This report is written on the topic of ‘How does Cultural Differences matter when the companies from different cultures merge together? The scope of this report is broad as it incorporates the implications of cultural differences in relation to the cross-border strategic alliance. Corporate Culture is used as term to signify how the managers and the workers of particular organisation tend to behave. Many international companies (Nestlè and Shell) have long term commitment towards cultural awareness and normally accepted it as an integral part of their international practices. Cultural clash and its bottom line influence are usually complicated and hard to predict. Frequently, failure to anticipate cultural clash originated from the senior managers and dealmakers lack of awareness. Understanding the prediction and mitigation of negative influence of cultural differences should be a part of cross-border alliances agenda for all management levels. From the case study chapter it has been figured out that most of American cultural traits have seemed to have direct clash with the Swedes culture which is characterised by certain aspects: modesty, values of relationship, caring and the quality of life. Both countries determined to have low power distance and high individualism but in US managemnt seemed to have slightly steeper management hierarchy than the Swedes management. Swedes ranked highlu in term of institutional collectivism but fairly low on small group or family collectivism. The vice versa case in Italian culture. Contrary to Americans, Italians are not much oriented towards performance or achievement and are turned up to be more emotional than American and Swedes and also have comparatively less future orientation. It has been recommended that Cultural differences is an impotant post-merger barrier for managers who are looking realise the value addition or the synergies impacr through the pooling of resource and capabilites of two firms from different cultures. Cultural clash and its bottom line influence are very often complicated and hard to predict. Frequently, failure to anticipate cultural clash originated from the senior managers and dealmakers lack of awareness. It has been seemed that the financial analyses which focuses only on the die-diligence process (Identifying cost-cutting benefits and counting up assets) tend to neglect any estimation on organisational and cultural synergy.
Table of Contents
1. Chapter 1- Aims & Objectives
1.1. Background Context
1.2. Research Problem
1.3. Research Objectives
2. Chapter 2- Literature Review
2.1. What is Culture?
2.2. Importance of Culture
2.3. Cultural Dimensions
2.3.1. Power Distance Index (PDI)
2.3.2. Uncertainty Avoidance
2.3.3. Individualism
2.3.4. Masculinity
2.4. Applying National Cultural Framework
2.5. Cross Cultural Management
2.5.1. Organisation
2.5.2. Leadership
2.5.3. Communication
2.6. The Corporate Response
2.7. Cultural Clash in International Joint Ventures or Cross Border M&A
3. Chapter 3- Case Study
3.1. Case Study on Pharmacia and Upjohn
4. Chapter 4- Discussion & Conclusion
4.1. Discussion
4.2. Conclusion
4.3. Recommendations
5. Chapter 5- References
Target and Research Focus
The primary objective of this report is to analyze the critical impact of cultural differences when companies from diverse national backgrounds engage in mergers and acquisitions, specifically examining how a lack of cultural awareness serves as a barrier to successful post-merger integration.
- Analysis of national cultural frameworks and their application in business.
- Examination of cross-cultural management in organization, leadership, and communication.
- Evaluation of the Pharmacia and Upjohn merger as a case study for cultural clash.
- Identification of strategies for senior management to mitigate negative cultural influences.
- Assessment of the link between cultural synergy and organizational financial performance.
Excerpt from the Book
3.1. Case Study on Pharmacia and Upjohn
As the part of same adavanced and industrialised world, Kalamzoo (US), Stokholm (Sweden) and Milan (Italy) seemed to be different from many ways. Senior managers supervising the merger between two considerably renowned pharmaceutical companies: UpJohn a company from United States & Pharmacia AB of Sweden (also have operations in Italy) had realised and experienced how much important these differences were, after the merger took place in 1995.
As the part of tradition, Swades take off most of the days during the month July as a part of annual vacation where as Italian take off during the month of August. Not aware of this fact, the scheduled meeting expected to be held in Summer had been cancelled many times by US executives as their counterparts were busy at beaches. Being a dominant firm in the given merger, US firm initiated the imposition of its practices (way of doing things) on the newly acquired European companies and thus the international relationship were increasingly became strained,
At that act both of the European counter parts (Swedes & Italian) were unhappy. Additionally, US executives had imposed drug and alcohol test policy and also imposed ban on office smoking. All of these things were semed to create direct clash with the local practices as these culture prefer more informal working environment. Even though, later on UpJohn had relaxed many of these rules with the aim of prevailing some of the local practices and preferences. But it emergef that the degree of resistance and ill feeling had already been developed among their European colleagues.
Summary of Chapters
Chapter 1- Aims & Objectives: Introduces the background of global workforce diversity and outlines the research problem regarding cultural differences in corporate decision-making.
Chapter 2- Literature Review: Provides a theoretical foundation by defining culture, explaining Hofstede's cultural dimensions, and discussing cross-cultural management practices.
Chapter 3- Case Study: Details the practical implications and consequences of cultural clashes during the merger of the pharmaceutical companies Pharmacia and Upjohn.
Chapter 4- Discussion & Conclusion: Synthesizes the findings to highlight the importance of cultural awareness in preventing post-merger failures and provides managerial recommendations.
Chapter 5- References: Lists the academic and industry sources utilized to support the arguments and analysis presented in the report.
Keywords
Cultural Clash, Mergers and Acquisitions, Cross-Cultural Management, Hofstede, Organizational Culture, Globalization, Pharmacia, Upjohn, Power Distance, Individualism, Uncertainty Avoidance, Strategic Alliance, Corporate Synergy, Human Resource Management, Leadership Styles
Frequently Asked Questions
What is the core subject of this report?
The report explores how cultural differences impact the performance and integration of companies from different nations when they merge.
What are the primary areas of interest in this study?
The work centers on organization, leadership, communication, and the identification of cultural barriers in international business.
What is the main research question?
It seeks to understand how cultural divergence affects the success of cross-border strategic alliances and how management can mitigate these risks.
Which scientific approach is utilized?
The report uses a literature review to establish a theoretical framework and applies a specific case study of a pharmaceutical merger to analyze real-world outcomes.
What is the focus of the main body chapters?
The main chapters review relevant academic cultural theories and analyze the specific managerial failures experienced by Pharmacia and Upjohn.
What are the characterizing keywords of the work?
The work is defined by terms such as Cultural Clash, M&A, Cross-Cultural Management, Organizational Culture, and Strategic Alliance.
How did American management styles contrast with Swedish preferences in the case study?
American management utilized centralized command-and-control structures, whereas the Swedish culture prioritized team-based, open management and consensus-building.
What specific financial impact did the cultural clash have on the merged firm?
The integration difficulties and cultural resistance contributed to an increase of $200 million in costs beyond the original projections, totaling $800 million.
- Citar trabajo
- Junaid Javaid (Autor), 2013, How does culture matter when different companies merge together?, Múnich, GRIN Verlag, https://www.grin.com/document/280880
