delivered by the brand) and Band has three elements in its relation with consumers: essence

product actus] stibuts

de Cheratony and Brand can be one ofthe cight categories: signs of ownership, McDonald (1992) differentiating devices, functional devices, symbol devices, risk reducers, shorthand devices, legal devices und strategie devices [Upshaw (1995) Total brand identity comprises brand name, logo/graphic system, selling strategies, producuservce performance, promotion merchandising

‘marketing communications and brand essence (brand positioning and strategic personality) ~ as the core ofa brand,

Kapferer(1997) {@) personality (character like a person), (3) reflection (whom a brand A brand consists of (1) physique (physical quality like a product itelD), Fepresent in consumers’ minds) (4) sejamage (sel interpretation of the types of people consumers think they are when consuming a brand), (S)euiture (from where the product derives) and (6) relationship, (Gransactions and exchanges among people)

Davidson (1997) Brandis considered as an iceberg: the upper (above-the-water) paris visible nd consists of logo and name which the managers often talk about, The beloe-the-water partis less visible and comprises values, intellect and culture which actually give a brand competitive advantages, CChematony and A brand includes two fundamental elements: functional performance: Riley (1998) based values and emotional values

‘Aker and ‘Brand is set of atributs delivering both funtional product benefits

Jeachimetbaler (2000) (scope, attributes, uses, qualty'value and functional benefits) and other Benefits such as user imagery, country of origin, organisational associations, brand personality symbols and brand/customer relationships In addition, a brand delivers sel-expressve benefits and emotional bene

‘elle (1998, 2008) A brand comprises salience (the identity Tike brand name, logo or symbol), performance (¥o meet functional neds), brand imagery (Uae ways the brand attempts to meet customers’ psychological ot social aceds), brand judgements (customers" personal opinions about and evaluations ofthe brand), feelings (customers' emotional responses and reactions tothe brand) and brand resonance (nature of relationship

between the brand and the customer)

In addition, several authors develop and discuss different brand evolution models which are given in Table 2 While there is much valuable detail describing the brand evolution ach of these papers (not all of it in total agreement), from the viewpoint of

1 observation is that they all agree on the following points:

+ The defining characteristics oF many brands do change over time + This progression is regular and predictable

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$4 DA Vi, ¥ Shi and M Gregory Table2 Different brand evolution models

Goodyear (1993, 1996) Harb (1999) ‘Kunde (2000)

‘Siclevel brand “Two diferent conceptualisations: Five-level brand lifeeyele model: ‘of the “brand” incurrent usage: evolution proces:

Unbranded good ‘commodity selling + Theextended product ‘model: having the + Product: when brand is ‘referred as product it does (physicalproduet atnbutes with no brands), fametional product atts centre and teats brand as ‘ot offer added value beyond functional + Brondes reference: name ‘lifeless obectihatean be benefits

' ——.-

Purpose vì oe ea ‘emotional values and

š _#2 M 2yØT8MGE The brand asa ving entity: involved customers

ponialadrenry that needs o be Weald eat level,

tenes be efits beyond holistically + Corporate brand baving

factional ones stronger vals and the

+ Brands icon: scoring brands sen way

Brand culture: brand has stronger value and more involvement perceived by customers The brand Stands forthe Function it

+ Brand as policy resents

sepreaeting eical ‘elevant to consumers seal and polite spets Brand religion: brandis “amust,a belie 0 Tan

‘These classifications are important in terms of identifying the elements and characteristics ofa brand although they are more customer-oriented For the sake of this research study ‘8 commonsense, pragmatic approach has been adopted to this issue As the respondents in the various case studies talked about brands it became clear that they also did not share ‘8 common definition However, all did seem to agree that:

‘© Abrand was a complex entity

‘© twas a mixture of both brand owner and brand user elements ‘© Iteontsined both functional

rational) and emotional components

This paper, therefore, defines a ‘product’ as the purely functional entity (to meet functional needs) that an organisation produces and/or sells and a brand as the development of this, through marketing activity, into a complex percept in the mind of the product's potential users A brand, therefore, includes a “produet’ (ihat meets purely functional needs) as its most basic form and added emotional attributes such as feelings, imagery, relationship, culture, personality and so on,

3 Lite ture review on product and brand management

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Brand and product integration in horlzontal M&As 85 The production view: this view places the emphasis on low cost production because ‘many consumers want low-cost products or brands, The most important task for the ‘management i to achieve production efficiency (see Keith, 1960, pp.35-38; Rachman and Romano, 1980; Grontoos, 1989, pp.52-60; Kotler, 1997; Kotler, 2001; Doyle, 2002; Kotler and Armstrong, 2008)

‘© The product view: this view highlights the importance of developing high-quality products because many consumers prefer products that offer superior performance and added festures The most important task for management is to focus their priority on developing ‘good’ products (see Kotler, 1997; Kotler, 2001; Kotler and ‘Ammstrong, 2008; and the first variant of the production-oriented view mentioned by Doyle, 2002)

‘+ The sales view: this view contends that consumers only purchase the firm's products ‘when they are actively promoted by the firm through a range of selling activities (sce Keith, 1960, pp.35-38; Rachman and Romano, 1980; Kotler, 1997; Kotler, 2001; Doyle, 2002; Kotler and Armstrong, 2008)

‘The markering view: this view considers the needs and wants of markeVeonsumers as the most important factor in deciding what the organisation should do Managements key task is to understand the market in order to deliver the “desired satisfactions’ more effectively than the competitors (see Keith, 1960, pp.3S-38; Rachman and Romano, 1980; Groaroos, 1989, pp.52-60; Koller, 1997; Kotler, 2001; Doyle, 2002;

Kotler and Armstrong, 2008)

The societal marketing view: this view is similar to the marketing concept except it takes into consideration societal benefits resulting from a firm's activities (see Kotler, 1997; Kotler, 2001; Kotler and Armstrong, 2008)

* The financial view: this view holds that generating the maximum retum on investment for investors from a given asset base is the ultimate task for the ‘management (see Doyle, 2002),

+ The volue chain view: this view places value at the core of product or brand ‘management (see Porter, 1980; Porter, 1985; Value Chain Group, 2000)

Based on these we classify and consolidate the product and brand management literature Into four main perspectives:

‘+The customer view (including marketing, marketing control and societal marketing concepts: this view contends that firms need to produce and market their products oF brands according to what customers want (market conditions) and allocate resources according to the market positioning of products or brands in order to deliver the desired satisfactions to customers more effectively than competitors and, therefore, to increase customer's (and society's) well-being,

‘©The supply view (production or manufacturing and sales concepts) is concerned with the firm's capabilities for producing products or brands effectively and efficiently + The product development view (or product concept) focuses on processes and availble resources such as technology and R&D for creating new products or brands

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S6 DA Va, ¥ Shiand M Gregory

‘+ The value creation view (including value chain and financial concepts) takes value as the key concept in product and brand management Under this view product or brand ‘management can be assessed from the firm's financial perspective, from the strategic ‘management perspective or from the entire value chain perspective

‘Table3_ Tae review framework forfour different views towards product and brand

mangement

Proder developmen

Customer view “Sub or @D)view Vole creation ew © Frodutandiand cò Some poplar Tectnologyand © Generic ° Beheeaohmiey personal poten positonng

‘and business-to- anne © Research and “hy

omumen market + Flomasine "develpment’ + Brand vison + Segneing ring AO 8 pentoring(ST?) n New product band bjetves development’ + Resouce based

Dao, (Process, retum strategies,

+ ARpehees ch PO

+ — PrOduetin4Ps: — Product life eye © Supply network ecision decides integrated product Š quality function 6 Vale ch andsupply Cang thay = Product portfolio management the scope of polotorbnnd —- malleiv sẻ development, ‘chain

+ + Proc and naman epial, "proces = Brand vale and Stdcornie’ Fenner

‘brand strength ane (BS,

+ Brand porto management

Because of the diversity ofthe product and brand literature itis important to note that there is some overlap in these views The major objective of ths classification is to help ta review the product and brand literature in # systematic way From the factional perspective these views to a large extent mirror the four main functions in an ‘organisation where the product oF brandis cental: marketing management, operations ‘management, technology management and strategic management The content of the literature review is given in Table 3 For instance, under the customer view the key ‘concepts developed by this approach as revealed in the literature are product and brand, Business-to-Business (B2B) and Business-to-Consumers (B2C), segmenting, targeting and positioning (STP), 4s policy, product lifecycle, product ponfoio management and brand management, and distribution and disteibators' owe brands Table 4 summarises the key contributions ofthe existing literature (which have been reviewed by this paper) to product and brand management field (that are relevant 10 brand integration in the M&A conten)

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Brand and product integration in horizontal M&As 7 ‘Table 4 Major contributions of literature inthe product and brand management field

oduct and Customer view Kole and Armsong (997); MeCary (1960), Borden (963), ‘wand management (1993); Doyie (1976, 2000, 2002); Leva (1965): Frey (1961; Biner and Booms (1981; Lauetborm (1990); Hamine and Champy Cox (1967); Pol and Conk

(1969; Moots and Pessemier (1993); Day (1981), Dhalla and Yuspeh (1967; Day 1977}; Abernathy and Uterbak (1978); Vernon (1966) Kotler eta 2001), Wind and Claycamp (1976); Boston Consulting Group; Shell Dicctional Matix, Mekinsey'GE, Wheelwright and Clark (1992), Coope eal, (2001); Matheson

tnd Menke (1994), Hall nd Naudia (1990); Goodyear (1993), Hanby (1959), Kunde 2000); AMA (1940; Park et al (1986), Upshaw (1998); Davidson (1997) Shipley and Howard (1993): Hutton (1997): Gordon etal (1993); Meda (2002); Madnby t l (1997}; Low and Blois 2002), Ulaga and Chacout (2001; Sharma etal (2001) Hamer et 2) (2008); Keller and Webster (2008: Kaper (197) Gardner and Levy (1955); Amoi (1992); de Cheratony and MeDonal (1992); Aer (1996), Kamkara and Russell (1991); Aaker and Joachinstaler 2000), de Cheratony and Dal Olmo (1998), de Cheratony (2006); Keller (1993, 1998, 2008) Olins (1985), Laforet and Saunders (1994, Riezebas (1998), Simon and Sullivan (1990; Ailaeai et al (2003); Barwise etal (1989), Wentz (1989), Chu and Keh 2006), Farquhar (1989): Lassar etal (1995); Kish etal, 2001) Shave et al (989; Michell tl (2001); Abrat (1986): Moriarty and Moran (1990), Simmons and Meredith (1983), Nandan and Dickinson (1994), Hoch (1996; Corstens and Lal 2000); Dunne and Narasimhan (1999) MeMaster (1987) Qxelch and Haring (1996)

Supply view: Shi and Gregory (1058; Flaherty (1989); Hayes and Wheelwright (196), Ferdows (1997) Dicken (1992); Levy and Samat (1976); Baset 1991), ‘Welch and Nayak (1992) emnings (1997); Prober etal (1993;

(2002); Nonaka (1994); Hansen etal (1999) Del and Kennedy (1982): andy (0985); Trompenaas and Hampden-Turer (1997), Cummings and Worley (2008) Korte (1995); Hanky (1999)

Prduet developmen view: Gregory (1998), McGinn (1991; Abell (1980); Miter tnd Davis (2000; Friar and Horwich (1985); Burgsimen etl (196), Fusfld (1978, Hams etal (1981); Bower and Chnstensen (1995), Kusmmetle (1997); Zearwitz and Gassnann 2002), Arimura (1999): Reger (2004, Booz-Allen (1982) Coope (19798, 1988, 2001); Adamee (1981) King (1973); Cooper and

Klsinschmit (1994, Cooper and Brezani (1984); louse ad Price (1991) Hauser and Clusing (1998), tu (1993), Roberson and Ulich (1998), ‘Gersenson et al (2003; Meyer and Uneback (1998); Meyer and Lehter (1997) Johannesson and Claesson (2008); Hammer and Suston (1998), Edosomwanin (1996)

Value creation view: Pore (1980, 1985): Miller (1992: de Chematony 2006), ame and Prahalad (1994, 1995); Daf (1983), Johnson and Scholes (1983); Barney (1991); Das and Teng 2000); Morgenstern and Neuman (1947) Gul (1887); Nai (1940.1950) lỤM (2007); Raypor and Sviokla (1995); Sawhney and Park (2001); Normans and Ramirer (1993), Payne (1988); Stevens (1989)

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88 DA, Va, ¥ Shiand M Gregory

However, there are still many research gaps in this area, First of all, although the ‘cxisting literature contains within it four dominant views, each seemed to place too much ‘emphasis on their own view with a litle consideration of the other views There is very litle research that considers the entire value chain process in the context of product and ‘brand management As such there is a lack of research that merges different points of view towards product or brand management Secondly, existing research has focused on a single business entity rather than the two or more different entities that are necessarily involved in M&As Thirdly, current research has not provided a comprefiensive sotution that can be cross-applied in order to address brand and product integration issues in MAA situation Specific imtegration strategies, processes and best practices as well as the factors that affect them ate overlooked

4° Research design

4.1 Research question and objectives

‘This paper aims to solve wo types of research questions in an integrated way The main research question is “How should brands amd products be integrated in onder to create value in horizontal Mdts, where the merging companies market similar brands and products?" Resolving this question successfully involves ereating a systematic, robust and flexible strategic model for dealing with the integration of the merging brands and products and appropriate processes for implementing this

Secondly, through observations for the brand and product integration in various M&As we want to understand what a brand really is or what is covered in a brand's sphere which is still mysteriously dressed Because the core of this research is towards brand of physical products underneath “brand” is the entire business system Our research aims to seek an understanding of the interdependency between brand and its business system

4.2 Conceptual framework development

In an earlier paper we have proposed four archetypes of brand and product integration strategies in horizontal M&As ~ ‘Choice’, ‘Growth Maximisation’, “Harmonisation’ and Foundation’ (Wu etal, 2009):

‘Choice’ strategy refers to the divestment ofa brand and produet

‘Growth Maximisation’ strategy represents the combination snd subsequent ‘management of merging brands and products to maximise their growth,

© ‘Harmonisation strategy is the process of aligning merging brands and products in ‘order to capitalise on their scale to achieve cost savings and operating improvements © ‘Foundation’ strategy refers to the development or ereation of new brands and

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Brand and product integration in horizontal M&As 89 The four main integration strategies represent the four available strategic directions (underlining different integration objectives) forthe acquiring companies o consider and choose when implementing brand and product integration In addition each of these four integration strategies might contain within it different sub-strategis which represent various different ways to achieve its objectives (€.8 “Repositioning” as a sub-strategy within the *Groweh Maximisation’ integration sưategy) While we were able to identify and conceptualise these four integration strategies, further empirical work is needed in this aca to refine these strategies and to determine whether there are yet more strategies being used in practic tn addition the funher empirical work also helps to establish what other sub-strategies exist and the circumstances in which they occur

43° Research design

Because cach M&A is extremely complex in terms of the number of factors that influence its outcome relevant and reliable quantitative studies (surveys, for example) are very difficult to realise, This paper adopted a qualitative methodological approach using ssuhiple sources of data Such an approach can yield "she Sosricate details af phenomena that are difficult to convey with quantiative methods’ (Strauss and Corbin, 1990, p.19)

‘This paper also aims to make generalisations on brand and product integration strategies and to identify key processes supporting the strategies based on different individual M&A events As the result of this, process oriented observation and inductive reasoning are a more suitable approach (Popper and Miler, 1983; Cussens, 1996; Manktelow, 1999) Further, this study will utilise data from a number of uifferent, but complementary, sources to enable the gradual build up of understanding as information from previous sources is added to new ones This approach is very much in line with recommended best practice (Easterby-Smith eta, 2002)

‘Among the available qualitative methodologies, multiple case studies were chosen a8 the most suitable method for this research mainly seeking to answer “how".type of research questions (Yin, 1994) As noted by Herrott and Firestone (1983, pp.14-19), smuliple case studies allow the research to produce more compelling and robust data than is possible with a single case study, The ease study approach is also more appropriate for situations where multi-faceted and dynamic situations and processes are being studied (Easterby-Smith et al, 2002), In addition this research relies on multiple sources such as interviews, company references, filings and documents rather than a single source Therefore in-depth cases with within-case and cross-case analyses will be the most feasible and effective way to conduct the esearch (Yin, 1994) ‘The specific inductive process adopted by this paper is derived from Flynn et al (1990) and is shown in Figure 2 In the previous research phase, existing literature is reviewed which demonstrates the lack of research in brand and product integration arca in M&As (i.e currently no research that has resulted in a model describing the process and strategies for the successful integration of brands and products in post-horizontal Mé&As) although it is one of the most important aspects in M&AS Based on the existing literature and the exploratory case studies the four conceptualised brand and product imegration strategies have been developed and proposed Therefore, in this paper the rescarch is designed to seck an enrichment and improvement of the four conceptualised strategies and the đeiled development of their sub-strategies through the choice of ‘multiple case studies as an appropriate method

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Figure2 Sequential low chart ofthe research (see online version for colours)

Pa

esearch Gp nd esearch Pomona Source: Adapted from Flynn etal (1990) 44 Multiple case selections

nem

ave Sate tt Rach Finds

Table $ summarises the horizontal M&As used as case studies inthis research Tahje€ Listof the conducted case studies

Tipe of Case Case candidates Industry Year Deal value Nationalities business

Ta Guinness-GrandSpiris Metropolitan 1997, £28 billion UK-UK BAC Ye Diageo-Seagram Spirits 2003 S¥2billion UK-France BIC 2 Glaxo Wellcome- Pharmaceutical 2001 £130illion UK-UK ‘SmithKline Beecham Bac 3a Ford-Jaguar Automobile 1989 $6biion USA-UK tác

Ford-Volvo-Land 1999 $6.4Sbillion USA-Sweden

3 Rover ne) USA-UK Ba

4 Packaging 2001 Sl2milHon USA-Rly BB S LenovotBMPC TT Division 2008 $1756lfion Chim-USA — B3B mc 61 SAB-Miller Beet 2002 $5.6billion Sowh Afica-USA B2C đồ SABMiller-Bavaria Boce 2005 SP2biltion UK-Columbia — B2C 7 Cadbury Scowepes- Conestonery 2001 $4.2bilion UK-USA ‘Adams BỌC 8 Ericsson-Marconi Telecoms 2006 £12 billion Sweden-UK — BởB 9 Dainippon-tnca Printing 300% £30 million Japan-UK Bạn 10 Millward Brown- Market Research 2005 Umeveled UK-USA Dynami Losi Bạn

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Brand and product integration in horizontal M&As a “These deals were diverse in terms of size (small, medium, large and mega), and types of business that these companies were involved (ie B2B and B2C) The merging firms in Case $ were involved in both B2B and B2C because thee products were offered to both organisational customers and end-users, The conducted cases are numbered from 1 to 10 However, Cases 1,3 and 6 contain different M&A events within them Therefor, leters (@) and (6) are added into indicat this ‘The Key criteria for selection of the cases are (1) horizontal M&As when the merging firms owned competing brands or products in the same industry and market; (2) the acquiring firm did not have any equity in the acquired firm before the M&AS: {G) adequate access tothe case firms: (4) deals were ideally announced before the end of 2006 but after 2000; and (5) the case fimms operated in diferent industries and involved different types of businesses, e.g B2B and B2C ‘According to Veloutsou and Panigyrakis (2001) the brand team comprises strategists! implementers (who are the core of the team who devise brand strategy und tead the team), supporters (e.g R&D, HR and production), facilitators (eg market research and finance) and incidentals (eg legal advisors) In an ideal situation (i.e having full access to the case company) the researcher Would conduct interviews with all ofthese functional teams to access brand and product integration information from different perspectives However, such situations are very rare because M&As are always considered ss highly confidential Therefore, in most of the cases the researchers conducted interviews with top senior management (e.g chairman, president), marketing and sales management ‘eam, and brand/product managers who were involved in the M&AS

4.5 Protocols of case data presentation and analysis

‘Adapted from Yin's and Miles and Huberman's case study framework (Yin, 1994; Miles and Huberman, 1994) examining both individual and cross-case analyses, cach case study needs to provide the following information:

+ 4 brief introduction to the M&A event: it explores, describes and explains general information about merging firms such as corporate overviews, location, brands, products, markets and customer groups, M&A motives and deal value

© Brand and product integration: it explores, describes and explains the details of the brand and product integration process ~ integration themes, strategic actions undertaken, influential factors to consider, and processes and procedures (if any) The data captured from each case study was first analysed within that case The individual case analysis was conducted based on the objectives set by the research in order to refine the conceptualised brand and product integration strategies ~ *Choice’, ‘Growth Maximisation’, “Harmonisation’ and " Foundation’ ~ and to identify if there was any other strategy available apart from these In addition the research also aimed to dovclop a set of sub-strategies within each main brand and product integration strategy

‘The eross-case analysis also used a format derived from the research objectives It is based on a summary of the findings drawn (or extracted) from the analyses of the individual case studies The cross-case analysis includes the tasks summarised below: ‘© Analysis and refinement ofthe conceptualised brand and product integration strategies

‘© Analysis, development and synthesis of sub-strategies wit

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93 DA Va, ¥ Shi and M Gregory 5 Case studies: an exemplar

This section intoduces one case study in detail from a pool of 13 conducted ease studies ‘The inoduetion of only one case aims to provide an example that demonstrates how the data of each case is organised and analysed The researcher picked this ease to introduce because it can cover all the four brand/product integration strategies developed by this research

5.1 Overview of the acquisition

In August 2001 Sealed Air Inc (SA), 2 global manufacturer of a wide range of food and protective packaging materials and systems, acquired Soten SpA, an lalian packaging firm, in a USSI2 million deal The Soten group then became a part of Scaled Air Cryovac's (SAC) shrink film business (a division of SA) in Europe Soten’s products ‘were polyolefin and PVC shrink film as well as production equipment for this display film: Soten was a manufacturer of technical display film which competed with SAC’S display, bakery and produce packaging businesses Soten was one of three European polyolefin line manufacturers and had a broad technical capability in the production of low cost polyolefin and PVC film production equipment

‘The acquisition ofthe Soten group offered SA the opportunity to:

* develop a significant second brand of display shrink film: to achieve growth in the low cost packaging segment and to enable targeted action against strategically important competitors (in order to defend and grow SA's existing ditect and distributor ‘based Cryovac film market share) without jeopardising the market price and reputation of SA's Cryovac brand (the Ist premium brand)

‘© improve the overall competitiveness of the Sealed Air Display film business by providing additional and significant lower capital cost capacity and production line capabilities to extend shrink packaging division (SPD) supplementary brand strategy

SA formed an integration team to run the acquisition In addition SA communicated internally and externally throughout the integration period

5.2 Brand integration activities

SA's post-acquisition sales strategy was (1) to defend existing sales of Soten's products ‘and (2) then grow new business with these products Seles managers of SA/Soten were required to draw up a list of customers authorised to buy Soten’s film products SA planned to supply these products to 85/90% of its existing distributors SA also targeted Soten's products at the customers who wanted to buy the packaging film at a lower price than the *Cryovac’ brand

SA's low-cost brand strategy was to divest itself of its imtemal *FIT" brand, rename Soten's products under the ‘OPTI’ name, and focus all efforts on the OPT!" brand The “FIT” brand was phased out because of

‘= its insignificant performance and contribution to SACs business

‘= the overlap with one of their own brands in the low-cost packaging film segment (resource limitations)

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Brand and product integration in horizontal M&As 3 As a result several actions were taken:

‘all of Soten’s products were renamed under the "OPTI" brand: The “OPTI” range is summarised in Table 6

# SEIT” was switehed to “OPTI”

terms of product specifications

‘+ all of Soten’s business was switched to ‘OPTI’ (e.g customers, reporting systems) ‘Table 6 Renaming Soten's products to "OPTI brand

Name of Soten's products Renamedas OPV brand Application

Hs ‘OPTI 100 “Malipurpose applications

3 001110 High speed

VL OPTI210 Soft shrink

AE opnsis Amti-fog

tp OPT1320 High speed pizza

PB OPTI330 Bakery perforated

pyc opi sio Pvc

SA also harmonised the PVC products made at the Soten and Volgograd plants to reduce production complexity and to enhance production efficiency As the result of this the PVC products had different formulations but their dimensions were standardised and similar,

‘Three to five years after the acquisition the R&D team of SA developed new products for both the “OPTI” shrink film brand and its associated production equipment:

manufacture ($1-2 million ne) On the other hand SAC designed high capacity,

high speed, good quality and high cost extrusion lines ($7-8 millior/line) SA set up

4 project that merged the two line design approaches This resulted in the creation of 4 new, hybrid design called "NTSEL", which combined the best features of each line design

New formulations for the “OPT! range: The existing R&D organisation of SA was integrated with Soten to develop new formulations for the “OPTI” brand that performed better and were also cheaper

5.3 Sealed air brand and product integration strategies

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Brand and product integration in horizontal M&As 95 ‘Table? Summary of within-Case (8) event analysis

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1 Renaming all Soten’s products to the ‘OPTI brand: SA's initial post-acquisition sales strategy was to defend the existing sales of Soten products and then grow new business with these products These defending and growing tasks mainly aimed to achieve growth for SA in the low cost packaging segment, Therefore, this sales strategy was in line with the conceptualised ‘Growth Maximisarion’ brand and product integration strategy The change of the name of the Soten's products (0 ‘OPTI aimed to create an identity for the low-cost brand (to differentiate it from the ‘premium *Cryovac’ brand) and maximise its position in the market place to achieve growth, Therefore, this change can be classified as a sub-strategy of the brand and product “Growth Maximisation’ integration strategy

2 The divestment of te ‘FIT’ brand after acquiring Soten company: SA divested itself of the “FIT" low cost brand by withdrawing it from the market This situation is in line withthe conceptualised “Choice’ brand and product integration strategy The reason SA discontinued the ‘FIT’ brand was because there was an overlap between the "FIT" and 'OPTI' brands SA used sales contribution criterion (of both FIT and OPTI) to make the divestment decision for ‘FIT’, In addition the *FIT" brand was also seen to be 100 close t0 the "Cryovac’ brand, the company's premium brand Inthe divestment process SA gradually switched al the eustomers and specifications of IT" to the ‘OPTI brand before discontinuing “FIT

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96 ĐA Eũ,Y.ShiandM Grgoy

4 The creation of new products: SA's R&D team combined the strengths of both SA and Soten to create two new types of products: the new NTSEL extrusion line and the new formulations for “OPT” shrink film This situation is, therefore, in line with she “Foundavion’ brand/product integration svategy 6 Further case analysis and key findings

6.1 Further case analysis

Following the same structure of the above case presentation and analysis, this section summarises 12 other case analysis and cross-case analysis, Table 8 illustrates © generic picture that 13 studied eases produced different types of brand and product integration strategies The following individual case analysis and cross-case analysis seek to understand the details of each brand and product integration strategy and their backgrounds

‘Table8 The four main brand and product integration strategies in the casestudies

‘Case studies Choice Growth Maximisation Harmonization Foundation

Case 1a (Guinness-Grand Met) Ø1 ø @

Case 1b (Diageo Seagrass} @ @ Case 2 (GW-SB) a a a a Case 3a (Ford-Jaguat) a a Case 3b (Ford Volvo-Land Rover) a a 8 Case 4 (SA-Soten} a a @ a Case $(Lenovo-IBM) ø a a Case 6a (SAB-Millet) a 5 a m Case 66 (SABMiller-GEB) @ a Case 7(CS-Adams) a a a Case 8 (Ericsson- Marconi) 5 a Case 9 (Dainippon-Inea) a Case 10 (MWB-Dynamic Logic) g fa

62 Refinement of the four brand and product integration strategies

“The within-case analyses of individual case studies show four different situations that are in line with our conceptual brand and product integration strategies ~ ‘Choice’, ‘Growth ‘Maximisation’, “Harmonisation” and "Foundation"

+ Cases la, 1b, 2, 3a, 4, 5 and 6b depict a situation where the merging firms divest themselves of or withdraw their overlapping brands or products totally or partially fom the market (see Appendix 1)

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Brand and product integration in horizontal M&As 9 + Cases 2, 3a, 3b, 4,7 and 8 describe situations where the merging brands or products ‘were reconfigured to share and use similar parts, production resources, platforms

and processes ‘of manufacturing complexity) These cases, and Cases 1b, 6a and 6b, also show that to achieve both cost savings and operating improvements gteducton the merging firms also leveraged ther size as well as their marketing and commercial knowledge by combining their brands or products to realise both objectives (cost saving and operating improvement) {see Appendix 3)

© Cases 1a, 2, 3b, 4, 5, 6a, 7, 9 and 10 demonstrate the situations in which the post- MRA organisations combined their merging brands or products (or elements of the ‘merging brands of products) to create new products or brands (sce Appendi 4)

[Apart from these four main directions the case studies do not stow any other option for integrating brands and products in the postM&A organisations Although the scope of the ‘Choice’, "Growth Maximisation’ and *Foundation’ is unchanged based ‘on the analyses given above, the within-case and cross-case analyses raise the need to expand the scope of the initial “Harmonisation’ integration strategy to covet more activities, i, the merging firms also leveraged their marketing and commercial knowledge (apan from ther size) by combining their brands or products to realise both cost saving and operating improvement objectives Therefor, the definition of the ‘Harmonisation’ strategy i refined as the re-configuration of merging brands or products or the capitalising ‘on the scale offered by the merging brands or products and on the marketing and commercial knowledge of the merged organisation in order to achieve cost savings and ‘operating improvements

Based upon these, the refined four main brand and product integration strategies in horizontal M&AS are:

The ‘Choice’ integration strategy refers to the partial or total divestment of a brand or product by the postchorizontal M&A organisation The *Choice” strategy is implemented in order to mect the legal requirements of the merger, to eliminate {internal brand or product competition within the company's portfolio, or to dispose of the brands or products which are off-strategy to the firm or are atthe end of their

life cycle

+ The "Harmonisation" strategy refers to the re-configuration of merging brands fr products or the capitalising on their seale and on the marketing and commercial knowledge of the menged organisation to achieve cost savings and operating improvements + The Foundation’ refers to the development oF creation of new brands or new products or new capabilites based nthe combination of merging brands or products or thei elements

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98 DAA VA, ¥ Sht and M Gregory

63 Development and synthesis of brand and product integration sub-strategies

Based on the analysis provided from Appendices 1, 2, 3 and 4, 18 sub-strategies can be synthesised within the four main brand and product integration strategies Table 9 ‘summarises the sub-strategies and their descriptions of each brand and product integration strategy They indicate specific ways to achieve the objectives of each of the main brand and product integration strategies Unlike the other sub-strategies ‘In-icensing’ applies to ‘brands or products of third partes rather than the post-M&A organisation's ones Table9 —Sub-strategis within Choice, Growth Maxims tion, Harmonisation and

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š new geographic markets by its own efforts or by licensing

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‘brands/products tothe markets and to improve their sales performance Inticeasing ‘The sub-strategy in which advantage of its market presence and strength to market the post-M&A organisation takes

and sella thirt-pary's (normally a competitor's) brandefproducte under license

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Brand and product integration in horizontal M&As 99 ‘Table Sub-strategies within Choice, Growth Maximisation, Harmonisation und Foundation strategies (continued) “Tntegrotion Sub-straegies ‘Description strategies Portolis scaling The capitalisation on scale ofthe merging brands/products to achieve cost synergy and operating improvement in post-horizonal M&AS

‘Commonalising ‘organisation actively bring more shared features and ‘The sub-integration strategy in which the post M&A atuibutes tothe merging brands/produets while ‘maintaining their uniqueness through is RAD efforts in order to leverage scale, efficiency, and operating improvement in purchasing and production and te reduce production complexity

Migrating “randfprodiet to another in onde to enhance both cost The move ot transfer of attributes or features of one synergy and operating improvement This transfer normally leads to a reduetion i the numberof brands/products as the result of combining atbutes integrated solutions or features of those ito Capitalising on CCapitalsing onthe marketing and commercial knowledge branding knowledge ofthe merging finns to enhance operating improvement and achieve cost savings forthe merging brands

Harmosisation

Combination of Combining the distinctive physical features claimed by engineering charactenstics ‘merging brands/products to create new brandsproducts, E engineering Combination of ‘brand product withthe funesional and emotional atibutes Combining the distinctive physical feature ofa

characteristics and of another brand/product in the combined portfolio to create © Gustomeratibutes new brand/producte

Combination of Combining the functional and emotional atibutes of customer anributes merging brands/products to create new brands/products, 7 Discussion

7.1 The linkage between brand and product integration strategies and sub-strategies with value creation in M&As

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100 DA Vit, ¥ Shi and M Gregory ‘Table 10 Summary of objectives of Choice, Growth Maximisation, Harm Foundation Sưangier mm Em

“The partial or total divestment of x brandfproduct (a a result of extemal ‘When the fir ams io eliminate internal competition its main forces ot reduction ofthe firm's intemal objective i to optimise the use of|

competition) resources (efficiency),

Growth Maximisstion brandw/products ‘The adding and management of merging Generating and achieving grow, Revenue synery Harmonisation The alignment of merging brandsproducts Cost synergy and operating for the capitalisation on their scale and improvement

‘marketing of commercial knowledge,

Foundation The development or cretion of new ‘brands or new capabilites based upon New capabilites Generaing and achieving growth the combination of merging brands o thie elements Figure 4 Relationship among Choice, Growth Maximisation, Harmonisation Foundation strategies and ] =) = ie Linked rough Growth Objective

From the M&A motives the four mojor brand and product integration strategies aim to achieve different objectives: efficient use of resoures, growth, revenue synerzy, cost synergy, operating improvernent and creation of development of new capabilites ‘These objectives can be coined under the same ‘value’ umbrella Table 10 analyses and sescribes these strategies and their objectives Based upon these the relationship among the brand and product integration strategies can be established and illustrated in Figure 4 ‘© between ‘Choice’ and ‘Harmonisation’: through the cost savings objective

‘* between ‘Growth Maximisation’ and ‘Foundation’: through the growth objective From the value chain perspective the individual brand and product integration sub- strategies can be linked to the value-generating activities According to Porter (1985) these activities are inbound and outbound logistics, production, marketing and sales, distribution, and aftersales services IMM (2007) and the Value Chain Group (2000) add in the rescarch and development and design into the value chain M (2007) also considers the entire supply chain instead of just inbound and outbound logistics Table 11 describes the contribution of the value-generating activities in implementing individual brand and product integration sub-srategies based upon their description given in “able 9 For instance the scope of implementing ‘premiumising’ isthe subject to R&D, design, marketing & sales, distribution, and afler-sles service (eg in premiumising a

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100 Ø.4 Vũ, Y.§hiandAf Gregon' ‘Table 10 Summary of objectives of Choice, Growth Maximisaton, Harm Foundation mm Em

“The partial or total divestment ofa brand/product (asa result of extemal ‘When the fim aims i eliminate intemal competition its main forces of reduction ofthe firm's intemal objective i o optimise the use of|

competition) resources (efficiency),

Growth Maximisstion brandyproducts ‘The adding and management of merging Generating and achieving growth, Revenue synergy Harmonisation The alignment of merging branduproducts Cost synergy and operating ‘or the capitalisation on their scale and improvement

‘marketing or commercial knowledge,

Foundation The development or creation ofnew borands or new capabilites based upon New capabilites Generating and achieving growth the combination of merging brands or the elements Figure Relationship among Choice, Growth Maximisation, Harmonisation Foundation strategies and ] [Em] [mm] [mm

From the M&A motives the four major brand and product integration strategies aim to achieve diferent objectives: efficient use of resoures, growth, revenue synerzy, cost synergy, operating improvement and creation of development of new capabilites ‘These objectives can be coined under the same ‘value’ umbrella Table 10 analyses and seseribes these strategies and their objectives, Based upon these the relationship among the brand and product integration strategies can be established and illustrated in Figure 4 ‘+ between “Choice and “Harmonisarion’: trough the cost savings objective

‘+ between "Growth Maximisation’ and ‘Foundation’ through the grovah objective From the value chain perspective the individual brand and product integration sub- strategies can be linked to the value-generating activities According to Porter (1985) these activities are inbound and outbound logistics, production, marketing and sales, distribution, and after-sales services, I(M (2007) and the Value Chain Group (2000) add in the research and development and design into the value chain IM (2007) also considers the entite supply chain instead of just inbound and outbound logistics Table 11 describes the contribution of the value-generating activities in implementing individual brand and product integration sub-strategies based upon their description given in Table 9 For instance the scope of implementing ‘premiumising’ is the subject to R&D, design, marketing & sales, distribution, and after-sales service (e.g in premiumising 3

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Brand and product integration in horizontal M&As tôi local beer brand the post-acquisition in Case 6b changed its taste formulation, the design of packaging and logo, withdrew sales of the brand from the normal outlet places, improved the way the beer is served, and increased the selling price)

‘Table 11 Brand product integration sub-strategies and the linkage to value chain Tam vs: “ng | §gậ bob | >> l a ễ : Pp Ps Withdrawing Sang Repositioning Premiumising Reusing a brand name Priorising, holding a a and Harvesting Expanding geographic make coverage Distribution chanel ø optimisation Inlieensng

Brand line!sgrent category extension a Brand qualiy improvement «= EỊ Ponlolio x 2a e898 5 8 Ssagga Migrating a @

Capitalising knowledge on branding

Combinauon ofengincering BD characteristics a Combination ofengincering BD characteristics and customer a sitibutes Combination ofeusiomer = E1 a atributes soaga

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103 DAA VA, ¥ Shi and M Gregory

7.2 The linkage between brand and product integration strategies and sub-strategies with competitiveness creation

‘This research deals with the development of different brand and product integration strategies in M&AS, The formulation and implementation of these strategies (in order to ‘ereate competitiveness and value) are the focus of strategic management Fuchs et al (2000) discuss three traditional approaches (positioning, resource-based and process- based) towards strategic management This paper views process is a part of resource and, therefore, describes two major views towards strategic management up to date:

‘The earlier view on strategy asserts the fit between the firm and its environment: Bowman (1974), Steiner and Miner (1977), Hofer and Schendel (1978), Mintzberg (1979), Porter (1980) The task for top management is to match the characteristics of environments with the firm's capabilities

‘The later view stresses the importance of a firm's resources to develop competences and to create the market need in order to improve value for money: e.g Daft (1983), Hamel and Prahalad (1994, 1995), Bamey (1991), Das and Teng (2000)

This research takes a consolidated approach and the findings of the research also agree with the view that a firm should consider both adaptation to its environment and the full exploitation of its resources and capabilities when formulating its strategies In the ‘context of horizontal M&As the brand integration considers both the "fit" of the post MAA organisation with its environment and the ‘stretch’ and leverage of its resources (including knowledge) to create competences and value

‘Based upon the definition of individual brand and product integration sub-strategies, their objectives, and the two strategic management views mentioned above the linkage between these individual sub-strategies and the strategic management views is possibly identified and given in Table 12 For instance, *Withdrawing’ sub-strategy is defined 8 “the intentional discontinuation of an existing brandiproduct or an in-development randiproduct by the merging firms in post-horizontal M&As’ ls driving forces are both the life cyele and elimination of intemal competition factors, When the post-M&A ‘organisation withdraws a brand or product because of its life cycle (ie the underlined technology of the brand is at the end of its cycle) this can be seen as the “fit” of the firm into its environment When ‘elimination of internal competition” is the reason the firm withdraw the brand or product, this can be seen as the stretch and leverage of its resources to create value, ‘Therefore, it can be seen that the selection and implementation of “Harmonisation and ‘Foundation’ strategies are concerned with the resource-base view while the other strategies — ‘Choice’ and ‘Growth Maximisation’ ~ are concerned with both the fit of the post-MA&A organisation in its environment and the resource-based view

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Brand and product integration in horizontal M&As 103 ‘Table 12 Brand/product integration sub-strategis and thee stmtegic management view

Sirategies _Subsirategies ‘Strategie management view

Choice Withdrawing ‘Swategi fit view and ‘resource-based view Selling Strategic fit view and resource-based view

Growin Repositioning Strategie ft view

Maximisation premiumising Strategic fit view and resource-based view Reusing a brand name Strategic fit view Prioriisng, holding and harvesting straegie fit view Resouree-based view and Expanding geographic market coverage Resource-based view Distribution channel oprimisaion Resource-based view

Indieensing Resource-based view

Brand lin'segmenveategory extension Strategic fit view and resource-based view Brand quality improvement Resource-based view Harmonisation Portfolio scaling Resouree-based view

Commonalisng Resource-based view

(including knowledge) Migrating Resource-based view (including knowledge) Crose-branding Resource-based view (ineluding knowledge) Resouree-based view (ncluding knowledge) Foundation

Combination of engineering chareccnstics Resource-based view and customer atnbutes (including knowledge)

Combination of customer atributes Resource-based view

uding knowledge)

7.3 A broader perspective towards 'brand"

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108 DA Va ¥ Shi and M Gregory

‘Through a number of case studies in different industries and business markets (B2B and B2C) the researcher had an opportunity to observe “brand!” from both customer and ‘organisational perspectives and to consider the integration of brands from these two perspectives For instance, the implementation of the ‘Harmonisation” strategy requires the organisation not only to consider its customers’ requitements but also to reconfigure its manufacturing and production process, R&D system or supply chain network and s0 on (cg redefining the relationship with distributors, supplies) These involve the changes both inside the organisation and in its relationship with stakeholders Based on these a broader approach towards ‘brand’ is defined as the brand can be considered to comprise the following aspects in its totality (Figure 5)

« — The bramd itself this includes physical product (e.g quality, ingredients or formulation, trade secret, features, design, pack and installation, patents, technologies, delivery, credit, warranty, after-sale service, promotion), brand identity (e.g, name, logo, symbol, design, trademark, rights, sign of ownership), brand personality (Character like a person), and brand image (which is built through advertising and communications),

+ Brand.customer relationship: this defines how the brand satisfies its customers (eg functional attributes; emotional, social, psychological and experiential attributes; imagery ~ the way brand attempis to meet customers’ needs) and how the customers see and react tothe brand (eg reflection; self-image; brand judgments ~ customers" personal opinions about and evaluations ofthe brand),

‘+ Organisational system and culture (which gives the brand competitive advantages): this comprises both tangible and intangible factors (e.g manufacturing and production facilites and processes, R&D, technology, aftersales services, culture, value) © Organisation and its relationship with stakeholders: eg with suppliers and distributors Figure $ Brand ina broader term (sce online version for colous) Brand should be seen from both customer and coxginiationl perspectives The toy of 9 brand

COrgansational yer and eure

{ Orpaisatonal “and is relationship with Lime = Gad, fe g- with suppliers, distributor)

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‘Brand and product inegration in horizontal M&As 105 8 Conclusions

Brand and product integration has been becoming a widespread, most urgent and compelling issue to many firms because of its significant contribution to the value and ‘competitiveness creation in M&AS The lack of research on the integration phase places an urgent need from industries for having comprehensive and specific strategies for brand and product integration In bridging this gap this research offers a value and ‘competitiveness realisation and creation approach in integration More specifically, the outcome of this research offers

+ Four main integration strategies as different strategic directions underlining different objectives acquirers can take to integrate brands and products in post-horizontal M&As

© 18 sub-strategies undemeath the main integration strategies: these will provide senior business and integration managers’ different specific alternatives to implement ‘brand and product integration to achieve the objectives set by the main integration strategies,

In terms of implementation, firms are suggested to be flexible in applying a suitable mixed set of brand and product integration (sub) strategies tailored from the suggested ‘ones, depending on their own practices For instance a firm can find out another suitable ‘option (such 8s ‘repositioning’) to manage its overlapping brands and products rather than ‘selling’ and ‘withdrawing’ them The firms also benefit from the result of this research in terms of taking the application of the developed strategies and sub-strategies toanon-M&A business context

‘Through the case studies a broader view towards ‘brand" is developed in which brand is linked to the entire organisational system and culture, These support and create competitive advantages for brand Therefore, our research confirms the view that the successful management of brands requires paying close attention to both the external customer franchise and the internal organisational system and culture

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‘Appendix 1 The divestment and withdrawal of overlapping brands/products in the (Cases_Divesiment or withdvawal of brands Cael Case Ib « case? + case 3a + cased « cues + case 6 studied cases

Divestment of ‘Dewar's Scotch whisky and "Bombay" and ‘Bombay Sapphire’ gin brands to the third party

Discontinuation of the ‘Sanderson’ whisky brand Divestment of Malibu’ rum brand tothe thư pany

Divestment ofa number of Seagram's brands + which Diageo and Pemod Ricard did not want to the third parties

Divestment of “Kyi” drug totally 0 hid pary © Divestment of ‘Ceftazidime! and "Zantac 7$° drugs partially to third parties

Divestment of in-development drugs (Prophylactic Herpes Vaccines and DISC technology, "GIL47211C"~ Topoisomerase 1 Inhibitors, Renzapride ~ drugs forthe treatment of lritable Bowel Syndrome IBS and Frovatiptan ~ Triptan drugs for treating

‘migraines othe third partes

Withdrawal ofthe product tral (fr extme formulation of 'Zavirex' in the US: this vas 4 part ofthe Zoviex’ brand)

Discontinuation of “Ford Scorpio" brand

Discontinuation of ‘FIT’ brand Discontinuation of ‘ThinkPad G" models Discontinuation of "ThinkPad 2° models a Withdrawal of ‘Colemborg’ Pilsner beer brand « Reasons ‘A condition ofthe merger (nuitrast issue) Elimination of internal ‘competition ‘As a condition ofthe merger (anitrast issue)

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