Reference no: EM131164002

Consolidating Three Organizations

Sitting at his desk, Ray McGreevy considered the situation he faced. His small but prosperous real estate firm had tripled in size because of two simultaneous acquisitions. He now needed to develop a management team that could coordinate the three previously independent companies into one efficient firm. He knew this would be no easy task, because the two acquired companies had each been operated as independent entities. In the seven years since Ray had started his real estate brokerage business, he had compiled an enviable record of growth and profits. His staff, originally consisting of himself and a secretary, had grown to more than 25 employees. His organization included himself as president, 2 vice presidents, 16 sales representatives, 4 secretaries, and 2 clerical workers. These employees were distributed equally between the two branches, each supervised by a vice president.

The sales representatives reported to the vice president in their particular branch. The two branches covered a large geographic area that was divided into two regions. About a year ago, Ray had decided to add a branch in a new area. After doing considerable research, he had decided it might be more feasible to acquire one of the smaller firms already operating in the area. A bank officer whom he had contacted approved his plans and promised to help in locating a company to buy and in financing the acquisition. Several months went by, and Ray discussed possible mergers with two firms; however, satisfactory terms could not be reached.

He was becoming slightly discouraged when the banker called him to set up a meeting with the owner of another real estate firm. This firm had been in business for approximately 30 years, and the owner had only recently decided to retire. The company, which was almost equal in size to Ray's, did not sell in his firm's geographic area. Therefore, it appeared to be a natural choice, and Ray was quite excited about prospects for acquiring it. The owner had agreed to accept payment over several years. Although the price was higher than Ray had originally intended to pay, the deal was too good to refuse.

Then, when the deal seemed ready to be closed, the owners of one of the other firms Ray had been interested in buying called and said they wished to renegotiate. Ray was able to make a favorable arrangement with them. After discussing his situation with the banker, he fi- nally decided to purchase both firms. Although this plan far exceeded his original intentions, he knew opportunities such as these did not come along every day.

Now Ray pondered his next step. He had been so busy in the negotiations that he had not had time to develop a plan for managing his enlarged company. As an entrepreneur, he knew he needed to develop a professional team to manage the new business properly. He now had three more branches and about 45 additional employees. There were so many questions to answer. Would it be better to operate the three branches as independent divisions? Should he retain the individual identities of the two new firms, or should he rename them after his original one? He needed answers to these and all his other questions.

QUESTIONS

1. Does organizational development hold the key to Ray's questions?

2. As a personnel consultant, what recommendations would you make to him?