Findings specific to objective 3

Objective 3:

Determine the influence of the acquisition on each subsidiary.

Subsidiaries can be understood as semi-autonomous units with the potential for entrepreneurial behaviour. Libstar, however, assumes responsibility for the definition of the strategic requirements of each subsidiary by using control and coordination mechanisms to direct the behaviour of subsidiary managers. Three categories and six subcategories emerged from the data in relation to the influence of the acquisition on each subsidiary (objective 3) during the interview process. These findings are presented below in Table 6.36.

Table 6.36: Overview of objective 3, theme 12: Influence of the acquisition on each subsidiary and the respective categories and subcategories which emerged

Objective

Questions & probes as

per interview guide Interview data

Themes

Questions

Categories _{Subcategories}

(deduced from interview data)

3. Determine the influence of the acquisition on each subsidiary 12. Influence of the acquisition on each Subsidiary

• What has been the biggest change that your company has experienced since being acquired by Libstar?

12.1 Structure

Systems

Corporate Governance Security and Stability 12.2 Financial

Stability

Benefits Bolder Decisions 12.3 Future Oriented Expansion of Knowledge

The third objective of this study, and the last question of the interview guide, aimed to determine the influence of the acquisition on each subsidiary. The acquisition has led to improvements in each of the subsidiaries, whilst not affecting or changing the core values and entrepreneurial culture of the companies. Once the data were analysed using ATLAS.ti, the most prevalent changes that have been experienced by the subsidiaries were grouped into three different categories. These categories emerged once the data had been grouped and organised using the program’s network analysis tool. The three different categories were financial stability, structure and a future-

oriented outlook for business.

Financial stability formed the first category. Greater benefits and being able to make bolder decisions were the primary elements of financial stability. This stability has also allowed for bolder decision-making as mentioned above in section 6.3.1.6 on risk-taking. Table 6.37 below presents a sample of the interviewees’ responses regarding the financial stability with which Libstar has provided its subsidiaries. This addresses theme 12, category 12.2. These quotes further illustrate Libstar’s positive contribution in terms of financial stability.

Table 6.37: Financial stability of the subsidiary Objective 3, Theme 12, Category 12.2

Benefits and bolder decisions

Respondent 3: “We make much bolder decisions.”

Respondent 6: “From a back office-type role they have also been very useful as we can get discounts from insurance,

banking and benefits.”

Respondent 7: “Financial control and discipline. We have become more controlled. Before being acquired by Libstar, I had

a bookkeeper, not an accountant. Being a farmer, my financial background is there but it’s not professional. […] We had the financial successes, but afterwards we realised that the control was not there. When we became a member of Libstar, the financial structures were spelled out. We have certain guidelines and we follow those. So now those are the last things we worry about. We’ve got a great accountant now who is in control of everything. […] I enjoy being a part of a bigger group in trade. […] We are allowed to go out there with a stronger background to go wheel and deal.”

Respondent 8: “This has been a positive change in terms of people, growth and systems being put in place - we never had

medical aid, provident fund or disability aid. We never had any of these things in place. There has been great social development in terms of incentives.”

Respondent 10: “Financial support. We wouldn’t be able to be in this vicinity if it wasn’t for Libstar.”

Structure formed the second overarching category extracted from the interviewees’ responses. In terms of structure, interviewees mentioned the systems, corporate governance, security and stability that have been put in place since being acquired by Libstar. These contributions have increased the operational efficiency of the subsidiaries. Table 6.38 below presents the interviewees’ responses regarding the structural contributions made by Libstar to each subsidiary. This addresses theme 12, category 12.1.

Table 6.38: Structure of subsidiaries Objective 3, Theme 12, Categories 12.1

Systems, corporate governance, security and stability

Respondent 1: “I think what has changed is that we as a business now, with the systems that Libstar have brought in, it has

made us better understand this business. I think that’s been the biggest change. […] We’re not alone now. We can speak to the Libstar Group for advice, which makes us feel a lot more comfortable. We feel a lot more relaxed, as a lot of the pressure has been taken off. It used to be a case of if something went horribly wrong with my business I would be left with nothing, whereas now I have the security of Libstar. Libstar has given us great stability.”

Respondent 2: “I think that we’ve become a lot more structured. When I came we were 25 people and now we’re over 120

people. It went from an R80 million turnover to now being over R600 million. The biggest thing is structure. Not formalised structure, just the necessary structure. They didn’t necessarily put it in; they just educated us and made us aware of how to better manage our business.”

Respondent 5: “We were granted the stability in order to grow and the need to expand and be noticeable in South Africa.

[…] We didn’t have the foundation before. The relationship was just farmer-driven.”

Respondent 6: “We’ve got to know the South African market very well. And administrative improvements with regard to

reporting structures, which has been very useful. Being forced to do a lot of reporting, forces you to be able to identify where you’re going wrong or where you’re going right.”

Respondent 9: “Definitely corporate governance.”

Being acquired by Libstar has encouraged the subsidiaries to become more future- oriented with their approach to business. Expansion of business knowledge has enabled the subsidiaries to focus on long-term goals, instead of the previous focus on immediate successes. Table 6.39 below presents the interviewees’ responses regarding the future-oriented approach of the subsidiary; addressing theme 12, category 12.3. These responses illustrate Libstar’s positive contribution to the subsidiaries and how this has benefited them.

Table 6.39: Future-oriented long-term outlook of the subsidiary Objective 3, Theme 12, Category 12.3

Knowledge expansion

Respondent 1: “[…] And then the second thing is the structure of our business in the right way for the future.”

Respondent 5: “I would say that we’re forced to consider the future a lot more than we would have before. Budgeting is the

biggest change. We are now forced to look at a three- to five-year budget. We used to just respond to the market. If our clients grew and if the opportunities we tried were successful, or unsuccessful, we would just carry on. […] It’s very useful to set these long-term goals and to strive for bigger things.”

Summary of theme 12: The influence of the acquisition on each subsidiary

The above categories and subcategories verify that all of the respondents view the acquisition as having positively change to their company and having further provided them with the necessary platform for growth and development. The support of the

headquarters discussed above is in accordance with the literature presented on the perspective of headquarters assignment in section 4.4 of chapter 4. This perspective suggests that the headquarters may use control and coordination mechanisms to direct the behaviour and actions of their subsidiary managers (Birkinshaw & Morrison, 1996; Ghoshal, 1986; Gupta & Govindarajan, 1994; Roth & Morrison, 1992). This perspective further supports subsidiary entrepreneurial culture and the notion of subsidiary-driven entrepreneurship, where subsidiaries are able to seek assistance and strategic support from the parent company when required, and they have the ability to draw on the knowledge and resource pool of the parent company when necessary (Boojihawon et al., 2007).