In today’s economy of globalization, technological change, an increase in innovation and shorter product life cycles have led to intensified international competition. The result is an increase in productivity and capital requirements due to high R&D and growing quality costs. Cross-border mergers have become a predominant form of global expansion and a common possibility of adapting to changing market conditions (Buchner, 2002, p. 21). As the described economic development will continue and may become even stronger, the requirement for cross-border mergers exists (Gösche, 1991, p. 153). However, statistics show that the failure rate has been quite high (see p.13, 2.3).
The author will investigate critical success factors, that are often neglected and the main cause of failure. By failure the author does not mean a complete failure, but that the merged company has not achieved its expected goals. Based on preliminary research and existing knowledge, the analysis of critical success factors will mainly refer to soft factors. In cross-border mergers cultural issues in the form of organizational and national culture play an important role (Gertsen et al., Cultural Dimensions in International Mergers and Acquisitions, 1998). Furthermore, the author will focus on change management, as mergers bring along major changes that have enormous impact on managers and employees. In this context the effect of knowledge management and communication will also be analysed (Buchner, Der Mensch im Merger, 2002). As these issues will have to be considered at certain stages within the merging process, emphasis will also be laid on due diligence and the integration process (Galpin & Herndon, The Complete Guide to Mergers and Acquisitons, 2000).
Table of Contents
1. Introduction
1.1 Issue
1.2 Aims and Objectives
2. Literature Review
2.1 Types of Merger
2.2 Motives for Merging
2.3 Rates of Failure
2.4 Challenges of Cross-border Mergers
3. Methodology
3.1 Secondary versus Primary Data
3.2 Quantitative and Qualitative Data
3.3 Structure of the Dissertation
4. Corus
4.1 Company Information
4.2 Why did British Steel and Hoogovens merge?
4.3 Results of Corus’ Merger
5. Aventis
5.1 Company Information
5.2 Why did Hoechst and Rhône-Poulenc merge?
5.3 Results of Aventis’ Merger
6. Analysis of Corus’ and Aventis’ Mergers
6.1 SWOT-Analysis
6.2 Porter’s Five Forces
6.3 In-depth Analysis of Corus’ Weaknesses
6.3.1 Strategy
6.3.2 Dealing with Economic Threats
6.3.3 Collaboration with Stakeholders
6.3.4 Cultural Conflict
6.3.5 Communication
6.3.6 Change Management
6.3.6.1 Personnel Development
7. Critical Future Success Factors
8. Conclusion
Research Objectives and Core Themes
The primary research objective of this dissertation is to investigate the high failure rate of cross-border mergers by examining the thesis that companies often overlook critical "soft factors" in favor of financial and operational "hard factors." By comparing two prominent case studies—the less successful Corus merger and the more successful Aventis merger—the study aims to determine how strategic due diligence and integration processes can improve merger success rates.
- Analysis of key reasons for cross-border merger failure.
- Evaluation of "hard" vs. "soft" factors (culture, change management, communication).
- Comparative case study of Corus and Aventis using strategic tools (SWOT, Porter's Five Forces).
- Development of improvement strategies for post-merger integration.
- Assessment of the importance of human capital and stakeholder collaboration.
Excerpt from the Book
6.3.4 Cultural Conflict
In March 2003 Corus’ British senior managers wanted to sell the aluminium business to Pechiney of France to pay its debts. However, the Dutch supervisory board blocked the move, as the aluminium operations in the Netherlands are profitable and it would have resulted in further job losses. The fact that the British tried to drain Dutch operations to pay their debts and that the Dutch took actions against this move, led to deep tensions between the different parts of the businesses of the two countries.
While, in Anglo-Saxon companies executives take decisions and boards only have an advisory role, board directors in continental Europe have more influence on the company’s day-to-day operations.
Conflict in Corus’ case occurred because the two parties worked against each other thinking of their own benefit, thus preventing each others’ actions. Merged companies should avoid “we” and “they”, and emphasize togetherness by recognizing that everyone is responsible for the company’s performance (Buchner, 2002, p. 49).
Chapter Summaries
1. Introduction: Presents the research problem regarding high failure rates in cross-border mergers and defines the dissertation's aims, focusing on comparing Corus and Aventis.
2. Literature Review: Provides background on merger types, motives, and the critical distinction between hard and soft factors that influence merger outcomes.
3. Methodology: Explains the use of secondary data and a comparative case study approach to analyze social processes and qualitative outcomes of the chosen mergers.
4. Corus: Details the company background, the reasoning behind the merger of British Steel and Hoogovens, and the subsequent poor results and challenges faced.
5. Aventis: Outlines the merger between Hoechst and Rhône-Poulenc, highlighting their strategic approach and eventual successful integration.
6. Analysis of Corus’ and Aventis’ Mergers: Employs SWOT and Porter's Five Forces to contrast the companies, followed by a deep dive into Corus' weaknesses regarding strategy, communication, and culture.
7. Critical Future Success Factors: Identifies vital steps for Corus to improve performance, including better stakeholder engagement and the integration of human capital management.
8. Conclusion: Summarizes findings, confirming that neglecting human and cultural factors in favor of short-term financial gains is a primary driver of merger failure.
Keywords
Cross-border mergers, M&A, Failure rate, Soft factors, Hard factors, Integration, Due diligence, Cultural conflict, Change management, Strategic management, Stakeholders, Corus, Aventis, Organizational culture, Synergies.
Frequently Asked Questions
What is the core focus of this dissertation?
The dissertation investigates why cross-border mergers frequently fail, specifically testing the hypothesis that the primary cause of failure is a disproportionate focus on "hard" financial factors at the expense of critical "soft" human and cultural factors.
What are the central thematic areas?
The core themes include strategic due diligence, organizational culture, change management, effective internal and external communication, and the critical role of human capital in post-merger integration.
What is the primary objective of the research?
The goal is to analyze why mergers fail or succeed by comparing the specific cases of Corus (less successful) and Aventis (more successful) to derive actionable strategies for future business consolidations.
Which methodology is employed?
The author uses qualitative research based on secondary data, including business journals, reports, and books, utilizing tools like SWOT analysis and Porter’s Five Forces to compare the two case studies.
What does the main body analyze?
The main body provides detailed company overviews, applies strategic frameworks to evaluate their performance, and conducts an in-depth analysis of Corus’ specific weaknesses, including management, stakeholder collaboration, and cultural clashes.
Which keywords define this work?
Key terms include cross-border mergers, M&A, soft vs. hard factors, integration, due diligence, cultural conflict, change management, and stakeholder management.
How did cultural conflict manifest in the Corus case?
Cultural conflict arose from the power imbalance and divergent national management styles, where British managers prioritized shareholder value and quick cost-cutting, while Dutch counterparts sought stability and protection of profitable local assets.
Why was Aventis considered a more successful merger compared to Corus?
Aventis was successful because it prioritized creating a shared vision, fostered open communication across borders, involved stakeholders early, and balanced financial objectives with deliberate cultural integration.
- Quote paper
- Tracey Roberts (Author), 2005, The high failure rates of cross-border mergers due to the focus of companies on hard factors, Munich, GRIN Verlag, https://www.grin.com/document/137585
