Nvidia’s Arm Takeover: The Hurdles in Collaboration

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Nvidia’s Arm Takeover: The Hurdles in Collaboration
Introduction
Collaboration in businesses is not always a simple process. Because businesses normally have different values, organizational culture and subscribe to totally different models of leadership, the process of collaboration is always fraught with varied levels of difficulty. In this analysis, the recent failure in collaboration between the American-based NVIDIA and the Cambridge-based chip designer ARM will be assessed in terms of how the Organizational Behavior chiefly contributed to the failed takeover bid. The report will suggest ways through which organizational takeover and collaboration problems could be addressed through changes in organizational behavior and make recommendations that would have worked in the case of NVIDIA-ARM deal.
Background of the Case
In September of 2020, the US-based company NVIDIA made a stunning announcement in the world of chip designers in particular and chip making industry in general. It announced its intention to take over ARM, the Cambridge-based chip designer that is a leading designer and manufacturer of chips in Europe. This announcement was stunning in the sense that at $40 Billion, it would be the largest ever in the semiconductor industry if successfully completed (Sweney, 2022).
It is important to note according to Holland (2022) that the Japanese bank Softbank who are the original owners of ARM had in principle agreed with NVIDIA to complete the US firm’s takeover, essentially leaving the deal up to the mercy of the regulatory forces both within the industry itself and in the national and regional governments that form an essential part of the bodies that would either okay or thwart the deal. For NVIDIA, the takeover would make them one of the leading chip designing companies in the world, with the potential for staging greater competition and capacity for instituting wide-ranging innovations in the field of chip making (Sweney, 2022).
As a company based in the UK, the repercussions of the sale to an American organization would be felt not only by the 3000 employees that the company employs in Great Britain but would also in effect affect European Union market where the company has a major stake (Sweney, 2022). In addition, NVIDIA’s own customers in the US and around the world were also ready to make their stands known, being that they would be directly impacted by the deal as well. The issue of consumer protection would also come to the fore. All these factors combined to give this case a unique profile and ensure that it attracted greater scrutiny both from the United States Federal Trade Commission (FTC) and the UK Competition and Markets Authority among other world governments. In the end, the deal with Softbank was abandoned owing to the seemingly insurmountable regulatory hurdles and the sustained opposition from within the players in the industry.
Organizational Behavior and the Problems that Triggered the Failure
Understanding what organizational behavior is in relation to the two organizations that sought a merger is essential in understanding the reasons why the deal could not come to completion. As an independent organization, NVIDIA that sought the takeover has its own organizational principles, culture and customers. ARM too has its own principles, culture and customers. In addition, the two organizations operate in politically and geographically different locations. This only means that the political priorities and economic feasibilities of any business arrangement they choose to have would be subject to external scrutiny (Brethower et al., 2022). In the United States for example, the prevailing political environment of the Biden Administration that occurred after the takeover intention was made public has been calling for heightened scrutiny of anticompetitive deals and having a crackdown on the same. It is in this regard that the FTC applied pressure to, and actively sought the blocking of the merger in December 2021. Similarly, the UK government saw the employment of its 3000 domestic workers as potentially jeopardized by a change in the ownership of the company. Because 80% of all chip production is still from Asia, allowing the merger for a region that is only attempting to gain a footing in this sector would be a shot in the foot (Holland, 2022). The operations of these two organizations had to therefore stick to the needs of the regulatory and governing bodies in their jurisdictions. It also includes assessing the realities of the theoretical modern organizational structure including the aspects of the virtual organization, boundaryless organization and the leaner organization.
One of the reasons that prevented the deal from being completed was the increased political desire to foster technology on the home turf of nations rather that outsource this essential element of the modern economy. In organizational behavior, there is the factor of motivation. The motivation for workers, the organization and the government is often to protect the interests of their nations first. This nationalistic desire to fulfil their patriotic duty often overrides the greater global partnership goals. While NVIDIA may have expressed its desire to make ARM better in terms of increasing its competitiveness and innovation, there was simply no guarantee that it was not simply acting in the expansionist dreams of the nation from which it was native. Deciding to reverse the merger therefore kept the company free from the decisions that would have been made from the parent company in the USA.

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