Seminar Paper, 2004
13 Pages, Grade: 1,7
Impacts on Mergers
Case Study: The Renault-Nissan Partnership
Impacts on Mergers
Mergers can only get results if they are well managed. But what are the important aspects in international mergers that need to be considered by global managers? Are there any differences between domestic mergers and international mergers?
In transnational mergers, it is vital to take national characters and communication styles into account. These varying behavioral patterns need to be synchronized in order to be successful in international circles.
But as in today’s business world “multiculturalism has emerged as a dominant fact of domestic life” (Adler 138), it is of equal importance to study corporations which only work domestically but with a multi-ethnic workforce. This paper does not distinguish between these two cases. Multinational organizations are consequently defined as any organization, corporation, or company which has to deal to some extent with multiculturalism either in their workforce, or through their environment.
It is assumed that acquisitions, alliances, and any kind of partnerships in an intercultural context need the same intercultural understanding as mergers to be successful and therefore the terms will be used as synonyms.
The first aspect that is worth consideration is national character. The history of a country, the experiences of the past, influences the attitudes of the present. For example, if a country has constantly been successful in defending itself from enemies, one can assume that the country is still very self-assured today.
But history is not the only aspect that forms national character: government, religion, and demographics, for instance, need to be considered as well when looking into a country’s background (Morrison et al. 121). A good example is the protestant work-ethic. That is an underlying principle of the Anglo-Saxon business approach which leads to a more competitive culture than in mainly catholic countries.
Those examples are only a short overview of a few characteristics, and analyzing the national characters is only the first step towards a better understanding of cultural differences in communication. To come closer to the center of discussion, the next step needs to focus on the varying styles in communication.
Communication styles diverge dramatically in different cultures. The reasons for this diversity are traits that vary according to culture. Exemplified by the “Maquiladora”, factories working along the Mexican-American border, McDaniel and Samovar studied some “Cultural Influences on Communication in Multinational Organizations”. For them, those are the “social unit”, “locus of organizational loyalty”, “authority structure” and “basis for authority”, “style of negotiation”, “decision making”, “role of conflict/ competition”, “empathy for others (emotion)”, “role of personal relations”, “basis for status”, “role of formality”, “importance of appearance”, “sense of history”, “spatial arrangements”, “time structure”, “importance of time”, “type culture” (degree of context), “proxemics”, and “tactilitiy” (290). Even without knowing the exact definitions and explanations McDaniel and Samovar give, this is a very good overview of some possible influences on communication behavior and especially their variety. Since every country has its own values, it is unfeasible to elaborate on a global list, and constantly some influences will fade away.
The type of culture, either high or low on the context scale, is here considered to have one of the most important impacts on communication styles and is therefore studied further. Hall and Hall introduced this concept, and according to them, “Context is the information that surrounds an event; it is inextricably bound up with the meaning of that event.” (6). In every society there is a certain context attached to each situation, for example think of the different behavioral patterns at a birthday party and at a funeral. For Hall and Hall, countries that are high on the context-scale do not need detailed background information for each interaction in daily life. They rather rely on information networks or on common experiences, whereas low-context people depend on detailed information at each interaction. This means, that communication between cultures that are placed on a different level on the context-scale turns complicated. Low-context people tend to give too much information, hence irritating high-context people, while on the other hand, high-context people fail to give adequate information for low-context people to be able to understand. Summarized it is important to recognize that “One of the great communications challenges in life is to find the appropriate level of context needed in each situation.” (Hall and Hall 9). An aspect that is directly linked to the level of context is the direct and indirect communication styles.
The indirect communication approach is related to high-context. Those culture “tend to leave some things to the imagination” (Hall and Hall 102), they do not converse frankly, but prefer subtlety, and it may be required to read between the lines to understand. June Yum notes that “indirect communication helps to prevent the embarrassment of rejection” (qtd. in Samovar and Porter 227), which is extremely important in most Asian countries. Direct communicators on the other hand, for which the Germans are an outstanding example, are associated with being low on the context-scale. Communicating directly means to say exactly what you think and not to conceal anything. Normally, it is unnecessary to read between the lines. The differences between the two approaches are shown in the following example: in low-context/ direct communication cultures “yes” normally means “yes”, while in high-context/ indirect communication cultures “yes” can mean “no” or “I hear you” as well. Consequently, people from low-context cultures struggle to comprehend when talking to indirect communicators, whereas high-context people are overloaded with information when talking to direct communicators. Now that some involving aspects are dealt with and that the reader should be more aware of the diversity culture can cause, the attention can be drawn to the central topic.
In a merger it is via definition the goal to create unity. But what kind of unity should an international manager strive for? The cultural diversity resulting from differences in national character and communication styles can be responded by five options for management-strategy (Adler 122-127): “cultural dominance”, meaning to use the same approaches abroad that have been used in the home-organization, often employed to suppress a weaker part, “cultural accommodation” (imitating the international colleagues), “cultural compromise”, with all sides granting something, “cultural avoidance” (pretending that neither dissimilarities nor conflict-potential exists) and “cultural synergy”.
In an international alliance this last concept seems to satisfy all the partners best, since it recognizes diversity and since it does accept that there are several ways to achieving one goal, while introducing cultural dominance – for instance – might easily sow the seeds of mistrust, as the other part might feel to be treated as unequal. The concept of “cultural synergy, develops new solutions to problems that leverage the cultural differences among all cultures involved while respecting each cultures uniqueness.” (Adler 127). In order to create those new solutions, Adler suggests a model for problem solving (118-122): First, the situation needs to be described from all the possible cultural perspectives. This means, that managers should seek to be objective and should imagine the basis of the situation from each culture’s point of view. Secondly, a cultural interpretation is necessary. Managers should ask themselves which the basic assumptions are to understand each participant involved. In other words, the parallels and variations need to be identified and interpreted. Finally, cultural “creativity” needs to be increased (121), that is to find appropriate keys for problem-solving, which each culture can accept.
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