In December 2014, Swisscom SA., through its Swisscom Enterprise division, undertook a strategy of horizontal diversification by acquiring a group of leading IT service companies in French-speaking Switzerland; Veltigroup SA. The objectives of this diversification strategy for Swisscom were focused on the following areas: expanding market share in French-speaking Switzerland, acquiring new talent, integrating new skills to increase growth drivers and finally introducing a new corporate culture. To achieve these objectives, Swisscom decided to fully integrate Veltigroup 18 months after the acquisition.
Based on this initial situation, the primary objective of this master's work is to compare theory with practice according to the different stages of the M&A process. The risk factors resulting from each step and the countermeasures carried out form part of the qualitative analysis of this acquisition. Secondly, the document focuses on the concrete achievement of the initial objectives of the acquiring company in relation to the expectations formulated in the initial strategy.
The differentiated analysis of economic approaches, as well as the major challenges with respect to the cultural differences of the companies involved, also form part of the retrospective analysis. As quantitative information on cultural differences was unavailable, the author held several semi-structured interviews with the respective management teams and conducted several surveys among employees of both entities. The results of these surveys highlighted differing perceptions of the results of the acquisition between management and employees. In order to provide the key to understanding this latent cultural discomfort, multiple research studies were carried out based on prime reference works, especially Frédéric Laloux's work on the evolution of business organization models.
The main conclusions show that Swisscom and Veltigroup are fundamentally disparate companies, both in terms of economic strategy and in terms of culture and structural organization. The acquisition of Veltigroup was a sound decision in terms of meeting the challenge of diversification and innovation, but the integration of resources within Swisscom has created tensions and there is a risk that the impetus provided by these new strengths will be lost in the mass of existing processes. In order to avoid losing these gains, Swisscom must initiate a thorough cultural (r)evolution in order to survive. The evolution of technologies, combined with the evolution of customer needs, requires a re-evaluation of its value creation chain.
But is it possible to implement new business models across the entire corporation? The author takes the view that such a transformation is not impossible, but that it would require a colossal effort in terms of time and resources with a lag in delivery, by which point it risks being out of step with market needs. Nevertheless, as the conclusion of this document shows, other approaches may be preferred, such as the unbundling of services into separate entities. This would enable a new culture to be instilled, allow a more matrix-based organizational structure, in turn offering more autonomy and innovation to be developed in tune with business needs. It is necessary to initiate the transformation of Swisscom with the common goal of reinventing the company in order to best meet the future needs of customers.