UNISYS: The Merger of Burroughs and Sperry
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UNISYS: The Merger of Burroughs and Sperry
- 1. UNISYS The Merger of Burroughs & Sperry Group 5 Mona, Prasan, Milin, Atman, Siddharth
- 2. The Team Mona Sharma Siddharth R Prasan Arora 2 Atman Shah Milin Parekh
- 3. The Case at hand UNISYS: The Merger of Burroughs and Sperry Harvard Business School 9-489-055 3
- 4. AGENDA • Introduction to Burroughs and Sperry • The Merger Trail • Successful Blue Print • Framing People & Cultural Issues • The Emotional Change Experience • Merger Analysis • CULTURE: THT Model • Impact of the Merger • TOWS Matrix • Unisys Today !! 4
- 5. The Man with the Plan • W M Blumenthal was a man of varied faces, politician, businessman, professor • Inspite of having a political background, he firmly believed in eliminating cronyism • Proactive personality who firmly believed in GOYA ! Werner Michael Blumenthal Former Chairman & CEO - Unisys
- 6. Timeline BURROUGHS SPERRY 1896 - William Burroughs's invented the first 1910 – Elmer Sperry forms Sperry Gyroscope. He practical adding machine invented the gyrocompass and other aeronautical and directional marine navigational systems. 1905 - The company changed its name to Burroughs Adding Machine Co. and relocated to 1930 – The company integrated with Sperry Detroit corporation 1953 - The company was renamed to Burroughs 1950’s – Sperry Corp. evolved as a management Corp and continued making adding machines holding company for enterprises in aviation, defense and navigation 1960- 1970 – The overall mainframe market’s growth slowed down causing a decline in 1951 – It acquired Remington Rand Corp., the Burroughs revenues founder of the first commercially viable computer 1980– The company appoints ex Treasury Secretary, Michael Blumenthal as the Vice 1980’s – It became a world leader in the large Chairman and CEO mainframe market 1980’s - Burroughs expanded into data 1983 – The company’s earnings were affected by a processing, communication, and office automation disparity between the change in the cost of sales and the products 1980’s – He successfully turned around the company's fortunes by increasing sales and 1985 – Its headquarters shifted from New York City doubling the ROE to Blue Bell Pennsylvania 1986 – The company recorded its highest turnover of $5 billion.
- 7. Company Analysis Pre-Merger Burroughs Sperry Highly Centralized De-centralized - 4 business Organization units Lacked multiple capacities and Technology tailor made to Portfolio poducts customers Computers Complete information Business Systems Bottomline Oriented - systems Excellence Oriented - systems Style efficiency and profitability high value and quality Region (geography) wise; Industry wise Sales Force except banking Product centric - "high degree Customer centric - high Approach of specialization among degree of orientation to functions and personnel" understanding needs of Strict adherence to budgets; customers High emphasis on R&D, Functional Financial and Operational designing and marketing Expertise competence
- 8. Company Analysis Pre-Merger Burroughs Sperry Invention of the Adding Invention of the Machine Gyrocomapass + marine, Started with aereonotical and vavigational equipment Efficient development Product development delays Timelines all across the orgainzation Aggressive; Business minded Loyal: Familial environment Personell environment Work culture Apolitical Political System Database mangement and Number crunching functionality transaction processing Sold principally to nondefense Strong in Defense systems Proficency markets Dominant Finance Government (defense) industries Dominant Belgium, France, UK Germany, Iberia, Italy, geographies Scandinavia
- 9. Why Merge ? • Economies of Scale • Financial Resources • Increase in Market Share (10.76%) - critical mass & clout (IBM was75%) • Helps to take on competition • Best of both worlds (dual architecture) – Customer overlap – 5% – Different core functions – Different dominant industries and geographies 9
- 10. The Merger Trail • In the 1980’s Sperry and Burroughs faced declining profits 1st Merger • Mr. Blumenthal believed the two companies could fit together Attempt • In 1985, he launched a merger attempt by offering stock swap of $65. However, Sperry’s management doubted its success • Mr. Blumenthal made another bid for Sperry 2nd • Sperry tried to defend its position and broker a deal Merger with Honeywell but the talks failed • In 1986 Burroughs offered $76.50 a share which was Attempt approved by Sperry’s Board. The merger was valued at $4.8 billion
- 11. The Start of an Era
- 12. Mergers – Reality Check • Failure rates of M&A range from 50 to 70 % • Share holder value is destroyed in more than 60% cases (BusinessWeek Study) • Enterprise value is rarely increased (BCG, KPMG Reports) Source: Getting It Together The Leadership Challenge of Mergers and Acquisitions – Gunter K Stahl 12
- 13. Successful Blueprint 13
- 14. Framing People & Cultural Issues 14 Source: Harvard Business Review China - Managing People and Cultural Problems in Mergers
- 15. The Emotional Change Experience Source: Ivey Business Journal - 2008 15
- 16. Blumenthal’s Preliminary Plan The preliminary plan involved addressing 3 issues a. A rally to the cause – “Name the New Company” b. Need to control potential attrition – Through over- communication c. Approach to organizing the new firm – creation of the Merger Coordination Council
- 17. Merger Implementation The Plan: 1. Merger Principles: a. Partnership b. Meritocracy c. Unity 2. Merger Coordination Council was set up, forming six integration objectives a. Develop new organization Merger Process b. Integrate marketing worldwide c. Review noncore businesses d. Consolidate operations e. Integrate products and technology f. Improve financial performance 3. 12 Task forces were set up for dedicated problems
- 18. The Principles of the Merger • Partnership – A merger of equals – The objective was to form a company that could compete with the 800lb gorilla (IBM) • Meritocracy – One of the most important aspects of the merger – It highlighted the commitment of the management to form a stronger company • Unity – To form a new image post the merger and create its own identity independent from Burroughs and Sperry – To achieve this objective, they decided to keep a new name, without showing bias towards any one company • Dispatch – Added later, because Blumenthal believed that delays lended fuel to uncertainty – New motto was “When in doubt, do it now”
- 19. Merger - Challenges • Debt • Skeptical Wall Street $8-$9 EPS by 1987 • Retaining both the architectures which were • Culture 19
- 20. CULTURE: THT Model Burroughs Sperry Rules Versus Universalism - people place high Particularism - rules are derived from each Relationships importance on rules circumstance/relationship The Individual Individualism - people believe in Communitarianism - people believe that Versus The Group individual freedom and acheivement group is more important than the individual Specific - separate work and personal Diffuse - work and personal lives overlap; How Far People lives; reltionships don’t impact much at reltionships are vital to meet objectives at Get Involved work work How People Neutral - reason influences people more Emotional - people want to find ways to Express Emotions than feeling express their feelings How People View Acheivement - people value your Ascription - people value your performance Status performance Sequential - people believe in staying on Synchronous - people see the past, present, How People schedule; place high value on order and and future as interwoven periods, view plans Manage Time punctuality; "time is money" and commitments as flexible How People Internal direction - people believe that Outer direction - people believe that their Relate to Their they can control their environment to environment controls them; they must work Environment achieve goals with their environment to achieve goals
- 21. Using THT to resolve a business dilemma Realize and Root • Implement Impact Reconciling Actions Reconcile • Resolve Cultural Differences Respect • Appreciate Cultural Differences Recognize • Increase Awareness Time
- 22. Operations Apolitical Financial 10 Product Oriented LOB Highly Centralized EPS Only Computers Eco. of Scale MIS Market Share Burroughs Apolitical New brand Cultural conflict Increase EPS – fast Redundant Staff LOB R&D Complete IS Political Development Delays Operations - Cost 0 Sperry 10
- 23. Impact of the Merger • Burroughs paid $76.50 per share totaling to $4.8 billion • Raised $1.74 billion dollars by selling its additional assets • Cut workforce by 24,000 employees :- savings of $300 million • The company was valued at $10.78 billion • 40% of its revenues came from its industrial and commercial operations and 35% from the financial operations. • Adopted the LOB model to bifurcate its operations
- 24. TOWS Matrix 24
- 25. Unisys Today !! • After merger, PCs became a rage & the demand for mainframes dropped rapidly • Unisys shifted to high end servers and IT services - business consulting and outsourcing • Developed the UNISYS 2200/500 CMOS mainframe, and the Micro A (the first desktop mainframe) in 1989 • Listed at #44 (tied) on the Top 100 Corporate Criminals of the Decade list for the 1990s • Was sued by the government and found guilty multiple times. (fraud, price escalation, failure to supply adequate equipment) • Revenues down to $3.8 Billion • Number of employees down to 22700 25
Notes de l'éditeur
- Light Bulb Questions(Intermediate) To reproduce the box effects on this slide, do the following:On the Home tab, in the Slides group, click Layout, and then click Blank.On the Design tab, in the Themes group, click the arrow next to Colors and then click Oriel.On the Insert tab, in the Illustrations group click the arrow under Shapes, and then under Rectangles, select rectangle (first row, first option from left).On the slide, drag to draw a rectangle.Under Drawing Tools, in the Format tab, in the Size group, click the arrow at the bottom right corner launching the Format Shape dialog box.In the Format Shape dialog box, select Size in the left pane, under Size and rotate in the right pane set Height to 1.88” and Width to 2”.Also in the Format Shape dialog box, select Fill in the left pane, and under Fill in the right pane select No Fill.Also in the Format Shape dialog box, select Line Color in the left pane, under Line Color in the right pane, select Solid Line, and then click the arrow to the right of Color, and under Theme Colors, select Black, Text 1 (first row, second option from left).Also in the Format Shape dialog box, select Line Style in the left pane, under Line Style in the right pane set Width to 0.25 pt.Close the Format Shape dialog box.Select the rectangle. On the Home tab, in the Drawing group, click Arrange, point to Align, and then do the following:Click Align Left.Click Align Top.Select the rectangle. On the Home tab, in the Clipboard group, click the arrow to the right of Copy, and then click Duplicate. Repeat this process three more times for a total of five rectangles.Select duplicate on right side. On the Home tab, in the Drawing group, click Arrange, point to Align, and then do the following:Click Align Right.Click Align Top.Select all five rectangles. On the Home tab, in the Drawing group, click Arrange, point to Align, and then do the following:Click Align Top.Click Distribute Horizontally.Under Drawing Tools, on the Format tab, in the Arrange group, click the arrow to the right of Group and select Group.Select the grouped rectangles. On the Home tab, in the Clipboard group, click the arrow to the right of Copy, and then click Duplicate. Repeat this process two more times for a total of four grouped sets.Select one grouped set. On the Home tab, in the Drawing group, click Arrange, point to Align, and then do the following:Click Align Center.Click Align Bottom.Select all other grouped sets, and also on the Home tab, in the Drawing group, click Arrange, point to Align, do the following:Click Align Center.Click Distribute Vertically.Select all grouped rectangles. Under Drawing Tools, on the Format tab, in the Arrange group, click the arrow to the right of Group and select Ungroup. To reproduce the video effects on this slide, do the following:On the Insert tab, in the Media group, click Video, and then click Video from File. In the left pane of the Insert Video dialog box, click the drive or library that contains the video. In the right pane of the dialog box, click the first video that you want, and then click Insert.Under Video Tools, on the Format tab, in the Size group, click the arrow at the bottom right corner to launch the Format Video dialog box.In the Format Video dialog box, select Size in the left pane, under Size and Rotate in the right pane, set Height to 1.88” and Width to 1.99”.In the Animations tab, in the Animation group, select Play.Also on the Animations tab, in the Timing group, click the arrow to the right of Start and select With Previous.On the Home tab, in the Drawing group, click Arrange, point to Align, and then do the following:Click Align Left.Click Align Top.Also on the Home tab, in the Drawing group, click Arrange, under Order Objects, click Send to Back.On the Insert tab, in the Media group, click Video, and then click Video from File. In the left pane of the Insert Video dialog box, click the drive or library that contains the video. In the right pane of the dialog box, click the second video that you want and then click Insert.In the Format Video dialog box, select Size in the left pane, under Size and Rotate in the right pane, and set Height to 1.88” and Width to 1.99”.In the Animations tab, in the Animation group, select Play.Also on the Animations tab, in the Timing group, click the arrow to the right of Start and select With Previous.On the Home tab, in the Drawing group, click Arrange, point to Align, and then click Align Top.Press and hold CTRL, select second video and second rectangle from top left. On the Home tab, in the Drawing group, click Arrange, point to Align, and then select Align Left or Align Right (depending on which way the video needs to move to match up with rectangle).Select the second video, on the Home tab, in the Drawing group, click Arrange, under Order Objects, click Send to Back.On the Insert tab, in the Media group, click Video, and then click Video from File. In the left pane of the Insert Video dialog box, click the drive or library that contains the video. In the right pane of the dialog box, click the third video that you want and then click Insert.Under Video Tools on the Format tab, in the Size group, click the arrow at the bottom right corner to launch the Format Video dialog box.In the Format Video dialog box, select Size in the left pane, under Size and Rotate in the right pane, set the Height to 3.75” and the Width to 4”.In the Animations tab, in the Animation group, select Play.Also on the Animations tab, in the Timing group, click the arrow to the right of Start and select With Previous.On the Home tab, in the Drawing group, click Arrange, point to Align, and then do the following:Click Align Right.Click Align Top.Also on the Home tab, in the Drawing group, click Arrange, under Order Objects, click Send to Back.On the Insert tab, in the Media group, click Video, and then click Video from file. In the left pane of the Insert Video dialog box, click the drive or library that contains the video. In the right pane of the dialog box, click the fourth video that you want and then click Insert.In the Format Video dialog box, select Size in the left pane, under Size and Rotate in the right pane, set the Height to 1.88” and the Width to 1.99”.In the Animations tab, in the Animation group, select Play.Also on the Animations tab, in the Timing group, click the arrow to the right of Start and select With Previous.On the Home tab, in the Drawing group, click Arrange, point to Align, and then click Align Bottom.Press and hold CTRL, select fourth video and seventeenth rectangle (fourth row, second option from left). On the Home tab, in the Drawing group, click Arrange, point to Align, and then select Align Left or Align Right (depending on which way the video needs to move to match up with rectangle).Select just the video, on the Home tab, in the Drawing group, click Arrange, under Order Objects, click Send to Back.On the Insert tab, in the Media group, click Video, and then click Video from file. In the left pane of the Insert Video dialog box, click the drive or library that contains the video. In the right pane of the dialog box, click the fifth video that you want and then click Insert.In the Format Video dialog box, select Size in the left pane, under Size and Rotate in the right pane, set the Height to 1.88” and the Width to 1.99”.In the Animations tab, in the Animation group, select Play.Also on the Animations tab, in the Timing group, click the arrow to the right of Start and select With Previous.Press and hold CTRL, select fifth video and thirteenth rectangle (third row, third option from left). On the Home tab, in the Drawing group, click Arrange, point to Align, and then select Align Left or Align Right, and then Align Top or Align Bottom (depending on which way the video needs to move to match up with rectangle).Select just the video, on the Home tab, in the Drawing group, click Arrange, under Order Objects, click Send to Back.On the Insert tab, in the Media group, click Video, and then click Video from file. In the left pane of the Insert Video dialog box, click the drive or library that contains the video. In the right pane of the dialog box, click the sixth video that you want and then click Insert.In the Format Video dialog box, select Size in the left pane, under Size and Rotate in the right pane, set Height to 1.88” and Width to 1.99”.Close the Format Video dialog box.In the Animations tab, in the Animation group, select Play.Also on the Animations tab, in the Timing group, click the arrow to the right of Start and select With Previous.On the Home tab, in the Drawing group, click Arrange, point to Align, and then click Align Bottom.Press and hold CTRL, select sixth video and nineteenth rectangle (fifth row, fourth option from left). On the Home tab, in the Drawing group, click Arrange, point to Align, and then select Align Left or Align Right (depending on which way the video needs to move to match up with rectangle).Select just the video, on the Home tab, in the Drawing group, click Arrange, under Order Objects, click Send to Back. To reproduce the text effects on this slide, do the following:Press and hold CTRL, select rectangles six, seven and eight (second row, first, second and third options from left), then under the Home tab, in the Clipboard group, click the Cut icon.On the Insert tab, in the Text group, click Text Box, and then on the slide drag to draw your text box in the area you just cut.Type text, Questions, in the text box, and then select the text. On the Home tab, in the Font group, select Book Antiqua from the Font list, with a Font Size of 88 pt. Under Drawing Tools, on the Format tab, in the WordArt Styles group, click the arrow at the bottom right to launch the Format Text Effects dialog box.In the Format Text Effects dialog box, select Text Fill in the left pane, under Text Fill in the right pane select Solid fill, then click the arrow to the right of Color and under Theme Colors, select Light Yellow, Background 2, Darker 75% (fifth row, third option from left).Also in the Format Text Effects dialog box, select Shadow in the left pane, under Shadow in the right pane, click the arrow to the right of Color and under Theme Colors, select Black, Text 1 (first row, second option from left), and the do the following:In the Transparency box, enter 35%.In the Size box, enter 100%.In the Blur box, enter 6 pt.In the Angle box, enter 90 degrees.In the Distance box, enter 4 pt.Also in the Format Text Effects dialog box, select 3-D Format in the left pane, under 3-D Format in the right pane, click the arrow to the right of Top, under Bevel select Art Deco (third row, fourth option from left), and then do the following:To the right of Top, in the Width box, enter 2 pt.To the right of Top, in the Height box, enter 4.4 pt.Under Contour, click arrow to right of Color and under Theme Colors, select Light Yellow, Background 2, Darker 10% (second row, third option from left), then set Size to 2pt.Under Surface, click the arrow to the right of Lighting and under Neutral, select Soft (first row, third option from left).Select text. On the Home tab, in the Paragraph group, select Center Text.Close the Format Text Effects dialog box. To reproduce the background effects on this slide, do the following:On the Design tab, in the bottom right corner of the Background group, click the arrow at the bottom right to launch the Format Background dialog box. In the Format Background dialog box, select Fill in the left pane, under Fill in the right pane, select Gradient fill, then click the arrow to the right of Type and select Radial.Still in the Fill pane, under Gradient stops, click Add gradient stop or Remove gradient stop until four stops appear on the slider. Customize the gradient stops as follows:Select the first stop on the slider, and then do the following:In the Position box, enter 0%.Click the button next to Color, and then under Theme Colors select Gold, Accent 4, Lighter 80% (second row, eighth option from the left).Select the second stop on the slider, and then do the following: In the Position box, enter 26%.Click the button next to Color, and then under Theme Colors select Gold, Accent 4, Lighter 60% (second row, eighth option from the left).Select the third stop on the slider, and then do the following:In the Position box, enter 59%.Click the button next to Color, and then under Theme Colors select Gold, Accent 4, Lighter 40% (fourth row, eighth option from the left).Select the last stop on the slider, and then do the following: In the Position box, enter 100%.Click the button next to Color, and then under Theme Colors select Gold, Accent 4, Darker 25% (fifth row, eighth option from the left). Close the Format Background dialog box.