Presents

INSTRUCTIONS

 You are expected to submit a brief write-up in form of ppt/pdf, with a maximum of
8 pages.
 There is no prescribed form of presentation format
 All submissions must be made by 22nd January 2021, 11.59 am via mail to

businessstrategyevents.arithmos@gmail.com

 You may reach out to us at the above mail if you have any concerns regarding the
case or logistics.
 Any plagiarism will be strictly penalized
 In case of any disputes, the decision of the organizing committee will be final.
 Name your pdf file as Teamname_collegename
 Elaborate and justify assumptions/data sources for the suggestions and

recommendations made.

COMMENTS ON CASE STUDY

{There should have been a point saying what are we supposed to do

beforehand someone reads the case study and analyze, maybe the one
handling this event has already explained still someone who reads the doc
for the first time should understand In the first go what are they suppose to
do}.

[ The case study was interesting but the questions were too restrictive and
could have been better, also the industry description along with a
background check of Radicle and Zupple would have been appreciated]
INTEGRATION PROBLEM 1INTEINTEGRATION PROBLEM 1

Mergers and acquisitions leave many victims in their wake, and such is the case in Zupple’s
takeover by Radicle. Roughly 30% of the employees are deemed redundant when these firms in
the same industry merge. After this merger, the workloads have ramped up in line with the
pressure and stress. The managers who led the finance and customer acquisition department at
Zupple conducted this sort of analysis where they learned that after the company is acquired by
Radicle, the new owners would want to steer the respective departments and reduce their ranks.
But they soon realized that they were far more knowledgeable than the other executives, hence
they were now in the position to drive the company’s combined practices. But other senior
managers and executives were competing for these positions, and the roles being offered to
existing employees at Zupple were something they didn’t fully understand.

Whereas in the case of the radicle, the employees were of the view that this merger has forced
them to quickly adapt to the unfamiliar policies, practices, and politics; work with strangers from
different corporates and even national cultures, and report to new bosses who are not even
aware of the dept track record and ambitions. Also, since the bosses and most top Schering
executives were moving on, the existing employees only had a few supporters left at the
combined organization. These challenges increased employee turnover.

Radicle’s and Zupple’s relationship problems were predictable as they failed to compare their
cultural compatibility beforehand. Radicle follows a tight culture where it believes in valuing
consistency and routine. Whereas, Zupple followed lucid culture where they generally let go of
rules, valued innovation, and promote creativity. When tight and loose cultures merge, there are
higher probabilities that they will clash thus creating inefficiencies in the company’s culture.

Illustrate the approach towards understanding and addressing the firms’ culture issues in
mergers and acquisitions. Describe the actions required to combine operations and deliver
value.

Particularly in this case where both the companies have different organizational cultures, one
has a strong whereas the other has a weak culture.

They Should take the shared approach to understand and address the firm’s culture.

The first step to take after the merger and acquisition of such a culture would be-

 INTRODUCTION AND COMMUNICATION

A meeting should be held to address the workforce of both organizations as they are the
most important resource. All the dilemmas should be addressed and talked about openly
as it would make them feel important and considerable towards each other.
They should take the best of each company’s culture and integrate them. Also, they
should come to some common ground if they will work together.
A high possibility is that Zuple’s employees may not feel welcomed as they are being
acquired and might feel weak hence Radicle should talk about the positive reasons for
which they believe in Zupple ie because the working culture is very knowledgeable.

Both should address that By tying culture to value-creation and to identifying and changing
specific behaviors when necessary, culture can become an effective tool for achieving postmerger
integration objectives.

The actions required to combine operations and deliver value would be:
Not combining the operations because both have different cultures in the initial phases might
create a lot of barriers hence the company should try to merge operations in a phased manner
and operate independently.

The companies have already been working independently for a long period and we can't expect
them to overnight change their operations or adjust. So for the betterment of both companies,
they need to work independently or run their operations as it was. A small change they need to
bring would be discussing its operations together on a weekly or monthly basis and being open
to taking suggestions and implementing them no matter whichever company is giving that
suggestion.

By phased manner what I mean is the company should try to mix the culture and operations in
6 to 10 years, each year merging a part of the operation which will eventually lead to a common
operation.

INTEGRATION PROBLEM 2INTEGRATION PROBLEM 2

Keystone Private equity firm had bought a 34% stake in Radicle by merging its seller vertical arm
[meaning?] with Radicle’s software which helped to strengthen Radicle’s external growth strategy
thereby opening up opportunities for reaching out to international customers.

Keystone's private equity firm had a difference of opinion with the other BOD and investors of
the company when this Radicle-Zupple deal was finalized. They were of the view that Radicle
could have built their buy-now-pay-later model organically from scratch. It would have built its
product without doing any major acquisitions. Also, the investors put forth the fact that its
competitors have hired product managers and built the product organically without incurring
any huge costs.

They also highlighted the fact that this acquisition involves the integration of Zupple’s portfolio
which previously operated independently from Radicle. There is a risk that the integration of
Zupple is maybe more complex than anticipated. This deal might also encounter unexpected
challenges or issues and might take longer than expected or divert management’s attention. It
might not deliver the expected benefits and this may affect Radicle’s operating and financial
performance. Hence, the private equity firm has decided to sell its entire stake from Radicle.

Analyze the impacts of the equity investor’s move and suggest ways to ensure that
Radicle’s profitability, and market position is not hampered post-merger.

The first impact will be a drastic fall in the share price of the market. As soon as the news
reaches market place the short-term and irrational investors will sell their shares leading to
falling in market capitalizations.

This move might also reduce Radicle’s morale for once.

Ways to ensure Radicle’s profitability and market position are not hampered:

 It should make sure that the reasons for the merger should be strong enough and known
to its investors, if not there should be an open tweet from the company’s top management
about its beliefs.
  Keeping in mind the merger is strategic Radicle should speak about the diversification
and smart workforce at Zupple which would eventually showcase in their quarterly
financials.

INTEGRATION PROBLEM 3

As per the sale-purchase agreement, existing contracts of Radicle such as customer agreements,
office leases, equipment leases, service agreements, distributor agreements, supplier agreements,
and a host of other operational agreements, will have to be transferred to Radicle(wrong
statement or understandable). As a part of the due diligence process, these contracts were
reviewed.

However, during the due diligence process, the material supplier contracts were overlooked. It
became difficult to determine any provisions that may be triggered by the merger. As a result of
which, provisions like termination of contracts, and change in control were neglected.

The CFO of Radicle identified that its supplier contracts for software and hardware services were
way different from the ones Zupple had agreed with. Hence, this increased the cost of canceling
the supply-side contracts which could not be continued post-merger.

How, according to you, should Radicle rationalize its supply chain thereby maintaining
control over the costs incurred?

The gross profit margin should be maintained for the newly developed or discovered supply
chain and the overhead between the two companies should be shared so that the net profit
overall as a company could be then maximized and it should be ensured that there is no net loss
for all the variable cost that is incurred for each of the separate product/service lines.
INTEGRATION PROBLEM 4

The BNPL industry has gained massive popularity. Radicle receives a significant number of
synergies, scale, and network effects from Zupple which will boost customer acquisition in
Redeem and the vendor app.
A major part of Zupple’s operations and earnings depends on its ‘Buy now pay later services
provided to the end consumers and Zupple’s ability to recoup the purchase value of all those
transactions.

Supple already has been facing huge NPA issues as the company is already exposed to credit
risk, fraud, and other related services. Moreover, Zupple will rely on Radicle’s technology to
assess a customer’s repayment capability for each transaction.
A prolonged miscalculation on customers’ repayment ability may lead to the business being
overly exposed to bad debts when the end customers fail to meet the repayment obligations to
Zupple, which can adversely impact Radicle’s operations.

Post the due diligence process, it was realized that there were material variances and
discrepancies found in the customer’s ledger book of Zupple, which increased the possibility of
Net NPA exceeding more than 10%.

Moreover, Radicle’s customer attrition was gradually rising as a result of these product
integration disturbances.

How, according to you can Radicle address these issues to ensure retention, reliability,
and continuance of services to the customers?

Supple's credit risk and fraud rates show its incompetency in the field of managing its funds and
credit repayment services hence Radicle should work on the couple's weakness and convert it
into strengths through its manforce and make sure they together make a renowned brand.

RADICLE CAN DO THE FOLLOWING:

Firstly each customer can be given a credit score which is to determine the credit limit provided
for buy now pay later

Secondly, a late fine is to be imposed on non-clearance of dues within the due date
Thirdly the user is to be registered using an aadhar card citing which action can be taken in lieu
of fraud being conducted.

The customer can also be bombarded with calls to pay his/her dues.

And last but not the least customer should be rewarded for clearing dues on time thus
remaining healthy relationships and thus retaining the customers.

RADICLE can also outsource the work of keeping track of customers' credit ratings with their
ability to pay back and eventually make sure, that those who don’t have the loans or buy now
pay later services aren’t given to them.

INTEGRATION PROBLEM 5

The senior managers in Radicle and Zupple generally agreed that the purpose of the acquisition
was to provide entry into new markets for the parent’s existing products. But the two sides could
not reach an agreement on the responsibility for and the timing of these actions.

Instead, they left these decisions to other managers who had not been involved in the
negotiations and this whole discussion was left in ambiguity. This helped Radicle to create a
maneuvering room during negotiations and an opportunity to save face in public
announcements. [This sentence is not in sync with the above-mentioned lines)

The differences of opinion that subsequently arose led managers in the parent and the
subsidiary to compete with each other rather than with outside competitors, which degraded the
overall corporate performance. Hence, the managers faced an ironic situation that increased the
potential for disagreement during negotiations and hence facilitated the closure of this deal.

Human Resource Management (HRM)

which is emphasized by scholars to have
an immense impact on the success of
M&A integration, notably in terms of
managing personnel communication,
conflict
How, according to you, should the key managerial professionals in both companies solve
this chaos?

Firstly a proper formal meeting of the senior managers should be held.

And the first thing they should do is acknowledge the lagging on their part for leaving such a critical matter
into the hands of the juniors who had little understanding of the synergy this acquisition would create
Secondly, the opinions of both parties must be brought to order and be discussed and clear immediately to
ensure no criticism arises in the future.
A proper agreement should be brought upon and signed by both parties.
Also, all the corporate formalities should be completed therein thus not leaving room for future bickering.
The HR department of both companies should make suitable policies and try to bring both parties on
common grounds as HRM has a significant impact on the success of M&A integration.