Final answer:
Darnell Littell attributes the failure of mergers primarily to the lack of a well-understood human performance plan. He highlights the importance of integrating corporate strategies and personnel in mergers, aside from financial considerations. Effective communication of business plans is crucial as a firm grows and seeks investment.
Step-by-step explanation:
The author Darnell Littell suggests that the primary cause of failure in mergers, beyond bad markets and economic fluctuations, is the absence of a well-understood human performance plan. While businesses are in the best position to make decisions that could potentially attract more customers or produce more efficiently, factors such as management quality, employee productivity, and competition both domestic and international can significantly affect the success of a merger. When it comes to mergers and acquisitions, it's not just the financials that matter, but also how well the companies can integrate their corporate personnel and strategies.
Decisions made by private firms, like shutting down a seemingly unprofitable factory or introducing a new product that might not succeed, are part of the inherent risks in a market-oriented economy. However, it is essential for a firm to communicate its business plans and ensure that the strategies likely to lead to profitability are well-understood by all stakeholders, including managers, employees, bondholders, and shareholders. This understanding becomes increasingly significant as a company grows and wishes to secure financial capital without relying solely on personal relationships with investors. A merger that lacks this comprehensive approach to human performance planning can result in the failure of both firms involved.