A Case Study of Intercultural Communication in Merger and Acquisition

【Abstract】With the trend of internationalization， more and more enterprises stride into global market through Merger and Acquisition. However， some of them buckled under the strain of cultural conflicts. In order to achieve success， these cultural challenges should be placed on greater emphasis. Therefore， through case study of a failed acquisition and a successful one， the author will explain why these cultural problems emerge and provide recommendations to manage them.

【Key words】intercultural business communication； acquisition； case study

【作者簡(jiǎn)介】黃夢(mèng)瑩（1993.2.25- ），女，漢族，遼寧燈塔人，現(xiàn)就讀于西安外國(guó)語(yǔ)大學(xué)商學(xué)院2016級(jí)商務(wù)英語(yǔ)專(zhuān)業(yè)，主要研究方向：商務(wù)英語(yǔ)語(yǔ)言研究。

Introduction

Nowadays， many enterprises take Merger&Acquisition; as an opportunity to improve their competitiveness. However， in such progress lays a main stumbling block—cultural conflicts. Therefore， to discuss the culture issues in M&A; and to propose possible solutions have practical implications.

Theoretical Framework

Hofsted-Bonds value dimensions

Individualism and Collectivism indicate whether a society is a loose or a tight network. Power Distance refers to the extent to which people can accept the unequally distributed authority. Uncertainty Avoidance “is a measure of how accepting a culture is of lack of predictability.” Masculinity embodies aggressiveness and Femininity stresses taking care of others. With long-term orientation， one looks towards the future. On the short-term side one cherishes the past and present， and respects tradition.

Case Study

Case 1： The failure of Hersheys

Hersheys， an American candy producer， acquired 80% of equities of a Chinese corporation—The Golden Monkey in September， 2014. A year later， Hersheys completed this cross-border M&A;， paying $ 584 million in return for a finger in the Chinese pie.（finance.sina） For both sides， the acquisition seemed to be a wise decision. Hersheys could use The Golden Monkeys sales channels to expand its market in China and the other could make another progress with foreign investment. However， the reality was not satisfying. Hersheys was abducted by many managerial vexations.

Firstly， within one year， the management in The Golden Monkey have witnessed a reorganization which resulted in a profit slip， 31% less than that of the same period in 2015. Secondly， the Hersheys planned to adjust the sales policy but was vigorously protested by the managers.（finance.sina） Thirdly， many employees have lost their jobs without being given any reasons. And the rest of them has a low morale.（Chinairn.com）

Case analysis

The emerged problems indicate that Hersheys does not quite know the Chinese culture.

For the first problem， the American companys immediate plan for revolution shows it has high masculinity score. Managers of the Hersheys are more aggressive than their Chinese colleagues for they are eager to see the progress of the new company. This also shows the short-term orientation and low uncertainty-avoidance of American culture which prefers changes rather than observing traditions. However， Chinese culture is a high uncertainty-avoidance one. We always try to avoid ambiguity. For Chinese employees， the reorganization was an adventure. Therefore， feeling unsafe， they stood out and protested against the change. For the second problem， Chinese culture has high power distance. Status and authority are valued. Thereby， though the new policy will directly influence only the senior management， not only the managers， personnel at grass-roots level will also be involved. For the third problem， Chinese culture demonstrates collectivism. The employees were not satisfied with the companys unreasonable dismissal. Thus， although they still work in the new company， their attitude is consistent with those who were redundant， which may cause low morale.

Case 2： The success of SANY Heavy Industry

SANY Heavy Industry is a Chinese corporate focusing on engineering machinery manufacturing while the German company Putzmeister is the worlds leading concrete machinery manufacturer. On April 17th 2012， SANY completed the acquisition of Putzmeister. In this process， several attempts were made by SANY to ensure a quick and sound integration.

Firstly， by rule of the agreement， Putzmeister would maintain its operational independence， and the CEO of Putzmeister—Nobert Scheuch， besides taking charge of Putzmeister as usual， would also be nominated to the Board of Directors of SANY. Secondly， Rather than decreasing the size of Putzmeisters workforce， SANY intended to create more employment opportunities. And also， SANY committed to maintain the management team and operational model of Putzmeister.（SANY.com）Thirdly， in order to ensure the smooth cooperation of employees from different cultural backgrounds， SANY designed a special model—for each major position， there would be a principal and an assistant manager， one is from China and the other from Germany. （Wenku.com）

Case analysis

In terms of growth objective， Putzmeister focuses more on the maintenance of its established status. In comparison， SANY holds a strong desire for growth. The contrast can be explained with Kluckholn and Strodtbecks time orientation. The German company is more past-oriented， with cultural memory being cherished.（ Dou Weilin， 2005） Thus， the CEO and employees tend to look back at glorious past and believe tradition is important. Knowing German sense of time， SANY chose to maintain the previous management team and let Nobert Scheuch guide for action. Regarding dismissal， Chinese culture and German culture are both high uncertainty avoidance， the commitment of no redundancy helped SANY gain trust from Putzmeister. As for the special model of major position. It ensures cultural integration. In fact， this integration is both at national level and organizational level. Because national culture is not the sole source for cultural conflicts. Therefore， guided by ethnocentrism and polycentrism， SANY creates a transaction culture（Shi Xingsong，2015 ）—a kind of combined culture characterized by values， practices and traditions of all sides. This could melt cultural conflicts and make this M&A; a success.

Recommendations

Firstly， we should accept the cultural differences and put ourselves into others shoes. Secondly， only through proper cognition of ones own culture（national， organization and occupational） can a company compare it with that of the other party， and then choose corresponding strategies to adapt and melt the conflicts. Thirdly， the employees of both sides should be provided with cross-cultural training.

References：

[1]Dou Weilin.（2005）.Intercultural Business Communication.Higher Education Press.

[2]Shi Xingsong.（2015）.Intercultural Business Communication： Theory，Method and Application.Shandong Foreign Language Teaching，21-27.