chapter 5 suggestions on cultural integration of
TRANSCRIPT
Chapter 5
Suggestions on Cultural Integration of Multinational mergers and
acquisitions Enterprises
5. 1 Government-level recommendations
5.1.1 Strengthen supervision of the relevant service system
The supervision and management of multinational enterprises should be paid
attention to, the first task is to clear the regulatory body and its responsibilities.
Joint-stock companies or individual membership, private enterprises should be
regulated by law and related overseas enterprises management practices,
implementation of supervision according to law. In addition, overseas investment of
China should be built a standard security system, this can be learned from the United
States, the United States is the first country to build overseas investment protection. It
can be found by consulting relevant literature, that relevant laws on overseas
investment of the United States were administered in 1948, in 1969, "Foreign
Assistance Act" was passed, OPIC enterprises were established this year in response
to this legislation, in 1975, the principal risk subjects of overseas investment were
established. And Britain, Germany and France are also not to be outdone, followed by
the construction of the relevant laws and regulations and the corresponding
institutions and organizations for the protection of overseas investments. In summary,
our government should also build relevant legal protection, construct supervision
system, give greater protection to Chinese enterprises when they expand overseas
investment and perform their duties.
5.1.2 Formulate national development strategic planning and implementation of
support policies
Since China's accession to the WTO, China has become a solid part of the
world economy, which is evident to all facts. According to the formulation of the
economic strategy, multinational enterprises will be the next 5-10 years of business
planning into China's economic development strategy. This will be a gospel for
transnational corporate mergers and acquisitions, showing that our government is very
much in favor of for the implementation of this initiative, grasping this opportunity
would be a great chance to expand our business development. In Korea, for example,
after the Government's support for mergers and acquisitions, categories of
multinational mergers and acquisitions in this country with lightning speed increased
more than 5 times, South Korean government’s support for this move is reflected in
the level of taxation, for example, giving the amount appropriate changes and
adjustments, and giving some preferential system, for the acquisition cost a
corresponding loss policy will be given to take care of mergers and acquisitions
enterprises, in addition to this aspect , for the economy the loan conditions will be
also relaxed, or making other strategies to give financial support at the financial level,
even allocating earmarked funds for the acquisition of specialized enterprises as a risk
subsidy. In China only low-interest loans are to be given to support cross-border
mergers and acquisitions as preferential policies, this is obviously not enough, it is
recommended that the Chinese governments introduce policy supports of other
countries as its reference, establish and improve a complete set of legal system,
introducing more talents to support the progress of the integration of domestic and
foreign resources.
5.1.3 Improve the examination and approval system
The development of current world economic is rapid with varied forms, in
order to make enterprises more internationalised, our government should rectify and
reform its departments appropriately, consider taking a multi-level authority for
approval of this initiative, and establish a domestic administrative examination and
approval authority with the administration of the Overseas Investment Committee as
the center, so that enterprises can more easily start the approval process. For the
approval criteria, constraint conditions can be relaxed appropriately, according to the
actual situation of enterprises the procedures for approval can be simplified
appropriately. By reducing the approval process, approving authority of the local
examination and approval authority can get an appropriate increase, gradually moving
to the consulting service-based registration system, providing more convenient
channels for multinational companies.
5. 2 Enterprise-level recommendations
5.2.1 Vigorously cultivate and use transnational business talents
Competition is wherever it exists, for enterprises if they want to be in their
own competitive advantage, they must seize the talents and be good at talent handling.
Talents can be cultivated by their own, or can be introduced outside. If choose the
former, the enterprise should not only focus on brand-name university graduates, but
focus on the professional foreign language graduates of foreign trade, also should not
choose some foreigners to hold a post without qualifications. It is understood that
most internal talents of the well-known enterprises coming from its employment
mechanism or internal accumulation of talent platform. Therefore, companies need to
pay more attention to their own internal and increase capital investment, build
relevant systems, modernize talents, and nurture qualified personnel for their own
enterprises. While the latter is chosen, business owners need "Bole" to find "Maxima"
for them. First of all, multinational companies need to have a strong international
background color, in terms of talent they can make it with international practice,
select the appropriate management of overseas recruitment related system, and learn
the foreign ways to introduce talents. Lenovo, for example, after its successful
acquisition of IBM PC business, did not choose to drastic reform, but followed the
former vice president, Huawei is introducing Taiwan and other select international
business background with talents, most of these companies are successful with very
broad development prospects.
5.2.2 Institutional innovation and the implementation of global business strategy
Enterprises need to strictly comply with relevant laws, such as the existing
"Company Law", and the employment systems also need to be strengthened. For the
talents recruit those with real materials, break the employment mechanism and inhale
more talents for business effectiveness without paying more attention to salary.
Secondly, the management of work can not be ignored, and they need to build
appropriate business management decision-making mechanism, taking other Western
companies as examples, and follow their related methods. For example, a hierarchical
decision-making management mechanism may be adopted, followed by
decentralization, mainly for the performance of middle-level cadres, the management
of the rights of high-level staff needs to be weakened, make them focus its center on
the macro-control and market research. In addition, the issues of product design and
production, etc., they need to strictly comply with the relevant standards, strictly abide
by the requirements of the standard for all countries, making the desire of
monopolizing the national practices can not be implemented. Moreover, companies
will also need to examine the current situation, identify opportunities to develop.
Vision should be accurate, while expanding the territory, rapidly occupying effective
market position. And finally learn to use the relevant laws and regulations to solve the
problem while protecting their rights and interests.
5.2.3 Taking innovation as a guide, forming technological competitive advantage
as soon as possible
The development of enterprises is inseparable from talent and innovation,
from an innovative point of view, business is the main body, they are both the
beneficiary and the initiator. Enterprises in the first task is to seize the market
opportunities to achieve technological competitive advantage, this should be done in
the following areas: First, optimizing the enterprise's existing innovation systems.
Take enterprises as the main body, not following the pace of research institutes and
other institutions, but to make enterprises as the protagonist of innovation work.
Second, the industrialization and R & D departments to keep up with the pace.
Completely shut out those phenomena of disconnect, to know the needs of expanding
scientific research projects in close connection with corporate R & D departments.
Third, funding for research projects should be strictly controlled. According to
accessing to the relevant literature, we can see that in developed countries, enterprises
will put at least 10% of annual profits into the enterprise important projects, and even
some 20% of the annual profits will be invested in which. This is indeed respected by
our country, but the real implementation is less. Therefore, our government and
enterprises should pay more attention to it, and actively build the audit of financial
oversight bodies, making the actual use of scientific research funding into practice,
this initiative can effectively reduce corruption case. Fourth, encourage innovation
and build technology-related innovation reward and punishment system, give
appropriately outstanding contributions to scientific and technological personnel, and
punish the disciplinary personnel. Fifth, strengthen Sino-foreign cooperation. In the
21st century, cooperation between Chinese enterprises and foreign enterprises is
already very common, on this basis, enterprises need to intensify cooperation at this
level of scientific research, to create a competitive advantage for themselves. R & D
and technology innovation and talent is inseparable, many developed countries are
worth being learnt from, and therefore need to strengthen cooperation with them.
5.2.4 Development and implementation of a strategic plan for mergers and
acquisitions integration
When multinational enterprises carry out mergers and acquisitions projects,
it is essential for corporate culture integration and acquisition of ownership, but
success is inseparable from a suitable merger integration of strategic planning.
Mergers and acquisitions need to focus on the integration of enterprises, we need to
know the risks of mergers and acquisitions are great, if one step is wrong, then the
other steps will be also wrong step by step, eventually leading to failure of mergers
and acquisitions. It is necessary to establish a scientific and appropriate integrated
planning, this plan needs to pay attention to the actual situation of each country and
each enterprise, so this plan must be a strategic merger integration planning. We take
TNC merger case as an example to make an analysis, based on our comprehensive
mergers and acquisitions experience of China, we should realize synergies mainly
depending on dealing with strategic issues, which need to carry out collaborative
integration work, specifically, the market operation, production management of
human resources, and enterprise organizational structure and national culture these
three should be combined to integrate. In other words, integration is not just about
corporate culture or part of the enterprise, but taking the enterprise as a whole plan to
expand into integration, it can be considered that this is the emphasis on the overall
integration of performance practices.
5.2.5 Attach great importance to corporate culture integration
Multinational enterprises should pay attention to discrepancies between
cultures, doing a good job of cultural integration, and handling well with its cultural
barriers. Corporate culture is mainly constituted by the following four aspects:
business values, corporate business behavior, interpersonal behavior, and public
relations. The company's operating values are the key, which are responsible for
co-ordinating the other three points. For multinational enterprises, the cultural
integration problem can not be ignored. First of all, comply with the principle of
seeking common ground while reserving differences, understand the local culture and
the differences between local cultures, integrate a new corporate culture as far as
possible. We can get a lot of understanding from Mirvis’s corporate culture thoughts,
it considers that we should realize the importance of corporate cultures to achieve
integration of both cultures, understand the cultures of both sides, and finally adapt to
each other to promote mutual development. When China 's enterprises enter the
market in other countries to start transnational operations, they must first have a
preliminary understanding of this country's culture and business conditions for this
country, make a specific analysis of the enterprise's business and internal structure and
other cultural elements. In the expansion of cultural integration, take their own
corporate culture as the main body, and reflecting the advantages of their own local
culture, absorbing the culture of the host country based on corporate local culture.
Finally expand running, integrate a new corporate culture, maximize the synergy
effects and value creation effect to the limit.
5.2.6 Boldly cultivate and use professional integration managers
Enterprise integration is inseparable from personnel integration, the key to
the integration is to control of the team managers. The presence of integration
manager can regulate both of the companies, it belonging to a hub, can identify
problems in a timely manner with high professional skills and strong problem solving
skills. In addition, the integration manager can make the two sides of the enterprises
more smoothly to communicate, to achieve integration goals. Seen in this light, the
presence of integration manager is necessary.
After checking the relevant findings, compared with non-use integration
manager of the enterprise, the presence of integration managers has a greater chance
of achieving the goal of integration. China should pay more attention to the role of
integration manager while expanding overseas mergers and acquisitions, to be good at
using talents. The practice is very correct that the vice president of IBM Group is still
employed by Lenovo Group after the successful acquisition of IBM Group. Most
companies understand the role of integration manager, however, due to the high cost
of integration of employment, some companies do not want to take this measure. But
in the long run, its actual benefits and costs are very impressive.
Recruitment of professional integration managers need to understand the
following aspects: First of all, understand their ability to work, which is critical for the
integration of the team building and management; Second, understand their work
experience, those who are holding a chicken feather token can not be hired, recruit
people who can clearly identify themselves and use their rights properly. Finally,
understand their mental capacity and emotional intelligence condition, which is the
necessary quality for a qualified integrated manager.
In general, if Chinese enterprises want to carry out mergers and acquisitions
more effectively and enable enterprises to achieve effective and long-term
development, they must attach importance to the role of integration manager and hire
relevant personnel.
5.2.7 Efforts to increase the integration of corporate culture
For mergers and acquisitions integration, the main difficulty lies in the
integration of corporate culture. The corporate culture mainly makes up of these four
areas : business values, business behavior, interpersonal behavior and public relations.
Corporate business values are critical, they are responsible for coordinating the other
three. For multinational enterprises, the cultural integration problem can not be
ignored. The key for mergers and acquisitions integration is to deal with these four
aspects of business contents for both sides of enterprises. Marks believes the
integration of the corporate culture is the primary task of cultural importance,
expanding the integration of both companies need to be aware of national culture,
understand local traditions, and have a clear understanding of the company's history
and reputation, and believes that the integration of the corporate culture can not
despise other cultures, and can not suppress the corporate culture of other side.
Implementation of corporate culture integration should be careful and need to attach
importance to it, it is recommended to start a special seminar to unify views and then
expand integration. In general, it is necessary to abide by the principle of seeking
common ground while reserving differences, understand the local culture and the
differences between the local cultures, producing the new integration of corporate
culture as far as possible. First of all to understand the country's culture and traditions,
have a preliminary understanding for the country's business situation, In addition to
fully understanding the enterprise's business and internal composition of the
enterprise, also need to analyze the differences. Expand the cultural integration based
on their own corporate culture, reflect the advantages of their native culture, absorb
the host enterprise culture on the basis of local culture, achieve the final integration of
a new corporate culture, and maximize the synergies and value creation effect to the
limit.
5.2.8 Focus on speed integrated value
While integration we should pay attention to the value of integration speed,
not anxious and not too slow. Slow integration is the result of cultural integration, in
this regard the integration is no quick fix, we need a process of adaptation, this also
requires a sound planning program. In terms of speed integrated value, many
companies have emerged in the case of integration failure. Based on the analysis on
the acquisition of the case data from Conyers Consulting Company, we know if the
length of integration is beyond two years, the probability of problems for merger
integration issues will be increased, it’s easy to affect the morale of employees,
affecting business efficiency, as synergistic declines arise, leading to failure of
mergers and acquisitions. According to Mercer management consulting firm’s data
consolidation on the merger, we know that the speed of integration has a great
influence on the performance of mergers and acquisitions. Specifically, the speed of
corporate merger integration is positively related to the performance, If the speed is
slow, the performance is also poor, if the speed is fast, the performance is growing
well. When Chinese enterprises expand mergers and acquisitions business, must
overcome this speed of the integration, there is no sense of urgency of time. Moreover,
integration needs to take into account holistic strategies, paying attention to
intelligence gathering, expand researches, this is a good reference for reducing
consolidation costs and preventing integration risks. We need to accelerate the
integration of speed after the merger, so as to achieve it with short-time and high
efficiency, and to achieve integrated synergies, so that corporate value re-creation will
be achieved through cross-border mergers and acquisitions, and the national
enterprises stride forward to international enterprises.
5.2.9 Beware of "small swallow big"
Cross-border mergers and acquisitions is an effective way for enterprises to
expand and enhance their capital, market value and brand in international operations.
There are many financial, energy, media and other corporate giants in this way
quickly to seize the favorable international market, to form monopoly advantages. But
many mergers and acquisitions multinational practices tell people, real successes of
hot "mergers and acquisitions" to the last are less than 40%. Such as Lenovo's
acquisition of IBM's PC business, it is with a lower success rate, only about a few
percent of the probability. Chinese enterprises because of their capital strength,
international level, management experience, technology leadership, brand and market
channels, and completely different with the Western cultural system, making their
cross-border mergers and acquisitions and integration more difficult. Therefore, when
Chinese enterprises go out looking for acquisition opportunities, can not blindly
imitate the operation mode of Lenovo Group, but can not be emotional impulses,
despite the merger integration costs, act on their own initiative. We should learn from
the United States General Electric Company and the "having many meals but little
food at each " mergers and acquisitions strategy, target mergers and acquisitions target
enterprises with overall planning and in-depth research, act according to actual
circumstances and focus on the replacement of business and new business expansion.
The size of each acquisition does not seek large, but seek to integrate and easy to
digest, to ensure a higher success rate of mergers and acquisitions.
5.3 The Strategy of Cultural Integration in Merger and Reorganization
5.3.1 The process of corporate culture integration
Cultural integration is through communication and mutual adaptation, and
ultimately achieve the purpose of integration success. Cultural integration is not easy,
need to be based on the two cultural differences, combined with the actual situation of
enterprises, to identify that part of the inappropriate development of enterprises, and
then removed, and eventually to assemble and integrate those parts suitable for
enterprise development. Cultural integration can be divided into the following three
levels. The first level is to communicate and exchange, this is a job to be performed
before the mergers and acquisitions. After expanding understanding, the enterprise
was able to carry out research and analysis, and ultimately made the decision to
achieve mergers and acquisitions. This level is mainly focusing on corporate core
values, having a preliminary understanding of corporate culture, and getting to know
leaders in the management of the enterprises. After achieving the above points, make
a comparative analysis on the enterprise culture and the local corporate culture, learn
the difference and expand their assessment analysis, take a good grasp of the whole
idea of mergers and acquisitions. The second level of work required to expand
cultural input. Expanding cultural input is very troublesome, an inattentive will
generate cultural conflicts, which therefore must be careful. A good grasp of core
values are the foundation, followed by finding the right point of entry for its
monitoring and promoting the work estimate, part of the focus of the monitoring
should be on difficult elements. Such as the emergence of struggling for power after
mergers and acquisitions integration, at this time both sides tend to maintain their own
thinking and ideas. This needs to expand surveillance and cultural input , cultural
input is mainly done to cultural counseling. In the case of cultural integration if the
allergy appears, we will have to pay full attention to the situation of culture itself,
weighing the pros and cons, and then start the integration work, and finally to
determine the progress of integration.
For cultural integration, we must first understand its specific situation,
examine whether all levels and phases meet integration requirements. The second is to
increase investment in staff training, expand staff training to promote employee
adaptability to different cultures, facilitate the detection of integration problems and
improve. Cultural conflicts can lead to integration failure. The innovation period will
be more favorable for the cultural integration, and help to create a new corporate
culture. This phase is to start with the development of enterprises, there is no end, can
not be predicted. Therefore expanding cultural integration needs as much as possible
to find a suitable cultural integration factor at this stage, strengthen cultural
construction. On the other hand employees can not be ignored, be good at observing
the differences between employees, and then to improve it, adding to exclude the
adverse cultural. The construction and development of new culture are conducive to
employees to enhance self-restraint. It is noteworthy that when companies start
cultural integration, they must have a good team, the cultural quality of team leader is
related to the height of the enterprise, integration and management are inseparable
from a good team, this is very effective in preventing cultural differences in cultural
integration, but also to promote cultural integration. According to the perspectives on
the process of corporate cultural integration, team building is to adapt to new forms of
the essential, and it is the best choice for enterprises.
5.3.2 The principle of corporate culture integration
Depending on the specific construction environment and the use of different
ways, corporate culture will show a different connotations. Standing on the
perspective of business development, starting point for the gradual integration of
corporate culture should be people-oriented, that is to put the enterprise employees in
the first position. The aim of corporate cultural integration is not only to emphasize
the subjective will of cultural builders, but also to grasp the object of cultural
construction, to instill this concept in the building of enterprise culture. Put the values
of your employees first, highlight the particularity and importance of the staff in the
development of enterprises, well maintain and manage the basic rights and interests of
employees in production and life, as well as some additional spiritual values they need.
In the process of building corporate culture, we are down to earth, fit the actual needs
of production and management, can not blindly pursue high standards and high goals,
under the premise of creative and insist on seeking truth from facts. After mergers and
acquisitions, there will be a certain period of cultural conflicts among enterprises, this
requires corporate leaders to carry out the overall cultural reform of mergers and
acquisitions, to achieve the integration of corporate culture in a short period of time,
and then quickly generate economic benefits.
However, in the course of concrete practice cultural conflicts often emerge,
exclusion phenomena arise during the integration process of the two cultures, this
requires corporate managers to come up with practical cultural reform program, and
gradually create a harmonious integration of the environment, in the process of
cultural integration, mutual actively absorb the essence of culture, and gradually
integrate the advantages of the two parties, improve and perfect those factors which
will not meet the enterprise development. In such a process, those excellent cultures
that are really conducive to the survival and development of enterprises will be
reserved and integrated, thus forming a new corporate culture. In addition, enterprises
should always maintain cultural exchanges with each other, in the process of
integration of corporate culture, both sides should conduct a comprehensive and
detailed understanding, and to adjust and improve some minor cultural differences. In
the cultural construction system the production and operation of the acquired
company should be taken into account, this is also requirements and a prerequisite for
successful mergers and acquisitions. Cultural integration followed the principle of
synchronous construction, requiring integration in all aspects can be synchronized, all
aspects can take into account and unity, all parties are able to penetrate and promote
mutual, this is also the basic requirements of corporate culture, in order that the
construction of cultural system can be recognized by the vast majority of employees.
5.3.3 Process of corporate culture integration for cross-border mergers and
acquisitions
The integration of corporate culture is a dynamic process of cooperation
between the two sides, different mergers and acquisitions relationship between the
two will produce a variety of cultural integration mode, how cultural integration is
conducive to production and operation of enterprises in the future is the focus of
attention for both sides, which is one of the factors influencing the success of mergers
and acquisitions. According to the characteristics of the dynamic cooperation process
between the two sides, that is, enterprises are gradually acquiring the situations of the
actual production and management of the acquired enterprise, this kind of cultural
integration mode is divided into the following four categories: injection, collaborative,
discrete and remodeling type, in general these four categories have their own
characteristics, basically covering the current emergence of corporate culture
integration mode.
1. Injection mode of corporate culture integration
Integration of corporate culture in the injection mode is essentially in the
process of mergers and acquisitions the host corporate culture will be gradually
injected into the merged enterprise, the host corporate culture and the merged
enterprise culture will be gradually integrated together in the subtlety. The acquired
company's original core values and philosophy of the enterprise are gradually
abandoned, leaving only those favorable to the development of enterprise culture.
Because culture is formed in the long-term production practice, it is an everyday
habits and ideas, this type of thing once formed will be difficult to change, injection
corporate culture integration mode applies to those enterprises whose host corporate
culture is extremely sound and robust, or by the presence of the cultural construction
of the acquired enterprises with a lot of flaws and shortcomings. In this model of
integration, the acquired company often plays the role of forced indoctrination, which
is very weak in terms of finance, management, operations, technology, etc. If mergers
and acquisitions are not carried out, they will not be difficult to maintain their
production and management, from the perspective of the acquired party, mergers and
acquisitions are highly desirable behaviors. However, since there are many differences
in the actual cultural construction of the two sides, there will still be some subtle
problems in the cultural infusion, such as different technical flow process that the
enterprises formed, different corporate social background and influence and different
working behavior patterns,etc. Therefore, for the acquiring side, when making the
decision to carry out mergers and acquisitions, also need taking into account the
actual cultural differences of both sides. Whether they want to improve the cultural
construction of the acquired companies through the injection of cultural patterns, they
need to do some publicity and import for the cultural differences before mergers and
acquisitions, let the two sides of the company's personnel and cultural institutions
have a certain degree of contact and communication in advance, do some of the actual
bedding and preparation work before the cultural integration. During mergers and
acquisitions we should pay attention to take care of the feelings of the acquired
business side appropriately, make amendments and improvements on the basis of its
production development, learn the excellent corporate culture from them rather than
deny the overall, create a more harmonious environment for the future cultural
integration, reduce the production of the unnecessary risk after mergers and
acquisitions. Through the appropriate publicity and communication, the main
corporate can make the acquired company's cultural transformation more smoothly to
some extent, and cause the staff's sympathy and enthusiasm easily. Of course, the
premise of using this model is that the gap between the two sides is still very evident
in all aspects. The most notable example is Desai Group acquiring Shen Wanshan,
setting up Desai Industry Co., Ltd. , the original leadership of the organization is to be
re-appointed directly after completion of the acquisition, after cultural injection
actively carried out, in a short period of one year, production and operating profit of
Desai Industrial Co., Ltd. is on the turnaround. In addition, there are many distinct
practical cases.
2. Collaborative mode of corporate culture integration
Integration of corporate culture in the collaborative mode is a corporate
culture built on premise of which both sides are very good, at the same time both
sides have the idea of becoming better, that is so-called win-win co-operation. This
model for both sides of the corporate culture is a slow penetration process, as the time
goes and it further develops into a new corporate culture. Both sides have a positive
attitude, on the basis of the original culture both gradually absorb the dominant
culture of each other, and then make up the shortcomings of their own culture existing,
in the new cultural model both adopt each other's good points and avoid his
shortcomings, mutual cooperate. Only in this case, both companies will be able to
promote each other and develop together. The two sides will come to a positive
acquisition impact on the development of the industry according to their development
needs. The most notable example is the combination of HP and Compaq to achieve a
powerful combination, the entire industry was subversive, and promote the rapid
development of computer technology.
3. Discrete mode of corporate culture integration
Culture discrete integration refers to the current merger sides are evenly
matched in the building of enterprise culture, neither is willing to make concessions in
cultural construction, while rejecting all other cultures into their own cultural system,
which led to that the acquisition of the two sides did not have the basic opportunities
to communicate with each other. This situation occurred in the mergers and
acquisitions which business differences in both sides are large, both directions in the
cultural construction have a certain bias, if having a mandatory cultural integration,
within their own enterprises there will be a large number of disharmony emerged,
eventually leading to mergers and acquisitions failed, it is not conducive to the
subsequent production and management development. Therefore, faced with such a
situation, it must be extremely careful to take exchange and communication before the
merger, reduce cultural conflicts arise in the process of cultural reorganization while
taking mergers and acquisitions, and gradually enhance the understanding and
integration of the two sides. The most typical example is the case of US company
General Electric Company's acquisition of Japanese Isuzu, as decision makers make
wise decisions, when General Electric Company of the United States becomes the
actual controller of Isuzu, they did not blindly carry out reforms with which the two
companies are independent production and management, which also makes the future
development of the two companies more quickly.
4. Remodeling mode of corporate culture integration
The essence of cultural reshaping corporate culture integration refers to the
way that the dominant part doesn’t value the corporate cultures of either their own or
the acquired company, the construction of enterprise culture in a post-merger
integration is in a state of undone situation, the occurrence of such a phenomenon
occurs for a variety of reasons, usually because the claimed subject wants a better
control of the acquired company, or because the cultural conflict between the two
sides is very serious, the new culture after the integration can not play a
corresponding role for the business development of the enterprise, the adoption of this
model is likely to result failure in mergers and acquisitions. Because the merger risk
for both sides in this way is asymmetric, almost all of its risk borne by the acquiring
enterprise, this is extremely unfavorable for future development, it will be likely to
harm the economic interests of all parties. The most typical example is the case of
TCL acquiring Alcatel company, because of cultural conflict between the two sides is
obvious, leading to damage to the interests of all parties, making the production and
operation of enterprises after mergers and acquisitions even worse.
5. The Choice of the mode of corporate culture integration
The Choice of the mode of follow - up culture integration should be agreed
by the two companies in the early stages of mergers and acquisitions, this is also a
comprehensive communication process for the two companies, to a certain extent,
there is a big cultural difference for the both parties of the acquirer and the acquired,
acquirers usually stand in the perspective of their own development to consider and
choose post-merger integration of culture, even if fully accept foreign culture, also
choose a certain extent of integration. It is very important for the employees on both
sides of mergers and acquisitions, how to choose a suitable cultural atmosphere for
their career development and stability, no matter what kind of mode, the cultural
aspirations of employees should be taken into account.
Once the business direction of both sides in mergers and acquisitions is
extremely relevant, at the same time the corporate culture of the dominant part is
extremely perfect and powerful, and there are a lot of flaws and shortcomings in the
cultural construction of the acquired enterprises, in this model of integration, the
acquired company often plays the role of forced indoctrination, this model is
conducive to the smooth conduct of mergers and acquisitions. If the collaborative
culture integration model is adopted by the enterprises, then there is a certain
requirement for the business direction of the enterprise. The use of this model should
first take into account the cultural differences between the two sides, actively look for
the presence of both in common, reference cultural advantages of both in cultural
development, combine the advantages of both, quickly built a new cultural system.
But if both sides of the cultural construction is perfect, the emergence of some
cultural conflicts in the process of cultural integration can not be avoided, in which
case the characteristics of a decentralized approach to cultural integration should be
brought into play, in the early integration well-designed compacts must be done,
otherwise, it may have a negative impact on the process of mergers and acquisitions.
The process of cultural integration of mergers and acquisitions, principles to
abide by and applicable integration modes are discussed above, and put forward some
suggestions and measures according to the specific application, some practical and
feasible strategies in the aspect of cultural integration have been put forward, they are
conducive to the sustainable development of enterprises after the merger.
5.4 Suggestions on the concrete operation of enterprise culture integration in
cross - border mergers and acquisitions
The areas of development in cross-border mergers and acquisitions in China
are still being explored, and so far the mergers and acquisitions model with their own
characteristics haven’t been formed, most companies are groping forward, and this
aspect of academic research has just begun, in general, the relevant supporting work
and research are in the initial stage, this study makes an in-depth study on the cultural
integration of cross-border mergers and acquisitions in domestic enterprises.
5.4.1 Employing international management talents after the acquisition
In order to make the whole work of mergers and acquisitions can be more
perfect execution, mergers and acquisitions must be carried out by specialized
departments and teams that are responsible for the implementation of the business,
under special circumstances demand, or even to hire specialized intermediary
companies engaged in mergers and acquisitions to assist in the work. This can solve
some unnecessary trouble in the follow-up cultural integration, to avoid the
phenomenon of integration difficulties caused by the cultural differences. If we
blindly follow the model of the existing domestic multinational mergers and
acquisitions, it will be very detrimental to the development of enterprises after the
merger.
5.4.2 Absorb different cultures, and create common ground
The road of cross-border mergers and acquisitions of Chinese enterprises is
still in the initial stage, this means that there is still a lot of preparatory work to do.
Overseas famous enterprises which domestic enterprises want to acquire in the future,
are more mature in their corporate culture development, there is a lot we can learn
from them. Therefore, in most cases the purpose of cross-border mergers and
acquisitions is to learn foreign advanced cultural concepts, in order to enhance our
own cultural construction, so that both can be seamlessly connected. It has a very
important role in promoting for the local business development.
5.4.3 Training for different cultures
Concerning the company management after the cultural integration, we
should select the relevant personnel within the enterprise, rather than relying on the
assistance of third-party agencies, implement appropriate cross-cultural training, so
that employees can receive a certain extent of foreign corporate culture, and better
accept and include the new culture in the early integration of culture. This will
establish a good reputation for the domestic mergers and acquisitions enterprises in
the international market. Explore outstanding employees from the internal parts of the
enterprise, and gradually reduce the dependence on foreign management team, this
also can save part of the cost, which can be used in the construction of enterprise
culture system.
5.4.4 Play the lead role model of business leaders
Domestic special development environment determines that the current
enterprise managers are not only the organizers but also leaders of the cultural
construction, they play a key role model in the enterprise culture reform. Therefore,
after the occurrence of multinational mergers and acquisitions, both companies need
to communicate in accordance with the actual situation to carry out the unity of
cultural values, and establish a new culture on the basis of their respective systems.
After the new corporate culture is established, the managers of both sides should
actively practice their own responsibility, guide the delivery of all employees to learn
new corporate culture. In summary, corporate managers play a very important role in
the integration of post-merger culture.
5.5 Conclusion
With the development of science and technology, especially the development
of digital information, make it possible that the production and operation of
multinational companies, but also provide a convenient strategic development
conditions for the globalization of high-tech enterprises. In the environment of global
integration development, modern enterprises have not satisfied with the development
and utilization of domestic resources, their perspectives will be extended to foreign
countries, direct investment overseas by multinationals has become a very fashionable
way. Under the guidance of the national macro-policy, the desire of Chinese
enterprises for going out become more and more intense, a considerable portion of the
domestic companies have chosen to overseas development, but the road for the
development of the mergers and acquisitions was not always smooth, the reasons for
this phenomenon are manifold, the key point is the cultural background of the
difference. This paper provides some strategies and thoughts on overcoming cultural
barriers, the main points are the following:
1. Cross-border mergers and acquisitions of enterprises ties more and more closely
in the global economic development, in this way it is possible for enterprises to
achieve certain business development abroad, they can indirectly reduce
production costs, bring new business opportunities for the development of
production, and help domestic enterprises to go to the world. Mergers and
acquisitions can make the development of enterprises to avoid the restrictions of
trade barriers, and then get more business space. However, there are still some
problems in mergers and acquisitions for domestic enterprises, integration failure
is one of the most influential factors, not only to have an impact on the mergers
and acquisitions process, more caused unnecessary shackles for the future
production and operation of enterprises. Thus, in which cultural integration plays
a key role, need to be focused on.
2. There is a big difference between Chinese culture and Western culture, and
concepts in the management is not the same, the emergence of these differences
will have a subsequent impact on the success of mergers and acquisition. In
addition to the actual operation of assets, equity transfer on the outer appearance,
most of the acquired business will be integrated, or even be implemented
corporate culture reconstruction. These differences are a double-edged sword, on
the basis of promoting the sustainable development of the company's future, may
have a certain impact on the internal harmony and stability of enterprises, however,
if handled properly, it is helpful for all parties, it will bring a broader space for
development of business enterprises.
Because cultural integration in the mergers and acquisition process plays a
vital role, so in order to solve a series of conflict problems that exist in the integration
process well, enterprises tend to have careful and meticulous investigation and
research before mergers and acquisition, do some publicity and import on the
existence of cultural differences, let the company's personnel and cultural institutions
of two sides in advance have a certain degree of contact and communication, do some
of the actual bedding and preparation work for the cultural integration, to prevent the
phenomenon of cultural conflict, in addition, develop appropriate measures to deal
with cultural conflicts, and actively build management models and compensation
programs recognized by mergers and acquisitions enterprises, in the system to reach
an agreement, and then create more economic benefits and potential business values.
Of course, there are some shortcomings in this study, mainly as follows:
(1)Cross-border mergers and acquisitions is not just a simple company equity
changes, the factors involved are varied, all of corporate finance, development,
culture and other aspects need to be improved. In the face of specific cases of
corporate mergers and acquisitions, make a detailed analysis of the actual situation,
actively explore a way out of mergers and acquisitions in line with its own. Since
there are still some limitations in this study, in particular, the retrieval of data and
documents is still not comprehensive enough, making the current research is not
perfect. In addition, except cultural integration factors in cross-border mergers and
acquisitions, other influencing factors have not been addressed in this study.
This study is based on the previous studies, because I have less talent and
learning, some understandings and views may still have limitations, and the actual
situation of cross-border mergers and acquisitions enterprises still need to be further
explored in the future. I will put in more effort in future academic research, focus on
related research of multinational mergers and acquisitions, make my own future
research results more applied to specific practice, constantly experience myself,
enrich the relevant research results, and strive to achieve real development and
innovation.