 High students, we are talking about the phases of mergers and acquisition and we are particularly concerned about the HR challenges that take place in each of these phases. In this topic, we are going to be discussing about the HR challenges in the due diligence phase. You can see that the due diligence phase is the second phase in the merger and acquisition process and during the due diligence phase, the entire plan of merger or acquisition is being chalked out. So regarding human resources, during the due diligence phase, we will be concerned about estimating people-related costs. Now we will be considered about what type of costs they are going to be in that phase of merger or acquisition. So what is going to be the transactional cost, which means that during the phase of merger or acquisition, what is going to be the cost of hiring HR, of losing HR, of retaining HR, what kind of extra benefits you may have to pay in order to retain people, what kind of benefits you would have to pay to let go of people. You know, there are a number of cases in which you offer golden handshakes and some similar kind of incentives and compensation packages for people who you are forcing to leave the organization. So this is a transactional cost of the merger or acquisition. So transactional cost, what will happen to you? Secondly, you would be concerned about what is going to be the ongoing cost. And ongoing cost is that how much salaries you would have to pay. Would you have to pay more salaries to people? For example, if you're going from a developing country to a developed country, what is going to be the ongoing cost of hiring people in a developed world, whereas you can hire people from the developing world. So what is going to be the arrangement, for example, you will go for more expatriate management or you will go for hiring people from within the local market. So what is going to be the ongoing cost of maintaining and retaining HR in your newly merged or acquired firm? And finally, what is going to be the saving on the HR end? What will you save? Many times, mergers or acquisition takes place because, pre-dominantly, labor costs are lesser in the countries in which multinationals they go for mergers and acquisition. So what are we going to save? How much HR cost is going to be saved in the form of less labor costs or less taxes required to be paid? Or what is the combination of savings in terms of human resources? So in the due diligence phase, your organization will be concerned, particularly about estimating people cost regarding task transactional costs, the ongoing costs and the savings which are involved in that process. And secondly, in the due diligence phase, you would be concerned about the cultural issues of the two organizations which are coming together. You know that it's going to be a merger of two cultures and probably it's going to be a merger of two national cultures. And you know from Hofstede's framework that national cultures vary on various different dimensions. So if your national culture is different from each other, you need to check out how you are going to manage that difference of culture and on what dimensions you need to work. And for that, you have the different type of frameworks, particularly the Hofstede's framework in which you can analyze the national cultures and say, well, okay, this culture is more individualistic. So people would be working like that over there. And this culture is more collectivistic. So if two cultures are coming together, what do you need to do regarding merging of these cultural issues? That is another aspect of the due diligence phase. Now this is what we have classified and academically said that in the first two phases and the pre-MNA phase and in the due diligence phase, these are the HR activities that should be taking place. But what happens in reality, what happens in actual business situation, is that various studies have shown that HR department gets involved as the process of integration evolves. HR department does not get involved from the pre-MNA phase. A study of 68 MNAs in Germany showed that HR issues are only considered when an integration strategy is already talked out. So we have discussed that, well, these are the HR issues in the pre-MNA phase and these are the HR issues which should be dealt in the due diligence phase. But we see in the local or in the business environment that HR issues are only dealt with when the integration strategy is talked out, that is the third phase. Another study of HR managers, HR executives that found that companies which involved in HR activities early on, they were more successful. So although in the real business environment, HR issues are brought into light in the later on phases, but it shows from research that you need to involve your HR in the initial phases and those companies which involve HR in the initial phases, they are definitely more successful. So this model which talks out and classifies the different activities in the earlier phases, if it is implemented in the real business situation, there is going to be more success in the merger and acquisition process. So that is what we have learned from modeling of these phases that although real business situations are different, but if we do something like that, the real business situation is going to get better.