Strategic planning for any business incorporates many factors, such as: long-term and short-term objectives, the current market climate, and a future projection of how it may affect planning. From the mission, vision and goals, which are recognised as long-term objectives, to departmental objectives, strategies and projects (short-term), creating a plan is a necessary stage in order to succeed. Although it is well known that plans do not always work the way that they are first drafted, they certainly make it easier to adapt to changes along the way; and having a concept to refer to can encourage innovative ideas to overcome barriers.
Three important things to consider with strategy are implementation, evaluation and development. Evaluation and development stand as a means of improving the implementation and the overall strategy, which will in turn bring you closer to completing your objective. Whether the objectives are high- or low-risk, long- or short-term, the company should always be looking towards the mission and vision, the raison d’être. After all, they are the ultimate objectives.
It is said that mergers and acquisitions seldom live up to their promise of delivering strategic benefits, however with intelligent strategic planning and realistic objectives, success can be achieved on various scales. With transparency between the two companies comes a level of understanding regarding strategy and how objectives can be met. This means that well-defined and realistically achievable goals provide a platform for a higher chance of success. Unfortunately, many mergers have been considered a failure due to ambiguity and over-ambition; this is especially true during the credit crunch where so many mergers deteriorated.
The infamous 2007 merger of RFS (Royal Bank of Scotland [RBS], Fortis and Banco Santander) and ABN AMRO is an excellent example of poor strategic planning. In a nutshell, RFS acquired ABN AMRO—also a merger between the Amsterdamsche Bank and the Rotterdamsche Bank—at a time when the financial market was extremely unstable and on the verge of the 2008 crisis. ABN AMRO had already sold the assets RFS were so keen to acquire, however the consortium went ahead with the deal anyway, leaving the original terms unchanged and overpaying in order to beat off competition from Barclays. RBS (UK) and Fortis (BE/NL) had insufficient reserves to prevail against the incoming storm as a direct result of the takeover, which led to the collapse of both. The British and Dutch governments bailed out the two banks respectively and ABN AMRO demerged and became a Dutch state-owned bank in 2010.
Mergers and acquisitions are fragile dependencies that require strong management and realistic objectives. Poor strategic planning and over-ambitiousobjectives are often the downfall of many mergers and acquisitions, but transparency opens the door to potential success.
Joe Mackenzie
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